Last month, CoreLogic continued its massive expansion into the valuations business by announcing that it was acquiring Mercury Network, a purchase valuation technology and appraisal management platform provider, from Serent Capital.
That announcement followed other several substantial valuations-related acquisitions for CoreLogic over the last few years, including buying LandSafe Appraisal Services, FNC, and RELS for a total purchase price of approximately $587 million.
When CoreLogic announced the Mercury Network deal back in June, the company said that it already acquired a 45% passive minority stake in Mercury Network and planned to purchase the remaining 55% later this year.
What wasn’t known at the time is just how much CoreLogic is for paying Mercury Network, but CoreLogic revealed the details of the acquisition in the company’s second quarter earnings report.
According to CoreLogic, the company paid $70 million for its 45% stake in Mercury Network.
Based on that price, that would place the total purchase price for Mercury Network at approximately $155.5 million, although CoreLogic did not detail the full expected cost at this time.
CoreLogic did repeat that it expects to complete the full purchase of Mercury Network this year.
CoreLogic said that it funded the purchase with “cash on hand and through available capacity on its revolving credit facility.”
According to CoreLogic, Mercury Network currently helps manage the collateral valuation operations of more than 800 small and medium-sized mortgage lenders and appraisal management companies.
Over the years, Mercury Network grew, especially after Serent Capital bought Mercury Network from a la mode back in 2015.
In the time since that deal, Mercury Network grew significantly as well, acquiring Platinum Data Solutions, a QC technology company, in 2016, and announcing plans to acquire Appraisal Scope, a provider of valuation management software.
Now, CoreLogic is adding all of that into its valuations business, which it is growing into an industry giant.
Last year, CoreLogic acquired FNC, a provider of real estate collateral information technology and solutions that automate property appraisal ordering, tracking, documentation and review for lender compliance with government regulations, for a total purchase price of $400 million.
CoreLogic also purchased the rest of RELS, a provider of property valuation and appraisal services, from Wells Fargo in 2016. Prior to the acquisition, RELS operated under the joint ownership of CoreLogic and Wells Fargo, with CoreLogic owning 50.1% of the company and Well Fargo holding the remaining 49.9%.
Under the terms of the agreement, CoreLogic was to pay $65 million to Wells Fargo for its ownership interest in RELS.
Prior to all of that, CoreLogic purchased LandSafe, an appraisal management company, from Bank of America for $122 million in 2015.
And those acquisitions proved to be quite good for CoreLogic’s business as its valuations segment drove business growth last year.
In the fourth quarter, CoreLogic saw significant growth in its Property Intelligence segment, which includes its valuations business.
In fact, CoreLogic’s fourth quarter Property Intelligence revenues increased 33% to $255 million, driven principally by growth in valuation solutions.
In the second quarter of 2017 (which CoreLogic reported earlier this week), the company’s PI revenues actually declined 9% to $251 million due to “lower valuation solutions revenues attributable to reduced U.S. mortgage market volumes and planned vendor diversification by a significant appraisal management client.”
But overall, the revenue that CoreLogic pulls in from valuations has grown substantially since it began its buying spree.
Back in the third quarter of 2014, the company only pulled in $1.4 million in revenue from valuations. Contrast that with 2016 when the company brought in $88.8 million in the first quarter, $113.7 million in the second quarter, $118.1 million in the third quarter, and $97.4 million in the fourth quarter.
And this year, CoreLogic pulled in $76.6 million in valuations revenue in the first quarter and $91.1 million in the second quarter.
Overall, CoreLogic’s revenue was down 5% in the second quarter to $474 million, as the company said that the “benefits of new products, market share gains and pricing actions partially offset the impacts of an estimated 15% decline in total U.S. mortgage volumes.”
Additionally, the company noted that its net income from continuing operations increased 2% to $41 million driven by higher operating income and lower interest expense and tax provisions.
“CoreLogic delivered a very strong operating performance for the second quarter and first half of 2017. In terms of revenues, we materially outperformed market volume trends in U.S. mortgage and grew our insurance, spatial and international operations,” CoreLogic President and CEO Frank Martell said.
“Underlying organic growth accelerated to 4% in the quarter buoyed by new product growth, share gains and pricing actions across our core solution sets,”. “We also made major strides in our collateral valuations business during the quarter by expanding our platform-related revenues and footprint, aggressively building our roster of new clients, and significantly boosting operating efficiency and margins.”
