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CoreLogic Inc (CLGX) Q4 2019 Earnings Call Transcript

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CoreLogic Inc (NYSE: CLGX)
Q4 2019 Earnings Call
Feb 26, 2020, 6:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the CoreLogic Fourth Quarter 2019 Earnings Conference Call.

I would now like to turn the conference over to Dan Smith. Please go ahead sir.

Dan L. Smith -- Investor Relations

Thank you, and good afternoon. Welcome to our investor presentation and conference call where we present our financial results for the fourth quarter 2019. Speaking today will be CoreLogic's President and CEO, Frank Martell; and CFO, Jim Balas.

Before we begin, let me make a few important points. First, we've posted our slide presentation, which includes additional details on our financial results on our website. Second, please note that during today's presentation, we may make forward-looking statements within the meaning of the federal securities laws, including statements concerning our expected business and operational plans, performance, outlook and acquisition and growth strategies and our expectations regarding industry conditions. All of these statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

For further details concerning these risks and uncertainties, please refer to our SEC filings, including the most recent Annual Report on Form 10-K and the subsequent 10-Qs. Our forward-looking statements are based on information currently available to us and we do not intend and undertake no duty to update these statements for any reason.

Additionally, today's presentation contains financial measures that are non-GAAP financial measures. A reconciliation of these non-GAAP measures to their GAAP equivalents is included in the appendix to today's presentation. Unless specifically identified, comparisons of fourth quarter financial results to prior periods should be understood on a year-over-year basis that is in reference to the fourth quarter of 2018.

Finally, please limit yourselves to one question with a brief follow-up. We will take additional questions at the end of the call as time permits.

Thanks. And now let me introduce our President and CEO, Frank Martell.

Frank Martell -- President and Chief Executive Officer

Thank you, Dan. And good afternoon, everyone. Welcome to Corelogic's fourth quarter and full year 2019 earnings call.

My prepared remarks today will cover significant 2019 operating highlights, as well as key areas of focus for 2020. Jim will follow and summarize our fourth quarter and full year 2019 financial results and provide commentary on our first quarter and full year 2020 financial guidance. We'll then finish up the call with a Q&A session.

CoreLogic topped off a very strong 2019 with an outstanding operating and financial performance in Q4. Revenues normalizing for the AMC transformation and the wind down of noncore technology units were up almost 12% in the quarter, driven primarily by core -- by growth in core mortgage, platform-related and other high-margin businesses, as well as higher origination unit volumes in the US market.

Organic growth trends accelerated during the quarter boosted by market share and pricing gains. One example of accelerated momentum on the organic growth front relates to our new collateral valuation services model. As you know, we successfully completed our AMC transformation last December. Our new service model has attracted significant market interest and we've recently secured major new contracts with two of the top 10 US mortgage originators. These wins together with a host of other new contracts for our reimagined service model are expected to generate strong double-digit underlying AMC revenue growth with higher margins in 2020.

Our operating income and adjusted EBITDA margin significantly increased during the quarter, reflecting the benefits of favorable revenue mix and operating leverage and ongoing productivity gains. Collectively, higher revenues and favorable revenue mix, as well as cost efficiency helped us to drive adjusted EBITDA margins above 30%. This represents a margin improvement of five full percentage points over prior year. As we exit 2019, we believe we're well-positioned to drive for higher organic growth rates and profitability in 2020 and beyond.

During the fourth quarter, we accelerated free cash flow conversion rates to finish out 2019 at 52%. During 2019, we continued to follow a balanced and consistent three-pillar capital allocation model, which focuses on appropriate reinvestment in our platform solutions, human capital and infrastructure, returning significant capital to our shareholders, and finally prudent management of our debt levels in line with -- in line with long-term targets.

I'll now provide a bit of color on each of these pillars in terms of accomplishments over the past year. In 2019, our business reinvestment focused on expanding our platforms and integrated solutions offerings, transforming our collateral valuations business model, enhancing quality, service and operating efficiency, investing in cyber and information security, and finally, progressing the GCP platform migration.

With regard to capital return, we allocated about one-third of our total free cash flow generated during 2019 to share repurchases. Importantly the company's Board of Directors also approved the initiation of a dividend beginning in Q1 of 2020. This quarterly dividend level is equivalent to approximately 30% of adjusted 2019 earnings. Although we expect our primary capital return to come in the form of dividends going forward, we plan to continue to repurchase our shares on an opportunistic basis. Finally, we reduced our debt by $110 million in 2019 as part of an ongoing program to progressively align debt levels with our longer term planning targets.

The balance of my prepared remarks today will focus on our revenue mix and driving high margin organic growth. As we push for higher growth rates at higher margins, we made significant progress over the past several years building market leadership in our core solutions, which focus on delivering unique data-driven insights that helps millions of people find, buy and protect the home they love.

During 2020, we expect to continue to strengthen and grow our platforms, which connect many of the most critical activities and constituencies in the housing ecosystem. These businesses are scale market leaders, generate consistent revenue streams and strong margins and leverage our unmatched data and analytics solutions.

