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spk09: Good morning ladies and gentlemen and welcome to the Real Matters second quarter 2023 conference call. At this time all lines are in 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 star zero for the operator. This call is being recorded today Friday April the 28th 2023. I would now like to turn the conference over to Lynn Beauregard, Vice President of Investor Relations. Please go ahead, Lynn.
spk07: Thank you, Operator, and good morning, everyone. Welcome to Real Matters Financial Results Conference Call for the second quarter ended March 31, 2023. With me today are Real Matters Chief Executive Officer Brian Lang, Chief Financial Officers Bill Herman, and Rodrigo Pinto. This morning before market open, we issued a news release announcing our results for the three and six months ended March 31st, 2023. The release, accompanying slide presentation, as well as financial statements and MD&A are posted in the investor section of our website at realmatters.com. During the call, we may make certain forward-looking statements which reflect 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. Please see the slide entitled Cautionary Notes 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, 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 and six months ended March 31, 2023, where you will also find reconciliations to the nearest IFRS measures. With that, I'll turn the call over to Brian. Brian?
spk00: Thank you, Lynn. Good morning, everyone, and thank you for joining us on the call today. Before we get to the business of the day, as this will be his last earnings call with us, I'd like to take a moment to acknowledge our CFO, Bill Harmon, for his dedication and contributions to the business over the last six plus years. He's been an integral part of the team, and it's been a privilege to work with him. On behalf of Jason and the board, thank you, Bill. We wish you nothing but the best in your next chapter. I'd also like to extend a warm welcome to our incoming CFO, Rodrigo Pinto. We're very happy to have you on board, Rodrigo, and we look forward to continuing to grow this business together. Now, onto the business of the day. I'll start today by providing an overview of our second 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 were very pleased with how the business performed in the second quarter, a quarter that has historically been our lowest seasonal period in our fiscal year. Consolidated net revenue increased to 9.9 million in the second quarter, up 1% sequentially. Our U.S. appraisal segment posted record net revenue margins of 27.6%, and consolidated net revenue margins increased 70 basis points sequentially to 26.4%. With an improved net revenue margin profile and a lower cost base, we improved consolidated adjusted EBITDA to a loss of $1.7 million versus the $2.9 million loss we recorded in the first quarter of 2023. U.S. mortgage market conditions continue to be challenging in the second quarter, as spreads remained wide due in part to market volatility and 30-year mortgage rates fluctuated in the 6% to 7% range. That said, home sales seem to be bottom-bouncing, and 87% of refinance originations today are cash-out transactions, which is the highest share on record in the last 30 years. On the purchase side, we are starting to see green shoots in the market and we are cautiously optimistic that a spring market will deliver sequential market volume growth in the third quarter. We continue to believe that the refinance market will return to more normalized levels in the future, and we have the capacity in place and the ability to scale the business to meet the demand of higher market or organically driven volume growth. Beyond the impact of current market conditions, We made solid progress in the second quarter as we continue to win market share and add new clients. In U.S. appraisal, net market share increased year over year, and we launched one new lender and one new channel with an existing client. In U.S. title, we launched one new lender and one new channel, and we were awarded additional market share with our Tier 1 lender at the end of the quarter. In Canada, we launched three new channels. In U.S. appraisal, purchase origination revenues were down 3% sequentially and refinance origination revenues were up 2% quarter over quarter. We set a new high for U.S. appraisal net revenue margins in the second quarter, which increased 60 basis points to 27.6% from the record 27% we posted in the first quarter this year. continuing to put us 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 supported improved quality and drove faster turn times. We continue to perform at the top of our tier one lender scorecards in the second quarter. Our performance has been key to continuing to win additional market share and our ability to advance the sales cycle for new channel expansion as well as title opportunities. U.S. title segment revenues were down 6% quarter over quarter and down 9% for centralized title. As I noted earlier, we continued to adjust our cost base in U.S. title and we narrowed our adjusted EBITDA loss to $2.3 million in the second quarter from the $2.9 million loss we posted in Q1. The team remains highly engaged with existing and potential new clients, and 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 three new channels, and we increased market share year over year. Canadian segment net revenue was flat sequentially. However, net revenue margins increased 80 basis points quarter over quarter to 18.7%, and we increased adjusted EBITDA margins to 69.8% from 64.2% in the first quarter of fiscal 2023. With that, I'll hand it over to Bill. Bill?
