Q4 2025 Real Matters Inc Earnings Call

I'll kick things off today by walking you through our thoughts on the full year, Rodrigo will then provide some color on the fourth quarter. Before I make some brief closing remarks

Our business demonstrated resilience and competitive strength throughout 2025. As we consistently launched, new clients expanded market, share, and maintain, strong financial discipline, which allowed us to deliver solid operating, Leverage

We launched 10 new clients and 1 new channel in US appraisal in Canada. And both these segments continue to generate solid positive adjusted ibido

We expanded our us title business, by adding 7 new clients, in fiscal 2025, including a second, tier 1 lender which marked another major milestone in the evolution of our title business.

We have not let Market headwinds deter us from executing on our strategy and improving our overall competitive position.

We continue to outperform while leveraging the performance Equity. We've built in appraisal to cross-sell and expand our title client portfolio establishing a solid foundation for a scalable business that will Thrive under normalized market conditions.

There's considerable upside for our business as pent-up demand continues to build and the supply of homes on the market edges. Its way back to pre-pandemic levels,

There are currently 51 million mortgages outstanding in the U.S., with over 12 million carrying interest rates above 6%.

This is an increase of almost 30% in the refinance pool from last year at this time.

A 50 basis point reduction in rates can represent hundreds of dollars in savings per month for many of these households once they refinance their existing mortgage.

given today's,

More favorable interest rate Outlook these Dynamics. Clearly underscore the opportunity to unlock significant growth in mortgage origination volume.

American homeowner equity is at an all-time high, with roughly $17.8 trillion in aggregate equity and $11.6 trillion in tappable equity.

Homeowners will continue to look for ways to access these funds to finance important life events.

Additionally, new households will form as younger Generations, pursue home ownership as a means of achieving Financial Security.

A recent consumer mortgage survey indicated that future buyer intent to purchase remains relatively strong, with 40% planning to purchase in the next 2 years. Meanwhile, 50% of existing mortgage holders plan to refinance when rates ease.

Trying to our financial performance for 2025. We reported Consolidated revenues of 170 million in fiscal 2025,

while our us title and Canadian segments achieved double digits year-over-year, growth in both revenue and net revenue for fiscal 2025.

our us appraisal revenues were lower, mainly due to a purchase Market that continues to operate at its lowest level in decades,

Consolidated, net revenue, decreased modestly, to 45 million from 46 million in fiscal 2024, and we posted an adjusted Eva loss of 3.2 million, compared with positive adjusted, Eva of 1.9 million in fiscal 2024.

In US, appraisal Revenue was down.

Market for purchase mortgage, originations.

Fiscal 2024 also included significantly, higher origination volumes from a temporary reallocation of market share with 1 of our leading clients which made 2024 a tough comparable period.

We posted us appraisal net revenue. Margins of 26.3% in fiscal 2025.

Within our Target. Operating model, range of 26, to 28% and the segment recorded, positive adjusted ibida of 13 million.

On the performance front, we wrapped up physical 2025 by extending our track record of holding top positions on lender scorecards.

and we launched 3 new clients in our us appraisal business, including a top 15 mortgage lender

In fiscal 2025, we invested in our U.S. appraisal business. As we prepare for the rollout of the new Uniform Appraisal Data Initiative, which will modernize appraisal forms across the industry.

Our team has been at the Forefront of this multi-year industry-wide change working with lenders, regulators and appraisers to ensure. We continue to deliver the best performance and fulfill our commitment to providing extraordinary experiences for our clients and their customers.

Our platform and ongoing investments in the right technology have solidified our leadership position in the appraisal industry. It's the reason why lenders continue to choose to partner with Solidify.

Our brand has never been stronger.

This year brought significant progress for our us title segment. While volume headwinds continue to weigh on the mortgage industry lenders are investing in capacity ahead of a potential mortgage recovery. This shift along with our investment in sales help Drive momentum and our us title sales pipeline

We launched 7 new U.S. Title clients in fiscal 2025, including a second tier-1 lender and the largest credit union in the U.S.

Thanks to this expanded client base. We closed fiscal 2025, with a daily order, run rate in US title that has more than doubled compared to the start of the year.

During fiscal 2025, our U.S. title segments served as a significant driver of topline growth, as revenues were up 21%, principally as a result of a 41% increase in refinance origination revenues.

