Q3 2024 Real Matters Inc Earnings Call

Good morning, ladies and gentlemen, and welcome to Real Matters Q3 2024 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session.

Operator: and 24 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call, you require immediate assistance, please press, as far as zero, for the operator.

Lyne Beauregard: If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 1, 2024. I would now like to turn the conference over to Lyne Beauregard, Vice President of Investor Relations and Corporate Communications. Please go ahead.

Operator: This call has been recorded on Thursday, August 20, 2024.

Lyne Beauregard: I would now like to turn the conference over to Lyne Beauregard, Vice President of Investor Relations and Corporate Communications. Please welcome to Real Matters Financial Results Conference Call for the third quarter ended June 30, 2024. With me today, a Real Matters Chief Executive Officer Brian Lang and Chief Financial Officer Rodrigo Pinto. This morning, before market open, we issued a news release announcing our results for the three and nine months ended June 30, 2024. The release, accompanying slide presentation, as well as the financial statements in NDNA are posted in the Investor section of our website at RealMatters.com.

Operator: Thank you, Operator, and good morning, everyone. Welcome to Real Matters' Financial Results Conference call for the third quarter ended June 30, 2024. With me today are Real Matters Chief Executive Officer Brian Lang and Chief Financial Officer Rodrigo Pinto.

Lyne Beauregard: Thank you operator and good morning everyone. Welcome to Real Matters Financial Results conference call for the third quarter ended June 30th 2024. With me today are Real Matters Chief Executive Officer Brian Lang and Chief Financial Officer Rodrigo Pinto.

Lyne Beauregard: This morning, before market opened, we issued a news release announcing our results for the three and nine months ended June 30, 2024. The release, accompanying slide presentation, as well as the financial statements and ND&A are posted in the Investors section of our website at realmatters.com.

Lyne Beauregard: During the call, we may make certain forward-looking statements which reflect the current expectations of management with respect to our business and the industry in which we operate. Well, however, there are a number of risks and certainties and other factors that could cause our results to differ materially from our expectations. Please see the slide entitled "Cautionary Note Regarding Forward-Looking Information" in the accompanying slide presentation for more details. You can also find additional information about these risks in the risk factor section of the company's Annual Information Form. For the year ended September 30, 2023, which is available on Cedar Plus and in the Investor section of our website.

Lyne Beauregard: During the call, we may make certain forward-looking statements which reflect the current expectations of management with respect to our business and the industry in which we operate. However, there are a number of risks, uncertainties, and other factors that could cause our results to differ materially from our expectations.

Lyne Fisher: 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 form for the year ended September 30, 2023, which is available on CDAR Plus and in the investor section of our website. 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 MD&A for the three and nine months ended June 30, 2024, where you will also find reconciliations to the nearest IFRS measures. With that, I'll turn the call over to Brian.

Lyne Beauregard: 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.

Lyne Beauregard: of the company's annual information form for the year ended September 30th, 2023, which is available on CDAR Plus and in the investor section of our website.

Lyne Beauregard: As a reminder, we referred to non-GAAP measures in our slide presentation, including net revenue, net revenue margins, adjusted EBITDA, and adjusted EBITDA margins.

Lyne Beauregard: 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 MD&A for the 3 and 9 months ended June 30, 2024.

Lyne Beauregard: Non-GAAT measures are described in our MDNA for the three and nine months ended June 30, 2024, where you will also find recommendations to the nearest IFRS measures.

Lyne Beauregard: where you will also find reconciliations to the nearest IFRS measures. With that, I'll turn the call over to Brian .

Brian Lang: With that, I'll turn the call over to Brian. Brian. Thank you, Lynn. Good morning, everyone. And thank you for joining us on the call today. I'll kick things off by going over the business highlights of the quarter. Rodrigo will then follow up with a brief discussion of the financial highlights. And we'll then update you on our target operating model before we take questions.

Brian Lang: Thank you, Lyne. Good morning, everyone, and thank you for joining us on the call today. And we'll then update you on our target operating model before we take questions. We delivered positive consolidated adjusted EBITDA of $1.7 million in Q3, mainly due to continued strong operating leverage in our U.S. appraisal and Canadian segments. The spread between the 30-year fixed-rate mortgage and the 10-year Treasury yield widened by approximately 10 basis points sequentially, and the U.S. 30-year fixed-rate mortgage was range-bound at around 7 percent, which continued to weigh on refinance volumes.

Brian: Thank you, Lyne. Good morning, everyone. And thank you for joining us on the call today.

Brian: I'll kick things off by going over the business highlights of the quarter. Rodrigo will then follow up with a brief discussion of the financial highlights and we'll then update you on our target operating model before we take questions.

Brian Lang: We delivered solid performance in the third quarter. Consolidated revenues increase 17 percent sequentially to $49.5 million due to growth in all three segments. And third quarter consolidated revenues were up 8 percent year over year. We delivered positive consolidated adjusted EBITDA of $1.7 million in Q3, mainly due to continued strong operating leverage in our U.S. appraisal and Canadian segments. The spread between the 30-year fixed rate mortgage and the 10-year Treasury yield widened by approximately 10 basis points sequentially. And the U.S. 30-year fixed-rate mortgage was range-bound at around 7 percent, which continued to weigh on refinance volumes.

Rodrigo: We delivered solid performance in the third quarter. Consolidated revenues increased 17% sequentially to $49.5 million due to growth in all three segments and third quarter consolidated revenues were up 8% year over year.

Rodrigo: The spread between the 30-year fixed-rate mortgage and the 10-year Treasury yield widened by approximately 10 basis points sequentially.

Brian Lang: This combined with other lingering macro market factors muted some of the seasonal purchase origination volumes we tend to see at this time of the year. We estimate that third quarter U.S. Mortgage market origination volumes increased 25 percent quarter over quarter.

Rodrigo: We estimate that third quarter U.S. mortgage market origination volumes increased 25% quarter over quarter. However, they were down 3% year over year, bottom bouncing in this historically low mortgage origination market.

Brian Lang: However, they were down 3 percent year over year, bottom bouncing in this historically low mortgage origination market.

Brian Lang: Notwithstanding external market forces, we continued to focus on our core operations in the quarter, driving performance, efficiency, and delivering strong operating leverage. Third quarter US appraisal mortgage origination revenues were up 15% quarter over quarter, due to the seasonality of purchase transactions. We posted year-over-year market share increases with four of our top US appraisal clients, and we maintained our top position on lender scorecards. US appraisal net revenue margins held strong at 27.6%, down modestly from the record we posted in the second quarter, and net revenue was up 12% quarter over quarter, mainly due to a seasonal increase in our purchase origination revenues.

Brian Lang: Third quarter U.S. appraisal mortgage origination revenues were up 15% quarter over quarter due to the seasonality of purchase transactions. We posted year-over-year market share increases with four of our top U.S. appraisal clients, and we maintained our top position on lender scorecards. With the change in our revenue mix, net revenue margins were down 40 basis points sequentially, and we posted an adjusted EBITDA loss of $1.9 million compared with a loss of $1.7 million in the second quarter, principally due to a one-off expense recovery that benefited us in the second quarter.

Rodrigo: Third quarter U.S. appraisal mortgage origination revenues were up 15% quarter over quarter due to the seasonality of purchase transactions.

Lyne Beauregard: We posted year-over-year market share increases with four of our top US appraisal clients, and we maintained our top position on lender scorecards.

Rodrigo: U.S. appraisal net revenue margins held strong at 27.6%, down modestly from the record we posted in the second quarter, and net revenue was up 12% quarter over quarter, mainly due to a seasonal increase in our purchase origination revenues.

Brian Lang: With the increase in volumes on our platform and relatively flat operating expenses, we continued to see strong operating leverage in the business and increased our US appraisal adjusted EBITDA 25% quarter over quarter to 5.5 million dollars. Third quarter US title segment revenues were up 5% quarter over quarter as a slight decline in refinance origination revenues was offset by an increase in REO and home equity revenues.

