Q4 2021 Doma Holdings Inc Earnings Call

February 17, 2022

During the session you will need to press star one on your telephone please be advised that today's conference is being recorded.

You require any further assistance. Please press star zero I would now like to hand, the conference over to Beatrice Bartholomew head of Investor Relations. Please go ahead.

Thank you operator, good afternoon, everybody and thank you for joining domo fourth quarter and full year 2021 earnings conference call.

Earlier today <unk> issued a press release announcing its fourth quarter and year end results, which is also available at Investor <unk> <unk>.

Leading today's discussion will be done the founder and Chief Executive Officer, Matt <unk>, and Chief Financial Officer Gnomon Ahmad.

Following managements prepared remarks, we will open up the call to questions.

Before we begin I would like to remind you that our discussion will contain predictions expectations forward looking statements and other information about our business that is based on management's current expectations as of the date of the presentation.

Forward looking statements include but are not limited to boneless expectations or predictions of financial and business performance and conditions and competitive and industry outlook.

Forward looking statements are subject to risks uncertainties and other factors that could cause our actual results could differ materially from historical results.

And or from our forecast, including those set forth in Benelux form 8-K filed today.

For more information please refer to the risks uncertainties and other factors discussed in our SEC filings.

All cautionary statements that we make during this call are applicable to any forward looking statements.

Make wherever they may appear.

You should carefully consider the risks and uncertainties and other factors discussed in <unk> SEC filings.

Do not place undue reliance on forward looking statements as bill them is under no obligation or expressly disclaims any responsibility for updating altering or otherwise revising any forward looking statements, whether as a result of new information future events or otherwise except as required by law.

Additionally, during this conference call. We will also refer to non-GAAP financial measures, including retained premiums and fees.

Adjusted gross profit and the other measures described in our earnings release.

GAAP results and descriptions of our non-GAAP financial measure with a full reconciliation to GAAP can be found in the fourth quarter 2021 earnings release, which has been furnished to the SEC and is available on our investor website.

And with that I'll turn the call over to Matt some costs CEO of Doma.

Thank you Peter.

Warm welcome to you on your first earnings call as a key new member of the Jamba team. We're really excited to have you here.

We will cover three main themes one we have continued to outperform the industry with our growth.

Two our continued outperformance was driven by our differentiated machine intelligence driven platform to help close residential real estate transactions faster higher quality and more affordably.

Three our overall results from 2021 that helped us crystallize a clear set of prioritize investment areas for the business, which we will be executing in 2022 to help accelerate our vision of enabling instant digital homeownership experiences.

With respect to see number one our continued outperformance of the market in Q4, we again delivered industry, leading growth now decidedly rising rate environment for the real estate sector.

This marks our third consecutive quarter of outperformance, which we attribute to the ongoing adoption of our <unk> technology by customers and referral partners alike.

Our Q4 performance also ensured that we delivered full year retained premiums and fees at the high end of our most recent 2021 guidance and meaningfully exceeded our adjusted gross profit expectations for the year.

The second theme for today is what continues to drive our strong results.

Our value proposition is better faster more affordable home purchase or refinance closings enabled by an industry leading machine learning platform, we are better because our technology delivers fewer manual steps to our referral partners and customers. This reduction in manual steps creates a superior customer experience.

We're faster because in using technology to instantly resolve key action items in the real estate closing process, we take the risk out of key decisions and get people to the closing table in a more expeditious way.

We are more affordable because we're driving the cost of the transaction down part of which reduces the cost of closing to homeowners and part of which increases our own gross margins.

Our value proposition is best evidenced by our continual triple digit growth rates in the dome enterprise channel, where our domain intelligence platform is predominantly deployed.

And since we still only occupy a relatively small percentage of market via our core title and escrow offering to enterprise accounts the room to continue growing and outperforming in this proven corridor remains abundant as we head into 2022 and beyond.

As we called out late last year. We are also increasingly focused on broadening the use and coverage of our proven domain intelligence platform to more areas of the market.

The nearest term manifestation of that involves expanding our core machine intelligence powered title and closing offering into purchase transactions within our local channel.

I am now pleased to share that this was yet another area in which we delivered on one of our key commitments in 2021 as we successfully opened our first purchase transactions on the domain intelligence platform in December .

The successful application of our technology on the purchase side lines up well with the overall mortgage market backdrop, which is now experiencing a rapid decline in refinance volume. This ties into the third key theme I want to discuss today, which is that because our technology works and we continue to have strong conviction in the opportunity in front of us to grow market share we have now defined specific.

Prioritize areas of investment that we will accelerate in 2022 to enable us to secure our leadership position in the industry accelerate our growth potential and add even more certainty to our path to profitability.

I'll now provide some additional detail on what is driving these three big themes after that I'll turn the call over to gnomon, who will provide more detail on our Q4 financials as well as our outlook and guidance for 2022.

With respect to our outperformance of the market in the fourth quarter when the overall mortgage market contracted by over 43% year over year. According to the mortgage bankers Association in large part due to rising interest rates.

<unk> grew our retained premiums and fees or Rps by 24% year over year and delivered adjusted gross profit of $25 million down nine.

Percent year over year.

For the full year Dhamma grew rps by approximately 37% year over year to $260 million and adjusted gross profit grew approximately 24% year over year to $114 million as a point of reference this far exceeded the initial outlook, we shared with the market last March calling for Rps of $226 million and adjusted gross.

Of $89 million.

Our enterprise channel continues to lead our growth story. This is where we have fully deployed our domain intelligence platform and differentiated technology and which as a reminder is driven by refinance volume today, we drove market share gains and closed order growth of nearly 300% year over year in enterprise in Q4 and for the full year, we grew the size of it.

This channel five times based on closed orders, while the market for refinances contracted by 27%.

This growth in Q4 was propelled by the addition of several new enterprise referral partners that included another top 10 national mortgage lender, a leading provider of innovative home equity products and technology led non bank originator.

In addition, we saw wallet share expansion with a number of our existing enterprise accounts.

For example, a top five lender, who launched with DOUMA and Q2 last year saw 25% faster title cycle times with DOUMA than their prior best performing title and escrow vendor. This superior performance drove them to increase delmas transaction volume twice in the span of a few months in Q4.

Another lender partner has been able to leverage them isn't entitled Technology to streamline their prioritization and processing order tire targeted 15 day close, prompting them to expand their volume with del Monte <unk> more states in Q4. After just six weeks post launch.

Some of the wallet share gains within the enterprise channel were also driven by the expansion of the domain intelligence platform to three more states, bringing our coverage of the residential real estate market in the United States to approximately 83% based on gross written premium.

And our local channel. We also delivered closed order volume in Q4 that outperformed the residential real estate market per the MBA.

