Release Date: April 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Real Matters Inc (RLLMF, Financial) achieved double-digit revenue growth in its US Title and Canada segments year-over-year.
- The company improved its net revenue margins by 80 basis points quarter-over-quarter to 27.3%, maintaining its target operating model for the tenth consecutive quarter.
- Real Matters Inc (RLLMF) launched three new clients in the second quarter, indicating successful client acquisition efforts.
- The US Title segment posted a 40% year-over-year increase in refinance origination revenues due to a growing client base and net market share gains.
- The company has a strong balance sheet with no debt and $45.7 million in cash, positioning it well to capitalize on future market improvements.
Negative Points
- Consolidated net revenue decreased to $10.1 million from $11.5 million in the second quarter of 2024, primarily due to a decline in the US purchase mortgage origination market.
- US Appraisal revenues were down 9% sequentially, reflecting challenges in the market despite outperforming estimated market volume declines.
- The company recorded a consolidated adjusted EBITDA loss of $1.9 million compared to a positive EBITDA of $700,000 in the second quarter of fiscal 2024.
- US Title segment operating expenses increased by 29% year-over-year, driven by hiring additional sales personnel and increased variable costs.
- The rising interest rate environment led to a decrease in addressable mortgage origination market volumes, impacting revenues from purchase and refinance originations.
Q & A Highlights
Q: How are customers reacting to the current market conditions and uncertainty, particularly in terms of discussions for other channels or Title opportunities?
A: Brian Lang, CEO, explained that the uncertainty in the market has actually continued the momentum in their Title pipeline. They are engaged in several RFPs, including with Tier 1 lenders, and are optimistic about seeing volume in the coming months. The growing refinance pool is also seen as an opportunity, with many mortgages having rates above 6%, which could lead to increased activity as market conditions change.
Q: How should we think about the OpEx trajectory in light of the Canadian dollar's movement and ongoing investments?
A: Rodrigo Pinto, CFO, noted that the devaluation of the Canadian dollar helps reduce operating expenses as they report in US dollars. Despite recent currency fluctuations, they do not foresee major changes in OpEx. They will continue investing in their platform and sales efforts, particularly in Title, to set up for future success.
Q: Do you think Rocket's recent acquisitions will benefit Real Matters, and could it accelerate RFPs, especially in Title?
A: Brian Lang, CEO, indicated that Rocket's acquisitions, such as Redfin and Mr. Cooper, present significant volume opportunities. Mr. Cooper has not been a customer, so this represents incremental upside. The acquisitions could accelerate RFP conversations in Title, with a potential for increased volume and market share gains.
Q: Can you expand on the opportunity with the service provider you have an RFP with in Title?
A: Brian Lang, CEO, explained that service providers manage mortgages and focus on refinancing opportunities. This presents a significant opportunity for Real Matters, as refinancing requires both appraisal and title work. They expect to build market share gradually, similar to Tier 1 banks, depending on the refinance pool's growth.
Q: What are your aspirations for data, and are there adjacent acquisition opportunities?
A: Brian Lang, CEO, stated that they are working on organic data initiatives and continue to explore acquisition opportunities. They are particularly interested in the Title side and are open to acquisitions that align with their strategic goals. Despite healthy valuations, they remain focused on driving core business growth and exploring potential opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