Over the past several years we have built and/or expanded our platform offerings, focused on marketing services, home purchase, insurances spatial and international. We're also making strong progress building next-generation capabilities with a particular focus on data quality, structures and visualization as well as technology platforms and advanced automation techniques.

These capabilities should allow us to build operating leverage, tap into new growth opportunities across multiple verticals and set a foundation for additional margin expansion beyond 30%. We are successfully shifting greater percentage of our revenue mix toward high-margin platforms, integrated solutions and expansion of our non-mortgage adjacencies.

In 2019, we grew non-US mortgage volume sensitive solutions to almost 40% of our revenues. A key component of our strategic plan remains to grow our non-US mortgage sensitive footprint to at least 50% of our total revenues over the next few years. None of these advances will be possible without a strong success of our core mortgage solutions. We estimate that our solutions powered the origination of at least seven out of 10 mortgages in the US in 2019.

As a leader in critical underwriting, we're able to drive strong quality of service and operational performance for our clients. During 2019, our core mortgage operations continued to gain scale and build market leadership through the provision of bundled solution packages that leverage our efficient and integrated technology and back office infrastructure and best in the industry data repositories. In terms of market volumes, we saw overall unit volumes grow by slightly more than 10% in 2019 boosted by elevated refinancing activity.

Over the first six months of this year US market unit volumes remained elevated due to continued heavy refinancing activity. Based on current market conditions and external projections, we believe overall market volumes will likely remain elevated through at least the first six months of this year. For the full year, we expect interest rates to remain low and market volumes to be largely consistent with 2019 levels.

In conclusion, the CoreLogic team delivered an outstanding operational and financial performance in 2019 and we're well-positioned for continuing growth and success in 2020 and beyond. I want to thank our employees, clients and shareholders for their support.

We're excited about the opportunities ahead of us to create value for our stakeholders and we will push to achieve our strategic vision of providing transformative cutting-edge property insights, platforms and solutions that enable real estate professionals, financial institutions, insurance carriers, government agencies and other housing market participants to help millions of people find, buy and protect their homes.

Thanks for joining us today. Jim will now discuss our financial results.

Jim Balas -- Chief Financial Officer

Thanks, Frank. And good afternoon, everyone. Today, I'm going to discuss our fourth quarter and full year 2019 financial results and then provide updated views on capital return and financial guidance for 2020.

As Frank mentioned, CoreLogic delivered a strong operating and financial performance in the fourth quarter of 2019. Financial highlights included, first, total revenue growth of 6% driven largely by higher US mortgage unit volumes and growth in valuations, real estate solutions and insurance focused platform businesses. Second, successful completion of our AMC transformation program which positions us for growth in margin expansion in 2020 and beyond. Third, significant adjusted EBITDA margin expansion to more than 30% an increase of approximately 500 basis points, driven by favorable business mix and productivity gains. Fourth, the repurchase of 625,000 common shares which brought our 2019 fiscal year total to more than 2 million shares and reduced our total share count by about 3%. And finally, we announced the initiation of our quarterly cash dividend program.

Full year 2019 revenues totaled $1.762 billion. Full year adjusted EBITDA totaled $498 million and adjusted EPS was $2.83 per share. These results were all above the guidance ranges we provided last October. The balance of my remarks on 2019 results relate to our fourth quarter performance.

Fourth quarter revenues totaled $426 million, up 6% or $23 million, compared with $403 million in the prior year, driven primarily by growth in core mortgage, real estate solutions, as well as improved US mortgage unit volumes and an insurance-related acquisition closed in December of 2018.

The transformation of the AMC and exit of non-core technology units impacted 2019 fourth quarter revenues by $24 million. Excluding the effect of the AMC transformation and non-core technology units, revenues increased approximately 12%.

UWS revenues totaled $259 million, up 8% from 2018 levels, led by the benefits of higher US mortgage origination unit volumes and organic growth. Excluding the effect of the AMC transformation and non-core technology units discussed earlier, UWS revenues increased approximately 20%.

PIRM revenues rose to $171 million, an increase of 2% as growth in insurance and real estate solutions more than offset the impacts of lower tenant screening volumes, currency translation and reduced housing market activity in Australia.

Operating income from continuing operations totaled $56 million for the fourth quarter, compared with $29 million in the same prior year period. Operating margins increased approximately 600 basis points to 13%. Higher operating income was principally attributable to the benefits of revenue growth, operating leverage, improved business mix and cost productivity.

Fourth quarter net income from continuing operations totaled $30 million, compared with $13 million in 2018, an increase of 131%. Diluted EPS from continuing operations totaled $0.37, compared with $0.16 in the same prior year period, an increase of 131%. Adjusted EPS totaled $0.77, compared with $0.48 in 2018, an increase of 60%. These increases were due to the company's strong operating performance discussed previously.