Home equity revenues also increased 28% year-over-year due to net market. Share gains with existing clients.

And growth in reverse mortgage transactions.

With the change in our revenue mix and increase in volumes, net revenue margins increased by 680 basis points from fiscal 2024 to 53.1%, and net revenue was up 39%.

We posted an adjusted ebit of loss of 7.3 million compared with the loss of 6.8 million in the prior year, primarily attributable to higher operating expenses incurred to strengthen our sales capabilities.

Outside of this investment in sales, almost each additional dollar of net revenue. We earned dropped to the bottom line.

Even with the recent increase in our title volume run rate, we still have the capacity to almost double our volumes with the existing cost base outside of variable cost increases.

In Canada Revenue was up 12% year-over-year from higher Market volumes and net market share gains with new and existing clients.

We launched a total of 7 new clients in Canada and fiscal 2025, including the largest direct response, home and auto insurance group in the country.

Canadian, net revenue margins held strong at 18.8% in fiscal 2025.

And net revenue was up, 11% from fiscal 2024.

The Canadian segment generated positive adjusted ibida of 4.7 million. An increase of 15%

from fiscal 2024.

With that, I'll hand it over to roderigo to look at the fourth quarter. Rodrigo.

Thank you, Brian. And good morning everyone.

During fiscal Q4, the average 30-year fixed mortgage rates declined from about 6.67% in early, July to roughly 6.3% by the end of September. While the 10-year US Treasury yields decline from 4.4% to roughly 4.2%.

with an exception of 1 week in September, where the 10 year was closer to 4%,

The changing interest rates drove some activity in green Finance, mortgage origination volumes for a short period towards the end of the quarter. Similar to what we experiencing fiscal Q4 last year.

We continue to believe that we have a large and expanding long-term opportunity ahead of us. And so we remain focused on things we can control including continuing to exercise discipline when it comes to our expenses, the timing of investment decisions and how we Scale based on volumes.

We'll do what's necessary to grow our client base and our market share with our clients managing our operating efficiency to drive operating leverage and margin expansion, while maintaining a strong balance sheet.

Learning to our fourth quarter of financial performance. I'll start with our U.S. appraisal segment, where we've recorded revenues of $33.1 million, down 2% from the same period last year.

Revenues from purchase mortgage originations declined. Principally due to a lower addressable Market however revenues from refinance mortgage originations increased due to higher. Addressable mortgage origination volume.

From refinance, transactions.

As Brian mentioned, earlier the comparable quarter, also included higher purchase and refinance volumes from a temporary reallocation of market share from 1 of our leading clients, which returned to Prior levels over the course of fiscal 2025.

Home equity revenues were relatively flat and accounted for 27% of the segments, revenues.

Us appraisal net revenue was 8.4 million for the 4 quarter compared with 9 million into 424 and net revenue. Margins decreased by 120 basis points. Mostly due to the distribution of transaction volumes, as it relates to geographies clients and product mix.

Fourth quarter us appraisal operating expenses. Decreased 8% year-over-year to 4.5 million.

We posted us appraisal adjusted DBA of 3.9 million down 4% from the fourth quarter of fiscal 2024. However, adjusted ebida margins increased by 110 basis points to 46.3% compared with the fourth quarter last year, as the decreasing that Revenue was offset by lower operating expenses.

Turning to our us title segment, fourth quarter revenues, increased 18% year-over-year to 2.9 Million and refinanced. Origination revenues were up 17% principally due to net market. Share gains with existing and new clients and higher. Refinance, mortgage origination volume.

In the U.S., net revenue was $1.6 million, up 28% from the fourth quarter last year. Net revenue margins increased to 54.2% from 49.8% due to higher refinance origination volumes.

Us title operating expense were up 16% year-over-year primarily due to additional hires to accelerate to the deployment of new title clients. And we recorded an adjusted DBA loss of 1.7 million for the US title segment compared with a loss of 1.6 million. In the fourth quarter quarter of fiscal 2024,

If we excluded the investment we made in our title sales cap capabilities. The vast majority of the incremental net revenue, we recorded in the quarter, would have flow to the bottom line.

In Canada, fourth quarter revenues, increased 6% year-over-year to 10 million due to higher Market, volumes and net market share gains with new and existing clients for Appraisal Services.