Rodrigo: With the increase in volumes on our platform and relatively flat operating expenses, we continue to see strong operating leverage in the business and increased our U.S. appraisal adjusted EBIT at 25% quarter over quarter to $5.5 million.

Rodrigo: Third quarter U.S. title segment revenues were up 5% quarter over quarter as a slight decline in refinance origination revenues was offset by an increase in REO and home equity revenues.

Brian Lang: With the change in our revenue mix, net revenue margins were down 40 basis points sequentially, and we posted an adjusted EBITDA loss of 1.9 million compared with a loss of 1.7 million in the second quarter, principally due to a one-off expense recovery that benefited us in the second quarter. We launched in two channels with one new client and US title in the third quarter. We continue to progress our discussions with lenders and advance the pipeline with a view of launching new title clients onto our platform. The RFP cycle is active and moving forward.

Brian Lang: We launched in two channels with one new client and U.S. title in the third quarter. We continue to progress our discussions with lenders and advance the pipeline with a view to launching new title clients onto our platform. The RFP cycle is active and moving forward. As most lenders look toward the increasing probability of lower rates and higher refinance volumes in 2025, we are well positioned to help them address that market opportunity.

Rodrigo: We continue to progress our discussions with lenders and advance the pipeline with a view of launching new title clients onto our platform.

Brian Lang: As most lenders look toward the increasing probability of lower rates and higher refinance volumes in 2025, we are well positioned to help them address that market opportunity. Today, 14% of outstanding mortgages have an interest rate above 6%; 24% of outstanding mortgages have an interest rate above 5%; and the inventory of mortgages being written at higher rates continues to climb, growing the pool of potential future refinance candidates. In Canada, revenues were up 30% quarter over quarter, in line with stronger spring market activity. We hit near record net revenue margins of 19% in Canada in the third quarter, and net revenue was up 31% sequentially.

Rodrigo: Today, 14% of outstanding mortgages have an interest rate above 6%.

Brian Lang: Today, 14% of outstanding mortgages have an interest rate above 6%, 24% of outstanding mortgages have an interest rate above 5%, and the inventory of mortgages being written at higher rates continues to climb, growing the pool of potential future refinance candidates.

Brian Lang: In Canada, revenues were up 30% quarter-over-quarter, in line with stronger spring market activity. We hit record, near record, net revenue margins of 19% in Canada in the third quarter, and net revenue was up 31% sequentially. That, combined with a stable cost base, resulted in strong operating leverage, and we increased adjusted EBITDA by 46% quarter over quarter to $1.3 million.

Brian Lang: That combined with a stable cost base resulted in strong operating leverage, and we increased adjusted EBITDA by 46% quarter over quarter to $1.3 million.

Rodrigo Pinto: With that, I'll hand it over to Rodrigo. Rodrigo?

Rodrigo Pinto: With that, I'll hand it over to Rodrigo.

Rodrigo Pinto: Thank you, Brian, and good morning, everyone. Our third quarter results benefited from a seasonal uptick in purchase volumes. However, U.S. mortgage market conditions did not change dramatically in the third quarter, and volumes remain well below pre-pandemic norms. As Brian discussed, we continue to firmly believe that the market will recover, and so we remain focused on the things we can control, ensuring that we do what's necessary to grow our client base and our market share, managing our operating efficiency to drive margin expansion while maintaining a strong balance sheet.

Rodrigo Pinto: Thank you, Brian, and good morning, everyone. Our third quarter results benefited from a seasonal uptick in purchase volumes. However, US mortgage market conditions did not change dramatically in the third quarter, and volumes remain well below pre-pandemic norm. As Brian discussed, we continue to firmly believe that the market will recover, and so we remain focused on the things we can control. And, sharing that we do what's necessary to grow our client base and our market share, managing our operating efficiency to drive a margin expansion, while maintaining a strong balance sheet.

Rodrigo Pinto: Turning to our third quarter financial performance, I'll start with our U.S. appraisal segment, where we recorded revenues of 37.5 million, up to 12% from the same period the last year due to an increase in our market share with our clients. We outperformed the market in the third quarter. Our purchase origination revenues were up 90% year-over-year, compared with an estimated addressable market decrease of 4%. And our refinanced origination revenues were up to 23% compared with an estimated addressable market decrease of 11%. Home equity revenues were up 10% year-over-year and accounted for 23% of the segment's revenue because of solid market share growth.

Rodrigo Pinto: Turning to our third quarter financial performance, I'll start with our U.S. appraisal segment, where we recorded revenues of $37.5 million, up 12% from the same period last year due to an increase in our market share with our clients. We outperformed the market in the third quarter. Our purchase origination revenues were up 9% year-over-year compared with an estimated addressable market decrease of 4%. And our refinance origination revenues were up to 23% compared with an estimated addressable market decrease of 11%. Home equity revenues were up 10% year-over-year and accounted for 23% of the segment's revenue because of solid market share growth.

Rodrigo: And our refinance origination revenues were up to 23% compared with an estimated addressable market decrease of 11%.

Rodrigo Pinto: U.S. appraisal net revenue was 10.3 million for the third quarter, up from 9.2 million in Q3 23. We continue to see solid net revenue margins in the third quarter, with an increase of 10 basis points year-over-year to 27.6%, which is at the upper end of our target operating model range.

Rodrigo Pinto: U.S. appraisal net revenue was $10.3 million for the third quarter, up from $9.2 million in Q3'23. We continue to see solid net revenue margins in the third quarter, with an increase of 10 basis points year-over-year to 27.6%, which is at the upper end of our target operating model range. Third quarter U.S. appraisal operating expenses increased 10% year-over-year to $4.8 million.

Rodrigo: U.S. appraisal net revenue was $10.3 million for the third quarter, up from $9.2 million in Q3'23. We continue to see solid net revenue margins in the third quarter, with an increase of 10 basis points year-over-year to 27.6%.

Rodrigo Pinto: Third quarter U.S. Appraisal operating expenses increased 10% year-over-year to 4.8 million. We posted U.S. appraisal adjusted to be the of 5.5 million, up 15% from the third quarter of fiscal 2023. And adjusted to be the margins increased to 53.2% from the 52% we posted in the third quarter last year as a result of increase in net revenue, partially offset by its light increase in operating expenses.

Rodrigo Pinto: We posted U.S. appraisal adjusted EBITDA of $5.5 million, up 15% from the third quarter of fiscal 2023, and adjusted EBITDA margins increased to 53.2% from the 52% we posted in the third quarter last year as a result of increased net revenue partially offset by a slight increase in operating expenses. Turning to our U.S. title segment, third quarter revenues declined $500,000 year-over-year to $2.1 million. On a year-over-year basis, refinance origination revenues were down by 200,000, or 23%, compared to a marked decline of 5%.

Rodrigo Pinto: Turning to our U.S. Title segment, third quarter revenues declined 500,000 year-over-year to 2.1 million. On a year-over-year basis, refinance origination revenues were down by 200,000 or 23% compared to a market decline of 5%.

Rodrigo Pinto: U.S. title net revenue was 0.9 million, down to 21% from the third quarter last year, and net revenue margins decreased to 43.6% from 45.2% due to a changing revenue mix.

Rodrigo Pinto: U.S. title net revenue was $0.9 million, down 21% from the third quarter last year, and net revenue margins decreased to 43.6% from 45.2% due to a change in revenue mix. U.S. title operating expenses were relatively flat year over year, and we recorded an adjusted EBITDA loss of $1.9 million for the U.S. title segment compared with a loss of $1.6 million in the third quarter of fiscal 2023, principally due to lower net revenue margins.

Rodrigo Pinto: U.S. title operating expenses were relatively flat year-over-year, and we recorded an adjusted loss of 1.9 million for the U.S. title segment compared with the laws of 1.6 million in the third quarter of fiscal 2023, principally due to lower net revenue margins.

