Q4 2023 Real Matters Inc Earnings Call
Speaker 1: Good morning ladies and gentlemen and welcome to the Real Matters Q4, Fiscal 2023.
Good morning, ladies and gentlemen, and welcome to the real matters Q4 fiscal 2023 conference call. At this time all lines are in a listen only mode, but following the presentation. We will conduct a question and answer session and if at any time. During this call you require immediate assistance. Please press star zero for the operator.
Speaker 1: At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session.
Speaker 1: If at any time during this call you require immediate assistance, please press star zero for the operator. Also note that this call is being recorded on Friday, November 17, 2020.
Also note that this call is being recorded on Friday November 17 2023.
Speaker 1: I now would like to turn the conference over to Lynne Bourregard. Please go ahead.
And I would like to turn the conference over to Linda Burgas. Please go ahead.
Yeah.
Thank you operator, and good morning, everyone welcome to round out a substantial results conference call for the fourth quarter and fiscal year ended December 31, 2023 with me today are real Myers, Chief Executive Officer, Brian <unk>, and Chief Financial Officer Rajiv.
Speaker 2: Thank you, operator, and good morning, everyone. Welcome to Real Matters Financial Results Conference call for the fourth quarter and fiscal year ended September 30th, 2023. With me today, a Real Matters.
Speaker 2: This morning before market open, we issued a new release announcing our results for three months and fiscal year ended September threes.
This morning before market opened we issued a news release announcing our results for the three months and fiscal year ended September 32023, the release accompanying slide presentation as well interesting and MD&A are posted in the investors section of our website at real matters that pool.
Speaker 2: The release, the company's slide presentation, as well as the financial statements and DNA are posted in the investors section of our website at Real Matters.
Speaker 2: During the call, we may make certain forward statements which reflect current expectations of management with respect to our business and the industry.
During the call we may make certain forward looking statements, which reflect current expectations of management with respect to our business and the industries in which we operate however, there are a number of risks uncertainties and other factors that could cause our results to differ materially from expectations.
Speaker 2: However, there are a number of risks, uncertainties, and other factors that could cause our results to differ materially from our current
Speaker 2: Please see the slide entitled, Cautionary Note Regarding Forward Looking Information in the Company 5 presentation.
Please see the slide entitled cautionary note regarding forward looking information and the accompanying slide presentation for more detail.
Speaker 2: You can also find additional information about these risks in the Risk Factors section of the company's annual information form for the year-end of September 30, 2018.
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 32020, Q, which is available on SEDAR and in Investor section of our website as a reminder, refer to non-GAAP measures in our slide presentation, including net revenue net revenue margin adjusted EBITDA and.
Speaker 2: which is available on CDER Plus and in the investor section of our web.
Speaker 2: As a reminder, we refer to non-GAAP measures in our slide presentation, including net revenue margins, adjusted EBITDA, and adjusted EBITDA margins. non-GAAP measures are described in our NDMA for three months at the fiscal year end of September 30, 2023.
Adjusted EBITDA margin non-GAAP measures are described in our MD&A for the three months its fiscal year ended September 32023, where you will also find reconciliations to the year.
Speaker 2: where you will also find reconciliation to the nearest ISRS measures. With that, I'll turn it over.
I have a rash of measures with that ill turn the call over that.
Okay.
Speaker 3: Thank you, Lynn. Good morning, everyone, and thank you for joining us on the call today.
Thank you Lynn and good morning, everyone and thank you for joining us on the call today.
Speaker 3: In fiscal 2023, Real Matters focused on preparing for scale by optimizing our network, platform, and our team, permanently transforming our cost base and making the business more efficient at scale.
In fiscal 2023 real matters focused on preparing for scale by optimizing our network platform and our team permanently transforming our cost base and making the business more efficient at scale.
Speaker 3: We've been focused on doubling down on our competitive advantage to build franchise value with key clients for the long term.
We've been focused on doubling down on our competitive advantage to build franchise value with key clients for the long term.
Speaker 3: We have expanded our channel penetration across all segments, deepening our relationships with customers, which should provide added leverage as the market scale.
We have expanded our channel penetration across all segments deepening our relationships with customers, which should provide added leverage as the market scales.
Speaker 3: We have kept our commitment to shareholders by focusing on what we can control and running our business with a long-term view.
We have kept our commitment to shareholders by focusing on what we can control and running our business with a long term view.
Speaker 3: By historical standards, 2023 was one of the most challenging markets we've faced as a company and as an industry.
By historical standards 2023 was one of the most challenging markets, we faced as a company and as an industry.
Speaker 3: Inflation, rapidly rising interest rates, a sustained increase in home price appreciation, low housing inventory and continuing economic uncertainty have driven mortgage market volumes down to levels we haven't experienced in this industry in almost three decades and certainly in our time as a public company.
Inflation rapidly rising interest rates, a sustained increase in home price appreciation low housing inventory and continuing economic uncertainty has driven mortgage market volumes down to levels. We haven't experienced in this industry in almost three decades and certainly in our <unk>.
As a public company.
Speaker 3: We estimate there were 2.7 million purchase transactions in six months.
We estimate there were $2 7 million purchase transactions and six.
Speaker 3: hundred thousand refinance transactions in fiscal 2023, which is almost half the volume of the worst year in the last 28 years.
100000 refinance transactions in fiscal 2023, which is almost half the volume of the worst year in the last 28 years.
We said this before but it bears repeating especially in today's environment. The cyclical nature of the mortgage market is nothing new to us. It's the very reason, we built a business that could weather the peaks and valleys and why we prioritize long term objectives and profitability.
Speaker 3: We said this before, but it bears repeating, especially in today's environment. The cyclical nature of the mortgage market is nothing new to us. It's the very reason we built a business that could weather the peaks and valleys and why we prioritize long-term objectives and profitability.
Speaker 3: 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.
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.
Speaker 3: We delivered solid performance in the fourth quarter, generating positive consolidated adjusted EBITDA of 600,000.
We delivered solid performance in the fourth quarter generating positive consolidated adjusted EBITDA of 600000.
Speaker 3: We launched six new clients and we added a new channel with a Tier 1 lender in both US appraisal and US title during the quarter.
We launched six new clients and we added a new channel with a tier one lender in both U S appraisal and U S title during the quarter.
Speaker 3: We reported consolidated revenues of $163.9 million in fiscal 2023, down 52% year over year as new client launches and the increase in our market share with our clients was offset by lower market volume.
We reported consolidated revenues of $163 9 million in fiscal 2023 down 52% year over year as new client launches and the increase in our market share with our clients was offset by lower market volumes.
Speaker 3: We estimate that US mortgage origination market volumes declined 53% year over year in fiscal 2023.
We estimate that U S mortgage origination market volumes declined 53% year over year in fiscal 2023.
Speaker 3: Consolidated net revenue for the year was $43 million compared with $85.4 million in fiscal 2022. However, we increased consolidated net revenue margins by 100 basis points year over year.