Insurance inspection revenues were relatively flat.

Net revenue was up 5% to 1.9 million and adjusted ibida increased to 1.3 million from 1.2 million in the fourth quarter of fiscal 2024.

In total 4 quarter, Consolidated, revenue, and net revenue, were relatively flat compared to the prior year at 46 million and 12 million respectively as increased increased revenues from our us title and Canada. Segments were partially upset by a decrease in revenues of our us appraisal time.

We recorded consolidated adjustability of $0.1 million, down from $0.6 million in the fourth quarter of 2024.

from the balance sheet with no debts and cache of 40 million at September 30th 2025

The decrease in our cash balance from prior quarter was mainly due to timing of Collections and changing working capital, which we expect to normalize in the first quarter of fiscal 2026.

With that, I'll turn it back over to Brian. Brian.

Thank you, Rodrigo.

Throughout fiscal 2025, the company continued to execute our strategy by focusing on performance.

Market share expansion, new client growth and maintaining strong financial discipline.

Our U.S. appraisal and Canadian segments consistently delivered positive adjusted EBITDA and fiscal 2025, reflecting their resilience and operational efficiency amid market headwinds.

These segments, continue to contribute stable, earnings underscoring, the strength of our business model.

Additionally, the US title segment achieved a return to growth during the year.

This positive momentum marks a meaningful step forward on our path toward reaching our Target operating model.

The program in US title coupled with continued discipline and execution across our business units position us. Well, for future growth and profitability.

Heading into fiscal 2026. We are optimistic about the potential for growth from pent-up demand in an increasingly Stable Market environment.

With more than 12 million mortgages outstanding at interest rates. Exceeding, 6%, the pool of right refinance candidates has increased by nearly 30% in the last year alone, and with sustained consumer demand for housing and an improved interest rate forecast.

Market conditions, for our business are becoming increasingly positive.

We see clear potential to unlock significant growth in mortgage origination volumes.

As our business scale.

More transaction volumes flow through our platform. We expect to expand our margins and profitability in line with our Target operating model.

Our team remains focused on increasing market share with our existing clients by optimizing scorecard performance and pursuing new client relationships, especially in U.S. title.

Our business was built to thrive in the peaks and to withstand valleys of the cyclical mortgage market.

And we look forward to the opportunity that lies ahead with that operator. We'd like to open it up for questions now.

Thank you as a reminder, to ask a question. Please press star, 1, 1 1 on your telephone and wait for your name, to be announced to withdraw your question. Please, press star, 1 1 1, again please, stand by while we compile the Q&A roster,

And our first question comes from Stephen, Michelle of BMO Capital markets, your line is open.

Hey, thanks for taking my question. Um, so on past calls. There's some optimism about, uh, the more traditional lenders. Getting a bit more aggressive in taking share. Um, how is that playing out right now? Are you still optimistic that they're, you know, they in your clients are going to be, uh, taking share from the non-traditional lenders.

Stephen, thank you. Appreciate the question. So I think there's a couple of Dynamics going on in the market right now which gives us optimism that a bunch of the larger banks will definitely continue to, uh, to I think make an impression. So the first 1 is as you, you heard us mention the spreads are definitely coming down, so that for us, uh, sort of gives the um, gives that there's going to be impact. Uh, by the rates coming down, people are seeing more confident in the market.

Uh, so I think that's sort of piece 1. Uh, piece 2 is we can see when we look at the rates that are posted uh, over the last couple of months. We are definitely seeing a more aggressive position by some of the the really big Bank lenders in the US. So I I think both the spread coming down sort of more much more normalization of the spread when we take a look uh, forward, I think has an impact a lot

Along with the fact that a lot of those Tier 1, big banks are starting to set, uh, step into the market and get more aggressive on, uh, on their rates.

Okay, thanks to the color on that. Um, I just in the same vein. Now, let's talk about your us title pipeline. Um, do you get the sense that, uh, the companies in that pipeline are more or less willing in the current environment to, uh, take on a new vendor, like yourself? Like I'm just wondering how the the temperatures changed over the past 3 to 6 months.

Thanks. Well well I think sort of linked somewhat to to uh the conversation around spreads, so spreads, I think there's a normalization happening there so that for us says that there's more optimism around uh, the market.

