Real Matters Inc.

Good morning, ladies and gentlemen, and welcome to the Real Matters Q1 2023 earnings conference call. At this time, all lines are in at least anonymo. Following the presentation, we will conduct a question and answer session. If at any time during this call you require any assistance, please press star zero for the operator. This call is being recorded on Friday, January 27, 2023. I would now like to turn the conference over to Lynn Portergaard. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to the Real Matters Financial Results Conference call for the first quarter ended December 31st, 2022. With me today are Real Matters Chief Executive Officer Brian Lang and Chief Financial Officer Bill Herman. This morning, before market opened, we issued a news release announcing our results for the three months ended December 31st, 2022. The release accompanying slide presentation, as well as the financial statements and MD&A are posted in the investor relations section of our website at realmatters.com. 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, a number of the risks, uncertainties, 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 forum for the year ended September 30th, 2022, which is available on CDAR and in the investor relations 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 NDNA for the three months ended December 31st, 2022, where you will also find reconciliations to the nearest IFRS measures. With that, I'll now turn the call over to Brian. Brian?

Thank you, Lynn. Good morning, everyone, and thank you for joining us on the call this morning. I will kick things off today with an overview of our first quarter performance and some of the key drivers behind our numbers. Bill will then take a deeper dive into our segment financials, and I'll wrap up the call with some brief remarks prior to taking questions. We reported consolidated revenues of $38.2 million, net revenue of $9.8 million, and an adjusted EBITDA loss of $2.9 million in the first quarter, reflecting ongoing mortgage market headwinds driven by a significantly higher interest rate environment. Our performance in the first quarter was in line with our focus on keeping the business EBITDA neutral on a full-year basis and maintaining a strong balance sheet through this part of the mortgage market cycle. Beyond the impact of current market conditions, we made solid progress in the first quarter on the things that we can control. We continued to win market share, we added new clients, and we achieved record high net revenue margins in our U.S. appraisal segment. In U.S. appraisal, we increased market share with five of our largest clients year over year, We launched three new lenders and one new channel with an existing tier one client. We also launched two new lenders in US title and two new clients and three new channels in Canada. At the same time, we continue to optimize headcount and manage our cost base to align with a lower volume environment, reducing our consolidated OpEx by 43% year over year in the first quarter. Our cost-saving measures allowed us to maintain sequentially flat adjusted EBITDA in our US title segment. We also ended the first quarter with a cash and cash equivalence balance of $45.1 million. While 30-year mortgage rates declined in the quarter, they were still up over 330 basis points from the first quarter, 2022. and weekly mortgage applications, as measured by the Mortgage Bankers Association, were at a 26-year low at quarter's end. At today's rates, the vast majority of mortgage refinances are cash-out transactions. However, we continue to believe that the refinance market will return to more normalized levels in the future, and we remain confident in our ability to scale the business to meet the demand of higher market volumes and to realize our fiscal 2025 financial targets. In U.S. appraisal, purchase origination revenues were down 45% year-over-year in the first quarter, compared to an estimated addressable market decline of 48%. And refinance origination revenues were down 83% year-over-year, consistent with the decline in the estimated addressable market for refinance activity. We had a record quarter for net revenue margins in the U.S. appraisal, which increased 640 basis points year over year to 27%, landing squarely in our fiscal 2025 net revenue margin target range for the segment. Our ability to direct more work to our top-performing appraisers allowed us to achieve higher margins, which also bolsters quality and drives faster turn times. This network effect is key to continuing to win additional market share with our clients. We continue to perform at the top of our tier one lender scorecards in the first quarter. And so, despite the lower overall volume environment, we were extremely pleased with the strong operational performance of our U.S. appraisal business. U.S. title segment revenues were down 85% year over year, and down 92% for centralized title, principally reflecting an estimated 89% decline in refinance market origination volumes and changes in our client portfolio. We continue to adjust our cost base in U.S. title in the first quarter to more closely align with current market volumes for refinance transactions, reducing our operating expenses by 64% year over year. During the first quarter, our sales team was highly engaged with existing and potential new clients at the annual Mortgage Bankers Association Convention, discussing how we can leverage our capabilities to better serve their needs and strategically expand our relationships, particularly in title. Our focus remains on leveraging our current performance and various strategies to onboard new clients and build franchise value for the long term. In Canada, we launched two new lenders, three new channels, and we increased market share with our three largest appraisal clients. Canadian segment revenues were down 38% year over year on lower market volumes. However, net revenue margins increased 440 basis points to 17.9%, and we increased adjusted EBITDA margins to 64.2%, compared to 57.7% in the first quarter of 2022. With that, I'll hand it over to Bill. Bill?