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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2022

OR

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

Commission File Number 001-37394

Black Knight, Inc.

______________________________________________________________________________________________________________________________________________________

(Exact name of registrant as specified in its charter)

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

(904) 854-5100

___________________________________________________________________

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

There were 156,026,791 shares outstanding of the Registrant’s common stock as of November 2, 2022.

FORM 10-Q

QUARTERLY REPORT

Quarter Ended September 30, 2022

TABLE OF CONTENTS

	Page
Part I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
A. Condensed Consolidated Balance Sheets (Unaudited) as of September 30, 2022 and December 31, 2021	1
B. Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) for the three and nine months ended September 30, 2022 and 2021	2
C. Condensed Consolidated Statements of Equity (Unaudited) for the three and nine months ended September 30, 2022 and 2021	3
D. Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2022 and 2021	5
E. Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3. Quantitative and Qualitative Disclosure About Market Risk	33
Item 4. Controls and Procedures	34
Part II: OTHER INFORMATION	35
Item 1. Legal Proceedings	35
Item 1A. Risk Factors	35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3. Defaults Upon Senior Securities	38
Item 4. Mine Safety Disclosures	38
Item 5. Other Information	39
Item 6. Exhibits	39

i

Part I: FINANCIAL INFORMATION

Item 1.Condensed Consolidated Financial Statements (Unaudited)

BLACK KNIGHT, INC.

Condensed Consolidated Balance Sheets

(In millions)

(Unaudited)

	September 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	16.1	$	77.1
Trade receivables, net		191.8		191.8
Prepaid expenses and other current assets		91.1		83.0
Receivables from related parties		0.1		0.2
Total current assets		299.1		352.1
Property and equipment, net		146.6		154.5
Software, net		459.4		497.0
Other intangible assets, net		503.6		613.2
Goodwill		3,817.2		3,817.3
Investments in unconsolidated affiliates		169.0		490.5
Deferred contract costs, net		190.5		196.0
Other non-current assets		252.6		230.3
Total assets	$	5,838.0	$	6,350.9
LIABILITIES AND EQUITY
Current liabilities:
Trade accounts payable and other accrued liabilities	$	57.8	$	64.5
Income taxes payable		17.7		11.8
Accrued compensation and benefits		86.4		91.4
Current portion of debt		33.6		32.5
Deferred revenues		65.3		64.6
Total current liabilities		260.8		264.8
Deferred revenues		53.9		81.5
Deferred income taxes		232.9		284.1
Long-term debt, net of current portion		2,648.6		2,362.6
Other non-current liabilities		49.9		78.7
Total liabilities		3,246.1		3,071.7
Commitments and contingencies (Note 10)
Redeemable noncontrolling interests		42.8		1,188.8
Equity:
Common stock; $0.0001 par value; 550,000,000 shares authorized; 160,040,598 shares issued and 156,031,768 shares outstanding as of September 30, 2022, and 160,040,598 shares issued and 155,357,705 shares outstanding as of December 31, 2021		—		—
Preferred stock; $0.0001 par value; 25,000,000 shares authorized; issued and outstanding, none as of September 30, 2022 and December 31, 2021		—		—
Additional paid-in capital		1,386.6		1,410.9
Retained earnings		1,398.8		968.2
Accumulated other comprehensive loss		(6.0)		(17.5)
Treasury stock, at cost, 4,008,830 shares as of September 30, 2022 and 4,682,893 shares as of December 31, 2021		(230.3)		(271.2)
Total shareholders’ equity		2,549.1		2,090.4
Total liabilities, redeemable noncontrolling interests and shareholders’ equity	$	5,838.0	$	6,350.9

See Notes to Condensed Consolidated Financial Statements (Unaudited).

1

BLACK KNIGHT, INC.

