Doma Holdings, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the DOMA Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star then one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then zero. I would now like to turn the conference over to your speaker for today, Chris Momoni, Investor Relations of DOMA. You may begin.

Thank you, Operator. Good afternoon, everybody, and thank you for joining DOMA's third quarter 2021 earnings conference call. Earlier today, DOMA issued a press release announcing its third quarter results, which is also available at investor.doma.com. Leading today's discussion will be DOMA's founder and chief executive officer, Max Simcoff, and chief financial officer, Noman Ahmed. Following management's prepared remarks, we will open up the call to questions. Before we begin, I would like to remind you that our discussion will contain predictions, expectations, forward-looking statements, and other information about our business that is based on management's current expectations as of the date of the presentation. Forward-looking statements include, but are not limited to, done with expectations or predictions of financial and business performance and conditions and competitive and industry outlook. Forward-looking statements are subject to risks, uncertainties, and other factors that could cause our actual results to differ materially from historical results and or from our forecasts, including those set forth in DOMA's Form 8-K filed today. For more information, please refer to the risks, uncertainties, and other factors discussed in DOMA's SEC filings. All cautionary statements that we make during this call are applicable to any forward-looking statements we make wherever they appear. you should carefully consider the risks and uncertainties and other factors discussed in DOMA's SEC filings. Do not place undue reliance on forward-looking statements, as DOMA is under no obligation and expressly disclaims any responsibility for updating, altering, or otherwise revising any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Additionally, during this conference call, we will also refer to non-GAAP financial measures, including retained premiums and fees, adjusted gross profit, and other measures described in our earnings release. Our GAAP results and description of our non-GAAP financial measures with a full reconciliation to GAAP can be found in the third quarter 2021 earnings release, which has been furnished to the SEC and is available on our website. And with that, I'll turn the call over to Max Simcoff, CEO of DOMA.

Thanks, Chris, and good afternoon, everybody. Thank you for joining us today for DOMA's third quarter earnings call. I spent my opening remarks on our first call as a public company this past August talking about DOMA's growth and how it is primarily driven through the application of cutting-edge machine learning technology to remove giant chunks of friction, frustration, and expense from the historically tedious process of closing a residential purchase or refinance transaction. And I'm going to start today's call with the same focus on that same theme. as demonstrated by three key drivers in Q3. Number one, our accelerating growth in Q3 was driven by our technology. Number two, our outperformance is showing no signs of slowing down. And number three, we are now focused on applying our proven technology to more of the market, particularly the purchase market, as we look to further extend our market share gains in 2022. Now let's examine each of these points a bit further. First, against the backdrop of a declining mortgage market, in particular for refinancings, DOMA's closed order volume grew 39% year over year, with DOMA's enterprise segment growing at almost 400% year over year. As a reminder, DOMA's enterprise segment is where all of our proprietary DOMA intelligence platform and differentiated operations are fully deployed today, and therefore, where the transformational benefits of our technology are most evident. In Q3, Our tech-driven differentiation benefited from continued investment in our product. Specifically, we rolled out important new functionality to our DOMA Docs capabilities that deepens its algorithms to tackle the more complex closing disclosure scenarios. For context, the creation of closing disclosures involved the manual and error-prone work of fee collaboration with lenders and typically represent roughly 20% of the entire closing process. DOMA Docs uses machine intelligence to replace this manual process of delivering closing documents. with a fully automated solution, driving better outcomes for our largest clients. As one example, we were able to drive a 32% increase in transaction processing efficiency for a top five national lender we serve, thanks to the reduction in turnaround time and manual file touches that a set of new computer vision capabilities in DOMA Docs delivered in Q3. We also made further progress in building out new capabilities for our DOMA Connect integration layer, which allows our largest clients to automate order creation and management, These new capabilities improved order flow across key middleware platforms used by our largest mortgage originators, making those connections more seamless and fostering further expansion of wallet share. The new Doma Connect capabilities delivered data elements via an XML endpoint to one of our largest strategic accounts that will enable them to automate a manual review process and drive faster transaction processing. Doma was their first partner to deliver this deep level of integration which had been an outstanding request made of their traditional title and escrow partners for over two years. These new technology capabilities of DOMA Docs and DOMA Connect, building on the strong core foundation of our differentiated DOMA intelligence platform, prove that our technology is a key driver of our growth. To dive a bit deeper now in the second key takeaway from Q3, our outperformance versus the market shows no signs of slowing down. In a