This outperformance was driven principally by 4% year over year closed order growth and purchase transactions at a time when the overall purchase market fell 8% year over year.

Keep in mind that in our local channel we remain in the earlier stages of incorporating the full capabilities of our domain intelligence platform and as such are more limited in our ability to drive outsized growth as you will recall in late 2021, we embarked on a transformational effort to bring local purchase onto the dome intelligence platform I'm thrilled to highlight once again that we.

We opened our first purchase transactions using Domo intelligence in December 2021 expansion of this offering will be our core focus this year.

With respect to some of the detail behind our second quarter theme, our differentiated machine intelligence technology helped us gain further lead in Q4 benefiting from continued investment in new product advancements specifically, we added more transparency for co signers within our <unk> product, which allows homeowners to review an E sign about 50% of documents prior to the in person signing.

Making the overall experienced less daunting and stressful. Additionally, we expanded the overall use of Dhamma closed tomorrow lender partners, notably launching the product with one of the top technology lead lender partners, we work with.

We also expanded our machine learning driven delmastro product capabilities to bring a completely touchless processing, a closing disclosure documents to two of our largest referral partners within Doe and the escrow. We also added new capabilities for payout parsing policy automation and automated funding disbursement that all help to further expedite the final stages of closing and drive faster payouts.

To the parties involved.

Our successful deployment of our domain intelligence platform in the enterprise channel and our growth and platform expansion initiatives with local channel is a good transition to the details behind our third key theme or acceleration of investment in several key near term strategic initiatives using the benefit of proceeds raised when we went public in July of 2021.

Our top key strategic initiative for 2022 is an acceleration of investment to enable the expansion of our differentiated product and capabilities for home purchase.

In the coming year consistent with what we previewed on prior earnings calls you can expect these accelerated investments to be most evident in customer acquisition and go to market migration of purchase transactions to the dome intelligence platform and delivery of new product functionality.

Our second highest priority for 2022, informing how and where we invest ahead of planned momentum is expanding into the appraisal and valuation market to build out broader capabilities for a growing set of lenders and real estate professionals, who have expressed a specific desire for a single product to eliminate the friction of both title and a.

Phrasal.

I will now provide a bit more color on each of these two key areas of investment.

With respect to our first priority, bringing government to purchase we will be accelerating our investments in our purchase go to market plan, particularly in our efforts to acquire new customers. In 2022, we will be making investments in a number of key areas, specifically sales and marketing that will help get our differentiated offering in the hands of the local business in a more meaningful way.

These customer acquisition investments go hand in hand, with the migration of more transactions onto domain intelligence, bringing more of our local purchase volume onto the <unk> intelligence platform is a transformational effort, but also comes at an opportune time.

This acceleration will require a number of upfront costs, but also drives undeniable longer term benefits. This tradeoff in the short term will help us drive faster growth in our local channel, which in turn adds more certainty on our path to profitability. So we're looking forward to deploying the necessary capital in that area.

Finally, as it pertains to the new adjacent markets across the residential real estate value chain, we began deploying capital to explore and validate our hypotheses and expansion opportunities in Q4, which quickly helped us hone in on appraisal as the most important key adjacency for us to invest in expanding into in 2022.

We aren't yet ready to provide any specific timelines in this area, but I can confirm that we are actively building infrastructure to enter this market <unk>.

Additionally, our investment focus in home warranty as well as a few other key areas of opportunity and removing friction from the process of buying or selling a home have taken further shape and we expect to better articulate our approach to these other potential adjacent opportunities as they develop.

In closing, although the macro economy has become more challenging for real estate companies to operate in the trajectory of our business in 2021 demonstrates that we have a strong path for continued growth. Additionally, in a rising rate environment, our customers become more sensitive to expenses and speed, we believe that as the market tightens we will.

Pick up further market share as our value proposition becomes even more attractive for lenders and real estate professionals, who are looking to reduce costs.

Of this we have confidence that now is the best time to invest meaningfully in the key strategic areas discussed.

We remain confident that the robust growth and continued evolution of our business will continue propelling us forward on our path to profitability and position us to deliver long term sustainable value for our shareholders I will now turn the call over to gnomon to go through the specifics of our fourth quarter and full year results as well as to provide our financial guidance for 2020 to Oman.

Thanks, Max and good afternoon, everyone.

Leadership team and I are immensely proud of our entire team as we delivered our third consecutive quarter of industry, leading growth against a challenging backdrop for the mortgage industry, particularly for refinances.

Finished the fourth quarter in a position of strength.

Closed up the year with retained premium and fees at the high end of our guidance for 2021, and adjusted gross profit materially exceeding that guidance.

I'll first provide a brief overview of <unk> fourth quarter results before I discuss our financial guidance for 2022.

And then we'll be happy to take your questions.

We generated revenue on a GAAP basis of $138 million up 17% from the fourth quarter in 2020.

As we have stated previously.

Revenue includes the portion of the third party agent premiums that Dumas does not retain so we focus on tumors retained premium and fees or Rps, which excludes the premiums are paid by third party agents.

We believe this is a much better representation of underlying top line performance.

With this in mind RPF grew to $66 million in the fourth quarter of 2021, 24% increase versus the same period the prior year.

Our growth in the fourth quarter was primarily driven by a 296% year over year increase in closed orders in our enterprise channel.

The strength in this channel was the result of our referral partners continued confidence in our differentiated machine intelligence driven platform.

Closed orders and our local channel declined 24%, but still outperformed an overall, 43% market compression for the MBA.

This outperformance was driven principally by 4% year over year closed order growth and purchase transactions for two months at a time when the overall purchase market fell 8% year over year.

Turning to our profitability for the fourth quarter.

Main focus is adjusted gross profit, which came in at $25 million down 9% year over year.

Adjusted gross profit as a percentage of RPM was 37% in the fourth quarter of 2021 compared to 50% in the fourth quarter of 2020 the.

The decline in adjusted gross profit as a percentage of RPF was primarily driven by the higher mix of enterprise transactions, which carry a significantly lower price points versus our local channel and the expansion and redundancy of our fulfillment staff as we migrate more transactions with AUM intelligence. This is a trend we anticipate continuing in 2022 with the acceleration of local purchase.

Onto the Domo intelligence platform.

In our previous earnings calls we are.

Previewed both of these dynamics as expected upcoming impact store results.

Finally, our accelerated investments in support of our long term strategic plans resulted in adjusted EBITDA in the fourth quarter decreasing by $33 million year over year.

The decline in Q4 profitability was driven by investments in customer acquisition research and development and other G&A.

Including investments in service of operating as a public company.

With respect to the capital management side of the business. We continue to operate a capital light infrastructure, consisting mainly of software development related to the Doe intelligence platform, which resulted in a $12 million investment in the fourth quarter of 2021.

