Q4 2022 Real Matters Inc Earnings Call
Sure.
[music].
Good day, ladies and gentlemen, and welcome to the real matters fourth quarter and fiscal 2022 conference call. At this time all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session.
If at any time during this call you require immediate assistance. Please press star zero for the operator.
This call is being recorded on Wednesday November 16th 2022.
I'd now like to turn the call over to Lynn will regard Vice President Investor Relations. Please go ahead.
Thank you operator, and good morning, everyone welcome to real matters financial results conference call for the fourth quarter and fiscal year ended September 32022.
With me today are real matters, Chief Executive Officer, Brian <unk>, and Chief Financial Officer Bill Herman.
This morning before market opened we issued a news release announcing our results for the three months and year ended September 32022, the release accompanying slide presentation as well as the financial statements and DNA are posted in the investors section of our website at real matters Dot com.
During the call we may make certain forward looking statements, which reflect the current expectations of management with respect to our business and the industry in which we operate however, there are a number of risks uncertainties and other factors that could cause our results to differ materially from our expectations.
Please see the slide entitled cautionary note regarding forward looking information and the accompanying slide presentation for more detail.
You can also find additional information about these risks in the risk factors section of the company's annual information form for the year ended September 32021, which is available on SEDAR and in the Investor Relations section of our website.
As a reminder, we refer to non-GAAP measures in our slide presentation, including net revenue net revenue margin adjusted EBITDA and adjusted EBITDA margin non-GAAP measures are described in our MD&A for the three months and year ended September 32022, where you will also find reconciliations to the nearest <unk> measures.
With that I'll turn the call over to Bryan Bryan.
Thank you Lynn and good morning, everyone and thank you for joining us on the call today.
By most measures fiscal 2022 was a challenging year for our industry.
Following a period of historically low interest rates and elevated mortgage origination volumes in 2020 'twenty. One. These last 12 months as seen in the U S mortgage market absorbed the impact of record home price appreciation low housing inventory and rapidly rising interest rates.
In the second half of the year.
The result has been a steep mortgage market slowdown that we haven't experienced in several decades.
Despite these unprecedented market headwinds, we continue to focus on the core fundamentals of our business in fiscal 2022 by growing market share with existing clients launching new clients achieving top performance on lender scorecards and actively managing our costs.
The cyclical nature of the mortgage market is nothing new to us. It's the very reason, we built a business that can weather the peaks and valleys and why we prioritize long term objectives and profitability.
It's why we focus on building market share with large blue chip clients that are driven by performance metrics and why we created a platform that would allow us to scale up and down with a lower cost to serve than our competitors.
So today I will focus the bulk of my remarks on the fundamental drivers of our business that are germane to how we operate the business, which is what will drive our long term success.
Before we move into the review of our performance I'd like to take a moment to recognize our team for the incredible job they've done over the course of the year to ensure our business remains on solid footing and position for growth on the other side of this cycle.
We have excellent leaders and a strong bench with decades of experience in this industry under their belts, who are aligned to our business model and our long term objectives.
Turning to our results I'll kick things off with a review of our full year performance and then bill will discuss the fourth quarter.
<unk> things up with some brief closing remarks before we take questions.
In fiscal 2022, we launched a total of 27, new lenders across all three segments and we increased market share with our five largest U S appraisal clients by an average of 6%.
We also marked a major milestone by surpassing 50% market share with one of our tier one lenders in U S appraisal.
Our market share gains with clients was the direct result of our performance as we continued to rank at the top of lender scorecards in both appraisal and title expanding our leadership position.
We ended the year with more than $46 million of cash on our balance sheet and no debt.
We continue to focus on managing our costs in line with market volumes and keeping the business EBIT neutral on a full year basis through this part of the mortgage market cycle.
In fiscal 2022, we launched 14, new lenders and too.
To existing clients in new channels and use appraisal, including a tier one lender in the home equity channel.
We closed out the year with U S appraisal purchase market share of four 1%, which compares to four 4% at the close of fiscal 2021 and U S appraisal refinance market share of 12, 1% up from nine 9% at the end of fiscal 2021.
As you know our respective market shares will shift in line with the mix of business of our client base, some of whom have historically been more weighted towards refinance.
When taking into consideration the shift in purchase market share of our clients.