Consolidated net revenue for the year was $43 million compared with $85 4 million in fiscal 2022. However.
However, we increased consolidated net revenue margins by 100 basis points year over year.
Speaker 3: We posted a consolidated adjusted EBITDA loss of $2.4 million in fiscal 2023 with positive adjusted EBITDA in the last two quarters.
We posted a consolidated adjusted EBITDA loss of $2 4 million in fiscal 2023 with positive adjusted EBITDA in the last two quarters.
Speaker 3: in line with our focus on keeping the business EBITDA neutral in a market environment that has proven to be the most challenging in more than 28 years.
In line with our focus on keeping the business EBIT neutral in a market environment that has proven to be the most challenging in more than 28 years.
Speaker 3: We managed our cost base and improved our operational efficiency to better align with that lower market environment, reducing our consolidated operating expenses by more than 41% year over year.
We managed our cost base and improved our operational efficiency to better align with that lower market environment, reducing our consolidated operating expenses by more than 41% year over year.
Speaker 3: We have permanently transformed our cost base and are now operating with the lowest cost structure we've had since going public.
We are permanently transformed our cost base and are now operating with the lowest cost structure, we've had since going public.
Speaker 3: prime example of what our platform is capable of delivering.
An example of what our platform is capable of delivering.
Speaker 3: In US Appraisal, fiscal 2023 purchase origination revenues were down 41% year over year, and refinance origination revenues were down 73% year over year.
And U S appraisal fiscal 2023 purchase origination revenues were down 41% year over year and refinance origination revenues were down 73% year over year.
Home equity revenues were up 2% year over year as we launched in this channel with several lenders and had strong market share gains in fiscal 2023, which was offset by lower market volumes.
Speaker 3: Home equity revenues were up 2% year over year as we launched in this channel with several lenders and had strong market share gains in fiscal 2023, which was offset by lower market volume.
Speaker 3: Home equity represented almost a quarter of our U.S. appraisal revenues in fiscal 2023, and this volume is not captured in our market share calculation.
Home equity represented almost a quarter of our U S appraisal revenues in fiscal 2023, and this volume is not captured in our market share calculations.
Speaker 3: We increased US appraisal net revenue margins by 530 basis points to 27.4% in fiscal 2023 as a result of our operating model, posting our highest annual net revenue margin since going public, landing squarely in the range of our fiscal 2025 target of 26-28%.
We increased U S appraisal net revenue margins by 530 basis points to 27, 4% in fiscal 2023 as a result of our operating model posting our highest annual net revenue margin since going public landing squarely in the range of our fiscal <unk>.
125 target of 26% to 28%.
Speaker 3: US Appraisal Adjusted EBITDA was $14.2 million in fiscal 2023, down from $27 million in fiscal 2022.
U S appraisal adjusted EBITDA was $14 2 million in fiscal 2023 down from $27 million in fiscal 2022.
Speaker 3: We ended the year with 4.1% U.S. appraisal purchase market share, flat from fiscal 2022, and U.S. appraisal refinance market share of 10.4% down from 12.1% in fiscal 2022.
We ended the year with four 1% U S appraisal purchase market share flat from fiscal 2022, and U S appraisal refinance market share of 10, 4% down from 12, 1% in fiscal 2022.
Speaker 3: Purchased transactions continue to make up close to 80% of the volume on a market size that is extremely low by historical standards, which we believe distorts market share among lenders given the scarcity of transaction volume.
Purchase transactions continue to make up close to 80% of the volume on the market size that is extremely low by historical standards, which we believe distorts market share among lenders given the scarcity of transaction volumes.
Speaker 3: As we've discussed on previous earnings calls, 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 toward refinance.
As we've discussed on previous earnings calls 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 toward refinance we.
Speaker 3: We believe that our tier one lenders who account for the majority of our revenues were disproportionately impacted by the decline in the US mortgage origination market in fiscal 2023.
We believe that our tier one lenders who account for the majority of our revenues were disproportionately impacted by the decline in the U S mortgage origination market in fiscal 2023.
Speaker 3: We increased our market share with our tier 1 clients on an average by 10% in fiscal 2023.
We increased our market share with our tier one clients on an average by 10% in fiscal 2023.
Speaker 3: The Tier 1s are large lenders, both bank and non-bank, who value performance and they continue to represent a significant opportunity for market share growth for Real Matter.
The tier ones are large lenders, both bank and non bank, who value performance and they continue to represent a significant opportunity for market share growth for real matters.
We posted U S title segment revenues of $9 $5 million down from $36 5 million in fiscal 2022 and.
Speaker 3: We posted U.S. title segment revenues of $9.5 million, down from $36.5 million in fiscal 2022. And home equity revenues accounted for more than a third of U.S. title revenues in fiscal 2023, up from 14% in fiscal 2022.
And home equity revenues accounted for more than a third of U S title revenues in fiscal 2023 up from 14% in fiscal 2022.
Despite the 74% decline in top line revenues, we reported an adjusted EBIT loss of $8 $3 million compared with a loss of $8 1 million in the prior year, principally because we reduced our operating expenses by 61% year over year to 12.
Speaker 3: Despite the 74% decline in top-line revenues, we reported an adjusted EBITDA loss of $8.3 million compared with a loss of $8.1 million in the prior year, principally because we reduced our operating expenses by 61% year-over-year to $12.2 million.
$2 million.
Our title business today is more efficient than ever and we can now scale the business at a lower cost.
Speaker 3: Our title business today is more efficient than ever, and we can now scale the business at a lower cost.
Speaker 3: We went live in a second channel with our tier one lender in U.S. title at the end of the fourth quarter and ended the year with overall market share of 0.5% in U.S. title.
We went live in a second channel with our tier one lender in U S title at the end of the fourth quarter and ended the year with overall market share of 5% in U S title.
Speaker 3: Our team continues to advance the pipeline with an optimistic view of adding new lenders and increasing our market share.
Our team continues to advance the pipeline with an optimistic view of adding new lenders and increasing our market share given.
Speaker 3: Given the efficiency of operations, we remain well positioned for a variety of volume scenarios over the medium and long term.
Given the efficiency of operations, we remain well positioned for a variety of volume scenarios over the medium and long term.
Speaker 3: Canadian segment revenues were $33.5 million, down from $52.2 million in fiscal 2022. We increased net revenue margins in the segment by 480 basis points as we leveraged our field professional network in a lower market environment and at a higher mix of insurance inspection revenue.
Canadian segment revenues were $33 $5 million down from $52 2 million in fiscal 2022, we increased net revenue margins in this segment by 480 basis points as we leveraged our field professional network and a lower market environment.
A higher mix of insurance inspection revenues.
Speaker 3: We reduced Canadian segment operating expenses by 26% year over year, and we recorded a 530 basis points increase in adjusted EBITDA margins year over year.
We reduced Canadian segment operating expenses by 26% year over year, and we recorded a 530 basis points increase in adjusted EBIT margins year over year.
Speaker 3: In fiscal 2023, we launched five new lenders and four new channels in US appraisal, five new lenders and three new channels in US title, and 10 new clients and six new channels in Canada.