Rodrigo Pinto: In Canada, third quarter revenues were flat year-over-year at 9.9 million, as lower market volumes in appraisal and lowering insurance inspection revenues were offset by a year-over-year market share gains with two of our largest appraisal clients. Net revenue was up 7% to 1.9 million, and as Brian mentioned earlier, we posted near-records net revenue margins of 19% in the third quarter as we continue to leverage our platform. on. Canadian adjusted EBITDA was 1.3 million, on par with the third quarter of 2023.

Rodrigo Pinto: In Canada, third-quarter revenues were flat year-over-year at $9.9 million as lower market volumes in appraisal and lower insurance inspection revenues were offset by year-over-year market share gains with two of our largest appraisal clients. Net revenue was up 7% to $1.9 million, and as Brian mentioned earlier, we posted near-record net revenue margins of 19% in the third quarter as we continue to leverage our platform. Canadian adjusted EBITDA was $1.3 million, on par with the third quarter of 2023.

Rodrigo Pinto: In total, third quarter consolidated Matt's revenue increased 8% year-over-year to 13.1 million from improvements in U.S. appraisal. Consolidated operating expenses were up 11% year-over-year to 11.9 million in the third quarter. We recorded consolidated Adjusted EBITDA of 1.7 million, in line with our results in the third quarter of 2023.

Rodrigo Pinto: In total, third quarter consolidated net revenue increased 8% year-over-year to $13.1 million, mainly from improvements in U.S. appraisal. Consolidated operating expenses were up 11% year over year to $11.9 million in the third quarter. We recorded, consolidated, adjusted EBITDA of $1.7 million in line with our results in the third quarter of 2023. However, our cash position decreased in the third quarter due to the timing of collections. We received a client payment of $5 million two days after quarter end, which will be a source of cash in Q4 this year. Our balance sheet remains strong, with no debt and cash of $41.4 million at June 30th, 2024. With that, I'll turn it back over to Brian.

Rodrigo: In total, third quarter consolidated net revenue increased 8% year-over-year to $13.1 million, mainly from improvements in U.S. appraisal.

Rodrigo Pinto: Our cash position decreased in the third quarter due to the timing of collections. We received a client payment of 5 million two days after quarter end, which will be a source of cash in Q4 this year.

Rodrigo: Our cash position decreased in the third quarter due to the timing of collections. We received a client payment of $5 million two days after quarter end, which will be a source of cash in Q4.

Rodrigo Pinto: Our balance sheet remains strong, with no debt and cash of 41.4 million at June 30th, 2024.

Rodrigo Pinto: We've that.

Brian Lang: I'll turn you back over to Brian. Brian?

Brian Lang: Thank you, Rodrigo. Our business delivered solid performance in the third quarter. Revenues were up quarter-over-quarter in all three segments. We benefited from mild seasonal market tailwinds. Market share gains helped bolster our results, and we outperformed the market on a year-over-year basis. We continued to leverage our network to improve year-over-year net revenue margins in U.S. appraisal and Canada. And these more mature businesses delivered strong operating leverage, which allowed us to increase our adjusted EBITDA in these segments. Our strategy has been to position our business to thrive in the peaks and to withstand valleys of the cyclical mortgage market.

Brian Lang: Rodrigo. Our business delivered a solid performance in the third quarter. Revenues were up quarter over quarter in all three segments. We benefited from mild seasonal market tailwinds, market share gains helped bolster our results, and we outperformed the market on a year-over-year basis. We continue to leverage our network to improve year-over-year net revenue margins in US appraisal in Canada. And these more mature businesses delivered strong operating leverage, which allowed us to increase our adjusted EBITDA in these segments.

Speaker Change: Thank you, Rodrigo. Our business delivered solid performance in the third quarter. Revenues were up quarter over quarter in all three segments. We benefited from mild seasonal market tailwinds. Market share gains helped bolster our results and we outperformed the market on a year-over-year basis.

Speaker Change: We continued to leverage our network to improve year-over-year net revenue margins in US appraisal in Canada. And these more mature businesses delivered strong operating leverage, which allowed us to increase our adjusted EBITDA in these segments.

Brian Lang: Our strategy has been to position our business to thrive in the peaks and to withstand valleys of the cyclical mortgage market. And we've been successful in growing the business through a number of these cycles since the company was founded 20 years ago. What remains outside our control is the inherent uncertainty in predicting interest rates and corresponding mortgage market volumes during any given period.

Brian Lang: And we've been successful in growing the business through a number of these cycles since the company was founded 20 years ago. What remains outside our control is the inherent uncertainty in calling interest rates and corresponding mortgage market volumes during any given period. As we outlined in our news release, we are establishing a simplified target operating model that is not time bound with the same net revenue and adjusted EBITDA margin target ranges. There were outlined in our fiscal 2025 targets. Contingent on our mortgage origination volumes, irrespective of market size or market share. Under the target operating model, our U.S.

Brian Lang: As we outlined in our news release, we are establishing a simplified target operating model that is not time-bound, with the same net revenue and adjusted EBITDA margin target ranges that were outlined in our fiscal 2025 targets, contingent on our mortgage origination volumes irrespective of market size or market share. Under the Target Operating Model, our U.S. appraisal segment has the potential to deliver $50 to $65 million in adjusted EBITDA, and our U.S. title business could generate $30 to $45 million in adjusted EBITDA.

Brian Lang: appraisal segment has the potential to deliver 50 to 65 million dollars in adjusted EBITDA. And our U.S. title business could generate 30 to 45 million dollars of adjusted EBITDA. To be clear, our target operating model is not a terminal value of what we can achieve but simply a reflection of the profitability of our business at higher volumes with scale. There is no prescribed limit to the amount of market share we can win within our clients or in the market. We remain confident that the U.S. mortgage origination market represents a significant growth opportunity for our business, and our operations are well positioned for a market recovery.

Brian Lang: To be clear, our target operating model is not a terminal value of what we can achieve but simply a reflection of the profitability of our business at higher volumes and scale. There is no prescribed limit to the amount of market share we can win within our clients or in the market. We remain confident that the U.S. mortgage origination market represents a significant growth opportunity for our business, and our operations are well positioned for a market recovery. We will continue to focus on our model, delivering industry-leading performance and aggressively pursuing market share and new clients, particularly in our title business. With that operator, we'd like to open it up for questions now.

Speaker Change: We remain confident that the U.S. mortgage origination market represents a significant growth opportunity for our business and our operations are well positioned for a market recovery.

Brian Lang: We look forward to leveraging our model to continue to demonstrate the through-cycle earnings potential of our business in line with our focus on scale and market share growth. We will continue to focus on our model, delivering industry-leading performance and aggressively pursuing market share and new clients, particularly in our title business. We will also continue to make decisions that support the long-term success of our company and creating value for all of our shareholders.

Speaker Change: We will continue to focus on our model, delivering industry-leading performance, and aggressively pursuing market share and new clients, particularly in our title business.

Speaker Change: We will also continue to make decisions that support the long-term success of our company and creating value for all of our shareholders.

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

Speaker Change: With that, Operator, we'd like to open it up for questions now.

Operator: Ladies and gentlemen, we will now begin the question-and-answer session. To ask a question, see if you press a star followed by the number one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing any keys. And to withdraw your question, please press this star followed by the number two. One moment, please, for your first question.

Speaker Change: Thank you. And ladies and gentlemen, we will now begin the question and answer session. To ask a question, simply press the star followed by the number 1 on your cell phone keypad. If you are using a speakerphone, please pick up your handset before pressing any keys. And to withdraw your question, please press the star followed by the number 2. One moment please for your first question.

Gavin Fairweather: And your first question comes from the line of Gavin Fairweather with Cornmark Security's piece. Go ahead.

Operator: And your first question comes from the line of Gavin Fairweather with Cormark Securities. Please go ahead.

Speaker Change: And your first question comes from the line of Gavin Fairweather with Cormark Securities. Please go ahead.

Brian Lang: Hey, good morning. Maybe just starting on the appraisal business, the share gains and market out performance have continued to impress here. If you look at the share that you've won lately with some of your bigger customers, curious if you've got the full benefit of that in Q3 or some of that going to flow into Q4 and maybe you can discuss any visibility you have on additional share awards in Q4 and beyond. Great question, Gavin. Thanks for that. So, we did have some strong market share wins. As I mentioned, four of our top customers, we gain market share with.