Our purchase appraisal market share for fiscal 2022 would have been higher.
U S appraisal purchase and refinance origination revenues were down 26% year over year, largely the result of an estimated addressable market decline of 32%.
And other revenues were up 39%, mainly due to higher home equity volumes.
As market volumes receded from last year the platform directed more work to our top appraisers, which bolstered quality and drove faster turn times.
This also allowed us to benefit from the network effect in U S appraisal, which increased net revenue margins to 22, 1% from 21, 5% in fiscal 2021.
And we exited fiscal 2022 at 25, 4%, which is our highest quarterly net revenue margin we've ever posted in the Companys history.
Over the course of the year, we actively managed our operating expenses in response to progressively declining market volumes.
In fiscal 2022, we posted adjusted EBITDA of $27 million in U S appraisal down from $39 8 million in fiscal 2021.
And U S title, we launched seven new lenders in fiscal 2022, and we ended the year with U S title market share of one 2% down from one 8% at the end of fiscal 2021.
Our U S title market share was impacted by changes in our client portfolio as well as certain clients shutting down their mortgage operations due to market conditions for refinance mortgage origination activity.
That said our sales team continues to advance the pipeline leveraging the home equity opportunity to expand our channels with existing clients and to win new title business.
In fiscal 2022, our performance remained at the top of scorecards across our lender base.
We will continue to maintain our focus on operational excellence by improving performance and closely managing our expenses through this part of the cycle.
U S centralized title revenues were down 74% year over year, largely due to the estimated decline in refinance market volumes of 61%.
We reduced our operating expenses in U S title over the course of the year by 45% and we exited the fourth quarter of fiscal 2022, with a 61% year over year decline in payroll and related costs compared to the same quarter last year.
We expect to garner the full year impact of these initiatives in fiscal 2023.
As we said in the past our focus remains on leveraging our current performance and home equity strategy to onboard new clients and build franchise value for the long term.
In Canada, we launched six new clients in fiscal 2020 to the.
The Canadian segment revenues were generally flat on a year over year basis. However, excluding FX Canadian segment revenues increased modestly on higher insurance inspection revenues.
Appraisal revenues were flat year over year as solid market share gains were offset by significantly lower market volumes.
Net revenue margins increased to 13, 2% from 12, 9% in fiscal 2021.
Exiting the year at 14, 3%.
And we are post we posted adjusted EBITDA of $4 5 million compared with $4 8 million in fiscal 2021.
With that I'll hand, it over to Bill Bill.
Thank you, Brian and good morning, everyone.
Turning to slides four and five for a closer look at our fourth quarter financial results.
Consolidated revenues declined 54% in the fourth quarter of fiscal 2022 compared to the same quarter last year due to lower revenues across all three segments.
U S appraisal revenues declined 52% year over year to $43 9 million due to lower addressable mortgage origination volumes, partially offset by net market share gains with existing clients.
And new client additions.
We launched five new clients and an existing client and one new channel in the fourth quarter of this year.
You've asked appraisal origination only revenues were down 58% year over year in the fourth quarter, which compares to a 62% decline in volumes with the largest public company mortgage originators, we track in the U S.
Other revenues from home equity.
Paul has increased 42% year over year due to higher market volumes, which is aligned to our strategy to cross sell into new channels with existing clients.
Transaction costs in U S appraisal declined 55% year over year and.
Net revenue declined 41% to $11 1 million.
Net revenue margins increased 470 basis points to 25, 4% compared to the same quarter last year.
We leveraged our appraisal greater network and a lower market environment.
Was partially offset by an increase.
And lower margin home equity volume serviced.
You asked appraisal operating expenses declined 14% to $6 6 million.
Down from $7 6 million in the fourth quarter of fiscal 2021.
In large part to lower payroll and related costs.
U S appraisal segment adjusted EBITDA declined to $4 6 million from $11 2 million in the fourth quarter of fiscal 2021 and.
And adjusted EBITDA margins contracted by 41% in the fourth quarter of fiscal 2022.
Which compares to the 59, 5% we posted in the same quarter last year.
So the lower addressable mortgage origination market volumes.
Turning to our U S title segment revenues declined 82% year over year.
Merrell leads to lower refinance mortgage origination market volumes, our strategic decision to focus on centralized operations and long term centralized franchise players, which changed our client portfolio.