In fiscal 2023, we launched five new lenders and four new <unk> channels in U S appraisal five new lenders and three new channels in U S title.
10, new clients in six new channels in Canada.
Speaker 3: We continue to perform at the top of lender scorecards and advance the RFP pipeline, particularly in U.S. titles.
We continue to perform at the top of lender scorecards and advance the RFP pipeline, particularly in U S title.
Speaker 3: Our performance continues to reinforce our relationship with lenders.
Our performance continues to reinforce our relationship with lenders.
Speaker 3: We recently met with our largest clients at the MBA convention in Philadelphia, where we received high praise for our people, our network, our capabilities, and our ability to go above and beyond for lunch.
We recently met with our largest clients at the MBA Convention in Philadelphia, where we received high praise for our people our network our capabilities and our ability to go above and beyond for lenders in some cases getting the job done when our competitors failed.
Speaker 3: in some cases, getting the job done when our competitors fail.
Speaker 3: While the economic forecast did garner a lot of attention at the convention, our client conversations were mostly centered around capacity and ensuring that lenders have the right vendors in place for when the market recovers.
While the economic forecast did garner a lot of attention at the convention our client conversations were mostly centered around capacity and ensuring that lenders have the right vendors in place for when the market recovers.
Speaker 3: Lenders continue to see us as a trusted partner and we are leveraging our performance to ask for more of their business. With that, I'll hand it over to
Lenders continue to see us as a trusted partner and we are leveraging our performance to ask for more of their business.
With that I'll hand, it over to Rodrigo Rodrigo.
Speaker 3: Thank you, Brian , and good morning, everyone. As Brian said earlier, the U.S. mortgage market seems to be troughing with mortgage rates hovering at 23-year highs and transaction volumes at 28-year lows.
Thank you, Brian and good morning, everyone.
As Brian said earlier, the U S mortgage market.
To be trough with mortgage rates hovering at 'twenty, three year highs and transaction volumes at 28 year lows.
Speaker 3: 10-year treasury yields rose 75 basis points during the fourth quarter and inched higher since then with spreads at far beyond historical average.
10 year Treasury yields rose 75 basis points during the fourth quarter and niche higher since then we've spreads at far beyond the historical averages.
Speaker 4: There is no precedent on record for the economic conditions we are seeing today, and we have no way to predict what will happen in the short term.
There is no precedent on record before the economic conditions, we are seeing to date and we have no way to predict what will happen in the short term.
Speaker 4: Even if you look at the NBA's latest outlook for 2024, they are saying that 100 basis points decrease in interest rates could double their origination for 2021.
Even if you look at the Nba's latest thoughts look for 2024, they are saying that 100 basis points decreasing interest rates could double their origination forecast.
Speaker 4: There is an incredibly high level of elasticity demand and a very wide range of outcomes. But it's also the result of a market that has trough at such low levels.
There is an incredibly high level of elasticity of demand and a very wide range of outcomes, but it is also the results of a market that has trough at such a low level.
Speaker 4: We firmly believe that the market will recover over the mid to long term and so we remain focused on the things we can control, ensuring that we do what is necessary to grow our client base and our market share, managing our operating efficiency and driving toward our fiscal 25 targets while maintaining a strong balance.
We firmly believe that the markets will recover over the mid to long term and so we remain focused on the things we can control ensuring that we do what is necessary to grow our client base and our market share and managing our operate operating efficiency and driving toward our fiscal 'twenty five targets, while maintaining a strong balance sheet.
Speaker 4: Turning to our fourth quarter results, I'll start with our US appraisal segment where we recorded revenues of $31.2 million, down 29% from the same period last year as new clients launches and the increase in our market share with our clients was more than offset by lower market volume.
Turning to our fourth quarter results I'll start with our U S. Appraisal segment, where we recorded revenues of $31 2 million down 29% from the same period last year as new client launches and the increase in our market share with our clients was more than offset by <unk>.
Lower market volumes.
Speaker 4: Home equity revenues were up 16% year over year as we launched the home equity channel with some of our existing lenders in fiscal 23 and had market share growth further entrenching those clients' relationships.
Home equity revenues were up 16% year over year as we launch into home equity channel with some of our existing lenders in fiscal 'twenty, three and had market share growth further entrenching those client relationships.
U S appraisal net revenue was $8 6 million for the quarter down 23% year over year, we continue to see strong net revenue margins with an increase of 210 basis points year over year.
Speaker 4: US appraisal net revenue was 8.6 million for the quarter, down 23% year over year.
Speaker 4: We continue to see strong net revenue margins with an increase of 210 basis points year over year.
Speaker 4: Our ability to leverage our platform resulted in a significant year-over-year margin increase.
Our ability to leverage our platform resulted in a significant year over year margin increase.
Speaker 4: U.S. appraisal operating expenses declined 30% year-over-year to $4.6 million in the fourth quarter.
U S appraisal operating expenses declined 30% year over year to $4 $6 million in the fourth quarter.
Speaker 4: U.S. appraisal adjusted EBITDA was 3.9 million, a decrease of 14% from the fourth quarter of fiscal 22.
U S appraisal adjusted EBITDA was $3 9 million a decrease of 14% from the fourth quarter of fiscal 'twenty two.
Speaker 4: Just said it'd be the margins increased to 46 from the 41% we had in the fourth quarter last year as a result of an improved net revenue margin profile and the reduction of operating.
Adjusted EBITDA margins increased to 46 from the 41% we head into fourth quarter last year as a result of an improved net revenue margin profile and the reduction of operating expenses.
Speaker 4: Turning to our US title segment, fourth quarter revenues declined 41% over a year to $2.3 million due to lower refinance origination volume.
Turning to our U S title segment fourth quarter revenues declined 41% year over year to $2 3 million due to lower refinance origination volumes.
Speaker 4: US title net revenue was 1.1 million, down 0.7 million from the fourth quarter last year. However, net revenue margins increased by 90 basis points, mostly due to a change in product.
U S titled Net revenue was $1 1 million down zero point $7 million from the fourth quarter last year. However, net revenue margins increased by 90 basis points, mostly due to a change in product mix.
Speaker 4: We've reduced U.S. title operating expenses by 44% year over year to $2.6 million as we focus on operational efficiencies in this low refinance mortgage origination market.
We've reduced U S title operating expenses by 44% year over year to $2 6 million as we focus on operational efficiencies in this low refinance mortgage origination market.
Speaker 4: We recorded an adjusted EBITDA loss of $1.6 million compared with the loss of $2.9 million in the fourth quarter of fiscal 2022. An improvement of 46% mainly due to reduction in operating expenses adjusted by the fiscal year.
We recorded an adjusted EBITDA loss of $1 6 million compared with a loss of $2 9 million in the fourth quarter of fiscal 'twenty, two an improvement of 46% mainly due to reduction in operate operating expenses I just mentioned.
Speaker 4: In Canada, we posted fourth quarter revenues of $8.7 million, a decrease of 16% on a year-over-year basis.