That along with uh we've had another rate. Uh, cycle like we had last year in September, where we had the rates come down.

And so, I think last year that was very helpful for us to even because I think it unlocked some of the sales potential in the market, where lenders started. Realizing that if rates do move and volumes clock up, they're going to need capacity in order to, uh, deliver against those. We've had sort of the same

Reflection of that increase in volume, this past September. So we had another bump, um, in in volume, it was rates came down a chunk and volume did go up. Um, and so I think that again, reinforced to blenders that when the rates come down there is that, uh, optimism around the refi pool, which as we mentioned, has grown 30% year-over-year. So, we're now up to 12 million above 6%. I think all of those elements, uh, definitely lead into lenders being a lot more confident now than they were 12. 18 months ago on on rates. At some point coming down, the volume coming back in the market. So, we've seen the sales pipeline move. We've seen more activity in the sales pipeline. We've been able to move deals forward with more Pace than we did in, uh, in 2024 and our view is that that will continue. Um, and we're seeing that happening now, as we move into 2026,

All right, good to hear that you've been able to move some of those deals forward. Um, my final question it's uh, more for Rodrigo. It looks like there was a rather large receivables, build in the quarter. Is there anything to call out there and will it be a pretty quick online?

I see, but yeah, I know thanks for the question. No nothing. Nothing unusual there. That's a regular collections of accounts receivable. Uh, you know, subsequent to the quarter, I would say immediately after the quarter a large collection was made. So no there's nothing unusual. Um,

Relating to to, to the receivables and cash balance.

All right, good to hear. Um I'll pass the call or pass the line.

Thank you. Thank you.

Thank you.

And our next question comes from Robert Young of canaccord genuity, your line is open.

Hi, good morning. Uh, you noted the uh volume increase in uh title with the new Tier 1. Like you said, it's up to 2x zero over a year. Um, how do you think about that increase relative to where your expectations were on the ramp of this Tier 1?

And then I'm curious about how you think about the near-term. Um, just given the rates ticking up and the fact that title does lag appraisal so are. Should we expect a Slowdown in in title similar to what we're seeing in appraisal, uh, you know, as the lag as moving at lag or maybe just, you know,

Some thoughts around those items.

Sure, so I think, uh, good morning Rob. So I think the first, uh, area you were talking, you were asking about was around the ramp up of our second, tier 1,

So I I would say that it launched a little later than we would have liked. And so we're actually very happy with the ramp up, um, as, as, you know, usually there's a, a quarter or so of slow ramp up as we get going. Uh, we definitely have seen this, uh, lender ramp up with a good amount of pace. They are also being reasonably aggressive in the market from a, uh, a rate standpoint. So, uh, we're very happy with the, the volume that's coming in from that, that Tier 1. Now, that only started happening in the very back, end of the uh, the quarter. So you're going to see some of that Revenue come through in q1. Um, and and as I say, I think we're in very good shape. Our plan of course, is to get them up to the market, share that we expect, uh, in the next couple of quarters. And so we're very optimistic about the, the volume ramp with that particular customer. Um, I think also,

Also importantly, is the look forward on some of the customers in the pipeline. We've got a handful of both another Tier 1. We've got a significant server as well as some other top 50s that are currently moving to implementation.

And title from a purchase and refi standpoint or that this lag piece and and Tiny. I know title lags and so give me a scene. The weakness and Appraisal is that something that we should expect rolling into title?

No Rob, so I'll jump on that 1. No, no, no, not really Rob. It's, uh, again, the I would say they slow down in appraisal, is more related to the purchase Market where it doesn't impact the title side. Uh, however, to your point, the changing rates, yes, there's a little lag there, but we'll be within the quarter, right? The, the rates didn't fluctuate for such a long period of time that would cross quarters. So within the quarter you should see similar trend from trend, from a refinance perspective for both, you know, but appraisal has the the impact of uh purchase

okay. And then my second question, this might be a tricky 1, but if we look back to last year, we saw a similar sort of a volume bump and then there was a cooling off and it seems, you know, very similar at a high level to what we're seeing right now. And I, I was curious, if you just sort of, maybe unpack it a bit for us to tell us what's different or the same this time around.