Adjusted EBITDA totaled $129 million, up 26% compared to $103 million in the prior year. Adjusted EBITDA margin was 30%, an increase of approximately 500 basis points. The $27 million increase in adjusted EBITDA was principally attributable to revenue growth, improved business mix and the benefits of ongoing cost productivity programs.

UWS adjusted EBITDA was $99 million, compared to $71 million for the prior year quarter, reflecting operating leverage benefits from higher US mortgage unit volumes, organic growth, favorable revenue mix and continued productivity gains. PIRM adjusted EBITDA totaled $40 million in line with 2018 as growth in insurance and real estate solutions and cost productivity actions offset investments in new products, platforms and technology, currency translation and reduced housing market activity in Australia.

Finally, we continue to gain momentum and generate significant levels of free cash flow as we exited the year. For the 12 months ending December 31, 2019 free cash flow totaled $257 million, a 52% conversion rate of last 12 months adjusted EBITDA and an increase of approximately 400 basis points versus the third quarter.

Our relentless focus on operational productivity in building scaled and unique solutions has resulted in a durable and cash-generative business model. Over the past 10 years we have repurchased approximately 49 million or 42% of our common shares for approximately $1.5 billion. In 2019, we repurchased more than 2 million or 3% of our outstanding shares for $87 million. Additionally, we reduced our debt outstanding by approximately $110 million.

As we announced on December 11 of last year, we initiated our first ever quarterly common stock dividend of $0.22 per share. We would anticipate increasing the dividend over time as our financial results grow. While our current dividend represents approximately $70 million of the annual capital return, we continue to maintain flexibility to opportunistically repurchase shares.

I will close my prepared remarks today with a recap of our financial guidance. Our full year 2020 guidance issued on February 19, 2020 remains unchanged. With regard to the first quarter based on seasonality patterns, internal business activity and our current view of market unit volumes, we expect revenue to be in the range of $420 million to $440 million. In terms of adjusted EBITDA for the first quarter, we expect to be in the range of $117 million to $127 million, which represents a 20% to 30% increase from prior year.

Commencing with the reporting of our first quarter 2020 actual results, the company intends to provide an adjusted 2019 revenue measure that will incorporate the impact of the AMC transformation and the wind down of our non-core mortgage and default technology operations. The 2019 revenue impacts of our AMC transformation and the wind down of non-core technology units can be found in our revenue supplement posted on corelogic.com under Investor Relations.

To summarize, the CoreLogic team delivered strong financial results in 2019. We are well positioned to drive revenue growth and expand profitability in 2020 and beyond.

Thanks for your time today. I will now turn the call back over to the operator for Q&A.

Questions and Answers:

Operator

Thank you. [Operator Instructions] We'll take our first question from Bill Warmington with Wells Fargo.

Bill Warmington -- Wells Fargo -- Analyst

Good afternoon, everyone.

Jim Balas -- Chief Financial Officer

Hey, Bill.

Bill Warmington -- Wells Fargo -- Analyst

So the first question I wanted to ask was about the performance of U&WS versus the overall market. And I know it's not -- you have to pick your metric and that you've got part of the business with credit and flood being driven by the applications level. And then you've got the tax business being driven by the closing level. But it seems that at -- on an adjusted basis the 20% that you're showing for U&WS seems like that's quite a bit below the level of the inquiries and the closings. And so, the question that we've been getting from investors has been, what's with the gap, especially in light of mentions of share gains?

Jim Balas -- Chief Financial Officer

Yeah. On the U&WS -- Bill, it's Jim. So property tax solutions was up 30% roughly on the quarter year-over-year. Floods were upper 20s and so forth really where we had -- the challenge was on the credit side of the business, which is a continuation of the share shifting that we've seen as we profiled in the past quarter. But all in all, we thought our core mortgage business has performed quite well.

Bill Warmington -- Wells Fargo -- Analyst

Okay. And then the...

Jim Balas -- Chief Financial Officer

And then the valuation platforms were also strong performers in the similar growth profiles in the tax business.

Bill Warmington -- Wells Fargo -- Analyst

And so what -- on that headwind, you mentioned on the credit side for the three in one reports, when do you actually lap that?

Jim Balas -- Chief Financial Officer

I think we get close to lapping it within the next quarter or so.

Bill Warmington -- Wells Fargo -- Analyst

Okay. And then for my second question, I wanted to ask about -- if we could talk about a bridge for EBITDA from the 2019 level, just under $500 million to the guidance for 2020, the $500 million to $525 million in terms of how you see yourself getting there, given the puts and takes coming from the different pieces of the business?

Jim Balas -- Chief Financial Officer

Yeah. I mean, it's actually a fairly clean year because we've assumed a flat market. So we've embedded two to three points of organic growth as I think most of the notes reflected that they picked up as well. On that incremental revenue, it's the same pull-through that you would expect, roughly half of that falling near the bottom line. We also profiled within our bridge the $70 million which really doesn't carry a margin with it. And then there's the FX piece that we profiled roughly $10 million. We continue to see that Aussie dollar weaken. So we embedded that assumption in place.