In Canada, we posted fourth quarter revenues of $8 7 million, a decrease of 16% on a year over year basis.
Speaker 4: Net revenue margins expanded by 360 basis points year over year as we continue to leverage our appraiser network in a lower market environment.
And that's revenue margins expanded by 360 basis points year over year as we continue to leverage our appraiser and that's working a lower market environment.
Canadian segment operating expenses declined 18% year over year. This reduction of expenses combined with the increasing net revenue margins helped increase Canadian adjusted EBITDA margins to 72, 9% from 65% in the fourth quarter of 2022.
Speaker 4: Canadian segments operating expenses declined 18% year over year.
Speaker 4: This reduction of expenses combined with the increasing net revenue margins helps increase Canadian adjusted EBITDA margins to 72.9% from 65% in the fourth quarter of 2022.
Speaker 4: In total, fourth quarter consolidated net revenue declined 22% to $11.2 million compared to the $14.4 million we reported in the fourth quarter of fiscal 2022, as we experienced lower market volumes across all three segments.
In total fourth quarter consolidated net revenues declined 22% to $11 2 million compared to the $14 4 million, we reported in the fourth quarter of fiscal 2022, as we experienced lower market volumes across all three segments.
Speaker 4: Consolidated net revenue margins increased to 26.5% from the 24.7% we posted in the fourth quarter of fiscal 22, reflecting higher net revenue margins across all three sectors.
Consolidated net revenue margins increased to 26, 5% from the 24, 7% we posted in the fourth quarter of fiscal 'twenty, two reflecting higher net revenue margins across all three segments.
Speaker 4: Consolidated operating expenses were down 31% year over year to 10.9 million in the fourth quarter.
Consolidated operating expenses were down 31% year over year to $10 9 million in the fourth quarter.
Speaker 4: As Brian mentioned earlier, we posted positive consolidated adjusted EBITDA of $600,000 this quarter, up from a loss of $1.1 million in the same period of fiscal 2022.
As Brian mentioned earlier, we posted positive consolidated adjusted EBITDA of 600000, this quarter up from a loss of $1 1 million in the same periods of fiscal 'twenty two.
Speaker 4: Finally, I'll briefly turn to our balance sheet, which remains strong with no debt and a cash position of $42.3 million as of September 30, 2023. With that, I'll turn it back to you.
Finally, I'll briefly turn to our balance sheet, which remains strong with no debt and a cash position of $42 3 million as at September 30 of 2023.
With that I'll turn it back over to Bryan Bryan.
Speaker 3: Thank you, Rodrigo. In response to a very challenging mortgage market in fiscal 2023, we focused on preparing for scale by optimizing our network platform and our team, permanently transforming our cost base and making the business more affordable.
Thank you Rodrigo.
In response to a very challenging mortgage market in fiscal 2023, we focused on preparing for scale by <unk>.
Optimizing our network platform and our team permanently transforming our cost base and making the business more efficient.
Speaker 3: We continue to execute our strategy adding clients, growing market share with our Tier 1 clients, improving our net revenue margins, and reducing our operating expenses to navigate our business through this cyclical trough in the market.
We continue to execute our strategy, adding clients growing market share with our tier one clients improving our net revenue margins and reducing our operating expenses to navigate our business through this cyclical trough in the market.
Speaker 3: We posted positive, consolidated, adjusted EBITDA in the second half of fiscal 2023, finishing the year in a strong financial position with more than $42 million in cash and no debt.
We posted positive consolidated adjusted EBITDA in the second half of fiscal 2023, finishing the year in a strong financial position with more than $42 million in cash and no debt.
Speaker 3: Our operations are optimized and we have the capacity to scale up with our existing cost base when market conditions improve.
Our operations are optimized and we have the capacity to scale up with our existing cost base when market conditions improve.
Speaker 3: Overall, I'm very confident about our competitive position.
Overall, I'm very confident about our competitive position, we have a greater share of our clients' business in more channels and across more products than ever.
Speaker 3: We have a greater share of our clients' business in more channels and across more products than ever before.
Speaker 3: It's important to remember that the progress we've made will help turbocharge our results when the market turns.
It is important to remember that the progress we've made will help turbocharge our results when the market turns.
Speaker 3: Our focus is on long-term growth as it's always been.
Our focus is on long term growth as it's always been.
Speaker 3: We believe in the long-term earnings potential of our business, and we remain focused on our fiscal 2025 objective.
We believe in the long term earnings potential of our business and we remain focused on our fiscal 2025 objectives.
Speaker 3: With that, I'd like to take a moment to recognize our team for the incredible job they have done over the course of the year. Growing our margins.
With that I'd like to take a moment to recognize our team for the incredible job. They have done over the course of the year.
Growing our margins delivering performance, it's kept us at the top of lender scorecards deploying new technology and innovating in a way that reinforces our competitive advantage and also for being relentless in our pursuit of new business.
Speaker 3: kept us at the top of lender scorecards, deploying new technology and innovating in a way that reinforces our competitive advantage and also for being relentless in our pursuit of new business.
Speaker 3: We have excellent leaders and a talented team that is committed to our success.
We have excellent leaders and a talented team that is committed to our success.
Speaker 3: We're also grateful for the extraordinary contribution of the field professionals on our network who continue to go above and beyond for our clients.
We're also grateful for the extraordinary contribution of the field professionals on our network, who continue to go above and beyond for our clients.
Speaker 3: Finally, I'd like to thank our board and shareholders for their ongoing support and confidence in our business.
Finally, I'd like to thank our board and shareholders for their ongoing support and confidence in our business in.
Speaker 3: In particular, I'd like to thank Jason Smith for his contribution as our executive chairman. His experience and guidance has been invaluable as we've navigated the business through booming and challenging marketing conditions over the years. Starting today, Jason will become chairman of the board and we look forward to his ongoing support. With that operator, we'd like to open it up for questions now.
In particular I'd like to thank Jason Smith for his contribution as our executive Chairman.
His experience and guidance has been invaluable as we navigate the business through booming in challenging marketing conditions over the years.
<unk> today, Jason will become chairman of the board and we look forward to his ongoing support.
With that operator, we'd like to open it up for questions now.
Thank you, Sir ladies and gentlemen, if you would like to ask a question. Please press star followed by one on your Touchtone phone.
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Please go ahead and press Star one now if you do have a question.
Speaker 1: The first question will be from Richard C. at National Bank Financial.
And your first question will be from Richard Tse.
At National Bank financial Please go ahead.
Speaker 5: Yes, thank you. You've obviously done a really good job at sort of
Yes. Thank you.
You've obviously done a really good job at sort of controlling those controllable, especially on the cost side. So how should we think about what you're doing now like are you kind of through all that work in.
Speaker 5: controllable, especially on the cost side. So, how should we think about what you're doing now? Like, are you kind of through all that work and, you know?
What is the executive teams are doing in the face of a still some challenging times or is there more to do there to get better or maybe give us some color on that please.
