Q1 2023 Real Matters Inc Earnings Call

Speaker 2: a number of the risks, uncertainties, and other factors that could cause our results to differ materially from our expectations.

Speaker 3: Please see the slide entitled Cautionary Note Regarding Forward Looking Information in the accompanying slide presentation for more details. You can also find additional information about these risks in the Risk Factors section of the company's Annual Information Forum for the year ended September 30, 2022, which is available on CDER and in the Investor Relations section of our website.

Speaker 4: As a reminder, we refer to non-GAAP measures in our slide presentation, including net revenue, net revenue margins, adjusted EBITDA, and adjusted EBITDA margins. non-GAAP measures are described in our NDNA for the three months ended December 31, 2022, where you will also find reconciliations to the nearest IFRS measures.

Speaker 5: With that, I'll now turn the call over to Brian . Brian ? Thank you, Lynn. Good morning, everyone, and thank you for joining us on the call this morning.

Speaker 6: I will kick things off today with an overview of our first quarter performance and some of the key drivers behind our numbers.

Speaker 7: Bill will then take a deeper dive into our segment financials.

Speaker 8: And I'll wrap up the call with some brief remarks prior to taking questions.

Speaker 9: We reported consolidated revenues of $38.2 million, net revenue of $9.8 million, and an adjusted EBITDA loss of $2.9 million in the first quarter, reflecting ongoing mortgage market headwinds driven by a significantly higher interest rate environment.

Speaker 10: Our performance in the first quarter was in line with our focus on keeping the business EBITDA neutral on a full year basis and maintaining a strong balance sheet through this part of the mortgage market cycle.

Speaker 11: Beyond the impact of current market conditions, we made solid progress in the first quarter on the things that we can control. We continued to win market share, we added new clients, and we achieved record high net revenue margins in our U.S. Appraisal segment.

Speaker 12: In US Appraisal, we increase market share with five of our largest clients year over year.

Speaker 13: We launched three new lenders and one new channel with an existing tier one client.

Speaker 14: We also launched two new lenders in US title, and two new clients, and three new channels in Canada.

Speaker 15: At the same time, we continue to optimize headcount and manage our cost base to align with a lower volume environment, reducing our consolidated OpEx by 43% year-over-year in the first quarter.

Speaker 16: Our cost-saving measures allowed us to maintain sequentially flat adjusted EBITDA in our US title segment.

Speaker 17: We also ended the first quarter with a cash and cash equivalence balance of $45.1 million.

Speaker 18: While 30-year mortgage rates declined in the quarter, they were still up over 330 basis points from the first quarter, 2022. And weekly mortgage applications, as measured by the Mortgage Bankers Association, were at a 26-year low at quarter's end.

Speaker 19: At today's rates, the vast majority of mortgage refinances are cash-out transactions.

Speaker 20: However, we continue to believe that the refinance market will return to more normalized levels in the future, and we remain confident in our ability to scale the business to meet the demand of higher market volumes and to realize our fiscal 2025 financial targets.

Speaker 21: In US Appraisal, purchase origination revenues were down 45% year-over-year in the first quarter, compared to an estimated addressable market decline of 48%.

Speaker 22: and refinance origination revenues were down 83% year over year, consistent with the decline in the estimated addressable market for refinance activity.

Speaker 23: We had a record quarter for net revenue margins in the US appraisal, which increased 640 basis points year-over-year to 27%, landing squarely in our fiscal 2025 net revenue margin target range for the segment.

Speaker 24: Our ability to direct more work to our top performing appraisers allowed us to achieve higher margins.

Speaker 25: which also bolsters quality and drives faster turn times.

Speaker 26: This network effect is key to continuing to win additional market share with our clients.

Speaker 27: We continue to perform at the top of our Tier 1 Lender scorecards in the first quarter.

Speaker 28: And so, despite the lower overall volume environment, we were extremely pleased with the strong operational performance of our US appraisal business.

Speaker 29: US title segment revenues were down 85% year over year.

Speaker 30: and down 92% for centralized title, principally reflecting an estimated 89% decline in refinance market origination volumes and changes in our client portfolio.

Speaker 31: We continue to adjust our cost base in US Title in the first quarter to more closely align with current market volumes for refinance transactions.

Speaker 32: reducing our operating expenses by 64% year-over-year.

During the first quarter, our sales team was highly engaged with existing and potential new clients at the annual Mortgage Bankers Association convention, discussing how we can leverage our capabilities to better serve their needs and strategically expand our relationships.

particularly in title.