The rationalization of our diversified title business.
And certain clients ceasing their mortgage origination operations due to recent market conditions for refinance mortgage origination activity.
Revenues attributable to centralized title services.
87, 9% year over year.
<unk> revenues totaled 0.3 million, representing a zero $9 million decline from the fourth quarter of fiscal 2021.
Transaction costs in our U S title segment declined 69%, while net revenue margins contracted by 44, 1%.
Down from 67, 1%, we posted in the fourth quarter of fiscal 2021.
The decline in net revenue margin was due to a higher proportion of lower margin home equity volume service and a lower proportion of incoming order volumes are closed.
We continued to manage our operating expenses down in the quarter due to lower centralized title volume service.
Operating expenses declined $7 1 million to $4 7 million in the fourth quarter of fiscal 2022, which.
Which is largely the result of adjusting our cost structure in line with market conditions.
The U S title segment posted an adjusted EBITDA loss of $2 9 million in the fourth quarter of fiscal 2022.
Okay.
Down from a positive $2 $9 million, we posted in the same quarter last year, owing to the impact of lower market volumes.
As a result of the significant decline in rate refinance volumes in fiscal 2022.
We progressively reduced our U S title operating expenses throughout the year.
We exited the fourth quarter with a 61% year over year decline in payroll and related costs and U S title and we expect to garner the full year impact of these changes in fiscal 2023.
In Canada revenues declined 20% on a year over year basis to $10 3 million.
Net revenue margin expanded by 240 basis points as we leveraged our appraiser network and a lower market environment.
That was partially offset by lower net revenue margins from insurance inspection services.
Canadian segment operating expenses were flat year over year at zero point $5 million.
And adjusted EBIT margins declined to 65% from 66, 2% in the same quarter last year on lower net revenue.
In total fourth quarter consolidated net revenue was $14 4 million compared to $35 million reported in the fourth quarter of fiscal 2021 due to lower revenues across all three segments.
Consolidated net revenue margins declined to 24, 7% in the fourth quarter of fiscal 2022 down from the 27, 9% we posted in the fourth quarter of fiscal 2021.
Principally reflecting lower margins in U S title.
This was partially offset by margin improvements in U S appraisal and Canada.
We reduced consolidated operating expenses by 36% year over year.
$15 8 million in the fourth quarter, which largely reflects the changes we effected during the quarter and earlier in the year in response to declining market volumes.
Have the changes we effected in the fourth quarter of fiscal 2022.
And in effect for the full quarter consolidated operating expenses would have declined 42% year over year versus the 36% we reported.
And we would have posted positive adjusted EBITDA on the quarter.
However, we posted a consolidated adjusted EBIT loss of $1 1 million in the fourth quarter of fiscal 2022.
Down from a positive $11 million in the same quarter last year.
As we discussed on our third quarter conference call. We have been focused on keeping the business EBIT neutral on a full year basis and adjusting our operating costs in line with volume.
Turning to the balance sheet, we ended the quarter with cash and cash equivalents of $46 1 million at September 32022.
We purchased 400000 shares in the fourth calendar quarter under our NCI.
Cost of $1 5 million.
In fiscal 2022, we allocated $28 7 million share purchases by $6 5 million shares or approximately 8% of the.
Fully diluted shares outstanding at the end of fiscal 2021.
Given current market conditions, we continue to be prudent in managing our capital allocation.
With an ongoing focus on cost discipline.
And maintaining a strong balance sheet as we manage our way through this part of the mortgage cycle.
With that I'll turn it back over to Bryan Bryan.
Thanks Bill.
Looking back at our financial performance for the year consolidated revenues were down 33% to $339 6 million.
We generated net revenue of $85 $4 million and adjusted EBITDA of $7 4 million in fiscal 2022.
We continue to execute on our strategy in fiscal 2022 by increasing market share with existing clients and launching new clients.
And we reached a major milestone by surpassing the 50% market share threshold with one of our tier one clients in U S appraisal.
At the same time, we adapted our cost structure in response to market changes, while ensuring that we continued our focus on operational execution.
We are squarely focused on our fiscal 2025 strategic objectives that we communicated at our Investor day in 2020, we remain confident.