spk03: Thank you, Brian, and good morning, everyone. turning to slides 4 and 5 for a closer look at our second quarter financial results. U.S. appraisal revenues declined 60% year-over-year to $28 million, due in large part to lower addressable mortgage origination volumes, partially offset by net market share gains with existing clients and new client additions. Other revenues from home equity and default were down 14% year-over-year. Transaction costs in U.S. appraisal declined 63% year over year, but net revenue was down 49% year over year to $7.7 million. As Brian outlined earlier, net revenue margins increased a further 60 basis points from the record we set in Q1 2023 to a new high of 27.6% and represents a 620 basis point increase over the same quarter last year. The increase in net revenue margins is the result of leveraging our appraiser network in a lower market environment and servicing a greater proportion of standard properties. U.S. appraisal operating expenses declined 37% year-over-year to $4.6 million, down from $7.2 million in the second quarter of fiscal 2022. U.S. appraisal adjusted EBITDA decreased $4.7 million to $3.1 million in the second quarter of fiscal 2023, and adjusted EBITDA margins declined to 40.6% from the 52.1% we posted in the second quarter last year, owing in large part to lower market volumes. Turning to our U.S. title segment, revenues declined 79% year over year. Revenues attributable to centralized title services declined 88% year over year, while diversified title revenues totaled $0.2 million, down from $0.4 million in the second quarter of fiscal 2022. Other title revenues of $0.9 million, representing revenue from home equity services, were down $0.2 million compared to the second quarter of fiscal 2022. Transaction costs in our U.S. title segment declined 60% year over year, while net revenue margins contracted 36.8% from the 67.1% we posted in the second quarter of fiscal 2022. U.S. title net revenue was down $6.4 million from the second quarter of fiscal 2022. We continue to trim operating expenses in the quarter due to lower refinance mortgage origination market volumes. Operating expenses declined 6.3 million year over year to 3.1 million in the second quarter of fiscal 2023. The U.S. title segment posted an adjusted EBITDA loss of 2.3 million compared with a loss of 2.2 million in the second quarter of fiscal 2022 as a result of lower market volumes partially offset by cost reduction efforts undertaken over the last 12 months. In Canada, revenues declined 47% on a year-over-year basis to $7.4 million, while net revenue margins expanded by 530 basis points year-over-year as we leveraged our appraiser network in a lower market environment. Canadian segment operating expenses declined $0.2 million year-over-year and adjusted EBITDA margins increased to 69.8% from the 67.3% in the second quarter of 2022. In total, second quarter consolidated net revenue declined 59% to $9.9 million, compared to the $24.2 million we reported in the second quarter of fiscal 2022, largely due to lower market volumes across all three segments. Consolidated net revenue margins increased to 26.4% from the 25.5% we posted in the second quarter of fiscal 2022, reflecting higher margins in U.S. appraisal and Canada. We reduced consolidated operating expenses by 47% year-over-year to $11.6 million in the second quarter, excluding stock-based compensation expense. Corporate segment salary and benefit costs included $0.3 million of severance expense in the second quarter and we posted a consolidated adjusted EBITDA loss of 1.7 million this quarter, down from the loss of 2.9 million in the first quarter of fiscal 2023. Turning to the balance sheet, we ended the quarter with cash and cash equivalents of 41.8 million at March 31st, 2023. Before I hand things back over to Brian, I'd like to take this opportunity to thank the investment community for their ongoing support over the last six plus years. It has been a great pleasure to be part of this company and to be part of a team that communicates the Real Matters story. While the North American mortgage market presents its own challenges in terms of industry benchmarks and data, I think we've made some great strides in evolving how we present and communicate our results. For that, I thank my very talented team for their persistence and support. I am confident that the company is well positioned to achieve its long-term objectives, and I look forward to watching its continued success in the coming years as a continuing shareholder of Real Matters. With that, I'll turn it back over to Brian. Brian?