And then the margin we put out with the guidance at 30%. We've shown good -- shown very well on the margin performance over the last two quarters. So we feel like, we're very well positioned to continue to hit 30 for the full year in 2020. We do have some productivity initiatives and so forth like we always do that is embedded within that margin profile.

Bill Warmington -- Wells Fargo -- Analyst

Okay. All right. Well, thank you very much.

Jim Balas -- Chief Financial Officer

Thanks.

Operator

Thank you. We'll take our next question from Bose George with KBW.

Tommy McJoynt -- KBW -- Analyst

Hey guys. This is Tommy McJoynt on for Bose. I wanted to ask about the switch over to the PIRM segment. The margin came in a bit weaker than we were expecting. Just wanted to see if there was any investments or anything specific that happened out this quarter that you want to call out? And then could you also remind us, if there's any degree of seasonality in that side of the business?

Frank Martell -- President and Chief Executive Officer

Yeah, Tommy. Hey, this is Frank. Just before I answer your question I just -- to stick on Bill's points, I think that we had a great year. And I think looking at applications and that type of stuff, these numbers are all over the place. I think we're right on top of closed title orders and more relevant metrics. So we actually performed very strongly against to what we know to be the market volumes out there.

I think if you're looking at apps in the high-refi activity kind of market, you're going to see a lot of fallout. And as Bill talked about, we have a different cycle for some of the businesses. And certainly when you get into things like valuation where the AMC is primarily geared around a couple of major clients, it's not going to reflect the mortgage market volumes on a daily basis.

So just a little bit of a clarification there. But I think we were really -- we had a great year, we hit 30% margin over the second half of the year. We saw organic growth pick up which is good. And I think we'll continue to pick up as we get into 2020 and throughout 2020. A lot of the investment was around product and service that -- as we talk about for a long time, obviously, with the regulations and that kind of thing in this industry, it's a slower sell-in. But we're kind of at that point, now we're actually selling and getting take up in the new service. And I think the AMC is a great example of that.

So I think we're in pretty good shape there, in my view, in terms of where we're positioned well for the year. I think if you talk about PIRM, there is some seasonality in that business, obviously. And I think, you've got -- in terms of the margins right now. And we've talked about this pretty consistently. That's where you're seeing the heavier investment in the data repository. We're driving a new visual, virtual data repository. It's a big investment on the part of the company, part of what the cloud spend is in support of that. So you're going to see a heavier investment over the short to medium-term.

And that's really been going through for the last year. So that has an impact on those margins. They're still good margins, but they should come back up when we get through this period of investment. But I think the investment's well warranted, because it creates the competitive moat and it builds the value to the client base that is essential. Because we're -- they demand a strategic partnership level with us.

And I'd say, the last thing is, we have a fair of amount of investment. We talked about cyber and some of the other areas that do have a bit of a depressive impact on the margin in the short-run. But as everybody knows, cyber is a -- you have to do it and you have to spend the money. So, there's a little bit of that. The seasonality is not super pronounced. And then, of course, they get -- all of our FX exposure is also in that segment. So that's a fairly significant, number there. But the business performed pretty well in 2019. And I think we're going to see the organic pull-through accelerating into 2020 in that area.

Tommy McJoynt -- KBW -- Analyst

Got you. And just following up on the investment in the data repository and the cloud spend. I guess, obviously, you can never stop upgrading technology. But when do you kind of see that, you guys will be at a point where you're kind of happy with the investments that you made. And you really see more of a pickup in margin?

Frank Martell -- President and Chief Executive Officer

Yeah. So -- and we -- by the way, we obviously, because we're talking about this, we run it through our P&L. So everything is fully transparent there. And I think, from that standpoint, I think, I announced -- I believe in, as I remember, October or so of 2018 that we were going to boost investment in the platform area. So you saw that in 2019 obviously play out.

I'd say that, we'll continue to have elevated levels of investment. But I think, we're over the initial hump now that we did in late 2018 and 2019. But again, it all runs through the P&L, so you're just seeing it. But certainly, that's the core of the company. The data repository is the crown jewel of the company and it's something that will enable market leadership.

And also there is actually, believe it or not, perversely there are a growth and an efficiency element here with the investment. Because the GCP, for example, is a significant component of savings in -- beginning in 2019 and it will continue to grow into 2020 at a significant pace.

And then, obviously, again, it will be in the run-rate. But -- so there's a growth element and an efficiency element related to some of these investments that you will see manifest themselves as we get through 2020 and 2021.

Tommy McJoynt -- KBW -- Analyst

Okay. Thanks. And then just switching over to the mention of the two top 10 lenders that you signed for the new valuation model. Could you talk through what type of valuation work your orders are fulfilling for them? And is there -- is that still 100% transaction dependent? Or are there any contractual floors with those contracts?

Frank Martell -- President and Chief Executive Officer

So this is for -- as you know, we kind of -- we did a lot of work to reset the appraisal company that we have. We have a different model than the industry, we have a full -- fully employed panel. And what we've done is that, introduced a technology -- a heavy technology element. So we have a lot of automation in the cycle, which has allowed us to improve significantly the cycle times. And improve, also the customer experience related to this.