Our focus remains on leveraging our current performance and various strategies to onboard new clients and build franchise value for the long term.

In Canada, we launched two new lenders, three new channels, and we increased market share with our three largest appraisal clients.

Canadian segment revenues were down 38% year over year on lower market volumes.

However, net revenue margins increased 440 basis points to 17.9%.

And we increased adjusted EBITDA margins to 64.2% compared to 57.7% in the first quarter of 2022.

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 first quarter financial results.

Consolidated revenues declined 65% in the first quarter of fiscal 2023, compared to the same quarter last year.

Take a load of revenues across all three segments.

US appraisal revenues declined 64% year over year to $28.3 million, in large part to lower addressable mortgage origination volumes.

partially offset by net market share gains with existing clients and new client additions.

US appraisal purchase and refinance origination revenues were down 45% and 83% year-over-year respectively and other revenues from home equity and default decreased a modest 1.5%

on lower demand for home equity services.

Transaction costs in US Appraisal declined 67% year over year.

and net revenue declined 53%.

to $7.6 million.

As Brian outlined earlier, net revenue margins increased 640 basis points compared to the SAM quarter last year to a record 27% as we leveraged our appraiser network in a lower market environment and serviced a greater proportion of standard properties.

US appraisal operating expenses declined 33% to $5.3 million, down from $7.9 million in the first quarter of fiscal 2022.

due in large part to lower salary and benefit costs.

US appraisal segment adjusted EBITDA declined to $2.3 million from $8.5 million in the first quarter of fiscal 2022. And adjusted EBITDA margins contracted to 30.4% in the first quarter of fiscal 2023.

which compares to the 51.9% we posted in the same quarter last year.

owing in large part to lower addressable mortgage origination market volumes.

Turning to our US title segment, revenues declined 85% year over year due primarily to lower refinance mortgage origination market volumes and changes in our client portfolio.

Revenues attributable to centralized title services declined 92% year over year, while diversified title revenues totaled $0.2 million, representing a decline of $0.3 million from the first quarter of fiscal 2022.

Other title revenues of $0.9 million, representing revenue from home equity services, were down from the $1.4 million posted in the comparable prior year period.

Transaction costs in our US title segment declined 72% while net revenue margins contracted to 34.7%.

down from the 66.4% will be posted in the first quarter of fiscal 2022.

The decline in net revenue margins was due to a higher proportion of lower margin home equity volume service and a lower proportion of incoming order volumes that closed.

We continue to manage our operating expenses down in the quarter through the lower refinance mortgage origination market volumes.

Operating expenses declined $6.6 million to $3.7 million in the first quarter of fiscal 2023 as we continue to adjust our cost structure in line with market conditions.

The US title segment posted an adjusted EBITDA loss of $2.9 million in the first quarter of fiscal 2023.

down from the positive 0.4 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 market volumes, we progressively reduced our U.S. title operating expenses throughout fiscal 2022, and these initiatives continued in the first quarter of 2023.

As Brian mentioned earlier, these cost-cutting initiatives in the U.S. Title allowed us to maintain adjusted EVADA that was flat on a sequential basis.

In Canada, revenues declined 38% on a year-over-year basis to $7.5 million.

while net revenue margins expanded by 440 basis points as we leveraged our appraiser network in a lower market environment and realized higher net revenue margins from insurance inspection services.

Canadian segment operating expenses declined $0.2 million and adjusted EBITDA margins increased to 64.2% from 57.7% in the same quarter last year.

In total, first quarter consolidated net revenue was $9.8 million compared to the $28.8 million we reported in the first quarter of fiscal 2022 due to lower reported net revenues across all three segments. In total, the total net revenue was $9.8 million compared to the $28.8 million we reported in the first quarter of fiscal 2022.

Consolidated net revenue margins declined to 25.7% in the first quarter of fiscal 2023, down from the 26.7% we posted in the first quarter of fiscal 2022, principally reflecting lower margins in US title.

owing in large part to lower refinance mortgage origination market volumes and the mix of services supplied in this segment.

The margin decline in US title was partially offset by net revenue margin improvements in US Appraisal and Canada.

We reduced consolidated operating expenses by 43% year over year to $13.2 million in the first quarter, or $12.7 million when stock-based compensation is excluded, which largely reflects the changes we affected during the quarter and in fiscal 2022 in response to declining market volumes.