spk00: Thank you, Bill, and thanks for your ongoing support. We posted very solid results in the second quarter against what we believe is a bottom bouncing market and what is typically our lowest quarter of the year. We continue to gain market share with some of our largest lenders in both appraisal and title, while our performance kept us at the top of lender scorecards. In addition, we improved our margin profiles quarter over quarter across each of our segments by leveraging our platform and making prudent adjustments to our operating expenses. We also reduced our adjusted EBITDA loss sequentially in line with our focus to keep the business EBITDA neutral on a full year basis through this part of the mortgage market cycle. The adjustments we made to our business over the last 18 months have positioned us well for growth. And while we can't call the market, we are starting to see signs of improvement on the horizon. Today, our appraisal and title operations are more agile than ever, and we have the capacity to take on more volume and scale back up when the market recovers. We remain focused on our top-tier blue-chip client base while driving performance, growing market share, as well as adding new clients and ultimately scaling the business back up as the market normalizes. With that, operator, we'd like to open it up for questions now.
spk09: Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star followed by the number one on your telephone keypad. If your question has been answered and you would like to withdraw from the queue, please press star followed by the number two. And if you are using a speakerphone, please lift your handset before pressing any keys. One moment please for your first question. Your first question will come from Gavin Fairweather at Cormark. Please go ahead.
spk01: Hey, good morning. Thanks for taking my questions. Just maybe to start on U.S. appraisal, pretty remarkable to see revenue relatively flat in what was called a minus 15% market environment. Curious how you would attribute your outperformance there. Was that kind of recent share awards or share movements within the market or competitive dynamics? How would you attribute that performance there?
spk00: Thanks, Gavin. I appreciate the question. So I think if you're looking at a top line, then I think you're definitely looking at market share gains. So again, very strong performance, top of the podium this past quarter with our key tier one lenders. So I think really strong performance that came with some market share gains with our top customers. And then if you start moving down through net revenue down to EBITDA, you're going to see that we've done another, I think the team's done a great job this quarter managing out to the network and really delivering against continuing to be able to scale up the business. So you've seen the 27% that we delivered in net revenue margins last quarter up at 27.6%. So I think those are sort of two of the key drivers around the appraisal performance this quarter.
spk01: Yeah, and just maybe on those appraisal net revenue margins, as you start to think about activity kind of ramping back up in the market, do you think that these kind of levels are sustainable where you've been running, or do you think you might give some back if the market gets busier?
spk00: I think two answers to that question. The first one is sort of the long-term vision that we have. David and so you know in 25 we laid out our net revenue target and appraisal of 26 to 28% so good news, you see us performing within that. That span, so I think our view is to continue to perform within that span as we look out to 25. And right now, the good news for us anyways is we've kept some capacity in the appraisal business, so I think in the in the near term. we'll be able to take on some more volume without needing to add any capacity to the business. So that's, I think, going to weather us well in the near term. And so I'd expect us, as I say, Gavin, to be within those sort of 26% to 28% range over the next upcoming quarters as we see volume start scaling back up.
spk01: Yeah, and you touched on capacity there, which was what I wanted to chat about next. I mean, obviously, you've had some learnings throughout this market cycle about how to operate more efficiently internally. So can you give us a sense of the amount of spare capacity that you might have in the model, given how you're operating it today?
spk00: Sure. Well, you mentioned that we've had a lot of learning and going through The fastest up market and down market we've seen in over 20 years. We definitely did an awful lot of learning through that, Gavin. And so both through the way in which we manage the network with some of the technology and process work that we've done, we definitely feel we are even better positioned right now to scale the business up longer term. So when we take a look at capacity right now, we frankly have the capacity in our title business to do three times the volume that we are currently doing. And that's, as you know, Gavin, we are a national player. And so there is a certain amount of capacity we need to have in the system in order to be able to deliver for the tier one customer we have and the tier one customers that we're targeting. And then on the appraisal side of the house, we also, with the expectation of a seasonal market, so We do assume that Q3, we should see some increased volume with seasonality. We've kept that type of capacity in the business. So you can definitely see us moving volume up in the sort of mid-teens without us, again, needing to add headcount to the business. So I think in the near term, I think we're in really good shape for the back half of the year. But really importantly, as we look long-term, I think a lot of the changes that we've made based on those lessons that we've learned will only help us drive towards those 2025 margin targets in the business.
spk01: Okay. Appreciate all the color. That's it for me. And thank you, Bill, for all your help over the years. Well, thank you, Gavin. Appreciate it.
spk09: Your next question comes from Martin Toner at ATB Capital Markets. Please go ahead.
spk02: Thanks so much for your question, for taking my question. So it's interesting that centralized title was down sequentially while appraisal refi was up sequentially. Is that just a market share story specific to appraisal? Just wondering if you could elaborate there.