Speaker 3: Sure, thanks Richard. Yeah, I mean we've got a fairly significant project that we've been running and will continue to run for the upcoming quarters. We've got a great branded name for it and the real focus of it is scaling for the future.
Sure. Thanks, Thanks, Richard Yeah, I mean, we've got a fairly significant project that we've been running and will continue to run for the upcoming quarters.
We've got a great branded name for it and the real focus of it is scaling for the future.
Speaker 3: So Richard, we're focused on different areas of the business, but looking at the workflow within those areas. Our senior management team has been tasked with sort of taking those apart and figuring out which of those areas can we automate, which ones can we eliminate, and which ones can we make more efficient.
So Richard we're focused on different areas of the business, but looking at the workflow within those areas. Our senior management team has been tasked with sort of taking those apart and figuring out which of those areas can we automate which ones can we eliminate and which ones can we make more efficient.
So that's really the focus the focus is in a market like this with some some incremental capacity currently how do we take those resources and just continue to make sure that when we see the volumes start coming back we can really get even incremental torque on the opex in the <unk>.
Speaker 5: So that's really the focus. The focus is in a market like this with some incremental capacity currently, how do we take those resources and just continue to make sure that when we see the volume start coming back, we can really get even an incremental torque on the OPEX in the business so that we have a higher percentage of margin profile once we see that new volume come on board. Okay, that's fair.
Is this so that we have a higher percentage of margin profile. Once we see that new volume come on board.
Okay, that's fair and if I sort of step back even further and I don't know this is sort of a board discussion, but if you look at let's say two or three or four years from now is there a kind of a some sort of a strategy to sort of take out the cyclicality in terms of the business over all like I think you've talked about.
Speaker 5: but if you look at, let's say, two, three, four years from now, is there kind of some sort of strategy that sort of take out the cyclicality in terms of the
In the past but.
Are there service lines that you could add to serve kind of reduce the cyclicality that are that we see in certain times like where we're at today.
Speaker 3: Yeah, so I think the the big piece for us right now, Richard, is number one, to make sure that we are focused on the core business, which we have been. You've heard us talk about getting into other channels with our current customers. So making sure that we continue to maximize that.
Yes, so I think the the big piece for US right now Richard is number one to make sure that we are focused on the core business, which we have been you've heard us talk about getting into other channels with our current customers. So making sure that we continue to maximize that you will have seen on.
Speaker 3: You will have seen on home equity, we've taken on some more home equity business in a market like this. So, you know, within the current base, make sure that we've got as broad a penetration across the current customers that we have. Again, so that when we have that cyclicality, at least there's some different products that we can pivot to.
Home equity we've taken on some more home equity business in a market like this so.
Within the current base make sure that we've got as broad penetration across the current customers that we have again, so that when we have that cyclicality at least there is different some different products that we can pivot to.
Speaker 3: When we take a longer view, it's very similar to what we've laid out at Investor Day where we are focused on continuing to grow the core appraisal business.
When we take a longer view it as very similar to what we've laid out at Investor day, where we are focused on continuing to grow the core appraisal business. We have a tremendous amount of upside on the title business as you know cross selling our tier ones into that business and then the third leg remains the data business, which.
Speaker 3: We have a tremendous amount of upside on the title business, as you know, cross-selling our tier ones into that business.
Speaker 3: And then the third leg remains the data business, which we continue to take a good look at on the back end of the business.
We continue to take a good look at on the back end of the business and frankly that portion of our business, where we are getting some good enhancement as we look at that that is a future.
Speaker 3: And frankly, that portion of our business, where we are getting some good enhancement as we look at that as a future pillar of our strategy, is as we moved into the cloud, the capabilities to access the data and work with the data have only become that much stronger and better. So I think that will continue right now, Richard, to be the leg of the stool that we see as a real opportunity when we look out three, four years from now.
Pillar of our strategy is as we moved into the cloud the capabilities to access the data and work with the data I have only become that much stronger and better. So I think that will continue right now Richard to be the leg of the stool that we see as a real opportunity when we look out three four years.
Sure Matt.
Okay. Thank you I'll pass the line.
Speaker 1: Thank you, Richard.
Thanks Richard.
Question will be from Daniel Chen.
Please go ahead.
Speaker 6: Hi, good morning. Good to see you launch that second channel with the Tier 1 tie-line closing.
Hi, Good morning, good to see you launch that second channel what the tier one totaling closing customer can you just remind us how much more that second channel brings in terms of wallet share and then what are your discussions with that customer, saying in terms of the speed of ramp into the coming quarters.
Speaker 6: Can you just remind us how much more that second channel brings in terms of wallet share and then what are your discussions with that customer saying in terms of the speed of ramp into the coming quarter?
Got it thanks, Dan I appreciate that so second channel did launch finally at the end of Q4, we have now seen orders coming through so good news, it's up and live that will ramp up over the next few quarters Theres still some lessons learned as we bring in.
Speaker 3: Got it. Thanks, Dan. I appreciate that. So, second channel did launch finally at the end of Q4. We have now seen orders coming through. So, good news. It's up and live.
Speaker 3: That will ramp up over the next few quarters. There's still some lessons learned as we bring that channel on board, at least at the lender level, because this is a new process for them. But the longer term plan is that should be the same order volume as we've got in the existing channels. So think 50-50 between the two channels.
That channel onboard at least at the at the lender level.
Level, because this is a new process for them, but the longer term plan is that should be the same order volume as we've got in the existing channels. So think 50 50 between the two channels.
Speaker 3: And so we should see that come on sort of midway through the year next year, Dan.
And so we should see that come on sort of midway through the year next year Dan.
Speaker 6: That's great to hear. We've seen some reports that from the NBA saying that they're expecting the market to essentially recover early next calendar year.
So that's great to hear.
Seen some reports.
That looks like from the MBA is saying that they're expecting the market to essentially recover early next calendar year.
Speaker 6: Based on what you're seeing on the volumes passing through your platform, do you agree with some of these forecasts? What are you guys kind of expecting for the next?
Just based on what Youre seeing on device passing through your platform do you agree with some of these forecast what are you guys kind of expecting for next year. Thank you.
Why don't I get Rodrigo to lean in on that.
Speaker 4: Why don't I get Rodrigo to lean in on that? Hi, Dan. Again, very hard to predict the markets at this point, especially in the short term. Again, historically, MBA has been very optimistic.
But again very hard to predict the market at this point, especially in the short term.
Again, historically MBA has been very optimistic.
Speaker 4: as early as, you know, the beginning of the calendar year, which is our fiscal Q2, it's very hard to say, like, we'll see a very strong recovery. We do, you know, I guess, as the whole industry does, like, we do see some recovery coming the second half of the fiscal year, but it feels like our fiscal Q2 is a bit too early, you know.
As early as the beginning of the calendar year, which is our fiscal Q2, it's very hard to say like we will see a very strong recovery. We do you know.
I guess as the whole industry does like we do see some recovery, having the second half of the fiscal year.