So these are appraisal orders. They're on -- primarily on the mortgage origination side, although, we do a few other things, but the vast majority is on the mortgage origination side. And they would be -- they would be driven by orders that would come in based on the client's volumes. That's about -- as we've talked about, that's about a third of the overall valuation revenues. We've been -- that portions of revenues have been dropping as we've added the platform revenue. And that was a high-growth area for us in 2019. And that is more the -- kind of the -- there's a regular revenue recognition to that versus pure volume. There's some volume-related to that, but it's much less than the valuation portion.

Tommy McJoynt -- KBW -- Analyst

Okay. Thanks guys.

Operator

Thank you. We'll take our next question from Darrin Peller with Wolfe Research.

Darrin Peller -- Wolfe Research -- Analyst

Hey guys. Thanks for the time. Let me just ask, first starting on the UWS segment. When we think about the context of a flat market that you're guiding toward for origination units, the -- again, you talk about share gains. I mean what can we expect -- what are you guys expecting at least for the growth rate of that segment overall, obviously, just given the backdrop of a flat market, but potential for you guys to outperform that?

And then, obviously, the valuations piece, you have new wins coming on that will grow well. That should obviously help the growth profile. And I think, correct me if I'm wrong, at a pretty good margin, right? Just given the platform-related revenues and they're also coming much, much higher margin. So how does that impact the overall segment margin opportunity for the year?

Frank Martell -- President and Chief Executive Officer

Yeah. I'd say, Darrin, there's two elements to this. So we talked about -- and again, I think, there's a growth side of it. And I think, we've got a number of very strong growth drivers. Again, because of the regulated portion of this market, there's a lot of scrutiny that goes on by the clients before orders actually flow and revenue flows. But having said that, we've had a lot of share gains, and I would say, across each of the business units, except the AMC, over the last 18 months or so.

They are starting to filter in, in a more material way as we get into 2020. So you'll see share gains impact. The AMC, I talked about. So we expect very strong growth there. The flip side of that is, it's not going to be the same super high-margin that the platform side of that segment generates. But they'll be more significant.

And then, we have a few new products that we're excited about. Things like -- we have a borrower verification suite, a few other things that are hitting the market. So I think, you'll see solid organic growth in that segment in 2020 and beyond. So -- and it's really driven by those areas I talked about.

Darrin Peller -- Wolfe Research -- Analyst

Okay. That's helpful. I guess when we look at the underlying growth of the business outside of -- I mean, again, AMC should clearly drive or the valuations piece should drive better growth in the market for sure. Do you expect it to be any more -- I mean, property, you seem like you're at a pretty good market share at this point. I'm just wondering how much more you can do there? And credit, obviously, has got its competitive dynamics that might anniversary, but flood is still going to -- in your view, still grow at least in line with the market?

Frank Martell -- President and Chief Executive Officer

Yeah. So I think there's always share gain opportunity. We have high share positions in a number of businesses, but I think there's always share gain. And we did take share in some lower ends of the market in flood. For example, last year so there's that type of thing. I think there is opportunity to grow in tax as well and certainly in credit as well there.

So credit's been -- as Jim mentioned, there's been a bit more volatility with share shifting, because clients can shift shares depending on their requirements and etc. But in terms of that I think we've got good momentum in the market right now. So I feel good about that. But I think there's room to grow the shares in each of the areas with clearly the strongest momentum right now in the reimagined AMC area where we're going to have outsized gains this year.

Darrin Peller -- Wolfe Research -- Analyst

That's great to hear. Look, can I just ask one follow-up on the property intelligence risk management side the -- look, I mean, at the end of the day the growth rate there is still relatively flattish. And I guess, I'm curious especially if you back out Symbility. I mean, it looks like organic growth correct me if I'm wrong was down a little bit maybe 1% or 2%? I'm just curious what you see as the drivers to get that more -- to reaccelerate that?

Frank Martell -- President and Chief Executive Officer

Yeah. Look, I think the organic -- so I think a couple of things, Darrin. One is, I think I would characterize the growth rate as kind of flat last year for a number of reasons, but I think we did have the Australian market compressed for the first time in like three decades. So we have those guys were down in the upper teens in terms of market volumes.

Currency, it's amazing how low some of these currencies are in the US dollar. So that -- we took a haircut there. I think the fundamental product offerings and the client relationships are very strong. I feel pretty good about the -- some very significant product offerings that are going to hit the market. So I feel good about where we can get to on an organic growth trend in 2020. So -- and we're working hard to make that reality. So I think the growth trend is kind of flat to accelerating is the right characterization, I'd say within that segment.

Darrin Peller -- Wolfe Research -- Analyst

Okay. All right. Thanks, Frank. Thanks guys.

Operator

Thank you. We'll take our next question from Chris Gamaitoni with Compass Point.