We posted a consolidated adjusted EBITDA loss of $2.9 million in the first quarter of fiscal 2023 down from the positive $5.9 million in the same quarter last year.

Turning to the balance sheet, we ended the quarter with cash and cash equivalents.

of $45.1 million at December 31, 2022.

As we noted during our fourth quarter and year-end conference call in November , we have paused activity on our NCIB in favor of conserving cash in this market environment.

With that, I'll turn it back over to Brian . Brian ? Please call me from the far south bank

Thanks, Bill.

Looking at our business from a fundamental perspective and the elements that we can control, we were very pleased with our performance in the first quarter.

We made tremendous strides to ensure that our title business is right sized to market volumes during this point in the mortgage market cycle.

At the same time, we maintain a long-term view of our investment in US Title and the significant opportunity that it represents.

We know the earnings power of this business in a normalized market volume environment, which our results have demonstrated in the past.

Our existing client base and performance track record with lenders represents a tremendous asset and a significant opportunity for growth.

We remain confident in our ability to add clients and grow market share and ultimately achieve our fiscal 2025 financial objectives under normalized market conditions.

In the near term, our focus will remain on keeping the business EBITDA neutral on a full year basis through this part of the mortgage market cycle.

With a strong balance sheet and no debt, Real Matters has the financial strength to manage through the current downturn in the mortgage market.

and we are well positioned to scale back up when the mortgage market recovers.

We continue to manage the business with a view of long-term growth, profitability, and achieving our fiscal 2025 targets.

With that operator, we'd like to open it up for questions now.

Thank you. Ladies and gentlemen, we will now begin the question and answer session.

If you want to ask a question, please press star followed by the number 1.

If you want to withdraw your question, please press passive 2.

Your questions will be pulled in the order they are received. If you are using a speakerphone, please leave the handset before pressing any keys.

One moment please for your first question.

Your first question comes from Daniel Chan from TD Securities. Please go ahead.

Hi, good morning. There were some strategic changes from one of your large tier 1 customers earlier this year. Just wondering how your conversations with some of your other large customers are going in response to this strategic change, and if there's anything you need to do on your end to respond to it.

Thanks Dan. I think you're referring of course to the Wells Fargo announcement. And so I think without getting too much into the Wells announcement which has a very sort of limited impact on our business just due to where they are focusing their changes.

We really haven't heard anything like that from the other tier ones, Dan. So the focus of the conversations with them frankly from an operational standpoint have been much more focused on the market recovery and how they're thinking about running their operations.

when we start seeing the refi volume and the purchase volume begin to move. So I think they're being quite thoughtful around the operational side and the customer experience on the recovery. So that's really I think where the heart of the conversation has been outside of the Wells Fargo discussion.

Thanks, that's helpful. And then the Tier 1 talent closing second channel launch, what's the timing of that?

Yeah, so the tier one title work that we're doing, we've been having conversations. The pipeline, I think, continues to be robust, Dan, and as I've mentioned in the past, this is what we know is relatively interesting and some people will think it is and they why it matters that way.

This is not about if, it's about when. So we're going to continue those conversations. We definitely see that second channel happening with our current tier one this year. And we continue to drive the sales funnel with, as you've seen, we're bringing on new customers on the platform and continue very robust discussions with the other tier.

on just the kind of conversations with other lenders. I mean, you talked about Wells Fargo, but in general, are they, you know, as you're signing some of these new customer wins and getting new channels, are they thinking past the current downturn? Are they more focused on just the market as it is now and looking to consolidate?

or just how forward thinking are they versus being responsive and how does that affect the marketer dynamic for you?

Sure, so morning Thanos. So I would say the definite focus of the the big tier ones, we spent quite a bit of time with them the last couple quarters, is on the recovery. So they are of course focused on capacity but they are definitely looking beyond.

I would say quite a bit of feedback on some of the challenges that they had when we went through 20 and 21 and some of the challenging customer experiences. And so I would say the overall institutions are incredibly focused on making sure that that customer experience

as the market recovers is very strong. So that's really I think where they are focused. Definitely much more forward focused.

And I would say that that has only sort of continued over the last couple of quarters where we saw some some tough volume. I would say they are definitely focused to the future right now within us.

Okay, and then how do we think about operating leverage recovery? So as volumes rebound, would you be able to keep corporate costs at similar levels or will some of the costs have to come back?

