Doma Holdings, Inc.

Good day. Thank you for standing by, and welcome to DOMA's fourth quarter and full-year 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 a question during the session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to Beatrice Bartolome, Head of Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, everybody, and thank you for joining DOMA's fourth quarter and full year 2021 earnings conference call. Earlier today, DOMA issued a press release announcing its fourth quarter and year-end results, which is also available at investor.doma.com. Leading today's discussion will be DOMA's founder and chief executive officer, Max Simcox, and chief financial officer, Noman Ahmad. 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, domus expectations or predictions of financial and business performance, and conditions in competitive and industry outlooks. 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 file 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 may appear. You should carefully consider the risk 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 or 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 the 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 fourth quarter 2021 earnings release, which has been furnished to the SEC and is available on our investor website. And with that, I'll turn the call over to Max Simcoe, CEO of Doma.

Thank you, Bia, and a warm welcome to you on your first earnings call as a key new member of the Doma team. We're really excited to have you here. Today, we will cover three main themes. One, we have continued to outperform the industry with our growth. Two, our continued outperformance was driven by our differentiated machine intelligence-driven platform to help close residential real estate transactions. faster, at higher quality, and more affordably. And three, our overall results in 2021 have helped us crystallize a clear set of prioritized investment areas for the business, which we will be executing in 2022 to help accelerate our vision of enabling instant digital homeownership experiences. With respect to theme number one, our continued outperformance of the market. In Q4, we again delivered industry-beating growth in a now decidedly rising rate environment for the real estate sector. This marks our third consecutive quarter of outperformance, which we attribute to the ongoing adoption of our DOMA technology by customers and referral partners alike. Our Q4 performance also ensured that we delivered full-year retained premiums and fees at the high end of our most recent 2021 guidance and meaningfully exceeded our adjusted gross profit expectations for the year. The second theme for today is what continues to drive our strong results. Our value proposition is better, faster, more affordable home purchase or refinance closings enabled by an industry-leading machine learning platform. We are better because our technology delivers fewer manual steps to our referral partners and customers. This reduction in manual steps creates a superior customer experience. We are faster because in using technology to instantly resolve key action items in the real estate closing process, we take the risk out of key decisions and get people to the closing table in a more expeditious way. We are more affordable because we are driving the cost of the transaction down, part of which reduces the cost of closing to homeowners and part of which increases our own gross margins. Our value proposition is best evidenced by our continual triple-digit growth rates in the DOMA enterprise channel, where our DOMA intelligence platform is predominantly deployed. And since we still only occupy a relatively small percentage of the market via our core title and escrow offering to enterprise accounts, the room to continue growing and outperforming in this proven corridor remains abundant as we head into 2022 and beyond. As we called out late last year, we are also increasingly focused on broadening the use and coverage of our proven DOMA intelligence platform to more areas of the market. The nearest term manifestation of that involves expanding our core machine intelligence-powered title and closing offering into purchase transactions within our local channels. I am now pleased to share that this was yet another area in which we delivered on one of our key commitments in 2021 as we successfully opened our first purchase transactions on the DOMA Intelligence platform in December. The successful application of our technology on the purchase side lines up well with the overall mortgage market backdrop, which is now experiencing a rapid decline in refinance volume. This ties into the third key theme I want to discuss today, which is that because our technology works, and we continue to have strong conviction in the opportunity in front of us to grow market share, we have now defined specific prioritized areas of investment that we will accelerate in 2022 to enable us to secure our leadership position in the industry, accelerate our growth potential, and add even more certainty to our path to profitability. I'll now provide some additional detail on what is driving these three big themes. After that, I'll turn the call over to Nomon, who will provide more detail on our Q4 financials, as well as our outlook and guidance for 2022. With respect to our outperformance of the market, in the fourth quarter, when the overall mortgage market contracted by over 43% year over year, according to the Mortgage Bankers Association, in large part due to rising interest rates, DOMA grew our retained premiums and fees, or RPF, by 24% year over year and delivered adjusted gross profit of $25 million, down 9% year over year. For the full year, DOMA grew RPS by approximately 37% year-over-year to $260 million, and adjusted gross profit grew approximately 24% year-over-year to $114 million. As a point of reference, this far exceeded the initial outlook we shared with the market last March, calling for RPS of $226 million and adjusted gross profit of $89 million. Our enterprise channel continues to lead our growth story. This is where we have fully deployed our DOMA intelligence platform and differentiated technology, and which, as a reminder, is driven by refinance volume today. We drove market share gains and closed order growth of nearly 300% year over year in enterprise in Q4, and for the full year, we grew the size of this channel five times based on closed orders, while the market for refinances contracted by 27%. This growth in Q4 was propelled by the addition of several new enterprise referral partners that included another top 10 national mortgage lender, a leading provider of innovative home equity products, and a technology-led non-bank originator. In addition, we saw wallet share expansion with a number of our existing enterprise accounts. For