Chris Gamaitoni -- Compass Point -- Analyst

Thanks for taking my call. Frank, I wanted to start on free cash flow. Conversion was 52% this year. Lots of moving parts this year. Just wondering what the outlook is moving forward for free cash flow to EBITDA conversion?

Jim Balas -- Chief Financial Officer

Hey, Chris, it's Jim. On the free cash flow, we wound up at 52% for the year, but a couple of things in there. We did have higher investment levels and spend levels associated with some of our initiatives.

If you kind of normalize for that, we would have finished the year kind of in that 58% to 60% range -- 58% to 60% range which of course is well within our long-term target of 55% to 60%. So there was elevated investment. If you look on the cash flow the capex was a little higher and so forth, and then some of the investments that we had going on that helped taper that down.

Chris Gamaitoni -- Compass Point -- Analyst

Okay. On property tax, it was up 30% year-over-year $26 million. How much of that was influenced by revenue -- lifetime revenue recognition remeasurement in the refinance cycle? I'm just trying to understand kind of what's core growth versus the refinancing dynamic accelerating deferred revenue?

Jim Balas -- Chief Financial Officer

I don't think there's anything unusual on the rev rec side of things with tax. We did have some client wins. And then in the first year we generally pick up somewhere between 25% to 30% of that ticket in the current period. So a lot of that was volume and new clients that we added during the quarter.

Chris Gamaitoni -- Compass Point -- Analyst

Okay. That's good. And could you help us understand the revenue detail you gave on the website of the transitional AMC revenue? By the fourth quarter it's 5% of valuations. You made the comment that AMC is one-third. I'm trying to understand how much of kind of your new AMC revenue is currently in the valuations excluding this number that you gave? What's the mix if I take out these numbers?

Jim Balas -- Chief Financial Officer

Okay. I got you. It's -- so without the -- if you look at the valuation line item there on the supplement, it's probably like a 55-45 between the platforms in the AMC. We've talked about on past calls that were north of $100 million collectively with all the platform businesses. So that should help you anchor toward the number.

Chris Gamaitoni -- Compass Point -- Analyst

Okay. That's very helpful. Thank you so much.

Jim Balas -- Chief Financial Officer

Great.

Operator

Thank you. We'll take our next question from John Campbell with Stephens.

John Campbell -- Stephens -- Analyst

Hey, guys. Good afternoon. Congrats on the good results.

Frank Martell -- President and Chief Executive Officer

Thanks, John.

Jim Balas -- Chief Financial Officer

Thanks.

John Campbell -- Stephens -- Analyst

Back to the property tax business, I want to check on that. I know the revenue stream you guys have there is pretty much a recurring kind of nature to it. You guys mentioned that the growth was pure in the quarter. I'm just want to put a -- just make sure I'm getting to a good jumping off point there, but for the 4Q rev, is that a good run rate over the next, I guess, three quarters?

Frank Martell -- President and Chief Executive Officer

There is some seasonality with the tax business, the way the revenue model works. So it's not going to be something that is linear going -- shooting through them. But there is a seasonal part to it. But the most important thing to recall is that, it's a closed loan product that is 60 to 90 days after a loan closes. That's when we'll get the order and process and get -- and go through the invoicing and payment and so forth. So it does lag the market. So we had a softer growth rate in Q3. That picked up in Q4. We should have a pretty solid result in the first quarter as a result of all that, due to the strong volume activity that we're seeing right now. But it's not going to be linear over the course of each quarter of the year. There is some seasonality.

Chris Gamaitoni -- Compass Point -- Analyst

Okay. That's helpful. And then I'm guessing this is pretty minimal, but how much did NTS contribute in the quarter?

Frank Martell -- President and Chief Executive Officer

Minimal.

John Campbell -- Stephens -- Analyst

Okay.

Jim Balas -- Chief Financial Officer

I got it. It's small, but I think to pick up one of the comments that was raised earlier. If you look at commercial tax, it's an area of significant opportunity for us. We've had an operation in that space for some period of time. This gives us a lot more scale. So although, it's small in the grand scheme of things right now, it's a pretty big TAM that's pretty fragmented. So we're excited about the opportunity. I think right now quarterly split is small. But hopefully it's -- it grows much bigger as we go forward.

John Campbell -- Stephens -- Analyst

Okay. Last question for me. On the UWS margin, that was really, really good results. I think 840 bps year-over-year. Could you guys just maybe talk to the degree of the lift you saw from the UWS gross margin standpoint? I know you're getting some product mix shift there, that's probably pretty favorable, just versus overall opex leverage?

Frank Martell -- President and Chief Executive Officer

Yeah. I don't think -- I think that if you look at the margin performance, John, I would say that it's being driven by the operational efficiency of the platform. I mean, you're putting more volume through that platform. I think the team -- you may recall that one of the big underpinnings of our 30% margin was the tax automation project that we've been working on for a couple of years. We're seeing benefits from that.