And then I think historically is when volumes ramp there's a bit of a lag initially, right? Where you get a bit of a hit on the net revenue margin until you optimize for a given volume. How do we think about that in recovery?

Well, I think that's part of going through the exercise that we've gone through the past 12 to 15 months. I think we've got the business now in a place where we are running the business incredibly efficiently.

And because of the experience that we've had over the past 24 months, Thanos, going through the increase in volume and the decrease in volume, I think there's been a tremendous amount of institutional knowledge that's built up through that. So I think we are very well positioned right now from a...

staffing and a capacity standpoint to start taking on more volume. I think to your question around do we think we can maintain a somewhat similar cost base that of course will be the focus for us. I think we're running quite lean and mean now and I foresee that into the future.

So I think that's generally how we're setting ourselves up for success when we do start seeing more of a recovery.

Great, thanks Brian .

Thanks, Dennis.

Thank you. Your next question comes from Martin Toner from ADB Capital Markets. Please go ahead.

Thanks so much for taking my question. Can you talk a little bit about the competitive dynamics in both appraisal and title? I remember previously you had mentioned that there's lots of these appraisal companies that are up for sale.

but there's really no bids. I mean, has anything, any changes there?

At what rate are some of these competitors disappearing? and what's the competitive response if any in terms of like Being more competitive on price or anything else that goes

competitors who are even more challenging than you guys.

than you guys are doing.

Thanks Martin, good morning. So I think we compete as you know in the tier 1 space with fairly significant other AMC's on the appraisal side and large title insurance companies on the title side. And so we've actually seen very little change in that space Martin.

And of course, as you know, we stay completely focused on performance, and we've seen that we continue to remain at the top of scorecards on both sides of the ledger. So I think there hasn't been much change both competitively, how they're competing with us, nor...

within the space, your comments sort of around M&A activity going on within the market. Not a lot of that has been going on. I think folks are quite focused on managing the operations in the environment. We'll see how things go as we look forward and assume that over the next few quarters we'll start seeing...

some rebound in volume. So I think that's probably the best way to position it, Martin. We're not seeing much competitively on the scorecards. We continue to remain at the top of the scorecards and we're not really seeing that much activity in the market.

Fantastic. Thanks.

Just wondering any thoughts on the response from some of your big bank customers to how aggressive non-bank lenders have been here. I mean strategically it's...

You know, it's problematic to be losing To be losing more mortgage market share given how important that is to the overall customer relationship For the big days. Are they are they doing anything that would sort of benefit you guys given the

given the nature of your customer base.

Yeah, so I think, well, I mean, unfortunately, when you look at our customer base, Martin, across the businesses, we're fortunate that we've got a fairly diverse customer base. And so we've got a pretty good balance of the big tier one banks, along with some of the big.

non-banks, so we're very fortunate to have that sort of balance in the portfolio, but to your point the non-banks have definitely, I think because most of them have more of a refinance focus Martin, they've found it very difficult with the market where it is, so I think they've had to work

little harder than they may have in the past both to make sure they secure some of that refi volume but also to start pushing their way into purchase.

So I think one of the things that came out from that Wells Fargo announcement is their focus on making sure that their current customer base is very well serviced with mortgages. So I think all the tier ones definitely want to double down on that sort of dynamic.

And then we'll see how things play out over the next little while. But you know if we see some some rebound and purchase which I think the market expects in the back half of this year, Martin, it'll be very interesting to see how those tier ones respond and I think it'll be a very dynamic market.

That's really interesting. Thanks so much. Last one from me, I'm surprised that people aren't more upset about the spread between treasuries and mortgage rates. You don't need to be a congress person to...

you know think that like someone needs to crack the whip here and make this spread come back. I mean it's a bit of a tax on

potential home buyers, right? Any thoughts there on when that spread might normalize and what conditions need to be in place for that to start to happen?

Yeah, I mean as you mentioned Martin it is at sort of a historical high right now. We're up in the 280 basis points plus over the last couple quarters. So it is significantly high and our view is that there's opportunity there that as

I think the rates were rising at the rate they were rising. And I think as that, we assume, plateaus over the next few quarters. I think we should see that spread start normalizing. As I think we've talked about before, Martin, the long-term spread averages around 170 basis points. So to your point, we're quite...

And to your point, it is higher than usual. And we assume that over time it will start making its way down.

Super, thanks, that's all for me.

Thanks Martin.

Thank you.