But it feels like our fiscal Q2 is a bit too early.
Great. Thank you.
Thank you.
Speaker 1: Next question will be from Thanos Marshall-Poulos at BMO, please go ahead.
Next question will be from finals muscle pulse.
BMO. Please go ahead.
Speaker 7: Hi, good morning. Could you remind us what dynamic we should see with respect to net revenue margins, if we have a situation where it's just all of a sudden volume spike? I mean, clearly, you've indicated that your current OPEX base can support a much higher revenue base, but just net revenue margins in particular, you have to kind of manage some of the variable elements with the regional managers and so forth.
Hi, good morning.
Could you remind us what dynamic we should see with respect to net revenue margins.
If we have a situation where it's just all of a sudden volume spike.
I mean clearly.
You've indicated that your current Opex base could support a much higher revenue base, but just net revenue margins particular, you have to kind of manage the variable elements with regional managers and so forth.
Speaker 7: So if volumes were to spike, would that have any near-term impact on the margin or not?
So volumes were to spike.
Would that have any near term impact on the net revenue margin or not necessarily.
Speaker 3: Yeah, so I think that the impact, Thanos, thanks for the question, I think the impact would be very limited if there was a spike in volume.
Yeah, So I think that the impact Thanos. Thanks for the question I think the impact would be very limited if there was a spike in volume what the team has been had been working on with the network is that continual focus on driving orders to the top quartile of our Av.
Speaker 3: What the team has been working on with the network is that continual focus on driving orders to the top quartile of our appraisers in the case of the appraisal business.
Appraisers and in the case of the the appraisal business. So I think youre going to see very limited movement. There I mean as we've looked at the market for next year with as Rodrigo said.
Speaker 3: I think you're going to see very limited movement there. I mean, as we've looked at the market for next year with, as Rodrigo said,
Speaker 3: a somewhat flat, slightly down Q1, Q2 to an increase in Q3 and Q4.
A somewhat flat slightly down in Q1 Q2 to an increase in Q3 and Q4, our view is that youre going to see that same net revenue performance you saw in Q4 generally throughout the year. So even with that increase in volume. Our view is that that youre going to see those strengthened net.
Speaker 3: Our view is that you're going to see that same net revenue performance you saw in Q4 generally throughout the year.
Speaker 3: So even with that increase in volume, our view is that you're gonna see those strengthened net revenue margins.
<unk> margins.
Speaker 3: And so I don't think you'll see much different. If there is a spike, I think it would be very limited. If there was any difference, we are very focused on the leverage with that top quartile of appraiser.
And so I don't think youll see much different if there is a spike I think it would be very limited. If there was any difference we are very focused on the leverage with the that top quartile of appraisers.
Great.
Speaker 7: Great. And then with respect to home equity and the market share you've been gaining there, just to clarify, have your share gains in home equity been primarily with the Tier 1s or some of the Tier 2s, 3s, 4s? It's kind of also very active.
And then.
With respect to home equity in the market share you've been gaining there.
To clarify have you share gains in home equity and primarily with the tier ones or.
Are some of the tier 234, and just kind of also very active in that space.
Speaker 3: Yeah, so another good question. Thanks, Dennis. I just want to go back and remind where we started that home equity conversation. Remember, it was it was a while back.
Yes. So another good question. Thanks Dennis.
Wanted to go back and remind where we started that home equity conversation because you remember it was it was a while back where we said we were actually going to spend some time focusing on home equity and the rationale was very clear that this was a way for us to try and get into title right. So that that core type.
Speaker 3: Where we said we were actually going to spend some time focusing on home equity and the rationale was very clear that this was a way for us to try and get into title. Right. So
Speaker 3: That core title origination channel is what we are completely focused on. We did use home equity as a point of leverage to try and find our way into that. So we have moved the business from a home equity standpoint. It has mostly been with Tier 1s. A significant proportion of it, Thanos, is with Tier 1s.
It'll origination channel is what we are completely focused on we did use home equity as a point of leverage to try and find our way into that so we have moved the business from a home equity standpoint, it has mostly been with tier ones a significant proportion of it is with tier ones.
Speaker 3: We are now dealing with the top five home equity lenders in the U.S. But again, the resolve is not to focus completely on home equity. It was to try and get ourselves into the title channel. The side benefit in a market like this is that it has been able to help on the revenue side. And as Rodrigo said, the market share gains we have in home equity, of course, those do not impact our origination market shares, which is what we have put out for 2025.
Dealing with the top five home equity lenders in the U S. But again I mean, the resolve is not to focus completely on home equity. It's if it was to try and get ourselves into the title channel beside benefit in a market. Like this is that it has been able to help on the revenue side and as Rodrigo said, you know the market share gains.
We have an home equity of course, those do not impact our origination market shares which is what we've put out for 2025.
Okay, Great I'll pass along thanks, Brian.
Thank you Dennis.
Speaker 1: Next question will be from Robert Young at Canaccord Genuity, please go ahead.
Next question will be from Robert Young.
In accord Genuity. Please go ahead.
Speaker 7: Thanks. Maybe a little more on Dan's line of question on the second channel launch. I'm curious...
Maybe a little more on that line of question on the second channel launch I'm curious.
Speaker 8: If you could, just in layman's terms, just describe exactly what that second channel is, that'd be the first thing. Second thing, as you look at the pipe for other Tier 1s, it strikes me as interesting that your first Tier 1 customer and title has been giving you wallet share gains and now is expanding into a new channel. And so I'm curious that...
If you can just in layman's terms just describe exactly what that second channel is that the first thing second thing.
As you look at the pipe for other tier ones. It strikes me as interesting that your first tier one customer in title has been giving your wallet share gains and now is expanding into new tie in a new channel and so I am curious it.
Speaker 8: What the other tier ones are doing, if they're looking at this, if this is something that would be a signal to them that would be positive or this, like, what is it? How would they take this expansion into a second channel?
But the other tier ones are doing if they're looking at this as something that would be a signal to them that would be positive or.
What is it how would they take this expansion into a second channel.
Yeah.
Speaker 3: Good, sounds like a two-parter, Rob. So the first part is clarifying the two channels. So the first channel we had with the Tier 1 is what we would call a direct channel, so think call center type stuff, right? So it's direct to consumer. Whereas the second channel we launched is the retail channel, so going through the branches.
Okay, and it sounds like a two parter Rob so the first part is clarifying the two channels. So the first channel we had with the tier one is what we would call a direct channel so.
Call Center type stuff right. So its direct to consumer, whereas the second channel, we launched as the retail channels, so going through the branches.
Speaker 3: And so that's why that is a new sort of process for that Tier 1. As I say, good news, orders are flowing. And I think over the next couple of quarters, we should start seeing that to ramp up so that we are getting equal orders from both channels.
So that's why that is a new sort of process for that tier one as I say good news orders are flowing.
And I think over the next couple of quarters, we should start seeing that to ramp up so that we are getting equal orders from both channels.
Speaker 3: So that's question number one. Question number two is.