So I think you're seeing a much more efficient operational platform coming into play with the volume play coming in. And then some of it could be -- if we get into any quarter, it could be related to mix as well. The mix of what types of revenue we're taking. Because these are hundreds of thousands of loans, I mean, we're talking about thousands per day that are being boarded. So it's a -- mix can play a little bit.

But I think the big thing is, the platform is more automated, we have a better processing infrastructure and the team has digitized the -- some of the outputs to the clients. So I think we have some savings there. So it's a pretty -- pretty much driven by that. Firstly, gross margin opex.

John Campbell -- Stephens -- Analyst

Thank you.

Operator

Thank you. We'll take our next question from Jeff Meuler with Baird.

Jeff Meuler -- Baird -- Analyst

Yeah. Thank you. So, I guess, congratulations on the 2020 margin guidance and achieving the target you set out a while ago. So, I guess, now the question is, what's next? So intermediate to long term, just how much more margin potential is there in this business? And what do you kind of view as the key factors that get you from the 2020 achievement to whatever is next? Thanks.

Jim Balas -- Chief Financial Officer

Sure, Jeff. So, yeah, look, I think the team has done an amazing job, I mean, lifting the margins up 400, 500 basis points. And I would say, in a pretty challenged macro environment in the mortgage market, because I think, a lot of the mortgage volume upside we've been talking about throughout this call has been refi related. And we'll take it certainly and I think it's been a big part of the market and it will continue to be.

But I think the team did a great job on the margin. A lot of it came through, I would say, the efficiency side with product mix becoming a bigger impact. So we talk about the -- three or four years ago, the valuation platform business didn't exist. Now it's a high-margin component of the revenue stream, for example. So I'd say, we'll continue to drive both mix and efficiency, as we go forward. There is additional margin accretion in the business. I think, we want to get through 2020 and on our 30% margin. But I would say, you should expect incremental margin expansion in the business.

In my experience in data and analytics in the last 20 years or so, 25 years is that, above 30% you're getting into rarefied air in terms of most companies and most diversified information companies. Obviously, we have a couple of businesses that are important, but tend to be a little bit lower margin by their nature. And I'd say that, again, we talked about things like the AMC, but there are things that we can do to reimagine those models to get them up.

So I'm excited to see exactly how far the team can go on margins and things like the AMC, which, if you look at it, just purely from a financial point of view, it's a little bit of a drag on the overall margin. But if you look at it from a trajectory perspective, it will be accretive.

So I look at -- just like I believe, we planted a flag for organic growth acceleration, I think, the margins still have room to grow. I'm not sure we can put a three year target out there at this point in time, but I would -- again, expect that you'll see some margin expansion. What we have -- based on what we have in-flight and the revenue mix.

Jeff Meuler -- Baird -- Analyst

Okay. And then, just for property insights, since I think there's lots of different solutions in there, you obviously have Australia, you have a couple of different sub-end markets that you sell to within the US. Can you just kind of maybe help break down the rough sizing of the big pieces and the different trends? I think the call up this quarter was there's some headwind in like tenant screening. But, just if you could help us break down the big pieces and which ones are doing better or worse, I think, it would be helpful. Thanks.

Frank Martell -- President and Chief Executive Officer

Yeah. Look, I think -- I would say, broadly speaking, you have the data business with the analytics -- the data and analytics business in there. That's doing pretty well. We have had growth in, for example, good growth in the valuation model area, as an example. We're launching and it's in test now, an AI-driven valuation model which we're very excited about. High pickup rate and high accuracy. So that business is a decent-sized chunk.

The international piece is also, I'd say, is the other big chunk in there. And I would say, we talked about Australia, kind of a market volume-driven issue and FX-driven issue. Good growth in the UK this year, which is -- or last year which is good. And I think New Zealand is a bit smaller market, but the good growth in the UK.

And I think rebounding in Australia, because thankfully the -- I think, we've gotten a little bit of market growth so far this year and projection is for a positive year this year versus the down year. So that's -- and again, those two businesses are very kind of platform data-intensive businesses. So they have good revenue characteristics and durable revenue characteristics.

Tenant screening is not in that, I think, the big line. That one, we have a small business there. It's a good quality business point -- solutions business, but it has not grown in the last couple of years. Turnover has been kind of flat and there's a lot of challenge with the end-to-end players. But that, again, is kind of a small number, but it's been a little bit of a drag.

So I think this year, we're going to see a better picture in PIRM in general. I think, in data and analytics, we should see a better picture, Australia. So, I think, you're going to see that. And I think insurance and spatial, we bought Symbility in December of last year. The idea was to put the underwriting claims platforms into a cohesive package, which makes us relevant to the big carriers in the US. So, I think so far, I don't want to talk a lot about it, but we feel good about discussions and dialogue and different trial periods and stuff that we've been doing with some of the major players across the US. So more to come on that, but that business makes a lot of money and is -- kind of been a little bit flat.