Gavin Fairweather: Curious if you got the full benefit of that in Q3, or is some of that going to flow into Q4? Maybe we can just discuss any visibility you have on additional share awards in Q4 and beyond.

Brian Lang: Great question, Gavin. Thanks for that.

Speaker Change: Great question, Gavin. Thanks for that. So we did have some strong market share wins. As I mentioned, four of our top customers we gained market share with.

Brian Lang: And so, Gavin, it just depends on when we're granted the market share within the quarter as to how much of it's represented in the quarter, but some of it, of course, was in quarter wins. So, you should see some of that happened in this quarter, but we will see that, of course, roll into the upcoming quarters. Okay. Great to hear.

Brian Lang: And then, just secondly, on the title units in your target model, I guess if we assume a more normalized kind of market backdrop, I'm curious how many tier ones you think you'll need to kind of get live and reaching decent share to achieve that kind of level of volume. Thanks, again, Gavin. So the way that we've taken a look at the model, which we did, as you remember back in 2020, looking out to 2025, and the target that we had, we really had a handful of those top tier ones that we really have on our appraisal business.

Brian Lang: So we did have some strong market share wins, as I mentioned, four of our top customers we gained market share with. And so, Gavin, it just depends on when we're granted the market share within the quarter as to how much of it's represented in the quarter, but some of it, of course, was in-quarter wins. So you should see some of that happen in this quarter, but we will see that, of course, roll into the upcoming quarter.

Speaker Change: Thanks again, Gavin. So the way that we've taken a look at the model, which we did, as you remember, back in 2020, looking out to 2025, and the target that we had,

Brian Lang: Okay, great to hear. And then just secondly, on the title units in your target model, I guess if we assume a more normalized kind of market backdrop, I'm curious how many tier ones you think you'll need to kind of get live and reach a decent share to achieve that kind of level of volunteerism.

Brian Lang: Thanks again, Gavin. So the way that we've taken a look at the model, which we did, as you remember, back in 2020, looking out to 2025, and the target that we had, we really had a handful of those top tier ones that we currently have in our appraisal business. So that's the way we looked at it. And they come in, of course, at different times throughout the model. But that's really when we land at sort of the point, for us anyways, back in 2020 or 2025, we had a majority of them on the platform, but not all of them.

Speaker Change: We really had a handful of those top tier ones that we currently have on our appraisal business.

Brian Lang: So that's the way we looked at it, and they come in, of course, at different times throughout the model, but that's really when we land at sort of the point for us, anyways, back in 2020 of 2025. We had a majority of them on the platform, but not all of them. Okay.

Speaker Change: But that's really when we land at sort of the point for us anyways back in 2020 of 2025, we had a majority of them on the platform, but not all of them.

Brian Lang: Okay, that's helpful, Kyler. And then maybe just last, I think it's been a couple of quarters since we checked in on some kind of purchase title. I know that you're doing some piloting work, and there is some volume that's kind of running through the platform. And I know, you know, one of the challenges has been that a lot of title orders within the banks are kind of decentralized and managed at the bank level. Is there any kind of update that you could provide on that initiative? Are you seeing any changes to how the banks are managing things internally?

Brian Lang: That's helpful, Collar. And then maybe just last thing. I think it's been a couple of quarters. As we checked in on kind of purchase title, I know that you're doing some piloting work, and there is some volume that's kind of running through the platform. And I know one of the challenges is being that a lot of the title orders within the banks are kind of decentralized and managed at the bank level. Is there any kind of update that you could provide on that initiative, or do you see any changes to how the banks are managing things internally?

Speaker Change: Palleting work and there is some volume that's kind of running through the platform And I know you know one of the challenges is being that that a lot of the title Orders within the banks are kind of decentralized and managed at the bank level is there any kind of? Update that you could provide on on that initiative or you seeing any changes to how the banks are managing things internally

Brian Lang: Sure. Well, good question, fairly technical, Gavin, but it's a really good question in that there is a real focus right now with lenders on the US. A lot of it driven sort of from the top down to look at the more underserved communities within the US. And so to your point, they are trying to centralize a good portion of that purchase market, especially focused on the underserved, because they feel they can drive the costs down to a degree for that underserved community. So, as you mentioned, there is a pilot that's ongoing right now in the US around centralizing purchase title.

Brian Lang: Well, it's a good question, fairly technical, Gavin, but it's a really good question in that there is a real focus right now with lenders in the U.S., a lot of it driven sort of from the top down, to look at the more underserved communities within the U.S. And so, to your point, they are trying to centralize a good portion of that purchase market, especially focused on the under So, as you mentioned, there is a pilot that's ongoing right now in the U.S. around centralizing purchase title. It's sort of been our strategy to work with lenders and sort of get ahead of it within the mortgage process so that we could, over the long term, start centralizing more of that purchase market.

Speaker Change: A good portion of that purchase market is especially focused on the underserved because they feel they can drive the costs down.

Speaker Change: to a degree for that underserved community. So, as you mentioned, there is a pilot that's ongoing right now in the U.S. around centralizing purchase title. It's sort of been our strategy, was to work with lenders.

Gavin Fairweather: It's sort of been our strategy was to work with lenders and sort of get ahead of it within the mortgage process so that we could over the long-term start centralizing more of that purchase market. Okay. Good to hear our pass line. Thanks so much. Thanks, Gavin.

Brian Lang: Okay, good to hear. I'll pass the line. Thanks. Thanks, Gavin.

Speaker Change: Okay, good to hear. I'll pass the line. Thanks so much.

Martin Toner: and your next question comes from the line up, Martin Toner, with ATV Capital Markets, please go ahead. Thanks for taking my question. Can you talk, tell us a little bit about the lender you won in title? Sure, I mean, as you know, Gavin, we are continually moving the sales pipeline along, and so we were very focused on the top tier, the tier 1s. And so we've talked about RFPs this year when it comes to breaking in and moving some of that tier 1 pipeline along, but at the same time, the sales team continues to stay focused on tier 2s to 4s, as it makes sense.

Operator: And your next question comes from the line of Martin Toner with ATV Capital Markets. Please go ahead.

Speaker Change: Thanks, Gavin.

Speaker Change: Your next question comes from the line of Martin Toner with ATV Capital Markets. Please go ahead.

Martin Toner: Thanks for taking my question. Can you talk? Tell us a little bit about the lender you won on title.

Speaker Change: Thanks for taking my question. Can you talk, tell us a little bit about the lender you won in title?

Brian Lang: And so within this market, we brought in a player that's in that tier 2 to 4 range. And with someone that we think over the long term, there's definitely some significant upside, but in the current market, we're going to get a small but reasonable amount of new orders.

Brian Lang: Thank you. It can give us any more color on the possible timing of tier 1s. I mean, have there been either like active RFPs out there? If not, when might they happen? Yeah, so the update on that is that there are a couple of RFPs in the market with tier 1s, and they're both in progress. So that, frankly, from our standpoint, is a real positive, and we think that there's a chance that that will help, again, unlock more of those over the next couple of quarters. But as far as timing goes, Martin, we'll have to see; they are RFPs, but as I say, they're active and they are progressing well.

Brian Lang: Thank you. And can you give us any more color on the possible timing of Tier 1s? I mean, have there been, are there like active RFPs out there? If not, when might they happen?

Speaker Change: Thank you. Can you give us any more color on the possible timing of Tier 1s? I mean, have there been, are there like active RFPs out there? If not, when might they, when might they happen?

Brian Lang: Yeah, so the update on that is that there are a couple of RFPs in the market with Tier Ones, and they're both in progress. So that, frankly, from our standpoint, is a real positive, and we think that there's a chance that that will help, again, unlock more of those over the next couple of quarters. But as far as timing goes, Martin, we'll have to see. They are RFPs, but as I say, they're active, and they are progressing well.