Confident that we can grow our appraisal business to achieve a doubling of our U S appraisal purchase and refinance market share from fiscal 2020 levels and deliver net revenue margins of 26% to 28% and adjusted EBITDA margins of 65% to 70%.
In U S titles, we remain committed to building franchise value for the long term executing on our plan to triple our U S title refinance market share from fiscal 2020 levels to 6% to 8% by the end of fiscal 2025, and achieving net revenue margins of 60% to 65%.
And adjusted EBITDA margins of 50% to 55%.
Since going public in 2017, we purchased 24% of the issued and outstanding shares at IPO and we ended the year with more than $46 million of cash on our balance sheet.
With a strong balance sheet and no debt real matters has the financial strength to manage through the current downturn in the mortgage market. We continue to be focused on keeping the business EBIT neutral on a full year basis through this part of the mortgage market cycle.
We have a very strong client base and a proven performance track record, which positions us well to extend our client relations in U S title and grow market share in both U S appraisal and U S title through this cycle and into the growth on the other side.
With that operator wed like to open it up for questions now.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone.
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Pressing any keys one moment. Please for your first question.
The first question comes from Thanos.
Bob Polis.
BMO capital markets. Please go ahead.
Hi, good morning.
Given the Hey, Brian .
Just given obviously the industry headwinds.
Headwinds how do you think the competitive dynamic plays out over the next year.
Clearly you are taking share.
But as you look at some of the smaller competitors out there I mean do some of them start to go out of business or is that the markets are there consolidation opportunities.
Are you seeing any change in their behavior in response to the.
The market pressure.
You can call that horse in the coming months.
Thanks for the questions. So as you know from our standpoint, we focus squarely on continuing to perform in a market like this I think the benefit for US is with the network capabilities that we've built out I think it is clear that our cost structure is.
That we can flex up and down in a market like this and I think Q4 further provides.
<unk> provides the background on that and so to your point I think with assuming that the interest rates continue to sort of be where they are now and that there are some challenges around market volumes going forward I think a lot of competitors are really going to struggle, especially those in the title space that are <unk>.
On the refinance side so.
So there probably is some opportunity for consolidation in the business and some of those are going to struggle.
And so we will as always keep our eyes open to what's going on more broadly in the industry around competitors.
The reality is we're going to stay very focused on I think what we do best which is to perform win market share and manage our opex and costs in line with what we see from a market volume standpoint.
Okay.
And a question for Bill.
If we look at the.
The net revenue margin trajectory.
On a short term basis, I mean, obviously be volume dependent but should we think about.
The net appraisal all margin remaining at a similarly high level.
Title being similar in terms of bobs, the mix kind of weighing it down or how do we think about that dynamic short term.
So a great great question and I appreciate that I think Q4 was pretty indicative of the current market environment and with that as backdrop and absent a significant change in the current market environment I think the net revenue margins continue to hold through.
So when I think about appraisal being north of 25 in the quarter in particular.
Again absent a change in market dynamic I think youre going to continue to see something like that on the forward.
And maybe even something a little bit better entitles. The same so absent a change in the setting of a change in refinance market activity we've got.
Note that our prepared remarks, a disproportionate amount of home equity.
Activity that we're servicing and as a consequence, we have seen some compression in entitled margin. So absent a significant change in refinance market activity I think you would expect to see that forward.
And then finally, how would you think about the.
In CIB.
And your intention to execute on that just in context.
Where the industry is.
So yes, so I think incentives if we take a look at.
At capital allocation and how we're looking at that I think the NCI B, we have put a hold on expenditure on the NCI. We've got as you know in a very healthy balance sheet right now with fixed $46 million in cash and no debt. So I think we're going to continue to focus on.
EBIT neutral stance for the year and look at cash preservation as we say through this mortgage cycle pending the cycle in the mortgage market moving up in a different direction. Then we will look at something then but right now that is definitely our focus.
Okay.
Thanks offline.
Thanks Dennis.
Thank you. The next question comes from Daniel Chan TD Securities. Please go ahead.
Hey, good morning, just wondering if you could shed some.
Some light on the appraisal management portion purchase side the market share declines there.
Sure. Thanks for the question Dan So.
The appraisal as we mentioned the appraisal market share on purchase came in at four 1% and so Dan if we take a look at the changes in the market share of our customer base over the year.
