Black Knight Inks $250M Deal with Top of Mind Networks, Drive Marketing Automation

Black Knight Inc (BKI) has agreed to acquire marketing automation provider Top of Mind Networks (Top of Mind) for an all-cash deal valued at $250 million. Black Knight provides integrated software, data, and analytics to the mortgage, secondary market, and real estate industries.

The deal is likely to close in the third quarter of 2021, subject to customary closing conditions and regulatory reviews.

Top of Mind has developed Surefire, which is a leading customer relationship management (CRM) and marketing automation system for the mortgage industry.

The company said that it will initially work to integrate Surefire with its Empower loan-origination system and enhance integrations with its Optimal Blue product, pricing, and eligibility engine. Then later, the company plans to create new connections and integrations for mortgage lenders and services.

Furthermore, the addition of Top of Mind solutions will modernize Black Knight’s mortgage workflow, and thereby enhance the digital experience of its customers.

Black Knight expects the acquisition to boost Origination Software business revenue by approximately $13 million in the second half of 2021.

Black Knight CEO Anthony Jabbour said, “Integrating Surefire’s capabilities within the wider Black Knight mortgage technology ecosystem will make it possible for lender clients of all sizes to close more loans and create customers for life.”

Jabbour added, “Our combined clients will be able to access additional market-leading offerings from a single, trusted provider, while we will be able to further expand Black Knight’s opportunities to cross-sell our solutions through Top of Mind’s broad reach among more than 850 commercial banks, mortgage banks, credit unions and mortgage brokerage companies.” (See Black Knight stock analysis on TipRanks)

The company expects to release its second-quarter earnings in August, where it plans to provide further details relating to the buyout.

On May 6, Black Knight reported strong Q1 results. The company reported total revenues of $349.7 million, which surpassed the Street’s estimates of $340.6 million and grew 20% from the year-ago period. Earnings soared 19% to $0.56 per share, beating the consensus estimate of $0.52 per share.

Following the Q1 earnings, Oppenheimer analyst Dominick Gabriele maintained a Buy rating and a price target of $94 (28.1% upside potential).

Gabriele said, “Continuing to anticipate incremental foreclosure revenues delayed until 1Q22, BKI expects limited further incremental headwinds ($11M 1Q21). 1Q21 earnings provide an encouraging starting point given stock’s relative underperformance since 4Q20 and increased revenue guidance.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 4 Buys versus 2 Holds. The average analyst price target of $91 implies 24% upside potential to current levels. Shares have decreased 19.9% over the past six months.

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