So that's question number one question number two is the.
Speaker 3: The other Tier 1s, how do they look at this expansion? Other Tier 1s. Thank you. So yeah, so that's a twofold answer, I think, Rob. The first answer, and as I mentioned in my speaking notes, we were down at the NBA. So the good news is I get some pretty good flavor on exactly where we're at with our biggest Tier 1s.
And the other tier ones, how do they look at this expansion.
Thank you. So yes, so that's a two fold answer I think Rob.
First answer and as I mentioned in my my speaking notes.
We were down at the MBA. So the good news is I get some pretty good flavor on exactly where we're at with our biggest tier ones and so it's there's really I think two angles to that one the first one is because of the strong delivery on our appraisal business and I would even say some unique thinking about the future and.
Speaker 3: And so there's really, I think, two angles to that one. The first one is, because of the strong delivery on our appraisal business, and I would even say some unique.
Speaker 3: thinking about the future and the scale of the appraisal business, which we spent quite a bit of time on, I think that is only a benefit and a sort of a turbo charger when we get on the title side of the business. As you can imagine, we've made sure that it's very clear to those other tier ones how strong our performance is. We had another
The scale of the appraisal business, which we've spent quite a bit of time on.
I think that is only a benefit and a.
Sort of a turbocharger when we get on the title side of the business as you can imagine we've made sure that it is very clear to those other tier ones. How strong. Our performance is we had another quarter. This past quarter of number one performance on the title side. So believe me, we do a reasonable job of letting the others know that.
Speaker 3: quarter, this past quarter, of number one performance on the title side. So believe me, we do a reasonable job of letting the others know that. And what's been made clear to us, again, we'll have to see with time, is that there should be a couple of RFPs coming out on the street in calendar 2024.
And what's been made clear to US again, we will have to see with time is that there there should be a couple of rfps coming out on the street in.
In calendar 2024.
Speaker 3: We're hoping earlier than later in the year, but again, we'll have to see those coming out. So, I think there's, my view is, I'm quite bullish that there is an upside coming down the sales pipeline for next year on Tier 1 titles.
We're hoping earlier than later in the year, but again, we'll have to see those coming out. So I think there is.
My view is I'm quite bullish that there is a upside coming down the sales pipeline for next year on tier one title.
Speaker 8: Okay, thanks for that. You just said that you expect the fiscal Q1-Q2 to be a little bit slower and then maybe the second half a little better. I was curious if you could just parse that out a little bit. Is that mostly seasonality? Is that the typical seasonality we normally see or are there other factors that would inform your view that Q1-Q2 will be a little bit slower?
Okay. Thanks for that and then on your you just said that you expect the fiscal Q1 Q2 to be a little bit slower and then maybe the second half a little better I was curious if you could just parse that out a little bit is that mostly seasonality is that the typical seasonality, we normally see or are there other factors that would lead.
Informed your view that Q1, Q2 will be a little slower.
Rodrigo, yes, so Rob it's a combination Brian of course seasonality.
Speaker 4: Rodrigo? Yeah, so Rob, it's a combination, right? Of course, visibility impacts us, as it has in the past years. And the second point here, it is the market itself, macroeconomic factors, where based
Sure.
We went back to us as he has in the past few years.
And the second point here is the market itself right from a macroeconomic factors.
Yeah.
Speaker 4: based on what we see today and market experts are telling us, like it's the first half of the year, we should see.
Based on what we see today and.
Market experts are telling us like it's the first half of the year, we should see similar.
Speaker 4: similar conditions that we are seeing today, you know, where the second half of our fiscal year, we should see some recovery with rates perhaps going down, we spread, you know, tightening, and we should benefit ourselves from a mortgage origination volumes, right? But it's a combination.
Conditions that we're seeing today.
Whereas the second half of our fiscal year, we should see some recovery with rate, perhaps going down with spreads.
Tightening and which should benefit ourselves from a mortgage origination volumes right, but it's a combination of both.
Speaker 8: Great, and that spreads tightening. Is that dependent on the tier ones getting more competitive?
Great.
Reds tightening is that dependent on the tier one is getting more competitive.
In the space Yeah, Yeah.
Speaker 4: For sure, it will help, right? Again, as Brian said, the market is so low right now that the large lenders, I don't think they're moving very hard to gain market share or, you know, to markets to increase their volumes. But as soon as they start, you know, pricing things.
For sure it will.
Health right again, as Brian said the market is so low right now that the large lenders I don't think they are moving very hard to gain market share or.
Martin to markets to increase their volumes, but as soon as they start.
Pricing things.
Speaker 4: As they used in the past, we should see spreads getting tighter.
They used in the past that we should see spreads getting tighter for sure yes, Rob just one other item to add to that at the conference in Philadelphia. The MBA put up what I thought was quite an interesting slide which took a look at the rate as it stands today and they did some sensitivity analysis off of that so.
Speaker 3: Yeah, Rob, just one other item to add to that. At the conference in Philadelphia, the MBA put up what I thought was quite an interesting slide, which took a look at the rate as it stands today. And they did some sensitivity analysis off of that. So think of the rate 100 basis points higher or 100 basis points lower. And I thought quite interestingly, if the rate went up 100 basis points, their view was the volume would be generally flat.
Think of the rate of 100 basis points higher or 100 basis points lower.
And I thought quite interestingly if it was if the rate went up 100 basis points. Their view was the volume would be generally flat. So I think their view is we are definitely at the bottom.
Speaker 3: So I think their view is we are definitely at the bottom.
Speaker 3: And also interestingly, I think, if it went down 100 basis points, you actually saw a 40% increase in volume. Because you've got to remember where refinance volume is today at the $600,000. I mean, two years ago we were at $8 million plus, put it that way. So the idea that the refi volume could go up 50%, 60%, 70%...
And also interestingly I think if it went down 100 basis points, you actually saw a 40% $40, 40% increase in volume because you've got to remember where refinance volume is today at the 600000 I mean, two years ago, we were at 8 million plus put it that way so.
The idea that the refi volume could go up 50 60, 70%.
Speaker 3: If it went up 100%, we'd be back to the last sort of normalized years of 1.2, 1.3 million. So there's, I think anyway, there's plenty behind that. And I think the NBA was actually pretty sort of on. Not a lot of impact if the rate was to go up, but a pretty good impact if the rate does start to drop.
If it went up 100% we'd be back to the last no sort of normalized years of $1 to $1 3 million. So there is I think anyways, there's plenty behind that and I think the MBA was actually pretty sort of on not a lot of impact of the rate was to go up but a pretty good impact if the rate does start to drop.
Okay, that's very good to hear.
Speaker 8: Last question, and I'll let the past line just around your competitors. Are you seeing consolidation? It's got to be a rough market out there for people that don't have your scalability. And so I'm curious if you're.
Last question and I'll, let pass the line just around your competitors are you seeing consolidation, there's going to be a rough market out there for people that don't have your scalability and so im curious if youre seeing competitors drop out any consolidation maybe lay of the land now pass line.