quarter where overall market refinancing activity contracted by over 40% year-over-year, according to the Mortgage Bankers Association, our enterprise channel, which is almost entirely refinance-driven, turned in 386% year-over-year closed order growth due to both the addition of several new enterprise customers as well as the expansion of wallet share with a number of our existing enterprise customers. We also showed solid growth in closed local purchase orders versus double-digit market contraction in purchase, according to the NBA. And despite the likelihood that overall volumes for the mortgage market at large are expected to be significantly down in the near term, we remain bullish on DOMA's expected outperformance going forward. This dynamic can best be seen by virtue of the strong growth in our open order volumes, which grew 41% year-over-year in the third quarter. also representing our third consecutive quarter of sequential growth. Finally, moving to the third key takeaway, to extend our proven technology and operating model to more of the market as soon as possible, we are accelerating the pace of key growth investments inclusive of increasing our focus on migrating our local channel transactions to the DOMA intelligence platform, as well as beginning to capture a larger addressable market opportunity in adjacent markets. With respect to the migration of local channel transactions to the DOMA intelligence platform, we are confident that this will enable local realtors and local lenders to see more of the same value proposition that we've been delivering to our enterprise partners with a faster, better, and more affordable closing experience. We started this effort by moving local refinance transactions to the platform this year and are on track to begin moving purchase transactions to the platform later this quarter. This will be a heavy lift for the team over the next several quarters, but the longer-run benefits are expected to be exponential. Additionally, our ability to invest some of the proceeds we raised earlier this year in building out solutions for the two key adjacent market opportunities of appraisal and home warranty will help assure that we can maintain our record of outperformance not only through next year, but well beyond that as we execute on our long-term vision of creating an instantaneous, digital, and delightful closing process for our lender and real estate partners, and especially for our shared homeowner customers. As our team has recently started to put together our investment plan for 2022, we are focused on utilizing a significant amount of the proceeds raised by going public to expand the use and coverage of our DOMA intelligence platform throughout the year ahead and to ensure our continued outperformance versus the overall title and escrow market. Additionally, we continue to develop our approach to enter adjacent markets, such as the $8 billion appraisal market and the $3 billion home warranty market. As we finalize our 2022 plan, We will look to ensure that our scope and pace of investment next year and beyond will set DOMA up to capture a greater share of the residential real estate value chain and innovate in adjacent markets that are as manually intensive as the traditional title and escrow market. Going public and raising the associated proceeds for these investments established our place as a growth business, enabling us to more rapidly morph our local business, expand into new markets more quickly, and launch new product functionality that extend the advantages of our DOMA intelligence platform. We intend to take full advantage of this favorable positioning. Heading into the fourth quarter, we also remain focused on recruiting and hiring world-class talent, not only as the company grows and evolves, but in many cases ahead of our planned growth. We are at the beginning of a multi-year journey to expand and grow our customer acquisition and fulfillment functions, and we believe we will be best served by aggressively recruiting and onboarding uniquely talented individuals to drive our rapidly innovative customer acquisition and fulfillment functions. including many from outside the traditional real estate industry. In Q3 alone, we were able to add a number of critical new hires with diverse backgrounds from some of the leading tech companies on the planet, such as Amazon, Apple, Facebook, Netflix, LogMeIn, and Splunk, among others. In parallel, our recruiting team added resources to ensure that we can continue to hire key talent across the company as we head into another year of growth. As we deepen our talent bench, We are confident that the appeal of working to bring the real estate industry into the future will help us attract the best talent in the market. Our core vision and mission to make the homeownership process instant, delightful, and more affordable resonates strongly with anyone that has been through a closing experience. Due to the strength in our sales pipeline, the continued focus on technology and talent investment, and our accelerated pace of 41% growth in open orders during Q3, We are confident that we will finish the year at or above the high end of our previously stated full-year growth outlook, despite a softening mortgage market. Before concluding my prepared remarks, I want to personally thank each and every one of our DOMA associates across the country for their hard work, positivity, and passion for client service. DOMA is built not only on financial strength and flexibility, but also on an unwavering client centricity that is earning us enduring trust. We would have none of those attributes without our talented associates. who show up to work and prove their grit, selflessness, and determination each and every day. We thank all of our shareholders for your continued support, and we look forward to updating you on our progress in the months ahead. With that, I'll pass it over to Noamon, who can provide more color on our third quarter results and the financial outlook for the remainder of the year. Noamon?