In terms of our plans for 2022 and beyond.

To see positive momentum of our business with open orders in Q4 growing 21% year over year.

In 2022, we will focus on broadening the user coverage of our proven dual intelligence platform, primarily to drive purchase transactions through the platform.

As Mac mentioned, we plan on making accelerated investments in go to market migrate.

The migration of purchase transactions with zoom intelligence platform.

New product functionality and new adjacent markets across the broader closing process, primarily to enable differentiated capabilities for appraisal and valuation.

While these investments will have an impact on our 2022 financial results. We believe that these strategic priorities will drive long term sustainable growth.

And out of the path to securing our leadership in this industry.

I'll now close my remarks, with our outlook and guidance for 2022.

We expect retained premium fees of between $300 million and $320 million.

Ratio of adjusted gross profit to retain people and with fees.

344% and 47%.

And adjusted EBITDA between negative minus $1 billion and negative $70 million.

Importantly, the company has to reach adjusted EBITDA profitability in 2023.

I'll now pass the call back to Max before we open the call to your questions.

Thank you know Oman, we were excited to get back out there and meet both current prospective investors at various conferences and other hosted events. Some near term appearances. We plan to include the JMP Securities Technology Conference on March eight and the Jefferies Insure Tech conference on March 21.

I'll conclude today's call by reiterating how optimistic I am about the future here at Derma and our ability to continue setting the standards for how to eliminate friction frustration and expense from one of life's most important financial decisions as we enter our first full year as a public company. Thank you to all of our partners and customers for your continued trust to our employees for your hard work.

And to our shareholders for your continued support operator, we're ready for questions.

Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw.

To your question press the pound key please standby, while we compile the Q&A roster.

Our first question will come from Matt <unk> with JMP. Please go ahead.

Okay. Thanks, Good morning, I guess good afternoon.

Mac I was hoping you could dig into kind of the local market local channel build out a little bit more and just update us on kind of how you've been pleased with the progress there.

Versus say earlier expectations going back even a quarter or two.

And then just kind of how you see that unfolding as you as you go across 22.

Sure Hey, Matt good to hear your voice.

In terms of the local build out I'd say.

We are quite pleased with the progress we're making there.

As you've seen this quarter just like the quarter previous.

We outperformed the market in terms of purchase order momentum, albeit.

Our ability to drive outsized purchase momentum there is.

Affected by how much of our local businesses on the dominant intelligence platform and the most important key milestone we reach there last quarter was for the first time ever in the company's history, starting to run purchase transactions through the dome intelligence platform. So that is really what informs our focus on that particular channel. This year we are.

Intensely focused on making sure that we accelerate the movement of purchase transactions from our local.

Division through the dome intelligence platform and we're super excited to be at this important milestone and are now running all kinds of transactions through the platform.

Kind of a follow up to that and I guess my numbers terms and maybe theres really no way to predict because there's so many moving pieces, but as we look at whether it's kind of full year 'twenty, two where by the time, we get to the end of 'twenty two.

Do you have a rough strokes estimate of.

How we should think on the outside of how much of your business is kind of coming through that local market channel versus.

How that looks today, which is much more heavily enterprise.

Yeah.

Yes, so I don't I don't know that we have.

Broken it out between specifically between local and enterprise.

To capture this all in our in our direct business.

I think the consistent theme across both is that I'll call. It product led growth right. So where we have deployed our dhamma intelligence product, we expect to continue seeing outsized share take regardless of the macro backdrop.

Certainly you've seen that in enterprise this last quarter again, nearly 300% growth year over year at a time when the market was contracting significantly and so as we get more and more of our product deployed to the local channel, we would expect to see more and more share take accelerated and to the extent that that share take its purchase driven obviously that will drive a higher <unk>.

<unk> point and more of the overall direct revenue.

Okay, Great and then just one last question if I can just up a high level question on the guidance, particularly the retained premiums and fees portion of it.

When you had given us kind of the regional guidance back when the merger transaction was done.

You had commented that.

Kind of a baseline with no. What you built off of what is an MBA forecast from I think November or December of 'twenty, which is pretty dire is there are there kind of a similar industry.

<unk> our mix assumption that is included in some way and these.

Projections are giving or are they more kind of ground up what youre seeing at del Mar and not connected to.

The NBA or something else like that.

Yes, it's a great question I'm glad you mentioned, the MBA forecast and maybe I'll, let gnomon share some more color here in a second on any of our how we make our internal projections.

I think what you are hearing is an appropriate degree of caution right now given that.

We've seen a very rapid increase in 30 year fixed rate mortgage just as a point of reference when we last put that long term forecast together that we shared about this time last year. As you mentioned, we were referencing the mbas origination forecast that data set as of November or December of I guess it would've been 2020, then and in those forecasts they were sure.

Knowing a 30 year fixed rate mortgage getting to right around three four to three 5% at the end of Q1 of 'twenty two.

Clearly we're in a very different place right last year, the 30 year fixed eclipsed 4% for the first time in about two years I.

I think what's more notable as it was it was roughly a 22 basis point increase week over week and that 30 year fixed rate, which was the fastest increasing the rates since March of 2020, and we all know what happened in March of 2020. So.

I think we've tried to take a more prudent.

Way of forecasting.

<unk> forecasting what's going to happen with the macro backdrop.

I'll still being quite confident that we will accelerate share take because I mentioned, where we're deploying the dome intelligence platform and normally I don't know if you want to add anything specifically about.

How how we use anything else to set our expectations for the macro market.

No I think Max you captured it well.

I think we're just seeing rates move rapidly.

Which again I think.

We tried to take a more cautious approach in our planning here.

Given that move, but I think from an overall performance perspective.

Still intend to keep driving share gains like we did all of last year.

Our technology is deployed and I don't think Theres any change in sentiment. There. So what you are hearing is more around market caution, especially as we bring on more transactions on purchased two dome intelligence. We just opened up our first one so there is there is.

Significant room to go from here.

Great. Thank you very much for the color and congrats on a nice year.

Thanks. Thanks.

Thank you. Our next question will come from Tom White with D. A Davidson. Please go ahead.

Great. Thanks for taking my questions guys. Two if I can the first one is circling back on the guidance for 2022 so.

The EBITDA guide is is well below.

The initial forecast you guys put out during your kind of transaction then I can understand that.

You feel like Youre operating from a position of strength you feel like the momentum in the business.

Just.

Showing how differentiated the product is and you want to kind of lean into that.

But on the on the retained premium and fees. The mid point of that is also below that forecast you guys put out in.

That was supposed to be sort of a self funded plan.

So I guess I'm, just curious like other than rising rates.

The stuff that you just mentioned Max is there anything else I don't know related to pricing or or just anything that might explain.