Brian Lang: Okay, that's super. Can you talk a little bit to, and you know, you've talked about this before, just wanted you to kind of remind everyone about how much capacity you think you currently have given the rationalization of the cost-based over the last couple of years. Thanks, Martin. Yeah, so again, same story. We appraisal, we see 30 to 40% capacity in the system today, and title, we expect to see three to four times the capacity of the volumes we are seeing today.

Brian Lang: Okay, that's super. Can you talk a little bit about it? And, you know, you've talked about this before. I just wanted to kind of remind everyone about how much capacity you think you currently have given the rationalization of the cost base over the last couple of years.

Speaker Change: And, you know, you've talked about this before, I just wanted you to kind of remind everyone about how much capacity you think you currently have given the rationalization of the cost base over the last couple of years.

Brian Lang: Thanks, Martin. Yeah, so again, same story. Appraisal, we see 30-40% capacity in the system today. And title, we expect to see three to four times the capacity of the volumes we are seeing today.

Speaker Change: Thanks, Martin. Yeah, so again, same story. Appraisal, we see 30 to 40 percent capacity in the system today, and title, we expect to see three to four times the capacity of the volumes we are seeing today.

Brian Lang: Okay, super. And I noticed that in the target operating model, you didn't include anything for corporate costs in the EBITDA numbers. I'm assuming those numbers are before corporate costs. They are. So the idea was, Martin, with the operating model, was to focus on the two main drivers of the long-term EBITDA opportunity within the organization. So US appraisal and US title, and those EBITDAs that flow through the margins and the business, those are sort of stand-alone for both of those segments. So because Canada is such a steady, robust business, and frankly, there's very little deviation. It just sort of grows incrementally every year.

Brian Lang: Okay, super. And I noticed that in the target operating model, you didn't include anything for corporate costs in the EBITDA numbers. I'm assuming those numbers are before corporate costs.

Speaker Change: Okay, super. And I noticed that in the target operating model you didn't include anything for corporate costs in the EBITDA.

Brian Lang: They are. So the idea was Martin, with the operating model, was to focus on the two main drivers of the long-term EBITDA opportunity within the organization, so U.S. appraisal and U.S. title. And those EBITDAs that flow through the margins in the business, those are sort of standalone for both of those segments. If Canada is such a steady, robust business and, frankly, there's very little deviation, it just sort of grows incrementally every year, we've kept that out. And then, as you mentioned, corporate costs right now, that would be an incremental if you were going to get down to our consolidated adjusted EBITDA.

Speaker Change: appraisal and U.S. title.

Speaker Change: And those EBITDAs that flow through the margins in the business, those are sort of stand-alone for both of those segments. Because Canada is such a steady, robust business, and frankly there's very little deviation, it just sort of grows.

Brian Lang: We've kept that out, and then, as you mentioned, corporate costs right now, that would be an incremental if you were going to get down to our consolidated adjustity.

Speaker Change: incrementally every year. We've kept that out and then as you mentioned corporate costs right now that would be an incremental if you were going to get down to our consolidated adjusted EBITDA.

Martin Toner: Thank you very much; that's all for me.

Martin Toner: Thank you very much. That's all for me.

Martin Toner: Great, thanks, Martin.

Speaker Change: Great. Thanks, Martin.

Thanos Moschopoulos: And your next question comes from the line of Thanos Moschopoulos, with BMO Capital Markets. Please go ahead. Hi, good morning. Brian, how do you see the waiver dynamic evolving next time the cycle gets going? So if we were to look at what happened last cycle, would that perhaps be representative? Or might not that be a good indicator, given unique circumstances, such as COVID happening at the time and so forth?

Operator: And your next question comes from the line of Thanos Moschopoulos with BMO Capital Markets. Please go ahead.

Speaker Change: And your next question comes from the line of Thanos Moschopoulos with BMO Capital Markets. Please go ahead.

Thanos Moschopoulos: Good morning, Brian. How do you see the waiver dynamic evolving next time the cycle gets going? So if we were to look at what happened last cycle, would that perhaps be representative, or might that not be a good indicator given unique circumstances such as, you know, COVID happening at the time and so forth?

Thanos Moschopoulos: Hi, good morning.

Brian Lang: Yeah, good question, Thanos. And again, a little bit of a technical question, i.e. Last time that we saw the waiver rates go up, Thanos, I think it was a reaction to the overwhelming amount of volume that came in so quickly and so significantly. So, as we talked about way back when, the lenders were in a bit of a bind just because there's no way they could upgrade their operational business to deal with that type of demand in the market. So frankly, the supply just wasn't there with those big lenders. So the GSE step in, they take some of that pressure off of the lenders.

Brian Lang: Good question, Thanos, and again, a little bit of a technical question, i.e., the last time that we saw the waiver rates go up, Thanos, I think it was a reaction to the overwhelming amount of volume that came in so quickly and so significantly. So, as we talked about way back when, the lenders were in a bit of a bind just because there was no way they could upgrade their operational business to deal with that type of demand in the market.

Brian Lang: So frankly, the supply just wasn't there with those big lenders. So the GSEs step in, they take some of that pressure off of the lenders, and hence we saw the rates spike up fairly quickly. And then over time, as the volume started to run off, not surprisingly, the waiver rates slowly reduced over time. So I think it totally depends on what happens in the market over the next quarters slash years as far as refinance volume building up over that time.

Speaker Change: with with those big lenders. So the GSE step in, they take some of that pressure off of the lenders and hence we saw the rate spike up fairly quickly and then over time as the volume started to run off, not surprisingly, the waiver rate slowly reduced over time.

Brian Lang: And hence we saw the rates spike up fairly quickly. And then, over time, as the volume started to run off, not surprisingly, the waiver rate slowly reduced over time. So I think it totally depends on what happens in the market over the next quarters/years as far as refinance volume building up over that time. If it's a slow build, our view would be that it might be a very slow waiver increment, if any. But if there is a significant spike in the market, then no doubt we'll see something, at least along the lines of the GSE stepping in to help out.

Brian Lang: If it's a slow build, our view would be that it might be a very slow waiver increment, if any. But if there is a significant spike in the market, then no doubt we'll see something at least along the lines of the GSEs stepping in to help out.

Speaker Change: But if there is a significant spike in the market, then no doubt we'll see something at least along the lines of the GSE stepping in to help out.

Thanos Moschopoulos: I'm sorry, great. And then in terms of the heat he locked revenue, how do we think about that as rates come down? It's also a function that I guess what happens with housing prices, is it not? Or what would be your expectation for heat lock volumes with the race going down? Yeah, so again, heat locks is not as sensitive panels to interest rates, right? As originations to your point, it depends how much equity borrowers have in their houses. So house price or house price appreciation will impact volumes. So it's not that correlated to interest rates.

Brian Lang: Okay, great. And then, um, in terms of the HELOC-driven revenue, how do we think about that as rates come down? It's also a function of, I guess, what happens with housing prices, is it not? Or what would be your expectation for HELOC volumes with rates going down? Yes.

Speaker Change: Okay, great. Um, and then, um, in terms of, um, the, the heat lock driven revenue, um, how do we think about that as

Speaker Change: rates come down? It's also a function of, I guess, what happens with housing prices, is it not? Or what would be your expectation for HELOC volumes with rates coming down?

Brian Lang: Yeah, so again, Helox is not as sensitive to interest rates, right, as originations. To your point, it depends how much equity borrowers have in their houses, so how the price or how the price appreciation, you know, will impact volumes. So it's not that correlated to interest rates. And unfortunately, it's a market that you don't have a lot of public available information out there to estimate.

Thanos 2: Thanos 2 to interest rates, right, as originations. To your point, it depends how much equity borrowers have in their houses, so how's price or how's a price appreciation, you know, will impact.

Brian Lang: And then, fortunately, it's a market that you don't have a lot of publicly available information out there also to estimate. So it's very hard to give a number and how you would behave with movement in the mortgage rates. Yeah, correct.

Speaker Change: so it's very hard to give you a number and how you would behave with movement in mortgage rates.