That number would actually be north of 5%.
But right now it's $4 one just based on the overall market. So again I think we continue to move the sticks on an appraisal purchase again you saw you've seen.
The results on our refinance side up over 12%. So both of them I think we continue to move towards our 25 targets of 7% to 9% and 17% to 19%.
Okay. That's helpful and you mentioned that you are maintaining that fiscal 'twenty five target.
Why do you think you're you've.
Typically got larger lenders in your in your customer base. What do you think the larger appraisers are losing share this year and.
As you think about hitting that fiscal 'twenty five target is there any shift in your strategy to reach that target.
We stay focused on the big tier ones and tier twos as you know Dan Theres, an awful lot of benefits that come with running the network running the business focused on those big players. We've got sort of one manufacturing plant that we go through and we don't need to do a lot of customization. So we can.
To focus on the big players I think there'll be movements in the market, there's always ebbs and flows amongst those but the tier ones and tier twos, especially in a market. Like this are the ones that will definitely find their way through some difficult times. So we continue to stay squarely focused on them continue.
To focus on performance they continue to own a very very significant market.
Share of the overall market and we continue to see the results that we're expecting with those players.
Great. Thanks.
Thanks, Tim.
Thank you. The next question comes from Gavin Fairweather of Carmack. Please go ahead.
Oh, Hey, good morning, I thought I'd check in on pricing are you seeing field professionals sharpening their pencils to get more work and do you anticipate passing that onto lenders. If you are seeing that.
Yes, so in an environment like this.
Gavin I think this is.
Our network effect only gets amplified so our network effect as you know we continue to focus on.
Being able to drive the volume in the market to the best Appraisers in our on our platform those that definitely performed the best fastest turnaround times highest quality, which takes expenses out of our business. When we're pushing that that work out to the network. So that's really what ends up happening in <unk>.
Market like this when we do have lower volume and we are able to pass the pass along those benefits.
Pricing as you know we've talked about in the past that is something that we don't end up spending a lot of time on those of that pricing is passed along to the the homeowner.
And so we stay squarely focused on making sure that we're running.
The economics around the network as efficiently as possible with the best of course performance and results of the backend.
That's helpful. And then just on the dynamic of certain title clients kind of shutting down does that have a big impact on your volume or is that mostly kind of smaller tier three tier four customers that maybe had lower volume contribution.
Yes, so I mean, the decline that we mentioned so <expletive>.
Clients, we mentioned I mean, they are definitely in that smaller tier four tier three they were inherited through our linear acquisition.
And you know that we are squarely focused now on bringing the tier ones and tier twos on the platform.
And it's partially for this type of reason, which is through these types of dynamics, especially on the title business with the refinance market.
The tier ones and tier twos are the ones that can definitely find their way through.
Even in challenging times, so we're definitely squarely focused on the tier ones and tier twos I think this is.
Sort of a smaller impact on the business going forward.
I think we with those blue chip clients. So I think we'll see very little of that.
That's great and then just lastly for me, you've obviously taken a lot of cost actions to right size.
The business to the current market environment, and I think previously in times of growth.
Called out 65, or 75 sensitive kind of operating leverage in terms of net revenue following to EBITDA and in those periods of growth. So as we think about an eventual recovery of volumes may be kind of second half of fiscal 'twenty, three or maybe fiscal 'twenty four.
Do you think that that rule of thumb still holds or do you think about to kind of build up some capacity first.
Good question, Gavin why don't I pass that one over to Mr. Herman.
Sure. Thanks, Kevin I think what we're going to see in the back half of that 23.
<unk> laid out the seasonal uptick that we would expect in the housing market, especially in obviously use appraisal.
Hitting the margin profile like you've just referenced I think volumes seem to be more robust. This is going to be at our expectation probably one of the lowest market environments for mortgage origination volume and F. 'twenty three.
Believe that the MBA and Freddie and Fannie have their forecast right.
So I think those economics really accrue to us when mortgage volumes are a little more robust or perhaps even just simply normal.
That scalability. So I don't know is the way to be hitting the targets that you outlined but.
Confident in doing so as we think through the 2025.
Thanks, so much offline.
Thanks, Kevin.
Thank you.
Next question comes from Robert Young Canaccord. Please go ahead.
Hi, I was hoping that you could give us.