spk00: Yeah, so there's mix in there, Gavin. So remember in our In our title business, there's some mix in there. Why don't I pass this over to Bill?
spk03: Bill? Yeah, no, I think that's exactly right, Brian. So, Martin, there is definitely mix attributed to the title circumstance. So, you referenced how is our CT volume relative to market. I think that is absolutely spot on. I think the other component is Brian was referencing is really the depth and strength of the appraisal business. So we obviously have a much deeper bench. And as Brian already touched on already, it certainly has been a market share story for us. So I think that clearly transpired and it was demonstrated in our appraisal business this quarter.
spk02: Thanks, Bill. Thanks for that. So market share of your customers has been a bit of a headwind. Your customers have been losing some share in the market. And just wondering if you can give us an update if that has continued or abated or reversed.
spk00: So we're seeing some of the results come out right now, Martin, the past week or two from our big customers in the U.S. So they continue, not surprisingly, with some of the challenges in the market to have some challenges around mortgage volume. That being said, I think there's also quite a bit of moving parts right now in the banking industry in the US. And so our view has always been that in a market where it's a heavier purchase market than a refi market, the tier ones often take advantage of that with their installed customer base. But also, as I say, with the market being a little bit in flux right now in the US, there's often a a drive to sort of a more safe environment or to safety. And so I think they have a lot of the large lenders in the U.S. have actually been quite public around the fact that they are gaining some share from a customer standpoint. So, you know, as we look forward, our view would be that there is an opportunity for them to definitely gain some share, both from a purchase versus refi standpoint and also depending on how the market continues to evolve in the US. There may be some upside opportunity with a flight from risk to more safety with the big tier one players.
spk02: Fantastic, thanks. Last one for me. Given the enormous amount of pressure on volumes, the industry dynamics are such that it must place, I mean, a tremendous amount of pressure on a whole bunch of your smaller competition. You've mentioned in the past that vendors want to consolidate. Can you give us a little update on just like what's happening in the industry? Are you seeing lots of exits? And then is vendor consolidation benefiting you?
spk00: Yeah, so I think the dust is probably settling a fair bit around that right now, Martin. I think there has been some consolidation definitely in the business. And so we, as you know, we benefit when our customers consolidate because of our performance. So I think we've seen some benefits with consolidation. We did have a competitor exit the appraisal space. So that is a benefit to us with the key customers they had. We've already started to see some share gains there and we expect some more in the back half of the year. So that's really, I think, where it's at from a competition standpoint. As you know, we just stay wholly focused on performance, making sure we're beating out the competition, staying at the top of the scorecard. And as I say, I think right now, anyways, the dust has settled a little bit there. And so I think they're now turning their eyes towards a ramp up of volume over the next few quarters.
spk02: I'll pass the line. Thanks so much.
spk00: Thank you.
spk09: Your next question comes from Daniel Chan at TD Cowan. Please go ahead.
spk06: Thanks. Good morning. So some are expecting this to be the bottom for the mortgage origination market. Just wondering whether you share that view and how you think the market is going to play out over the next year. Sounds like you're pretty optimistic about it, just given that you have some excess capacity there. So just like to get your view on that.
spk00: Sure. Yeah, Dan, I think I've mentioned that we think really we're in a bottom-bouncing market. As you know, calling the 10-year and 30-year has been no easy task over the last couple of years. And I would say there's still a little bit of volatility right now in the market as to progress around that. But yes, I think you're right on with our view that we are in a bottom-bouncing market. A couple of the larger sort of associations have come out, especially on the housing side. So NAR came out quite recently and actually started talking about exactly that, that they feel that on the house sales side that we've bounced off the bottom. That was actually their language. I think some of the both the KPIs on the mortgage side, as well as some of the key indicators on the housing side, I think some of them are starting to turn and starting to look a little bit more positive. So we definitely think there's some tailwinds that are starting to come in play. And as we mentioned, I think seasonally, we're definitely looking towards getting a bit of a bump in this spring-summer market. We may have a little bit more conservative view than some of the big players, the MBAs and Fannies and Freddies out there. We're a little bit more conservative than they are, but we definitely see some positive momentum in the next two quarters.
spk06: Great. Thanks for that. And with the sentiment stabilizing on the market outlook, how are your discussions with your customers going? Are they ramping up resources? Are they becoming more open to adopting new platforms like your tile and closing solutions?