That delta in the and the retained premium and fee forecast and then I have a follow up.

Yes. So thanks for the question Thomas your answers now there's really nothing else other than the.

The rate environment right.

Again, so just.

It kind of can't be understated, how dramatic of an increase it is from unexpected 30 year fixed at three 4% to being north of four and.

And again, if you just look at the last couple of months.

Certainly seen a pretty significant increase there.

Really what's again driving what I'd characterize again, it's just a degree of caution in how we set our plan as you know.

We like to outperform.

So we and we did that last year and so we think prudent to set our plans accordingly.

I'll, let <unk> comment on the specific buckets of investment that go into the Delta.

Negative adjusted EBIT number because I think that's probably important to add a little color too as well.

I would summarize it a thematic level by exactly what you said, we are operating from a position of strength and frankly, we feel like now couldn't be a better time for a company like ours with the lead that we have to be investing to this degree in these areas, but I'll, let <unk> comment on what a couple of those areas are.

Yeah, Hey, Tom So look I think if you look at our.

Plan from last year.

Adjusted EBITDA expectations versus where we are right now.

Think about that delta versus the investment going is really in the areas that we talked about all year.

I think probably half of that is in product and market development. So this is the adjacencies, we just spoke about.

And at least Max commented on a freeze, though warranty there are a couple of other interesting areas. We're looking at to.

To deploy capital and then building out this product capability much faster on the purchase side.

Again, given the criticality of which again, we realized last year, we need to move purchase on faster than we had originally planned so we're making those investments upfront.

And then I would say about a third of the investment is also related to this purchase transformation, but it's more on the direct fulfillment site.

And as this is us moving transactions from local to the enterprise to the dual intelligence platform. We just wanted to ask again maintain a degree of overlap.

And excess staffing to ensure that that goes well.

And then the last thing I'll say the remaining Delta. There is just pure operating expenses from going public that frankly, we have not.

Anticipate it to be as high as.

As an example in insurance costs were $107 million here.

Than we had planned for but thats really the bulk of the investment.

If you see and what's driving the EBITDA Delta.

Okay.

Thanks for that.

Detail just a follow up on the on the rollout of Belmont intelligence to local like whats the way that we should kind of think about the progress there or is it like the percentage of your kind of local branches.

Where it's been deployed in the staff has been trained in.

And whatnot or is it is.

The percentage of kind of transactions that get run through the through through DIY.

Any sense like by the end of next year kind.

Kind of maybe what percentages.

Either way and that.

Might be and just as a follow on to that.

Any update on how you might price or change pricing and the local channel now that you've got Ti for Refis and for.

Purchase.

Sure. So maybe I'll take the first part of that question then gnomon can answer the second.

In terms of how to think about the pace.

Mentum in the rollout for the local channel.

It's kind of both of what you mentioned, it's both we pay attention to the number of direct purchase orders going through the technology.

Which regions of the country, we're rolling branches onto that technology.

And really what we're looking for is the same exact thing that we saw when we rolled out our technology for refinance right. We want these transactions to go.

Much faster, we wanted to close with higher certainty taking advantage of our instant underwriting technology.

And we want them to do that.

Much higher quality so.

We have seen that right out of the gate, which is which is great I mean I'd like to tell the team here its feeling a lot like deja vu around here from when we rolled out the same technology for refi several years back.

So so that's what I expect to see I think one note there thats important.

Is that when we rolled out.

<unk> intelligence platform for purchase in local in December we actually rolled it out to start just by pointing our domain intelligence technology at the escrow settlement piece of the transaction.

Instant underwriting algorithm for purchase will be rolling out online very shortly here. So we will we will then have full use of all of the technology. We use for refi also being used on purchase.

So that's how to think about.

Just how we gauge the success and the momentum of the rollout across the local channel.

One I don't know if you want to comment or if we have commented on what percentage of.

Transactions, we have targeted for that.

I'll, let you I'll, let you provide some color there.

Yes.

I would say is that our goal here is to get.

The vast majority if not all the volume over the next four to six quarters.

So.

I don't think we've disclosed percentages or we will be disclosing percentages by quarter would you should think about it from that lens.

And then that makes sense I appreciate it thanks.

Thanks, I know you asked on pricing too so just to touch off on that.

As of right now, where we think we're pretty competitively priced in the local channel.

We are starting to see some very interesting conversations take place within the enterprise channel around.

Directing purchase volume so for the first time ever.

Anders large centralized national lenders, who are seeing an ability to especially in a rising rate environment direct their customers towards more streamlined products.

The kinds of digitally integrated title and closing operating you have with them and so I think it's safe to say that in the enterprise channel. We plan to continue leaning in aggressively on price and to the extent that we're.

We're able to make progress with them on purchase through the enterprise channel I would expect to see it there as well.

Thank you.

Thank you. Our next question will come from Jason <unk> with Oppenheimer. Please go ahead.

Okay. So.

I'm trying to understand here, what what kind of growth investors are supposed to underwrite.

So I mean.

Basically we can't premiums are coming in November 18% or so.

Expectations stocks down, 20% give or take so that's consistent.

Gross gross income outlook is down about the same.

Youre pretty much telling us the market slow down.

I've kind of 40% growth youre seeing 20% growth yet like the companies that you.

Youre kind of want to be Tom you are I don't think slowing down nearly the same rate so.

Just how should investors think about like a multi year view.

Why they should invest in the company and kind of underwrite you given that.

20% growth.

You can kind of.

We can look at other companies and where they trade on and the multiples are really what are what are investors underwriting.

As a multi year because I don't think 20% is going to.

A lot of interest.

Yes, thanks for the question Jason.

Speak to.

The projected growth profile is going to be for other prop tech companies, who are facing the same interest rate backdrop that we are I think we're trying to take like I said, a very prudent and cautious view given how quickly interest rates have risen I think just in the last couple of months I think as it relates to your question now.

Our long term outlook for business Hasnt changed at all in fact.

<unk> never been more confident than I am right now and what our long term opportunity is to take a lot more share in large antiquated market that we're in.

Our focus this year with like I said with the with.

A more cautious and prudent approach to the market backdrop is to be able to still confidently invest in the areas that <unk> outlined and know that we are investing to accelerate our lead which will certainly help us continue to take share.

Against the backdrop of a market that is frankly that the overall macro backdrop as the market's been tracking.

A lot more substantially than.

And what people expected so.

No I don't know if you'd add anything to that but I think thats.

Is that kind of summarizes how we've how we've taken the approach that we have here.

Yes, I think your character to drill next.

Okay. Thank you.

Thank you and today's last question will come from Ryan Gilbert with BTG. Please go ahead.

Hi, Thanks, good afternoon everybody.

First question is on Doma enterprise.

I appreciate the color you had about new lenders coming on board and the increase in wallet share.