Condensed Consolidated Statements of Earnings and Comprehensive Earnings

(In millions, except per share data)

(Unaudited)

	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Revenues	$	386.7	$	378.0	$	1,168.4	$	1,089.0
Expenses:
Operating expenses		220.9		203.0		645.6		586.2
Depreciation and amortization		93.5		93.6		277.5		271.8
Transition and integration costs		4.1		(1.3)		19.9		10.9
Total expenses		318.5		295.3		943.0		868.9
Operating income		68.2		82.7		225.4		220.1
Other income and expense:
Interest expense, net		(26.6)		(21.6)		(70.3)		(62.8)
Other expense, net		(5.4)		(1.1)		(9.0)		(5.3)
Total other expense, net		(32.0)		(22.7)		(79.3)		(68.1)
Earnings before income taxes and equity in earnings of unconsolidated affiliates		36.2		60.0		146.1		152.0
Income tax expense		6.5		15.3		17.0		31.0
Earnings before equity in earnings of unconsolidated affiliates		29.7		44.7		129.1		121.0
Equity in earnings of unconsolidated affiliates, net of tax		0.3		1.6		303.3		3.0
Net earnings		30.0		46.3		432.4		124.0
Net losses attributable to redeemable noncontrolling interests		—		7.1		2.5		23.2
Net earnings attributable to Black Knight	$	30.0	$	53.4	$	434.9	$	147.2
Other comprehensive (losses) earnings:
Unrealized holding gains (losses), net of tax(1)		1.4		(0.2)		8.0		0.1
Reclassification adjustments for losses included in net earnings, net of tax(2)		0.4		4.0		5.6		11.9
Total unrealized gains on interest rate swaps, net of tax		1.8		3.8		13.6		12.0
Foreign currency translation adjustment, net of tax (3)		(0.4)		—		(1.0)		(0.4)
Unrealized losses on investments in unconsolidated affiliates, net of tax(4)		(1.9)		(2.9)		(1.1)		(4.5)
Other comprehensive (losses) earnings		(0.5)		0.9		11.5		7.1
Comprehensive earnings		29.5		47.2		443.9		131.1
Net losses attributable to redeemable noncontrolling interests		—		7.1		2.5		23.2
Comprehensive earnings attributable to Black Knight	$	29.5	$	54.3	$	446.4	$	154.3
Net earnings per share attributable to Black Knight common shareholders:
Basic	$	0.19	$	0.34	$	2.82	$	0.95
Diluted	$	0.19	$	0.34	$	2.80	$	0.94
Weighted average shares of common stock outstanding (see Note 5):
Basic		154.5		155.2		154.4		155.4
Diluted		155.4		156.2		155.5		155.9

(1) Net of income tax expense of $0.4 million and income tax benefit of $0.1 million for the three months ended September 30, 2022 and 2021, respectively, and income tax expense of $2.7 million and less than $0.1 million for the nine months ended September 30, 2022 and 2021, 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 $0.1 million and $1.3 million for the three months ended September 30, 2022 and 2021, respectively, and $1.9 million and $4.0 million for the nine months ended September 30, 2022 and 2021, respectively.

(3) Net of income tax benefit of $0.1 million and $0.3 million for the three and nine months ended September 30, 2022 and less than $0.1 million for the nine months ended September 30, 2021.

(4) Net of income tax benefit of $0.6 million and $1.0 million for the three months ended September 30, 2022 and 2021, respectively, and income tax benefit of $0.4 million and $1.5 million for the nine months ended September 30, 2022 and 2021, respectively.

See Notes to Condensed Consolidated Financial Statements (Unaudited).

2

BLACK KNIGHT, INC.