example, a top five lender who launched with DOMA in Q2 last year saw 25% faster title cycle times with DOMA than their prior best performing title and escrow vendor. This superior performance drove them to increase DOMA's transaction volume twice in the span of a few months in Q4. Another lender partner has been able to leverage DOMA's instant title technology to streamline their prioritization and processing in order to power a targeted 15-day close, prompting them to expand their volume with DOMA to 2x more states in Q4 after just six weeks post-launch. Some of the wallet share gains within the enterprise channel were also driven by the expansion of the DOMA intelligence platform to three more states, bringing our coverage of the residential real estate market in the United States to approximately 83% based on gross written premium. In our local channel, we also delivered closed order volume in Q4 that outperformed the residential real estate market per the MBA. This outperformance was driven principally by 4% year-over-year closed order growth in purchase transactions at a time when the overall purchase market fell 8% year-over-year. Keep in mind that in the local channel, we remain in the earlier stages of incorporating the full capabilities of our DOMA intelligence platform, and as such are more limited in our ability to drive outsized growth. As you will recall, in late 2021, We embarked on a transformational effort to bring local purchase onto the DOMA Intelligence platform. I'm thrilled to highlight once again that we opened our first purchase transactions using DOMA Intelligence in December 2021. Expansion of this offering will be our core focus this year. With respect to some of the detail behind our second core theme, our differentiated machine intelligence technology helped us gain further lead in Q4, benefiting from continued investment in new product advancements. Specifically, we added more transparency for co-signers within our DomaClose product, which allows homeowners to review and e-sign about 50% of documents prior to the in-person signing, making the overall experience less daunting and stressful. Additionally, we expanded the overall use of DomaClose on our lender partners, notably launching the product with one of the top technology-led lender partners we work with. We also expanded our machine learning-driven DomaAstro product capabilities to to bring the completely touchless processing of closing disclosure documents to two of our largest referral partners. Within DOMA Escrow, we also added new capabilities for payoff parsing, policy automation, and automated funding disbursement that all help to further expedite the final stages of closing and drive faster payouts to the parties involved. Our successful deployment of our DOMA intelligence platform in the enterprise channel and our growth and platform expansion initiative to the local channel is a good transition to the details behind our third key theme, our acceleration of investment in several key near-term strategic initiatives, using the benefit of proceeds raised when we went public in July of 2021. Our top key strategic initiative for 2022 is an acceleration of investment to enable the expansion of our differentiated product and capabilities for home purchase. In the coming year, consistent with what we previewed on prior earnings calls, you can expect these accelerated investments to be most evident in customer acquisition and go-to-market, migration of purchase transactions to the DOMA intelligence platform, and delivery of new product functionality. Our second highest priority for 2022, informing how and where we invest ahead of planned momentum, is expanding into the appraisal and valuation market to build out broader capabilities for a growing set of lenders and real estate professionals who have expressed a specific desire for a single product to eliminate the friction of both title and appraisal. I'll now provide a bit more color on each of these two key areas of investment. With respect to our first priority, bringing DOMA to purchase, we will be accelerating our investments in our purchase go-to-market plan, particularly in our efforts to acquire new customers. In 2022, we will be making investments in a number of key areas, specifically sales and marketing, that will help get our differentiated offering in the hands of the local business in a more meaningful way. These customer acquisition investments go hand-in-hand with the migration of more transactions onto DOMA Intelligence. bringing more of our local purchase volume onto the Doma intelligence platform is a transformational effort, but also comes at an opportune time. This acceleration will require a number of upfront costs, but also drives undeniable longer term benefits. This trade off in the short term will help us drive faster growth in our local channel, which in turn adds more certainty on our path to profitability. So we're looking forward to deploying the necessary capital in that area. Finally, As it pertains to the new adjacent markets across the residential real estate value chain, we began deploying capital to explore and validate our hypotheses and expansion opportunities in Q4, which quickly helped us hone in on appraisal as the most important key adjacency for us to invest in expanding into in 2022. We aren't yet ready to provide any specific timelines in this area, but I can confirm that we are actively building infrastructure to enter this market. Additionally, Our investment focus in home warranty, as well as a few other key areas of opportunity in removing friction from the process of buying or selling a home, have taken further shape and we expect to better articulate our approach to these other potential adjacent opportunities as they develop. In closing, although the macro economy has become more challenging for real estate companies to operate in, the trajectory of our business in 2021 demonstrates that we have a strong path for continued growth. Additionally, In a rising rate environment, our customers become more sensitive to expenses and speed. We believe that as the market tightens, we will pick up further market share as our value proposition becomes even more attractive to lenders and real estate professionals who are looking to reduce costs. Because of this, we have confidence that now is the best time to invest meaningfully in the key strategic areas discussed. We remain confident that the robust growth and continued evolution of our business will continue propelling us forward on our path to profitability and and position us to deliver long-term sustainable value for our shareholders. I will now turn the call over to Noamon to go through the specifics of our fourth quarter and full year results, as well as to provide our financial guidance for 2022. Noamon? Thanks, Max, and good afternoon, everyone.