Brian Lang: Okay, fair enough. Okay, I'll pass the line. Thanks.

Thanos Moschopoulos: Okay, I'll pass the line. Thanks. Thank you.

Brian Lang: Thank you.

Speaker Change: Yeah, fair enough. Okay, I'll pass the line. Thanks.

Speaker Change: Thank you. Thank you.

Rob Young: And your next question comes from the line up, Rob Young. We made kind of originality. Please go ahead. Hi, good morning. First one for me is maybe a simplification. You've already answered a little bit of this, but the spreads remain high against the 10 year for, I mean, the 30 year mortgage rates are kind of flat, you'd noted. But my sense is that you're the tier one customers in appraisal, maybe getting a little more aggressive. And so I was, I was wondering if you just dig into that dynamic a little bit. Are you seeing the tier one customers getting more aggressive, engaging more in this market, or is it still flat?

Operator: And your next question comes from the line of Rob Young with ConnecoR Genuity. Please go ahead.

Robert Young: Hi, good morning. The first one for me is maybe a simplification. You've already answered a little bit of this, but the spreads remain high against the 10-year for, I mean, the 30-year mortgage rates, kind of flat as you noted, but my sense is that the Tier 1 customers in appraisal may be getting a little more aggressive, and so I was wondering if you could just dig into that dynamic a little bit. Are you seeing the Tier 1 customers getting more aggressive, engaging more in this market, or is it still Just a little more information there would be very helpful.

Speaker Change: But my sense...

Speaker Change: is that the tier one customers in appraisal may be getting a little more aggressive. And so I was wondering if you could just dig into that dynamic a little bit.

Speaker Change: customers getting more aggressive, engaging more in this market, or is it still flat? Just a little more there would be very helpful.

Rob Young: There's just a little more; there would be very helpful.

Brian Lang: Sure, good question, Rob. So if we take a look at the quarterly reporting from the big banks in the US, the big lenders, I think you'll see that the folks like the Wells, the Chases, the US Bank, Bank of America, the big players, you will see that they had very significantly up quarters. So it's a point in time; for me, it's one quarter; it's not a trend line yet. We hope that that continues over the upcoming quarters. But it looks like, Rob, at least in Q3 of this, our Q3 of this year, that there's definitely been some progress made by tier ones in reclaiming some of that market share.

Rob: Sure, good question Rob. So if we take a look at the quarterly reporting from the big banks in the U.S., the big lenders...

Speaker Change: I think you'll see that the folks like the Wells, the Chases, the U.S. Bank, Bank of America, the big players, you will see that they had very significantly up quarters.

Brian Lang: So it's a point in time for me. It's one quarter; it's not a trend line yet. We hope that that continues over the upcoming quarters. But it looks like, Rob, at least in Q3 of this, our Q3 of this year, that there's definitely been some progress made by tier ones in reclaiming some of that market share. So, as I say, we've got to see what happens over the upcoming quarters, but definitely, there's some progress from our standpoint in moving towards more tier one volume.

Speaker Change: So it's a point in time for me. It's one quarter. It's not a trend line yet.

Speaker Change: We hope that that continues over the upcoming quarters.

Speaker Change: But it looks like, Rob, at least in our Q3 of this year, that there's definitely been some progress made by Tier 1s in reclaiming some of that market share. So, as I say, we've got to see what happens over the upcoming quarters, but definitely there's some progress from our standpoint in movement towards more Tier 1 volume.

Brian Lang: So, as I say, we've got to see what happens over the upcoming quarters, but definitely there's some progress from our standpoint in movement towards more tier one volume.

Brian Lang: Okay, that's great. And I guess maybe a bit of confusion might be around just why the spreads haven't come down if they are seeing more success. Is that just something that happens over a longer period? Is it something that doesn't show up in the way the spreads are calculated? Anything there that you can help me understand why the spreads haven't started to come in if they're getting more aggressive?

Brian Lang: Okay, that's great. And I guess maybe a bit of confusion might be around just why the spreads haven't come down. If they are seeing more success, is that just something that happens over a longer period? Is it something that doesn't show up in the way the spreads are calculated? Anything there that you can help to my understanding of why the spreads haven't started to come in if uncertainty versus uncertainty, Rob. And so even the Fed's announcement yesterday, I think again, should start giving people more comfort that it looks like inflation is slowly coming down. Things are starting to square up for a potential cut.

Brian Lang: Yeah, no, I think there's, I think it comes down to market certainty versus uncertainty, Rob. And so, you know, even the Fed's announcement yesterday, I think, again, should start giving people more comfort that it looks like inflation is slowly coming down, and things are starting to square up for a potential cut. And it definitely looks like that's the type of language that they're coming out with.

Speaker Change: Yeah, no, I think there's, I think it comes down to market certainty versus uncertainty, Rob. And so, you know, even the Fed's announcement yesterday, I think, again, should start giving people more comfort that it looks like inflation's slowly coming down, things are starting to square up.

Brian Lang: And it definitely looks like that's the type of language that they're coming out with. So again, Rob, I think that sort of puts a little bit of a tailwind behind the tier ones, so they can start thinking about, okay, maybe this is the right time for us to start waiting back into the market. So again, what we'll have to see is, you know, it's going to be a very busy fall season in the US market, both sort of economically, financially, and politically. So I think it'll be very interesting to watch. But right now, as I say, it was a good quarter for the tier ones.

Brian Lang: So, again, Rob, I think that that sort of puts a little bit of a tailwind behind the Tier 1s so they can start thinking about, okay, maybe this is the right time for us to start wading back into the market. So, again, what we'll have to see, as you know, it's going to be a very busy fall season in the U.S. market, both sort of economically, financially, and politically. So, I think that it'll be very interesting to watch. But right now, as I say, it was a good quarter for the Tier 1s.

Robert Young: Okay, great. Thanks. I appreciate that.

Rob Young: Okay, great. Thanks. Appreciate that. I know that's a hard question to answer. Maybe next question would be just to try to put a little bit of context into the volume targets you've given in the change in the way you're looking at the targets. Is there a way to put that into context for investors around, is that a good year, a bad year, a middle year? I know there's already some; you already addressed this a little bit on the call, but I'm trying to get a sense of how that maps to the previous market share targets.

Robert Young: I know that's a hard question to answer. Maybe the next question would be just to try to put a little bit of context into the volume targets you've given in light of the change in the way you're looking at the targets. Is there a way to put that into context for investors around the world, is that a good year, a bad year, a middle year? I know there are already some, you already addressed this a little bit on the call, but I'm trying to get a sense of how that maps to the previous market share targets, if there's a way to think of that.

Rob: Okay, great. Thanks

Rob: Appreciate that. I know that's a hard question to answer. Maybe next question would be just to try to put a little bit of context into the volume targets you've given in the change in the way you're looking at the targets.

Speaker Change: Is there a way to put that into context for investors around, is that a good year, a bad year, a middle year? I know there's already some, you already addressed this a little bit on the call, but I'm trying to get a sense of how that maps to the previous market share targets, if there's a way to think of that. Is it consistent with the previous market share targets or?

Brian Lang: If there's a way to think of that, is it consistent with the previous market share targets, or is it dependent on, you know, how do we think about that as looking forward if the market is correcting higher, or I'm just trying to get a sense of how to normalize? Sure. I mean, to be quite honest, Rob, it's fairly straightforward for us. We went back to the 2020 Investor Day presentation, looked at what we laid out in 2025, both from a total addressable market and market share targets that we laid out, and we frankly just did the math on that.

Robert Young: Is it consistent with the previous market share targets, or is it dependent on, how do we think about that as looking forward, if the market is correcting higher? I'm just trying to get a sense of how to normalize.

Speaker Change: Is it dependent on, you know, like how do we think about that as looking forward if the market is correcting higher or I'm just trying to get a sense of how to normalize.