Maybe a sense of any change in the risk that the GSE is they're willing to accept over this period.
<unk>.
Declined recently, but.
Maybe it shifts and waivers towards purchases curious if you can just maybe give us a summary of how you see the gse's changing their stance around risk.
Sure. Thanks, Rob I appreciate the question. So as you will remember waivers were quite a conversation back in 2020 one when the rates came down and there was tremendous amount of demand in the market. So we saw numbers up in the 30%, 40% from a waiver rate standpoint and at the time.
Rob we suggested that the waiver rates would slowly come down over the next couple of years and find their way back down to very low double digits and so I think frankly, that's what we're seeing so last year waiver rate was 26, 5% on the year end and you see this year, we're down to $17 six <unk>.
So even though there is a slight shift there, Rob which is no doubt I assume not surprising with refinance volume coming down as much as it has there is a little bit of a shift over to purchase. Our view is we will we will continue to see that waiver rate slowly come down over the next couple of years.
Okay are there any other changes in tools that they are looking at in the market.
No I mean, I think again, we've talked a little bit in the past around.
Fraser modernization, which they continue to stay focused on and we appreciate modernizing the process but.
And frankly, when you take a look at things like desktops, Rob we've seen very little volume around that so so no theres really been in our view anyway, no dramatic changes in GSE requirements, nor sort of their overall strategic intent.
Okay. Thanks for all that color.
A bit of an extension on Kevin's question, just around the field professionals, it's a pretty tough market and maybe this is a market where they might throw in the towel and decide to find some other place to take their career I'm. Just curious if youre seeing any change in your ability to get the capacity even in a lower market looking forward into the future do you see any.
Restrictions or issues around capacity young professionals.
Yes, Rob we have a very healthy network I mean, I've mentioned before that we use a a sort of a smaller proportion of the overall network to do the work that needs to get done in our sort of higher decile and core tiles, depending on the state of high performing appraisers. So.
No no my short answer is no I don't I don't see there being any issue longer term. Ironically I was asked the same question when the market was incredibly busy with her <unk>.
Tallo because they were they were so busy in a lot of them were at sort of burned out a little bit.
So I think that we've got great performance from the appraisers that we've got on the network Rob.
Rob we ended up using a fairly smaller proportion, especially when volumes are lower.
But we make sure that we continue to feed those those really strong appraisers, which drive all those network effects into the rest of the business.
Okay, Great and I guess, we see the strength of the net revenue margins.
<unk>.
One last question for me is just around and I appreciate the flexibility in the model and your ability to bring the operating costs down so effectively here.
Are you, making any tradeoffs like is there any change in.
Your R&D on new products like decentralized title or any of the business development in tier one title.
Alright.
Maybe just give a sense of whether there is any tradeoffs, you're making that we'd rather not.
And then I will pass the line.
Yes, I think you need to be very prudent in these times, Rob. So I think we are being prudent in the way that we're managing the overall cost structure of the business.
I don't think were making any major tradeoffs of any sort we are simply flexing as we've commented on in the past flexing the model up and down so we're managing costs, we're getting some benefits from things like moving to the cloud, which we had started previously and have accelerated so.
There are areas, where we're actually getting some cost benefits on strategic pillars that we were already quite focused on so.
We our focus has to be Rob that we continue to deliver and delight our customers on the products that are required in the market and so we continue to do that and continue to make enhancements, where we need to to ensure that that performance stays top of plate and we continue to drive the market share results that we commented on today.
That's great. Thanks, a lot.
Thanks, Rob.
Thank you. The next question comes from Martin Toner ATB capital markets. Please go ahead.
Thanks, So much quick question from me.
Refining volumes of about a million.
I'm, assuming those were all known and meaningfully molding borrowers just wondering do you see upside or downside to that.
Rose.
This volume thing.
In the world.
So Martin I believe I heard the question was around is the 1 million do we feel that Thats, a fair assumption going forward for 2003.
I believe that's the question.
Yes, just wondering like do you see upside or downside to that number do you see it is there.
Historically.
Good.
Barnes <unk> noble David Refinances.
Yes, so again, if we look out at sort of.
The MBA, Fannie Freddie and what Theyre looking at Martin Youll see sort of from eight to 800000 to $1 2 million as kind of the reference on their expectations around refi.