Speaker 8: competitors drop out, any consolidation, maybe lay of the land and I'll pass the line.
Yes. So so there has been quite a bit of movement. This year.
Speaker 3: Yeah, so there has been quite a bit of movement this year. The first one is, and really the big one, was one of our big competitors, CoreLogic, generally shut their doors, Rob.
The first one is and really the big one was one of our big competitors Corelogic generally shut their doors.
Rob so somewhat surprisingly frankly that they werent sold.
Speaker 3: Somewhat surprisingly, frankly, that they weren't sold. We, of course, were part of the conversations with them, but in the end, the decision was just to close the doors there. So, good news for us. There was definitely a benefit, especially with a couple of the big tier ones where we got some share.
We of course were part of the conversations with them, but in the end. The decision was just to close the doors. They're so good news for US there was definitely a benefit, especially with a couple of the big tier ones, where we got some share from that and I think theres going to be more consolidation I mean, there was announcement fairly recently about some more consolidation and I think in a.
Speaker 3: from that. And I think there's going to be more consolidation. I mean, there was an announcement fairly recently about some more consolidation. And I think in a market like this, it is incredibly challenging to find a way to even a neutrality. And I think, as you guys know, that's the benefit of building the network model that we've built, where we are able to flex up and flex down.
Market like this it is incredibly challenging to find a way to EBITDA neutrality and I think as you guys know thats the benefit of building the network model that we've built where we are able to flex up and flex down.
Speaker 3: and those with an awful lot of people doing a lot of the process and not necessarily the network type advantage we have. I think we're only going to see more of that in the next couple of quarters, Rob. Especially we're starting to see some of that on the title side too.
And those with an awful lot of people doing a lot of the process and not necessarily the network type advantage. We have I think we're only going to see more of that in the next couple of quarters, Rob, especially we're starting to see some of that on the title side too.
Thanks for taking the questions.
Problem.
Speaker 1: Thank you. As a reminder, ladies and gentlemen, if you would like to ask a question, please press star followed by 1.
Thank you as a reminder, ladies and gentlemen, if you would like to ask a question. Please press star followed by one on your Touchtone phone.
Speaker 1: And your next question will be from Martin Toner at ATB Capital Markets.
And your next question will be from Martin.
ATB capital markets. Please go ahead.
Speaker 9: Thank you. Most of my questions have been answered, but I have a few left.
Thank you most of my questions have been answered, but I have a few.
Yes.
Speaker 9: Brian , can I kind of go back to what you said about Tier 1?
Brian can I kind of go back to what you said about tier one.
Rfps.
Speaker 9: Did you do you think you could get volume from a tier one that you win?
Did you do you think you could get volume from.
A tier one that.
You win next.
Next year.
Yeah.
Yeah.
Speaker 3: Yeah, so the short answer to that, Martin, is yes, we do. We built in the back end of the year. We built in some volume, assuming that we have brought on and launched a Tier 1. So I'm letting you know that's why I'm a little bit bullish. We actually have built it in. It's going to be in the back end of the year, and you know there's a ramp that comes with that.
Yes, so the short answer to that Martin is yes, we do we built in the back end of the year. We built in some bulk volume assuming that we have brought on and launched a tier one so I'm letting you know that's why I'm a little bit bullish we actually have built it and it's going to be in the back end of the year and you know theres a ramp that comes with that.
Speaker 3: So the short answer is yes. I should just make sure though that we don't just, along with the tier ones, we also are very focused and the sales team's focused on making sure we're continuing to have very good conversations with the tier twos and tier threes. So tier one, of course, you guys know, super focused for us, but we've actually invested and brought on some sales talent to make sure that we're looking across not just tier ones but also into the big tier twos and threes.
Pat.
So the short answer is yes, I should just make sure though that we don't just along with the tier ones. We also are very focused in the sales teams focused on making sure. We're continuing to have very good conversations with the tier twos and tier three so dear.
One of course, you guys know super focus for us.
But we've actually invested in brought on some sales talent to make sure that we're looking across not just tier ones, but also ended the big tier twos and threes.
Speaker 9: Great, thank you. So you've gained 10% share with your tier one this year, roughly. Do you think you can duplicate that next year?
Great. Thank you so you've gained 10%.
Share with your tier ones. This year roughly you can we can duplicate that next year.
Speaker 3: Yes, we do think that's that's part of the game plan is definitely taking our market share with our customers up at least another 10% next year.
Yes, we do think that that's part of the game plan is definitely taking our market share with our customers up at least another 10% next year.
That's it for me thank you.
Speaker 10: Thank you. Next question will be from Gavin Fairweather at Cormark Securities. Please go ahead. Hey. Good morning. Thanks for taking my question. Just a quick one for me. When you think about a recovery scenario, do you think that can be a catalyst for recovery?
Thank you next question will be from Gavin Fairweather at core Mark Securities. Please go ahead.
Hey, good morning, Thanks for taking my question just a quick one for me when you think about a recovery scenario do you think that can be a catalyst for share gains for you just thinking about the scalability of the network versus your comps are tough to hire people and then also maybe.
That are potentially the tier ones is becoming more aggressive are you now in terms of mortgage underwriting.
Speaker 3: I mean, as we look forward, Gavin, I think there are three tailwinds that I think are getting set up for us.
Yes, I mean, as we look forward again I think there are three tail wins that I think are getting set up for us.
Speaker 3: hopefully in the not too distant future, right? Tailwind number one is the market. So we don't need to get too much into it. I think we've gone over how historically challenging the market is. We think there's a tailwind there.
In the hopefully in the not too distant future rate tailwind number one is the market. So we don't need to get too much into it I think we've gone over how historically challenging the market is we think there's a tailwind there the second tailwind as we've gone over is our tier ones winning back market share versus the market, which again, we see <unk>.
Speaker 3: The second tailwind as we've gone over is our tier one.
Speaker 3: winning back market share versus the market, which again, we see happening, let's call it second half of this upcoming year, but that's definitely a tailwind, we think. And then you just take the tailwind of the changes that we've made this year, both in our net revenue margins and in our OPEX, and start rolling that forward as the volume comes on. And I think with the three of them together, our view is anyways, you get a bit of a turbo charge, you get an awful lot of leverage off of those.
<unk>, let's call it second half of this upcoming year, but that's definitely a tailwind we think and then you just take the tailwind of the changes that we've made this year both in our net revenue margins and in our Opex and start rolling that forward as the volume comes on and I think with the three of them together.
Our view is anyways, you get a bit of a turbocharge you get an awful lot of leverage off of those three different dynamics.
Great. That's it for me thank you.
Speaker 11: Great, that's it for me, thank you.
Thank you.
Speaker 1: ladies and gentlemen at this time we have no further questions registered which concludes the conference call for today thank you for attending and taking the time
Ladies and gentlemen at this time, we have no further questions registered which concludes your conference call for today. Thank you for attending and taking the time.
Have yourself a great day.
Speaker 12: Thank you. Thank you. Thank you.
Thank you.
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