Ladies and gentlemen, as a reminder, should you have a question, please press star 1 to ask a question.

Your next question comes from Richard from National Bank Financial. Please go ahead.

Yes, thank you. You obviously have done a good job at keeping costs in check. In terms of the business going forward, can you maybe talk about areas that you may be investing in today or are you continuing to invest?

Sure, good morning Richard. Yeah, I mean Richard as you know where we stay laser focused is on our 2025 targets that we've laid out both market share and margin targets and so when we take a look at how we're investing we continue to invest.

to ensure that we're driving market share. So on the performance side of the leisure, we continue to invest in our network, in the platform, and making sure that we are doubling down on the network and advancing towards those goals that we've set out from a market share standpoint.

We also continue to invest in just the overall platform and our tech infrastructure. And so we are going through quite a bit of work there. And the whole idea of course Richard is in a time like this that we are

ensuring that we're setting ourselves up for success on the other side of sort of the last 12 plus months of challenges on volume. So I think that's really where we're investing in. We've got I think the bench strength of the team is

at sort of an all-time high right now simply because of the operating cost management that we've needed to do. So as I said a little bit earlier, I think both on the title business and on the appraisal business, I think the way in which we have now structured our teams.

sets us up very well for being able to manage our margins and costs as we look towards some more volume.

Okay and then I guess a related question on investments, you know no doubt the environment is a challenge for a lot of companies so with respect to you know these data prospects and potentially acquisitions there has it kind of given you sort of ample time to make those evaluations and it takes you sort of closer to potentially transmitting a trend.

So we are hunkered down, very much focused on operations in an environment like this. But to your point, working with our tech team, we are looking at data 2.0 for the business longer term.

Okay, great. Thank you.

Thank you.

Your next question comes from Robert Young from Canaccord G&E. Please go ahead.

Hi, good morning. A couple of questions. The first one, you said your focus is on EBITDA neutral on a full year basis.

and the seasonality in the business. I think if we look at that in a quarter over quarter basis, I assume you're expecting EBITDA positive, maybe in Q3 most likely. Any thoughts on how...

the cadence of IBA.mic go through the year.

Morning Rob. So I think we look at the year. It's a bit of a tale of two halves on the year which is the way the business in a more normalized environment works. So as you know, Q1 and Q2 are fall and winter.

And then we turn to spring summer for Q3 and Q4. The expectation from sort of the external resources like the MBA has a very bullish

Q3 spring market attached to it. So, you know, they're upwards in the sort of the mid 40% expectation. I think we're probably a little bit more conservative when we take a look at that and we're running the business to a slightly more conservative look on that, but I think that's, you know, the first two quarters, I think.

at least the MBAs and Fannies and Freddies, but we are expecting a bump in Q3, Q4. So that will keep us focused on that EBIT in neutrality and getting that uplift in Q3 and Q4, Rob, for full fiscal year.

Okay, great. Thanks for that. And then I think you'd said that you were in a lot of discussions with your tier one, probably tier two customers on the recovery. And so, I mean, given all the costs out that you're taking in the business, how do you give the tier one's confidence that you can weather this and then be there to scale?

if there's a rebound in volumes. What sort of things are they looking at?

Well, I mean, I got it. It's fortunately for us, Rob, they stay very focused on performance. And so, yeah, even in a environment like we're in now, where we have taken some costs out of the business to make the business more efficient.

We are seeing the same type of scores on our scorecards. So that's really I think where our customers fortunately stay very pointed is on that. And they know, we've just come through two years where we scaled up and really outperformed our competitors through 20 years.

and into 21 through, as you know, one of the fastest increase in at least the last 20 to 30 years in volume. And we were able to manage very handily through that. And one of the things that I always look at, Rob, is us becoming...

incredibly efficient and therefore having very minimal scaling up and down within the business because our network is what actually is what scales up and down with the volume. And so I think you saw that through 20 and 21, especially in our Canadian business. We didn't move our OpEx up in our appraisal business. We had to move it up a little bit.

with refi volumes the way they were, we had to do more work on title. And so that's, as you've seen us scale down, the goal will be as the market starts normalizing frankly, to keep our cost base very close to how we're operating today and only incrementally shift that because of the capabilities of our network.

to really flex out when we do have those increases in volumes.

Okay and given the scorecard focus, is there any opportunity, maybe lagging or are you seeing it happen now? Is there consolidation?

on a smaller number of nationwide vendors, you know, likely like yourself? Or is that something that you think would play out through recovery if it was going to happen?