I think those those seem to be.
Fair I think we talked about.
One of the lowest markets up until now was too we had $1 8 million.
<unk> transactions, so that sounds about that's almost sort of half and so I think that sounds about right. So I think that would be sort of a fair assumption again it depends on rates.
The caveats that come with that so we'll have to see how the rates play out over the rest of the year, but that seems to be what.
The industry players are forecasting.
And welcome from me.
<unk>.
Thanks Mark.
Thank you. The next question comes from Richard Tse National Bank Financial. Please go ahead.
Good morning. This is near calling in for Richard just wondering if you can provide an update on how things are progressing on regards to signing additional tier ones in the title and close segment.
Sure.
Yes. Thanks for the question, so I would say that in the near term the opportunity in our tier one space on title.
Definitely the second channel with the tier one that we have on our platform. So we're looking at that being launched in 2023.
I think we'd sort of be piece number one it's the second channel and its volume they've indicated to us its volume very similar to the volume. We have currently on the on the channel from them. So on the platform from them. So I think that sort of piece one piece too is on the tier ones, we're coming at it from a couple of different angles. So.
Of course, we're out progressing the sales pipeline on title origination conversations, but we're also coming at it from home equity we are using that lever to get in have a conversation on home equity, which then would be a drive back into title originations. So the sales pipeline is moving I think.
With a reasonable amount of pace I mean, we've got quite a few meetings before the end of year this year.
Round exactly this topic HELOC title origination. So I think we're in good shape in the near term, though I think it's definitely the second channel with with the tier one that we have on our platform that we're expecting.
In the near term.
Okay. Thanks, and just one more from me.
I know the current macro environment.
Theres been a lot of differing opinions on how things are going to go in regards to rates. So in terms of the cost structure is there still any more room to flex down or are you guys kind of.
Payable ones cost structure now.
I'm going to pass that one over to Mr. Herman Bill.
Yes, certainly a great question I think.
As you've seen we certainly had some cost cutting measures affected in Q4 timeframe.
We've exited Q4, when you do the math and you exclude stock based comp our run rate's around 13 eight.
On a quarterly exit I think theres still a little bit of room for us to maneuver down we actually affected some of those changes already in our Q1 time frame for fiscal 2023. So.
So the short answer is there is still a little bit.
The more that we can certainly affect.
Okay. Thank you I'll pass along.
Thank you.
Thank you. The next question comes from Stephen Lee Raymond James. Please go ahead.
Hey, Brian .
I just wanted to confirm so you add that one week channel with a tier one correct.
Correct.
Is that why your market share exceeded 50%.
No no thats not why.
It was more than 50% Stephen that was on a that's a different player that we launched that second Gen alone. So that was performance based with the tier one.
Very very strong performance the last couple of quarters, and so we benefited with that and also they've they've done some slight consolidation on there.
On their vendor programs. So we also benefit from that.
Okay. That's good to know and the volume and size of this new China is that comparable to the original China.
Yes, it's comparable so I mean, we'll see that play through in the numbers Stephen I think as we as we sort of go into Q1, and Q2, but I mean as part of the overall mix of the entire business as you can imagine it's a smaller.
Your number, but it's a new channel.
And Ryan.
All of the tier one other prospects due I think in China.
Sorry, say that again Steven of all our tier ones.
Could you potentially add a new channel with you.
Well sure I mean.
Some of them do HELOC with us.
Stephen and some of them. We are not currently doing HELOC with we talked a little bit around.
Some of the big players like wells and Chase, who very publicly shutdown their HELOC businesses in.
In 2000, and so there is opportunity for us to continue to have conversations with them as they look at opening up and getting back into the HELOC market. So theres opportunity for us to extend into other channels. As you know we stay incredibly focused on the mortgage origination channel.
So our focus is definitely on appraisal entitled origination, but.
In this particular case, we launched with with one of our big tier ones in HELOC in the quarter on appraisal and a.
A couple of others are considering re entering the market.
Okay got it thanks.
Thank you.
There are no further questions at this time, ladies and gentlemen. This does conclude your conference call for today. We thank you for your participation and ask that you. Please disconnect your lines.
Okay.
Yes.
Okay.
Yes.
Okay.
Yes.
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Thanks, David.
Sure.
Yes.
Okay.
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