spk00: Yeah, so I think as we've talked about in the past, we sort of talked about the big lenders and capacity, and it was bringing capacity down when the market was moving in that direction. But I would say that they've probably finished that much as we've talked about our operating expenses. We think we're now in a very good place to start looking to the future and to look towards more of a rebound over the next couple of quarters. So I think the lenders are in a similar spot, Dan. I wouldn't say that they're aggressive in any way on the hiring front and building up capacity, but I think they feel like they're in a pretty good position. I think on the down, when they were taking capacity out, they definitely communicated with me, some of the big lenders, that they were keeping in mind the upside of the market. So they definitely, I think, kept some more capacity in the system. So I think they're probably very well positioned for this growth that we're expecting seasonally. Yeah, so I think they'll be in good shape, and that's why we, of course, have also kept the same sort of level of additional capacity.
spk06: Any increased interest in your tile and closing solution?
spk00: Yeah, so again, I think that also has – because I think the lenders have – I think finished sort of their capacity views that they've been managing. I think they're now looking towards the future a little bit more. So the RFP conversation, some of which had actually started sort of right at the start of COVID and got pushed out, those are now definitely being put back on the table. So our expectation is in the next couple of quarters, so the second half of this year, we should see a couple of RFPs come to market from the Tier 1s.
spk08: Great, thank you.
spk09: Ladies and gentlemen, once again, if you would like to ask a question, please press star 1 now. Your next question will come from Sanis Miskopoulos at BMO Capital Markets. Please go ahead.
spk04: Hi, good morning. Brian, get a sense for industry capacity in terms of appraisers and title agents. Do you have a sense whether there's been a lot of people leaving the profession, which could perhaps cause issues if bonds were to scale up?
spk00: Morning, Thanos. No, we haven't seen any erosion to our network, Thanos. As you can imagine, we've been incredibly focused on making sure that we're continuing to bring our top extraordinary appraisers to the top of the queue and making sure that we're pushing work out to the absolute best of the appraisers, which in a market like this is why you're seeing some of the benefits on the margin lines. But also, frankly, our customers are seeing the benefits with turnaround time and quality. So I think that's been quite impressive with the volume where it's at right now. We have no concerns right now at all, Thanos, on capacity on the network. We have plenty of capacity for the types of volumes that we saw in 20 and 21 where we had a very strong working network. So no concerns right now on the network front. I think we're in good shape for sort of multiple years with the network.
spk04: Great. Is there any update in terms of a title for purchases? Is that still in the pilot phase or is anything of note happening there?
spk00: Well, we continue to look at it. We, as again, said, we do do some purchase volume in the title space, but this past year we've seen very, very little volume there. So we'll continue to look at the purchase space on title, continue to look at how we can sort of penetrate that with a bigger rate in the future. But right now I wouldn't expect anything dramatic in that space in the near term.
spk04: Great, Siah. Thanks, Brian. And Bill, congrats on the next chapter of your career. Keep it there.
spk06: Super. Thanks, Dennis. Thanks, Dennis.
spk09: Your next question comes from Robert Young at Canaccord Genuity. Please go ahead.
spk05: Good morning. Apologies if I missed this, but maybe just dig into a little more into how the share allocation by the Tier 1 and Title, what led to that, what drove it, maybe any color you can give around that.
spk00: Sure morning rob yeah so on the tier one front on title, I mean we've been performing, I think. Very, very well over the last couple of years, frankly, I think we they've been on now almost two years, so I think the performance has been incredibly solid. We always talk to the team around building that confidence over time and we were very fortunate. With that tier one that we actually awarded quite a bit of share in our first year when we were working with them, and I think. by continuing to perform at the top of the podiums. As I mentioned, this last quarter, every month, we were on the podium. So being up near the top, I think, makes a big difference for them and their homeowners. So I think we've done a great job. The team's done a great job delivering against the performance expectations. And so, hence, you're seeing the increase in share.
spk05: Right. And the pace of that share gain with that one client, is that relatively reminiscent of the first customer, the first tier one in appraisal? Or is that faster, slower?
spk00: No, it's actually somewhat similar. Again, if you remember, I usually talk about trying to get to 5% to 10% in the first year and getting to 20% in the second year. Sometimes we sort of get those as quarterly share increases. In this case, we sort of got as a big punctuation on sort of the end of the second year. So it's almost right in line with, frankly, how we look at onboarding new tier one customers and building out the share over time.