Well, we're early in the quarter Rob, so it's still a little hard to do a, a very direct comparison. Uh, but to your point, we, we have seen something quite similar, which is, you know, when the rates come down and they didn't come down that far as, you know, they came down sort of in the high fives. Um, we definitely see a good bump in, uh, in volume. And so, you know, from our standpoint that really underlies the opportunity, which is the rate does not have to come down very far, right? So relative off of the 6.3%, we're at. Now, when you get down 50 basis points, you start seeing volume, uh, moving up. So I think that's what we are expecting. Their there has been a, because we're back up at 6.2 6.3. There's a little bit of a, uh, reconfirming to where we were before September. But when we look longer term at the business, uh, you know, if, if there is that movement, which we'll have to see going into next year again.

What we're going to have to see what happens.

Uh, what we do know is that there is a lot of focus on this as you know, in the US around affordability. Uh you've heard all the sort of recent ideas on how we might be able to to, to do that. Um and the big difference now is there's even a larger pool uh of refinance candidates than there were were were last year. It's it's up 30%, so you know, we're optimistic that pool's bigger.

Uh, there's, there's we see now the movement of the opportunity when the rates come down, and it doesn't have to come down significantly. Uh, so I think we could see some real traction in the next few quarters again, depending on what happens with rates.

Okay. Thanks and lots for last 1. Sorry. If I missed it, but I, I I'm not sure if you addressed uh, or talked about um, uh, rocket and its, uh, acquisition of Mr. Cooper, I think that happened that closed a little faster than expected and is curious to be given. Give us an update on, you know what your outlook is, uh, with rocket and uh, the upside from, you know, Redfin and and Mr. Cooper, I'll pass the line.

Sure. Yeah. So I I think it's uh, a positive signal is that the deal did get done fairly quickly, so I think they were targeting end of year but that's now been closed. So they feel that uh, that that's moving. We've we've been told to expect to see some of the Mr. Cooper, origination volume

Uh over the next quarter or 2. So we're not exactly sure when we're going to get that robbed but good news. There's there's definitely some volume there. Uh Mr. Cooper, they're big volume is in the servicing side of their business and so again we'd need to see some some rate movement there for that to start unlocking. But they, they are 1 of the biggest, if not the biggest, uh, serer in the US now, they've moved into rocket. So there's definitely, uh, going to be a significant opportunity there again, that's titled a little

A little bit more to rate. So you know, if we look long-term on our relationship with Rocket, we've got a fantastic relationship with them. We've got really strong market share, and over time, that will be a real asset for the business.

Thank you.

And our next question comes from Martin toner of ATB Capital markets. Your line is open.

Thanks very much for taking. My question, can you address?

um, the doubling of volumes implies for the potential for 2026,

Um, secondary question. Uh, how much of appraisal is currently refi?

And how much of that?

Strength that we're seeing.

um, can be, uh,

Uh, sort of crossover from there or is it just all uh, share with with customers?

Uh, okay. So let me address the first question which is around uh title growth and uh, the impact of title growth in the business.

So, I think probably, um, why don't we do a quick look back, Rob? So, if we look back at the start of 2025, and then we look at where we ended.

Uh you know, we were running about 2 million dollars of Revenue um on per quarter on title, we're now closer to 3. So I think we ended uh, Rodrigo 2.9 Million.

So, you can see that as we increase over the year and got to our doubling of, uh, volume coming in. We were able to significantly increase, uh, our overall Revenue. So the our view is that with the

Uh, the pipeline that I talked about. Um, I think we're looking at definitely doubling that volume again, in the next few quarters. And so again, I think you should see the same type of Dynamics flow through through our margins through through, to the bottom line. So uh, I think we've got good historical, you've seen good growth. Uh, we expect that to continue uh, in the upcoming uh, quarters. And so I I I think you'll see in 2026, some strong Returns on our appraisal business. And as we mentioned, I mean, 1 of the big Dynamics is because of this incremental capacity that we've got that, you should see a significant amount of that net revenue flow to uh, to the bottom line.

So that's that's I think how we'd look at title on appraisal, uh, the question around proportionality. So right now about 2/3 of our originations

Are from uh, the purchase side.

And 1/3 of originations is on refinance.