Brian Lang: Sure, I mean, to be quite honest, Rob, it's fairly straightforward for us. We went back to the 2020 Investor Day presentation, looked at what we laid out in 2025, both from a total addressable market and market share targets that we laid out, and we frankly just did the math on that. And as you remember, we set what we thought it was going to be in 2025, a normalized market, i.e., if we look at the average for the last 10 years, and the average for the last 20 years, below that, but what we thought was a reasonable market.

Speaker Change: Sure, I mean, to be quite honest, Rob, it's fairly straightforward for us. We went back to the 2020.

Speaker Change: Investor Day presentation looked at what we laid out in 2025, both from a total addressable market and market share targets that we laid out.

Brian Lang: And as you remember, we set what we thought it was going to be in 2025, a what we call normalized market, i.e. if we look at the average the last 10 years, average the last 20 years below that, but what we thought was a reasonable market, and we just applied the share that we thought we would gain across both the appraisal and title businesses, and those were the units. So they're not terminal units; those are just units on a sort of hypothetical, what we would think of as a more normalized market.

Speaker Change: and we frankly just did the math on that. And as you remember, we set what we thought it was gonna be in 2025, what we call normalized market, i.e., if we look at the average the last 10 years, average the last 20 years, below that.

Brian Lang: And we just applied the share that we thought we would gain across both the appraisal and title businesses, and those were the units. So they're not terminal units. Those are just units on a sort of a hypothetical, what we would think of as a more normalized market. And so we'll see that when the market comes through and when we hit some of our market share targets. Okay, thanks.

Speaker Change: But what we thought was a reasonable market. And we just applied the share that we thought we would gain across both the appraisal and title businesses, and those were the units. So they're not terminal units. Those are just units on a sort of hypothetical, what we would think of as a more normalized market.

Brian Lang: And so we'll see that when the market comes through, and when we hit some of the market share target.

Speaker Change: And so, you know, we'll see that when the market comes through and when we hit some of the market share targets.

Robert Young: Okay, thanks. I'll pass the line.

Operator: Thank you, and once again, if you would like to ask a question, seem to press a star, followed by the number one on your telephone keypad.

Operator: Thank you. And once again, if you would like to ask a question, simply press star followed by the number one on your telephone keypad. And your next question comes from the line of Richard Tse with the National Bank Financial. Please go ahead. Yes.

Speaker Change: Thank you and once again if you would like to ask a question simply press the star followed by the number one on your telephone keypad.

Richard Tse: And your next question comes from the line of Richard Tse, with the National Bank Financial. Please go ahead. Yes, thank you. Just wanted to maybe comment a little bit about the competitive environment and specifically your particularly kind of interested in sort of companies like UWM, who seem to be kind of aggressive here in the market these days. Sure, so Richard, if we take a look at the market, we've talked a little bit in the past around the tier ones and their position in the market versus some of the non-bank lenders. And I think you know, across our portfolio, we've had a real focus on making sure that we're diversified.

Speaker Change: And your next question comes from the line of Richard Tse with the National Bank Financial, please go ahead.

Richard Tse: Yes, thank you. I just wonder if you'd maybe comment a little bit about the competitive environment and, specifically, or are particularly interested in companies like UWM who seem to be, you know, kind of aggressive here in the market these days.

Richard Tsai: Yes, thank you. I just wonder if you'd maybe comment a little bit about the competitive environment and specifically or particularly kind of interested in sort of companies like UWM who seem to be, you know, kind of aggressive here in the market these days.

Speaker Change: Sure. So, Richard, if we take a look at the market, we've talked a little bit in the past around

Speaker Change: The Tier Ones and their position in the market versus some of the non-bank lenders. And I think you know across our portfolio we've had a real focus on making sure that we're diversified. And so for us,

Brian Lang: And so for us, where we sit right now, our revenue is more or less split between the two of them. So, depending on the dynamics that are going on, we've kind of tried to take a lot of that out of the mix for us in particular. Your comment on United Wholesale is right. They have been picking up some market share through this downturn. And, as we've mentioned, I think in some past calls, a lot of what happens in a downturn like this is it becomes very price sensitive. And so there's a lot of sort of under bidding from a price standpoint.

Brian Lang: Where we sit right now, our revenue is more or less split between the two of them. So, depending on the dynamics that are going on, we've kind of tried to take a lot of that out of the mix for us in particular.

Richard Tsai: Where we sit right now, our revenue is more or less split between the two of them, so...

Speaker Change: Depending on the dynamics that are going on, we've kind of tried to take a lot of that out of the mix for us in particular.

Brian Lang: Your comment on United Wholesale is right. They have been picking up some market share through this downturn. And as we've mentioned, I think, in some past calls, a lot of what happens in a downturn like this is that it becomes very price sensitive. And so, there's a lot of sort of underbidding from a price standpoint. And so, I think United Wholesale has benefited a little bit from that. As you know, one of our biggest players in this space is Rocket, which is sort of a head-to-head competitor with United Wholesale.

Speaker Change: Your comment on United Wholesale is right. They have been picking up some market share through this downturn.

Speaker Change: And as we've mentioned, I think in some past calls, a lot of what happens in a downturn like this is it becomes very price sensitive.

Speaker Change: And so there's a lot of sort of underbidding from a price standpoint and so I think United Wholesale has benefited a little bit from that.

Brian Lang: And so I think United Wholesale has benefited a little bit from that. As you know, one of our biggest players in the space is Rocket, which is sort of a head-to-head competitor with United Wholesale. But that's, I mean, that's what I think we've seen, Richard. The tier ones have given up a little bit of share in a market like this that's so price sensitive to some of the bigger non-bank lenders. And I think our view is over the upcoming quarter's years. I think we should see a little bit of that move back in the direction of some of the banks versus the non-banks longer term.

Speaker Change: As you know, one of our biggest players in this space is Rocket, which is sort of a head-to-head competitor with United Wholesale. But that's, I mean, that's what I think we've seen, Richard. The Tier Ones have given up a little bit of share in a market like this that's so price sensitive to some of the bigger non-bank lenders.

Brian Lang: But that's, I mean, that's what I think we've seen, Richard. The Tier 1s have given up a little bit of share in a market like this that's so price sensitive to some of the bigger non-bank lenders. And I think our view is that over the upcoming quarters, I think we should see a little bit of that move back in the direction of some of the banks versus the non-banks over the

Richard Tsai: And I think our view is, over the upcoming quarter's years, I think we should see a little bit of that move back in the direction of some of the banks versus the non-banks longer term.

Brian Lang: Okay. And then I think, you know, most of the consensus can probably agree that is this really a timing thing before things begin to normalize. But as you think about this business strategically, I'm not sure, you know, at a board level, just the executive team. What are you doing in the background? Are you doing in the background? To sort of, I guess, you know, maybe I don't know future proofs, the right word, but potentially open up new markets or drive other efficiencies. You know, beyond, you know, everything we're sort of doing now is just kind of waiting. Like, are there other things that are kind of at work here that we should be aware of that you may be pursuing?

Richard Tse: Okay. And then I think most of the consensus can probably agree that it's just really a timing thing before things begin to normalize.

Speaker Change: Okay, and then I think, you know, most of the consensus can probably agree that it's just really a timing thing before things begin to normalize, but as you think about this business strategically, I'm not sure, you know, at a board level, just the executive team.

Brian Lang: But as you think about this business strategically, I'm not sure at board level, just the executive team. What are you doing in the background? Are you doing anything in the background to sort of, I guess, I don't know if future-proof is the right word, but potentially open up new markets or drive other efficiencies, you know, beyond everything we're sort of doing now is just kind of waiting? Like, are there other things that are kind of at work here that we should be aware of that you may be pursuing?

Speaker Change: What are you doing in the background? Are you doing anything in the background to sort of, I guess, I don't know if future-proof is the right word, but potentially open up new markets or drive other efficiencies?

Speaker Change: beyond everything we're sort of doing now is just kind of waiting. Are there other things that are kind of at work here that we should be aware of that you may be pursuing?

Brian Lang: I'd say, Richard, what we've done in the past few years and that we are definitely doing today, especially as the market has dropped, and the volume has dropped, and the market has suffered a little bit from a volume standpoint, is within the mix of products that we look at with customers, we have expanded those. So, as you've seen from our results, you've seen some good results on HELOC and REO.