Well no, I think there is, well I already know there is some consolidation going on, Rob, because we've been a beneficiary of some of that consolidation. So I think I'd assume for at least this quarter and potentially into next, but definitely I think there's conversations going on right now at Tier 1s and some of the big Tier 2s.

to take a look at the group of vendors that they have and some of them still have, I think in their view, too many right now. So I think we will definitely see some more of that consolidation this quarter and we'll see into the back half of the year.

at the group of vendors that they have and some of them still have I think in their view too many right now so I think we will definitely see some more of that consolidation this quarter and we'll see into the back half of the year. Okay and last question.

similar to Richard's question around where the area's investments are like maybe just we could talk about where you're focusing the outbound sales effort so it looks like you're adding new channels right now but where is the time being spent if you think about the time spent on expanding

tier one into title opportunity versus the channels that you're adding versus new customers. Where's the effort being sent to El Paso line?

Sure. I mean, Rob, it's a pretty good mix across the board, as you can imagine. So we had talked a little bit in the past around some focus on home equity. And so there has been some of that, and that's hence that comment that I made around a tier one moving into that space last quarter. I don't think we're seeing quite the home equity bump.

that we would have expected. And that's simply because I think the prime rate is quite high, which I think makes the cash out refi conversation almost a more interesting conversation versus home equity. But across the board, as you sort of see from the new customers that we've onboarded.

Rob, that we are doing it across the businesses. I mean, there of course is a real push on title, both that sort of home equity wedge strategy that we had, but also just going back at the performance equity that we've built with the tier ones and continuing to push that conversation.

And you know, I think we've made the appropriate investments that some of those lenders would be looking for in the business. So I think we're really well positioned right now. As I say, I think it's when, not if, on the title side. And Appraisal will just keep bringing on some of those.

outstanding customers that we don't already have on the platform over the next few quarters.

that we don't already have on the platform over the next few quarters. Thanks for taking the questions.

Thanks, Rob.

Thank you.

Your next question comes from Martin Toner from ADB Copy of Markets. Please go ahead.

Hi, apologies if this has been covered, but rates are down.

Applications are up.

How optimistic are you for the rest of 2023?

Welcome back, Martin. That's a good question, Martin, and I would say that there's definitely been, I think, in the new year as we've come back, there's definitely in the market, I would say, a little bit more optimism. And that's everything from the Fed, Bank of Canada starting to talk about...

potentially slowing down the rate increases. And of course we saw that here in Canada on Wednesday. So I think there's probably some optimism around that. Martin, we talked a little earlier today around the spread. So there's maybe a little bit of optimism there.

I think there continues to be demand in the market as we've talked about the Millennials in the past. So I'd say there's some definitely some optimism there. Now the applications are up. They're up the last couple weeks. We haven't seen that necessarily come through yet in orders. We've seen a very very slight uptick, but

We'll have to see, Martin, how this plays out over the next couple of quarters. And really the big indication for us will be the spring bounce and how much of a bounce we get in the spring. Call it March and really into April . I think that will really let us know if there is some real optimism and if the...

homeowners are back in. As you know, this has been, they've gone through what I would consider a bit of a rate shock over the past 12 months with the sort of historic increase in the rate. So if those can settle and I think this will become a much more normalized environment, then I think that sort of trails out for us.

Thank you.

Operator, do we have any more questions?

There are no further questions at this time.

Thank you very much for joining us today. Have a great day. Yes, I can hear you. Thank you. Good night.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and lastly, please disconnect your lines.

we went through 20 and 21 and some of the challenging customer experiences. And so I would say the overall institutions are incredibly focused on making sure that that customer experience as the market recovers is very strong. So that's really, I think where they are focused, they're definitely much more forward focused. And I would say that that has only sort of continued over the last couple of quarters where we saw some tough volume, I would say they are definitely focused to the future right now within us. Okay, and then how do we think about operating leverage recovery? So as volumes rebound, would you be able to keep corporate costs at similar levels or will some of the costs have to come back? And then I think historically is when volumes ramp, there's a bit of a lag initially, right? Where you get a bit of a hit on the net revenue margin until you optimize for a given volume or how do we think about that in recovery? Well, I think that's part of going through the exercise that we've gone through the past 12 to 15 months than us. I think we've got the business now in a place where we are running the business incredibly efficiently. And because of the experience that we've had over the past 12 to 15 months,