I'm interested in hearing your thoughts on any changes that you saw in the competitive landscape in the in the fourth quarter of 2021, or maybe year to date 2022, and the extent to which you are starting to bump up against other other title companies operating in enterprise.

Sure. Thanks for the question Ryan.

Short answer is we haven't seen much of a change in the competitive landscape.

Which I think is also again evidenced by our <unk>.

Close order growth again of nearly 300% in the fourth quarter.

<unk>.

Look the simple truth is we just have a far superior solution and it shows up in the results that we're producing for these customers and it shows up across the spectrum of what we're doing for them I think if anything.

Yes, there is a bit of competitive chatter over the last year or so that debt.

Best thing we had in our bag was just instant title.

What we've been really pleased with is rolling.

We're rolling out some new machine learning technology for escrow and settlement and seeing an effect kind of all aspects of the closing process for enterprise partners.

We've really become strategic partners for them and again I think it's evidenced in the wallet share gains.

And again frankly, we just haven't seen much of a competitive response, there I'm sure it's coming at some point.

Frankly, we would welcome the competition.

Okay got it and I think you touched on pricing and purchase.

And in response to another question, but.

Can you is there any way you can quantify the pricing differential on purchase orders that are going through.

<unk> intelligence platform versus the non non I should say, specifically opened through dome intelligence versus open and the traditional local channel and maybe how that compares.

With your other title competitors in the market.

Sure, Yes, right now the purchase transactions that are going through my intelligence go through our local channel.

And as such our local business has.

As separate rates and fees and I think they are probably even publicly filed you can look them up they are generally competitive what I would call.

Generally competitive with other.

Local distribution focused title companies, where we seek to differentiate on prices primarily for our enterprise channel.

Where where the technology is currently being used for refinances I mentioned earlier to the extent that we see further opportunity to handle purchase transactions through the enterprise channel. So direct from our lender partners that is an area, where we would seek to differentiate more on price.

Okay got it that's helpful last one for me just I guess on making sure I'm understanding go to market correctly is that just primarily adding field level sales staff or are you investing in other other.

Other areas there.

Yes go to market for us is really sales and marketing.

We've made a substantial investment in the business.

In a really best in class marketing capability across not just corporate marketing and brand, but also product marketing and demand generation.

So yes.

Yes, primarily salespeople and then marketing dollars that we spend on marketing for Amazon.

And head count for assessing our sales force.

Okay, great. Thanks very much.

Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

Okay.

[music].

Okay.

[music].

Good day, Thank you for standing by and welcome to Thomas fourth quarter and full year conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you look.

Any further assistance. Please press star Zero I would now like to hand, the conference over to Beatrice Bartholomew head of Investor Relations. Please go ahead.

Thank you operator, good afternoon, everybody and thank you for joining them fourth quarter and full year 2021 earnings conference call.

Earlier today Dummitt issued a press release announcing our fourth quarter and year end results.

It's also available at Investor Dot, though my dotcom.

Leading today's discussion will be done with founder and Chief Executive Officer, Matt <unk>, and Chief Financial Officer Gnomon Ahmad.

Following managements prepared remarks, well open up the call to questions.

Forward looking statements include but are not limited to bell at expectations or predictions of financial and business performance or conditions and competitive and industry outlook.

Forward looking statements are subject to risks uncertainties and other factors that could cause our actual results to differ materially from historical results and or from our forecast.

Leading those set forth in Benelux form 8-K filed today.

For more information please refer to the risks uncertainties and other factors discussed in our SEC filings.

All cautionary statements that we make during this call are applicable to any forward looking statements, we make wherever they may appear.

You should carefully consider the risks and uncertainties and other factors discussed in Benelux and SEC filings.

Do not place undue reliance on forward looking statements and film is under no obligation or expressly disclaims any responsibility for updating altering or otherwise revising any forward looking statement, whether as a result of new information future events or otherwise except as required by law.

Additionally, during this conference call. We will also refer to non-GAAP financial measures, including retained premiums and fees.

Adjusted gross profit and the other measures described in our earnings release.

GAAP results and description of our non-GAAP financial measure with a full reconciliation to GAAP can be found in the fourth quarter 2021 earnings release, which has been furnished to the SEC and is available on our investor website.

And with that I'll turn the call over to match them call Belmont.

Uh huh.

Thank you.

A warm welcome to you on your first earnings call as a key new member of the Jamba team. We're really excited to have you here.

Today, we will cover three main themes. One we have continued to outperform the industry with our growth to our continued outperformance was driven by our differentiated machine intelligence driven platform to help close residential real estate transactions faster higher quality and more affordably.

And three our overall results in 2021, that's helped US crystallize a clear prioritize investment areas for the business, which we will be executing in 2022 to help accelerate our vision of enabling instant digital homeownership experiences.

With respect to theme number one our continued outperformance of the market in Q4, we again delivered industry, leading growth and now decidedly rising rate environment for the real estate sector. This.

This marks our third consecutive quarter of outperformance, which we attribute to the ongoing adoption of our <unk> technology by customers and referral partners alike.

The second theme for today is what continues to drive our strong results.

We are faster because in using technology to instantly resolve key action items in the real estate closing process, we take the risk out of key decisions and get people to the closing table in a more expeditious way.

We are more affordable because we are driving the cost of the transaction down part of which reduces the cost of closing the homeowners and part of which increases our own gross margins.

Our value proposition is best evidenced by our continual triple digit growth rates in the dome enterprise channel, where our domain intelligence platform is predominantly deployed.

And since we still only occupy a relatively small percentage of the market via our core title and escrow offered to enterprise accounts the room to continue growing and outperforming in this proven corridor remains abundant as we head into 2022 and beyond.

As we called out late last year. We are also increasingly focused on broadening the use and coverage of our proven domain intelligence platform to more areas of the market.

The nearest term manifestation of that involves expanding our core machine intelligence powered title and closing offering into purchase transactions within our local channel.

I'll now provide some additional detail on what is driving these three big things after that I will turn the call over to gnomon, who will provide more detail on our Q4 financials as well as our outlook and guidance for 2022.

<unk> grew our retained premiums and fees or Rps by 24% year over year and delivered adjusted gross profit of $25 million down nine.

Percent year over year.

Of $89 million.

This channel five times based on closed orders, while the market for refinances contracted by 27%.

In addition, we felt wallet share expansion with a number of our existing enterprise accounts.

For example, a top five lender, who launch with DOUMA and Q2 last year, it's about 25% faster title cycle times with Belmont in their prior best performing title and escrow vendor. This superior performance drove them to increase delmas transaction volume twice in the span of a few months in Q4.