spk05: Right. And then I imagine already questions have been asked about, you know, the business development and amongst with other tier ones. But I imagine they're watching that or I assume they are. Are they? I mean, does this reference customer help them maybe speed along their own decision to start using you?
spk00: Yes, I think it does. I mean, I think the answer is yes, they definitely keep an eye on this. And as you can imagine, Rob, the sales team does an incredible job at making sure that they're well aware of the increase in share and the performance that we're delivering. And as you know, I mean, long term, as we look at it, that's the really long term plan are built into our 25 plan is bringing on a few more tier ones. And as I mentioned, We are really of the expectation, since they've let us know, that there's a plan to at least get a couple more of the RFPs from Tier 1s out on the table the second half of the year. So what's been, for us, a slightly frustrating inertia with moving things on the Tier 1 title side, I think we're seeing anyways in the conversations our team's having with the Tier 1s. It looks like they're now... putting a focus back on that. And I think a little bit has to do with the earlier question around seeing the market move in a more positive direction.
spk05: Right, right. And then maybe just on that, I mean, you said green shoots. I mean, how much of that is just the normal spring bounce? And how much of that is something that's indicative of maybe a more sustainable improvement? And I'll pass the line.
spk00: Yeah, so this comes back, as you know, to interest rates, Rob, and calling where interest rates are going to go over the next little while. So I think there's definitely some seasonality in there. And I would think that a lot of the analysts in the market aren't necessarily forecasting a tremendous change in the back half of this year when it comes to rates. We, of course, keep a good eye on that. And as we discussed in the past, if there was a change, if there was recession, if there was something dramatic changing in the year where rates might drop, of course, that will have a very different impact on the business from a growth standpoint. So those rates have been a little bit persistent. We've been bouncing sort of back and forth between, I think we got down to 6.2%, up to 7.2% over the last few quarters. So The good news for us is we're building up some refi inventory for the future in our title business. So that part is a positive for us. But as you say, depending on where the rates move over the next couple of quarters, we could see some more movement just from a rate standpoint, as opposed to it mostly being driven seasonally.
spk05: And would you be more cautious on your ramp back? I mean, just thinking of it from a point of view of like operating leverage, If you start to see the market move, would you be more hesitant to maybe build capacity ahead of the future? Or maybe just give a sense of how you think about your response to a bounce back. And then I really will pass the line.
spk00: Yeah, well, there was an earlier question, I think, that touched a little bit on that, Rob, which is that we've been, I think, very thoughtful around the lessons learned as we did ramp up in 20 and 21. The team, I think, did a great job at the time, but we did take a lot of, I think, really good lessons learned and have made quite a few changes, everything from how we do title search all the way through to how we manage things on the back end. So the team's really, I think, put in yeoman's work to make sure that the next time the volume does start to move, and especially even if it moves fairly dramatically, I think the scale of the model will only get not only just emphasized because you know the scale in the business today and how we drive margins when there is more volume. We demonstrated that through 20 and 21, and I think we're only better positioned and a little more agile than we were back when we went through that in 2021. So I would expect us to be, frankly, really well positioned if we are to see the volume move, and even if it moves with some pace.
spk05: Okay. Thank you.
spk00: Thanks, Rob.
spk09: Your next question comes from Martin Toner at ATB Capital Markets. Please go ahead.
spk02: Thanks, folks. One quick follow-up. If a Tier 1 initiates an RFP, typically, how long before they announce a winner?
spk00: Well, that's a question with a lot of variety to it, Martin, depending on the lender. So we've been in shorts. RFP processes that have taken, you know, three to six months, and we've been in longer ones. So we'll have to see how things move. I would suggest that because things have been quite stagnant on that front for the last couple of years, I would think that they will move with a little more pace than necessarily sort of a usual cycle of RFPs. So I think there's not only some demand from the servicing side and the servicers, but also I think that the tier ones do want to get out and take a look at what's going on in the market. And as I say, I think we're incredibly well positioned right now to deliver really well on an RFP. So we'll see how things go, Martin, but I wouldn't be surprised if it's a little bit more shortened than sort of the average time it takes.
spk02: Thanks for that. Perfect.
spk09: Ladies and gentlemen, as there are no further questions, this will conclude today's conference call. We would like to thank you all for participating and ask you to please disconnect your lines.
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