So I mean our view I think over time is well we'll have to see. Of course what happens in the market purchase as you know has been a real challenge this year so we're flat to down uh from a market standpoint, good news refinances up. So again it depends on what happens as we go forward. Of course, refinance is a slightly bigger proportion of our book this year from last year because refinance grew. Uh but depending on on how refinanced does this upcoming year, uh, we could get

Yeah, you know, that could be a higher proportion of the overall book and just as a reminder, um Martin it doesn't matter for us whether we're getting a purchase or refinance transactions, it all uh, has the same economics around it. So we'll just have to see again we're not going to call the Market but uh, I assume that if refinance goes up and purchase sort of stays where it is or or only goes up a little bit, then refinance will be a higher proportion of our book.

Awesome. Thank you Brian. Um, so

Purchase.

Was has is all like some of the headwinds and purchase like are well known by everybody. Um but it's already down Market down.

You know, over the last say, 2 years um, what's your view on that?

Like that business from here. Can we like it? Could we get a turn?

Do you think 2026 will be a tough year for purchases?

Well, I think the only thing I can really comment on Martin is there is a lot of focus on affordability in the US right now. So you've you've heard all the uh, potential Solutions. So outside of the initial view that the rates need to come down and the FED needs to do something. We've now got 50-year mortgages and portable mortgages. Uh, so there's there's lots of focus on affordability. All of that, by the way, would be beneficial for us. So, you know, we have no idea whether any of

That can actually move forward but that focus on trying to get more purchase activity, trying to get more new homeowners into homes. All of that is, is a potential positive Tailwind for the business. I just don't know. I can't call Market, uh, Market exactly what's going to happen in the market, uh, this upcoming year. But, you know, we are right now at historic lows in the purchase market. So our view is we should be moving in the right direction this upcoming year, but I can't tell you exactly how that's going to move.

Uh, that's great. Appreciate all that. That's it for me.

Thanks Martin.

Thank you. And as a reminder, if you have a question, please press star 1 1.

And our next question comes from Richard C of National Bank, your line is open.

Hi everyone. This is Amy Lee speaking on behalf of Richard at national. Uh, so you mentioned on the growth side, brain on the second tier 1 and you have quite a robust pipeline uh to um last quarter, you mentioned on the capacity side, you're running around 30%. Seeing yourself get to about 2 times capacity and title instead of maybe 3 to 4 with the potential uptick in volume over the next year. How might we think about any Investments you might need to take to handle all this?

Rodrigo.

Hi Amy. Uh, thanks for the question. So, yes. Uh, the, the the capacity in appraisal is to always stays at about the 30% that we we mentioned before, uh, in title. Uh, yes, we, we double our orders. So, as we said before, we use, we, we had 3 to 4 times capacity, in title. If you take that double of the order orders, we should be. We we are close to 75 to 100% capacity still. So we, we are close to we can double another time. Uh, the volumes in title and and

We feel good about not increasing our costs, you know, substantially or at all. Um but just as as I've reminded there's portion of our costs that is variable that increases with volume as well, right? So um but yes that's that's how we are looking at capacity at this point.

Great, thanks for that Clarity. Um, and you mentioned briefly, so the current Administration there seems to be a lot happening. A lot of Shifting in the regulatory environment, some like, perhaps Tailwind with the 40 year, fixed mortgages, but although also maybe banking deregulations has any of that flow into an impact into your markets.

Unfortunately, not yet, Amy, so we're on standby. Um, but as I say, I mean, you actually mentioned some of the big lenders also reaching out and talking about easing regulatory constraints and some of the challenges around that with some very specific.

Potential impacts on rates if they were able to do that. So you've got that whole Lobby effort going on from the big lenders.

Uh, and then to your point, they, they're now starting to throw out a whole bunch of ideas around affordability. Uh, and there's there's going to be I assume continued pressure in the next uh quarter or 2 around uh trying trying to bring down the interest rates. However they think they might be able to do that. So all that Focus for us,

Frankly, as I say, it's all generally positive. I don't know, Amy.

Fruition in the next quarter or 2. But, uh, when I think long term about the business, I mean, all of that would be, uh, positive, it would drive more purchasing opportunities, uh, for the market, as well as, uh, if they can get at some of the rates challenges, it would definitely D drive up, the, the refinance Market

got it. Thank you.

Thank you. This concludes the question and answer session and also today's conference. Thank you for participating, and you may now disconnect.

Thank you.