Another lender partner has been able to leverage them as interim entitled Technology to streamline their prioritization and processing in order to power targeted 15 day close, prompting them to expand their volume with del Monte <unk> more states in Q4. After just six weeks post launch.

Some of the wallet share gains within the enterprise channel were also driven by the expansion of the dome intelligence platform to three more states, bringing our coverage of the residential real estate market in the United States to approximately 83% based on gross written premium.

And our local channel. We also delivered closed order volume in Q4, but outperformed the residential real estate market per the MBA.

This outperformance was driven principally by 4% year over year closed order growth and purchase transactions at a time when the overall purchase market fell 8% year over year keep.

Keep in mind that in the local channel we remain in the earlier stages of incorporating the full capabilities of our domain intelligence platform and as such are more limited in our ability to drive outsized growth.

As you will recall in late 2021, we embarked on a transformational effort to bring local purchase onto the Delta intelligence platform.

Thrilled to highlight once again that we opened our first purchase transactions using Domo intelligence in December 2021 expansion of this offering will be our core focus this year.

With respect to some of the detail behind our second quarter theme.

Our differentiated machine intelligence technology helped us gain further lead in Q4 benefiting from continued investment in new product advancements specifically, we added more transparency for co signers within our <unk> product, which allows homeowners to review any sign about 50% of documents prior to the in person signing making the overall experienced less daunting and stressful.

<unk>, we expanded the overall use of Dhamma closed tomorrow lender partners, notably launching the product with one of the top technology lead lender partners, we work with.

Also expanded our machine learning driven dome Astro product capabilities to bring the completely touchless processing, a closing disclosure documents to two of our largest referral partners within Doe and the escrow. We also added new capabilities for payout parsing policy automation and automated funding disbursement that all help to further expedite the final stages of closing and drives faster payouts to.

The parties involved.

Okay.

Our top key strategic initiative for 2022 is an acceleration of investment to enable the expansion of our differentiated products and capabilities for home purchase in.

In the coming year consistent with what we previewed on prior earnings calls you can expect these accelerated investments to be most evident in customer acquisition and go to market migration of purchase transactions to the domain intelligence platform and delivery of new product functionality.

The appraisal well.

I will now provide a bit more color on each of these two key areas of investment.

These customer acquisition investments go hand in hand, with the migration of more transactions on to domain intelligence, bringing more of our local purchase volume onto the domain intelligence platform is a transformational effort, but also comes at an opportune time.

This acceleration will require a number of upfront costs, but also drives undeniable longer term benefits. This trade off in the short term will help us drive faster growth in our local channel, which in turn adds more certainty on our path to profitability. So we're looking forward to deploying the necessary capital in that area.

We aren't yet ready to provide any specific timelines in this area, but I can confirm that we are actively building infrastructure to enter this market. Additionally.

Pick up further market share as our value proposition becomes even more attractive to lenders and real estate professionals, who are looking to reduce costs.

Because of this we have confidence that now is the best time to invest meaningfully in the key strategic areas discussed.

We remain confident that the robust growth and continued evolution of our business will continue propelling us forward on our path to profitability and position us to deliver long term sustainable value for our shareholders I will now turn the call over to <unk> to go through the specifics of our fourth quarter and full year results as well as to provide our financial guidance for 2022.

Belmont.

Thanks, Max and good afternoon, everyone.

Finished the fourth quarter in a position of strength and close out the year with retained premium and fees at the high end of our guidance for 2021, and adjusted gross profit materially exceeding that guidance.

I'll first provide a brief overview of <unk> fourth quarter results before I discuss our financial guidance for 2022.

And then we'll be happy to take your questions.

We generated revenue on a GAAP basis of $138 million.

Up 17% from the fourth quarter in 2020.

As we have stated previously GAAP revenue includes the portion of third party agent premiums that doing what does not retain so we focus on donuts retained premium and fees or RPF, which excludes the premiums retained by third party agents. We believe this is a much better representation of underlying top line performance.

With this in mind RPF grew to $66 million in the fourth quarter of 2021, and 24% increase versus the same period the prior year.

Our growth in the fourth quarter was primarily driven by a 296% year over year increase in closed orders in our enterprise channel.

The strength in this channel was the result of our referral partners continued confidence in our differentiated machine intelligence driven platform.

Closed orders and our local channel declined 24%, but still outperforming overall, 43% market compression for the MBA.

This outperformance was driven principally by 4% year over year closed order growth and purchase transactions for domo at a time when the overall purchase market fell 8% year over year.

Turning to our profitability for the fourth quarter, our main focus as adjusted gross profit, which came in at $25 million down nine.

<unk> percent year over year.

Adjusted gross profit as a percentage of RPM was 37% in the fourth quarter of 2021 compared to 50% in the fourth quarter of 2020.

The decline in adjusted gross profit as a percentage of RPF was primarily driven by the higher mix of enterprise transactions, which carry a significantly lower price point versus our local channel and the expansion and redundancy of our fulfillment staff as we migrate more transactions with AUM intelligence. This is a trend we anticipate continuing in 2022 with the acceleration of local purge.

<unk> onto the Domo intelligence platform.

In our previous earnings calls, we have previewed both of these dynamics as expected upcoming impact store results.

Finally, our accelerated investments in support of our long term strategic plans resulted in adjusted EBITDA in the fourth quarter decreasing by $33 million year over year.

The decline in Q4 profitability was driven by investments in customer acquisition research and development and other G&A.

Including investments in service of operating as a public company.

With respect to the capital management side of the business, we continue to operate a capital light infrastructure.

Mainly a software development related to the <unk> intelligence platform, which resulted in a $12 million investment in the fourth quarter of 2021.

In terms of our plans for 2022 and beyond.

To see positive momentum in our business with open orders in Q4 growing 21% year over year.

In 2022, we will focus on broadening the use and coverage of our proven dual intelligence platform, primarily to drive purchase transactions through the platform.

As Mac mentioned, we plan on making accelerated investments in go to market migrate.

The migration of purchase transactions through the boom intelligence platform.

New product functionality and new adjacent markets across the broader closing process, primarily to enable differentiated capabilities for appraisal and valuation.

While these investments will have an impact on our 2022 financial results. We believe that these strategic priorities will drive long term sustainable growth.

And out of the path to securing our leadership in this industry.

I'll now close my remarks, with our outlook and guidance for 2022.

We expect to attain prepayment fees of between $300 million and $320 million.

Ratio of adjusted gross profit to retain prepayment fees.

44% and 47%.

And adjusted EBITDA between negative nine 1 billion and negative $70 million.

Importantly, the company intends to reach adjusted EBITDA profitability in 2023.

I'll now pass the call back to Max before we open the call to questions.

Thank you know Oman, we were excited to get back out there and meet both current prospective investors at various conferences and other hosted events.

So near term appearances we plan to include the JMP Securities Technology Conference on March eight.