Brian Lang: I'd say Richard, what we've done in the past few years and that we are doing definitely today is especially as the market has, the volume has dropped and the market has suffered a little bit from a volume standpoint, is within the mix of products that we look at with customers. We have expanded those. So, as you've seen from our results, you've seen some good results on Helock and REO in a normalized market. Those are things we don't actually spend much time talking about, but we are winning customers in some of those spaces. And on the title side of the business, we're winning customers in those spaces, frankly, because we want to get them into the origination channel.

Speaker Change: I'd say, Richard, what we've done in the past few years and that we are doing definitely today is...

Richard Tsai: Especially as the market has the volume has dropped and the market has suffered a little bit from a volume standpoint is Within the mix of products that we we look at with customers. We have expanded those so

Speaker Change: As you've seen from our results, you've seen some good results on HELOC and REO. In a normalized market, those are things we don't actually spend much time talking about, but we are winning customers in some of those spaces.

Brian Lang: In a normalized market, those are things we don't actually spend much time talking about, but we are winning customers in some of those spaces. And on the title side of the business, we're winning customers in those spaces, frankly, because we want to get them into the origination channel. So I think the team has been very flexible in trying to find opportunities where we can, all with the long-term concept of, of course, getting them into the origination channels.

Speaker Change: And on the title side of the business, we're winning customers in those spaces, frankly, because we want to get them into the origination channel.

Brian Lang: So I think the team has been very flexible in trying to find opportunities where we can all, with the long term concept of, of course, getting them into the origination channels. But I think the team's done a good job both on appraisal and title to make sure that we're covering the right products that our customers want with that long-term focus on origination. So I would say that's sort of the answer around the core business, Richard. What we laid out in 2020 again was some work around data. That's something that, of course, we keep our eye on.

Speaker Change: I think the team has been very flexible in trying to...

Speaker Change: Find opportunities where we can, all with the long-term concept of, of course, getting them into the origination channels. But I think the team's done a good job both on appraisal and title to make sure that we're covering the right products that our customers want.

Brian Lang: But I think the team has done a good job, both on appraisal and title, to make sure that we're covering the right products that our customers want with that long-term focus on origination. So I would say that's sort of the answer around the core business, Richard. What we laid out in 2020 again was some work around data. That's something that, of course, we keep our eye on. It's the third leg of the stool.

Speaker Change: with that long-term focus on origination.

Speaker Change: So I would say that's sort of the answer around the core business, Richard. What we laid out in 2020, again, was some work around data. That's something that, of course, we keep our eye on. It's the third leg of the stool. There is some work that goes on in the background around that. And that's something that we look at out in the future.

Brian Lang: It's the third leg of the stool. There is some work that goes on in the background around that, and that's something that we look at out in the future. But that's really the core focus, I think, for the business right now, Richard, is to make sure that we are deep in our customers. We're continuing to drive the performance that we are, stay at the top of their scorecard. And, as you mentioned, when the market starts rebounding back, we plan to take advantage of all of that.

Brian Lang: There is some work that goes on in the background around that, and that's something that we look at in the future. But that's really the core focus, I think, for the business right now, Richard, is to make sure that we are deep in our customers, we're continuing to drive the performance that we are, and stay at the top of their scorecards. And as you mentioned, when the market starts rebounding, we plan to take advantage of all of that.

Speaker Change: But that's really the core focus, I think, for the business right now, Richard, is to make sure that we are deep in our customers, we're continuing to drive the performance that we are, stay at the top of their scorecard, and as you mentioned, when the market starts rebounding back, we plan to take advantage of all of that.

Richard Tse: Okay, and then, you know, finally, with respect to, uh, the topic everyone's sort of talking about these days, Gen-AI and these LLIs, what do you see, or is there an opportunity for Real Matters, whether it be from kind of incorporating it into your product or using it to sort of gain further operating leverage in the business? Yeah, great.

Brian Lang: Okay. And then, you know, finally, you know, with respect to, you know, the topic everyone's we're talking about these days of GenAI and these LLMs. What do you see or is there an opportunity for Real Matters, whether it be from, kind of, incorporating into your product, or, you know, using it to sort of gain further operating leverage in the business? Yeah, great, great question, Richard. So I would start with the first thing that we have done, which we have now completed for both the U.S. and appraisal U.S. title businesses, is moving those businesses into the cloud, which may sound like maybe not necessarily a very difficult first step, but for us with all the tier ones that we have and all the regulatory and compliance type work that we need to do to get on there, I think we are at the front edge of that in the appraisal and title space, getting both the businesses set up completely on the cloud.

Richard Tsai: Okay, and then, you know, finally, you know, with respect to, you know, the topic everyone's sort of talking about these days, Gen-AI and these LLMs.

Richard Tsai: What do you see or is there an opportunity for Real Matters whether it be from kind of incorporating into your product or you know using it to sort of gain further operating leverage in the business?

Brian Lang: Great question, Richard. So I would start with the first thing that we have done, which we have now completed for both the U.S. appraisal and U.S. title businesses, is moving those businesses into the cloud, which may sound like maybe not necessarily a very difficult first step. But for us, with all the tier ones that we have and all the regulatory and compliance type work that we need to do to get on there, I think we are at the front edge of that in the appraisal and title space, getting both businesses set up completely on the cloud. Because once we're on the cloud, we have access to quite a few AI capabilities with both the likes of Google and Microsoft.

Speaker Change: Which may sound like maybe not necessarily a very difficult first step, but for us with all the tier ones that we have, and all the regulatory and compliance type work that we need to do to get on there, I think we are at the front edge of that.

Richard Tsai: in the appraisal and title space, getting both the businesses set up completely on the cloud.

Brian Lang: Because once we're on the cloud, we have access to quite a few AI capabilities with both the likes of Google and Microsoft. So our team has been doing proof of concepts this past year, where there's, I think, a significant amount of leverage, Richard, both for the operations of the business, but also for us to be able to do things somewhat differently than what we've done in the past. And longer term, of course, this impacts our data play and how we look at our data play longer term, because it gives us a much more, I would say, interesting view on our data, and it actually provides capabilities that would fast track some of the things that we've been thinking of doing in that space.

Brian Lang: So our team has been doing proof of concepts this past year where there's, I think, a significant amount of leverage, Richard, both for the operations of the business but also for us to be able to do things somewhat differently than what we've done in the past. And longer term, of course, this impacts our data play and how we look at our data play longer term because it gives us a much more, I would say, interesting view of our data.

Richard Tsai: And longer term, of course, this impacts our data play and how we look at our data play longer term.

Richard Tsai: because it gives us a much...

Speaker Change: a much more, I would say, interesting...

Brian Lang: And it actually provides capabilities that would fast-track some of the things that we've been thinking of doing in that space. So lots of opportunity in the core business. We're already starting to use some of it in the proof of concept work that we're doing to kind of run the operations of the business. But also, as we look longer term, there's some opportunity with our data play. Thanks, Richard.

Speaker Change: view on our data, and it actually provides capabilities that would fast-track some of the things that we've been thinking of doing in that space.

Brian Lang: So lots of opportunity in the core business. We're already starting to use some of it in the proof of concept work that we're doing to kind of run the operations of the business, but also, as we look longer term, there's some opportunity with our data play.

Speaker Change: So lots of opportunity in the core business, we're already starting to use some of it in the proof of concept work that we're doing to kind of run the operations of the business, but also as we look longer term there's some opportunity with our data play.

Brian Lang: Great, great. Thanks. Thanks, Richard. Appreciate it.

Speaker Change: Okay, great. Thanks.

Operator: Thank you.

Richard Tsai: Thanks, Richard. Appreciate it.

Operator: And those are all the questions that we have. Thank you all for joining.

Speaker Change: Thank you. And those are all the questions that we have. Thank you all for joining. This concludes today's conference. You may now disconnect.

Operator: Just to give today's conference, you may now disconnect.