I guess fortunately we didn't have a lot of storms last year like we had the year before. So that business always generates a lot of revenue when there are storms and weather events that -- so that creates a little bit of a lumpiness in the revenue profile. But again, that business we have new spatial layers that we're going to be able to sell this coming year. So I think spatial will see a little bit of bump as well. So all in all, I think, again, kind of a similar theme to the other areas. I think we planted a lot of seeds for organic growth. I think they're in the right margin spots to help us on the accretion of the margin as well.

Jeff Meuler -- Baird -- Analyst

Got it. Thanks, Frank.

Operator

Thank you. We'll take our next question from Kevin Kaczmarek with Zelman & Associates.

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Hey, guys. Thanks for taking my question. Within Property Intelligence, the -- all the FX revenue headwind would be in the property analytics line, right? Not -- there's none in insurance as spatial?

Frank Martell -- President and Chief Executive Officer

Correct. It's in the property insight line item.

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Yeah. Okay.

Frank Martell -- President and Chief Executive Officer

There's -- actually let me -- I stand corrected there is a little bit in the insurance, but it's quite modest. So the bulk of it is in the property insights line item.

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Okay. And then Frank, I know you discussed the expense benefits regarding the GCP migration, but you also mentioned the growth aspect. I mean, I assume you're talking about revenue growth. Can you give us maybe a better sense of the potential benefits, maybe faster product development or enhancements and when we might start seeing that?

Frank Martell -- President and Chief Executive Officer

Yeah. So, I think the GCP offers quite a few benefits, Kevin. And durability and systems performance are one. And there's a lot of -- the public cloud with resiliency and backup and recovery and that type of thing is -- there are benefits there that should help us save some money. I think the biggest example though that I would give you is that, we're building our smart data platform which drives our visual imagery and our repository, which is being built to be vertical agnostic.

So, our data repository which we think is best-in-class, we can apply that to different verticals. And this gives us the ability to do that in a cheaper way and then apply some advanced analytics that we're not able to do with the old technology. And I think that clearly opens up new vertical opportunities, adjacencies that we can't really get at that easily. It also offers us access to the API game, which is something that we do play in now, but we don't do as much as we can do on APIs and allowing customer sandbox and that kind of stuff. So that really is -- and I talk about growth enablement there. That's really what I'm talking about.

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Okay. And by verticals what do you mean? Like a real estate type customers or oil and gas or something like that? Is that what you mean by verticals?

Frank Martell -- President and Chief Executive Officer

Public sector is a big one.

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Okay.

Frank Martell -- President and Chief Executive Officer

I think if you look at geospatial and the consumers of our geospatial outputs, which are at this point predominantly public sector, but increasingly lenders and insurance carriers. It facilitates that, because you have a lot of -- you're going to use a lot more capacity and computational power to generate that kind of data versus the traditional data that we have. And then yeah, oil and gas, telco that kind of stuff where we've had a presence in, but I'd say it's relatively minor.

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Fair enough. All right. Thanks for taking my questions.

Operator

Thank you. We'll take our final question from Andrew Jeffrey with SunTrust.

Andrew Jeffrey -- SunTrust -- Analyst

Hi. Good morning, guys, appreciating the question. I jumped on a little late, so I apologize if I missed it. But, can you talk about just pricing power across the business? And I'm thinking in particular in insurance and spatial. I wonder if you can give us some sense of what's kind of going on there in terms of, maybe price versus volume dynamics and what the competitive environment's like?

Jim Balas -- Chief Financial Officer

Yeah. Look, I think competition, we have scattered competition. And so, it will depend on what area we're talking about here. I'd say that our effective price increases have been kind of 1% to 2% overall for the last couple of years. Some are much higher and some are kind of no price increase depends. We have -- a lot of our revenue is long-term contract contractual, some of which has cost of living adjustment some of them don't.

I would say, in general, I'd characterize our pricing powers we have moderate pricing power. And I'd say most of it relates to feature enhancement or new data set that type of thing. I don't think our clients -- because everybody is trying to do the same thing we're doing it to get more efficient. So they're just not going to let you go in and do discretionary price increase.

But I think we've been able to get price through service -- consolidating our services into a cohesive workflow offering. And also, I think with enhanced feature enhancements, etc. We'd like to raise it -- we'd like to get to 3% kind of consistently and we've been working on it. A couple of years ago we didn't get any price. Last couple of years, gotten couple of percent. And I think we -- our aspirational goal is to get up to the 3% level. Again assuming inflation stays where it is.

Andrew Jeffrey -- SunTrust -- Analyst

All right. Thank you very much.

Operator

[Operator Closing Remarks]

Duration: 55 minutes

Call participants:

Dan L. Smith -- Investor Relations

Frank Martell -- President and Chief Executive Officer

Jim Balas -- Chief Financial Officer

Bill Warmington -- Wells Fargo -- Analyst

Tommy McJoynt -- KBW -- Analyst

Darrin Peller -- Wolfe Research -- Analyst

Chris Gamaitoni -- Compass Point -- Analyst

John Campbell -- Stephens -- Analyst

Jeff Meuler -- Baird -- Analyst

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Andrew Jeffrey -- SunTrust -- Analyst

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