Jeffrey is ensure tech conference on March 21.

And to our shareholders for your continued support operator, we're ready for questions.

Yes.

Thank you as a reminder to ask a question you will need to press star one on your telephone.

Your question press the pound please standby, while we compile the Q&A roster.

Our first question will come from Matt <unk> with JMP. Please go ahead.

Okay. Thanks, Good morning, guys. Good luck.

Thanks.

Mac I was hoping you could dig into kind of the local market local channel build out a little bit more and just update us on kind of how <unk> been pleased with the progress there.

Versus say earlier expectations going back even a quarter or two.

And then just kind of how you see that unfolding as you as you go across 22.

Sure.

Good to hear your voice so in terms of the local build out I would say we are quite pleased with the progress we're making there.

As you've seen this quarter just like the quarter previous.

We outperformed the market in terms of purchase order momentum, albeit.

Our ability to drive outsized purchase momentum there as well.

It did by how much of our local businesses on the dominant intelligence platform and the most important key milestone we reach there last quarter was for the first time ever in the company's history, starting to run purchase transactions through the dome intelligence platform. So that is really what informs our focus on that particular channel. This year, we are in <unk>.

<unk> focused on <unk>.

Sure that we accelerate the movement of purchase transactions from our local.

Division through the gentleman intelligence platform and we're Super excited.

To be out this important milestone and are now running all kinds of transactions through the platform.

Kind of a follow up to that I guess my numbers terms and maybe theres really no way to predict because there's so many moving pieces, but as we look at whether it's kind of full year 'twenty two or by the time, we get to the end of 'twenty. Two do you have a rough strokes estimate of.

How we should think on the outside of how much of your business is kind of coming through that local market channel versus.

How that looks today, which is much more heavily enterprise.

Yes, so I don't I don't know that we've broken it out between specifically between local and enterprise we tend to capture this all in our in our dress business.

Sure.

The consistent theme across both.

Is that I'll call it product led growth right, so where we have deployed our Dharma intelligence product, we expect to continue seeing outsized share take regardless of the macro backdrop.

Price point and more of the overall direct revenue.

Okay, Great and then just one last question if I can just up a high level question on the guidance, particularly the retained premiums and fees portion of it.

When you had given us kind of the regional guidance back when the merger transaction was done.

You had commented that.

Kind of a baseline of what you built off of what is an MBA forecast from I think November or December of 'twenty, which is pretty dire is there are there kind of a similar industry.

Volume or mix assumption that is included in some way and these projections.

You are giving or are they more kind of ground up what youre seeing in del Mar and not connected to.

The NBA or something else like that.

Yes, it's a great question I'm glad you mentioned, the MBA forecast and maybe I'll, let gnomon share some more color here in a second on any of our how we make our internal projections.

I think what Youre hearing is an appropriate degree of caution right now given that.

We've seen a very rapid increase in the 30 year fixed rate mortgage just as a point of reference when we last put that long term forecast together that we shared about this time last year. As you mentioned, we were referencing the mbas origination forecast that data set as of November or December of I guess it would've been 2020, then and in those forecast they were <unk>.

Knowing a 30 year fixed rate mortgage getting to right around 343, 5% at the end of Q1 of 'twenty two.

Clearly we're in a very different place right last year, the 30 year fixed eclipsed 4% for the first time in about two years I.

I think what's more notable it was roughly a 22 basis point increase week over week and that 30 year fixed rate, which was the fastest increase in the rates since March of 2020, and we all know what happened in March of 2020. So.

I think we've tried to take a more prudent.

Way of forecasting.

<unk> forecasting what's going to happen with the macro backdrop.

I'll still being quite confident that we'll accelerate share take because I mentioned, where we're deploying the delano intelligence platform and normally I don't know if you want to add anything specifically about.

How how we use anything else to set set our expectations for the macro markets.

No I think Max you captured it well.

I think we're just seeing rates move rapidly.

Which again I think.

We tried to take a more cautious approach in our planning here.

Given that move but I think from an overall performance perspective look we still intend to keep driving share gains like we did all of last year.

Our technology is deployed and I don't think Theres any change in sentiment. There. So what you are hearing is more around market caution, especially as we bring on more transactions on purchase to dome intelligence. We just opened up our first one so there is there is.

Significant room to grow from here.

Great. Thank you very much for the color and congrats on a nice year.

Thanks. Thanks.

Thank you. Our next question will come from Tom White with D. A Davidson. Please go ahead.

Great. Thanks for taking my questions guys. Two if I can the first one is circling back on the guidance for 2022 so.

The EBITDA guide is is well below kind of the initial forecast you guys put out during your kind of transaction then I can understand that.

You feel like Youre operating from a position of strength you feel like the momentum in the businesses.

Just.

Selling how differentiated the product is and you want to kind of lean into that but but on the on the retained premium and fees.

The mid point of that is also below the forecast you guys put out in.

That was supposed to be sort of a self funded plan.

So I guess I'm, just curious like other than rising rates.

The stuff that you just mentioned Max is there anything else I don't know related to pricing or or just anything that might explain.

That delta in the and the retained premium and fee forecast and then I have a follow up.

Yes. So thanks for the question Thomas right now, there's really nothing else other than the.

The rate environment right.

Again, so just.

It kind of can't be understated, how dramatic of an increase it is from unexpected 30 year fixed at three 4% of being north of four and.

And again, if you just look at the last couple of months.

Certainly seen a pretty significant increase there.

Really what's again driving what I'd characterize again, it's just a degree of caution in how we set our plan as you know.

We'd like to outperform.

So we and we did that last year and so we think prudent to set our plans accordingly.

I will let <unk> comment on the specific buckets of investment that go into the Delta.

Negative adjusted EBIT number because I think that's probably important to add a little color too as well.

I would summarize it a thematic level by exactly what you said, we are operating from a position of strength and frankly, we feel like now couldnt be a better time for a company like ours with the lead that we have to be investing to this degree and these areas, but I'll, let <unk> comment on what a couple of those areas are.

Hey, Tom So look I think.

If you look at our.

Plan from last year.

Adjusted EBITDA expectations versus where we are right now.

Think about that delta versus the investment going is really in the areas that we talked about all year.

I think probably half of that is in product and market development. This is the adjacencies. We just saw.

About.

And at least Max commented on free so warranty there are a couple of other interesting areas. We're looking at.

Deploy capital.

Then building out this product capability much faster on the purchase side.

Again, given the criticality of which again, we realized last year, we need to move purchase on faster than we had originally planned so we're making those investments upfront.

And then I would say about a third of the investment is also related to this purchase transformation, but it's more on the direct fulfillment sites and.

And as this is us moving transactions from local to the enterprise to the dome intelligence platform. We just wanted to ask again maintain a degree of overlap.