Condensed Consolidated Statements of Equity

(In millions)

(Unaudited)

	Three months ended September 30, 2022
								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, 2022	160.0	$	—	$	1,367.8	$	1,368.2	$	(5.5)	4.0	$	(230.4)	$	2,500.1	$	47.4
Fair value adjustment to redeemable noncontrolling interests in Optimal Blue Holdco, LLC	—		—		4.6		—		—	—		—		4.6		(4.6)
Grant of restricted shares of common stock	—		—		(1.0)		—		—	—		1.0		—		—
Forfeitures of restricted shares of common stock	—		—		0.8		—		—	—		(0.8)		—		—
Tax withholding payments for restricted share vesting	—		—		(0.2)		—		—	—		—		(0.2)		—
Vesting of restricted shares granted from treasury stock	—		—		0.1		—		—	—		(0.1)		—		—
Equity-based compensation expense	—		—		13.6		—		—	—		—		13.6		—
Net earnings	—		—		—		30.0		—	—		—		30.0		—
Equity-based compensation expense of unconsolidated affiliates	—		—		—		0.6		—	—		—		0.6		—
Foreign currency translation adjustment	—		—		—		—		(0.4)	—		—		(0.4)		—
Unrealized gains on interest rate swaps, net	—		—		—		—		1.8	—		—		1.8		—
Other comprehensive loss on investments in unconsolidated affiliates	—		—		—		—		(1.9)	—		—		(1.9)		—
Other	—		—		0.9		—		—	—		—		0.9		—
Balance, September 30, 2022	160.0	$	—	$	1,386.6	$	1,398.8	$	(6.0)	4.0	$	(230.3)	$	2,549.1	$	42.8

	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

See Notes to Condensed Consolidated Financial Statements (Unaudited).

3

BLACK KNIGHT, INC.

Condensed Consolidated Statements of Equity

(In millions)

(Unaudited)

	Nine months ended September 30, 2022
								Accumulated
				Additional				other					Total		Redeemable
	Common stock			paid-in		Retained		comprehensive		Treasury stock			shareholders’		noncontrolling
	Shares	$		capital		earnings		loss		Shares	$		equity		interests
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	—		—		(12.5)		—		—	—		—		(12.5)		12.5
Acquisition of remaining redeemable noncontrolling interests in Optimal Blue Holdco, LLC	—		—		—		—		—	—		—		—		(1,156.0)
Grant of restricted shares of common stock	—		—		(51.8)		—		—	(0.9)		51.8		—		—
Forfeitures of restricted shares of common stock	—		—		2.0		—		—	—		(2.0)		—		—
Tax withholding payments for restricted share vesting	—		—		(11.2)		—		—	—		—		(11.2)		—
Vesting of restricted shares granted from treasury stock	—		—		8.9		—		—	0.2		(8.9)		—		—
Equity-based compensation expense	—		—		37.2		—		—	—		—		37.2		—
Net earnings (losses)	—		—		—		434.9		—	—		—		434.9		(2.5)
Equity-based compensation expense of unconsolidated affiliates	—		—		—		(4.3)		—	—		—		(4.3)		—
Foreign currency translation adjustment	—		—		—		—		(1.0)	—		—		(1.0)		—
Unrealized gains on interest rate swaps, net	—		—		—		—		13.6	—		—		13.6		—
Other comprehensive loss on investments in unconsolidated affiliates	—		—		—		—		(1.1)	—		—		(1.1)		—
Other	—		—		3.1		—		—	—		—		3.1		—
Balance, September 30, 2022	160.0	$	—	$	1,386.6	$	1,398.8	$	(6.0)	4.0	$	(230.3)	$	2,549.1	$	42.8

	Nine 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, 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	—		—		(392.3)		—		—	—		—		(392.3)		392.3
Grant of restricted shares of common stock	—		—		(29.2)		—		—	(0.6)		29.2		—		—
Forfeitures of restricted shares of common stock	—		—		1.6		—		—	—		(1.6)		—		—
Tax withholding payments for restricted share vesting	(0.1)		—		(24.4)		—		—	—		—		(24.4)		—
Vesting of restricted shares granted from treasury stock	—		—		11.4		—		—	0.2		(11.4)		—		—
Equity-based compensation expense	—		—		32.4		—		—	—		—		32.4		—
Net earnings (losses)	—		—		—		147.2		—	—		—		147.2		(23.2)
Equity-based compensation expense of unconsolidated affiliates	—		—		—		2.0		—	—		—		2.0		—
Purchases of treasury stock	—		—		—		—		—