And excess staffing to ensure that that goes well.

And then the last thing I would say the remaining Delta. There is just pure operating expenses from going public that frankly, we have not.

Anticipate it to be as high as in <unk>.

Example, our insurance costs were $107 million higher.

Than we had planned for but thats really the bulk of the investment.

Different that you see and what's driving the EBITDA Delta.

Okay. Thanks.

Thanks for that.

Detail.

A follow up on the on the rollout of Belmont intelligence to local like whats the way that we should kind of think about the progress there or is it like the percentage of your kind of local branches.

Where it's been deployed in the staff has been kind of trained in.

And whatnot or is it the percentage of transactions that get run through the through <unk>.

I mean any sense like by the end of next year.

Kind of maybe what percentages.

Either way.

Might be and just as a follow on to that.

Any update on how you might price or change pricing and the local channel now that you've got Ti for Refis and for.

Hmm.

Purchase.

Sure. So maybe I'll take the first part of that question then gnomon can answer the second.

In terms of how to think about the pace and momentum in the rollout for the local channel.

It's kind of both of what you mentioned, it's both we pay attention to the number of direct purchase orders going through the technology.

Which regions of the country, we're rolling branches onto that technology.

And really what we're looking for is the same exact thing that we saw when we rolled out our technology for refinance right. We want these transactions to go.

Much faster, we wanted to close with higher certainty taking advantage of our instant underwriting technology.

And we want them to do that.

Much higher quality so.

So so that's what I expect to see I think one note there that's important.

Is that when we rolled out.

My intelligence platform for purchase in local in December we actually rolled it out to start just by pointing our domain intelligence technology at the escrow settlement piece of the transaction.

Instant underwriting algorithm for purchase will be rolling out online very shortly here. So we will we will then have full use of all of the technology. We use for refi also being used on purchase.

So that's how to think about.

Just how we gauge the success and the momentum of the rollout across the local channel gnomon I don't know if you want to comment or if we have commented on what percentage of.

Transactions, we have targeted for that.

I'll, let you I'll, let you provide some color there.

Yes.

I would say is that our goal here is to get.

Vast majority if not all the volume over the next four to six quarters.

So.

I don't think we've disclosed percentages or we will be disclosing percentages by quarter would you should think about it from that lens.

And then that makes sense I appreciate it thanks.

Thanks, I know you asked on pricing too so just to touch off on that.

As of right now.

We're pretty competitively priced in the local channel.

We are starting to see some very interesting conversations take place within the enterprise channel around <unk>.

Directing purchase volume so for the first time ever lenders large centralized national lenders, who are seeing an ability to especially in a rising rate environment direct their customers towards more streamlined products like the kinds of digitally integrated title and closing offering you have with them.

And so I think it's safe to say that in the enterprise channel. We plan to continue leaning in aggressively on price and to the extent that that we're able to make progress with them on purchase through the enterprise channel I would expect to see it there as well.

Thank you.

Thank you. Our next question will come from Jason <unk> with Oppenheimer. Please go ahead.

So.

I'm trying to understand here, what what kind of growth investors are supposed to underwrite.

So I mean.

Basically retained premiums are coming in November 18% or so.

Patients talk about 20% give or take so that's consistent.

Gross gross income outlook is down about the same.

You are pretty much telling us the market slow down.

I've kind of 40% growth youre seeing 20% growth yet like the company that you.

You are kind of one of the top two or I don't think slowing down nearly the same rate.

<unk>.

Just how should investors think about like a multi year view on why they should invest in the company.

Kind of like underwrite you given that.

20% growth.

You can kind of.

We can look at other companies and where they trade on and the multiples are really what are what are investors underwriting.

As a multiyear because I don't think 20% is going to attract a lot of interest.

Yes.

Thanks for the question, Jason I can't speak to.

What the projected growth profile is going to be for other prop tech companies, who are facing the same interest rate backdrop that we are I think we're trying to take like I said, a very prudent and cautious view given how quickly interest rates have risen I think just in the last couple of months I think as it relates to your question now.

Our long term outlook for business Hasnt changed at all and in fact I've never.

<unk> never been more confident than I am right now and what our long term opportunity is to take.

A lot more share in large antiquated market that were in our.

Our focus this year with like I said with the with <unk>.

More cautious and prudent approach to the market backdrop is to be able to still confidently invest in the areas that <unk> outlined and know that we are investing to accelerate our lead which will certainly help us continue to take share.

The backdrop of a market that is frankly that the overall macro backdrop as the market's contracting.

A lot more substantially than.

And then what people expected so.

No one I don't know if you'd add anything to that but I think thats.

Is that kind of summarizes how we've how we've taken the approach that we have here.

Yes, I think your character to drill next.

Okay. Thank you.

Okay.

Thank you and today's last question will come from Ryan Gilbert with BTG. Please go ahead.

Hi, Thanks, good afternoon everybody.

First question is on Doma enterprise I appreciated the color you had about new lenders coming onboard and the increase in wallet share.

Sure. Thanks for the question Ryan.

Short answer is we haven't seen much of a change in the competitive landscape.

Which I think is also again evidenced by our <unk>.

Close order growth again of nearly 300% in the fourth quarter.

<unk>.

Yes, there is a bit of competitive chatter over the last year or so that that.

First thing we had in our bag was just to instant title.

What we've been really pleased with is rolling.

Rolling out some new machine learning technology for escrow and settlement and seeing an effect kind of all aspects of the closing process for enterprise partners.

We've really become strategic partners for them and again I think it's evidenced in the wallet share gains.

And again frankly, we just we haven't seen much of a competitive response, there I'm sure it's coming at some point.

Frankly, we would welcome the competition.

<unk>.

Okay got it and I think you touched on pricing and purchase.

In response to another question, but.

Can you is there any way you can quantify the pricing differential on purchase orders that are going through.

<unk> intelligence platform versus the non non or I should say, specifically opened through dome intelligence versus open and the traditional local channel and maybe how that compares.

With your other title competitors in the market.

Sure, Yes, right now the purchase transactions that are going through my intelligence go through our local channel.

And as such our local business has.

Has separate rates and fees and I think they are probably even publicly filed you can look them up they are generally competitive what I would call.

Generally competitive with other.

Local distribution focused title companies, where we seek to differentiate on prices primarily for our enterprise channel.

Other areas there.

Yes go to market for us is really sales and marketing.

We've made a substantial investment in the business.

In a really best in class marketing capability across not just corporate marketing and brand, but also product marketing and demand generation.

So yes.

Primarily salespeople and then marketing dollars that we spend on marketing programs.

And head count for assessing our sales force.

Okay, great. Thanks very much.

Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

Q4 2021 Doma Holdings Inc Earnings Call

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