Real Matters Inc.

Good morning, ladies and gentlemen, and welcome to the Real Matters third 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 on Friday, July 28, 2023. I would now like to turn the conference over to Lynn Beauregard. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to Real Matters Financial Results Conference call for the third quarter ended June 30th, 2023. With me today are Real Matters Chief Executive Officer Brian Lang and Chief Financial Officer Rodrigo Pinto. This morning, before market opened, we issued a news release announcing our results for the three and nine months ended June 30th, 2023. The release, accompanying presentation, as well as financial statements and MD&A are posted to the investor 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, 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 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 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 revenues, net revenue margins, adjusted EBITDA, and adjusted EBITDA margins. Non-GAAP measures are described in your MD&A History and 9 months into June 30, 2023, where you will also find reconciliations to the nearest IFRS measures. With that, I'll turn the call over to Brian. Brian?

Thank you, Lynn. Good morning, everyone, and thank you for joining us on the call today. I'll kick things off by providing an overview of our third quarter performance and some of the key drivers behind our numbers. Rodrigo 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 delivered positive results in the third quarter as we saw solid improvements in our financial performance across all three of our reporting segments, which brought the business back to positive adjusted EBITDA. Consolidated revenues and net revenue were up 22% sequentially. In fact, notwithstanding the impact of interest rates and market volumes going forward, this was the first time we posted sequential revenue growth in seven quarters. Consolidated adjusted EBITDA increased both sequentially and year-over-year to $1.7 million in the third quarter. Our results were driven by sequential net market share gains across all three segments in the third quarter, as well as an uptick in market volumes, part of which was attributable to spring market seasonality. As we noted during our last quarterly earnings call, the U.S. mortgage market seems to be bottom-bouncing below 30-year lows. Ten-year Treasury yields inched higher during the third quarter and spreads remained wide relative to historical averages, which pushed 30-year mortgage rates closer to 7% for a good portion of the quarter. Even with the backdrop of a challenging rate environment and continued housing supply constraints, most U.S. metros saw home price growth stabilize, which helped drive seasonal demand for housing and a corresponding increase in purchase origination volumes. According to the National Association of Realtors, Existing home sales increased 7% year-to-date through May. Market refinance transactions were nominal in the third quarter, bottom bouncing off all-time lows. Cash-out refinance transactions remain the principal driver behind the baseline levels of refinance origination we are seeing today, making up more than 80% of volumes. We continue to believe that the refinance market will return to more normalized levels in the future and we have capacity in place and the ability to scale the business to meet the demand of higher market or organically driven volume growth. Our position on lender scorecards helped us deliver sequential market share wins across the board in third quarter. In U.S. appraisal, we recorded net market share gains year over year and we launched one new channel with an existing client. In U.S. Title, we onboarded the additional market share we won with our Tier 1 lender, and we launched one new channel with an existing client. In Canada, we launched five new clients and increased market share in the third quarter. In U.S. Appraisal, purchase origination revenues were up 25% sequentially, and refinance origination revenues were down 2% quarter over quarter. Other revenues were up 37% quarter over quarter due to higher home equity volumes from market share gains. I think it's safe to say that the mix of volume we're seeing between purchase and refinance is unlike any market we've seen over the last 30 years. Purchase transactions today make up close to 80% of the volume on a market size that is extremely low by historical standards. The silver lining for our U.S. appraisal business is that the breadth of our client base allows us to capture the economics regardless of market mix. We posted strong net revenue margins of 27.5 in U.S. appraisal in the third quarter as a result of our operating model. Our team was actively engaged with existing and potential clients during the third quarter Leveraging our number one ranking on scorecards and our position as industry leaders to garner additional market share and to open the door to new opportunities to grow the business. We continued to advance the sales pipeline in the third quarter. U.S. title segment revenues were up 17% quarter over quarter and up 41% for centralized title. We were very pleased with our performance in title in the third quarter as we held the number one spot on our Tier 1 lender scorecard and onboarded volume from the market share increase we received at the end of the second quarter. U.S. title net revenue margins in the quarter were up 840 basis points sequentially, principally as a result of a higher proportion of centralized title volumes. We narrowed our adjusted EBITDA loss in US title to 1.6 million in the third quarter from the $2.3 million loss we posted in Q2, 2023. We have worked diligently to reduce our cost base in title over the last 12 months, which included the deployment of technology that has made us more efficient while permanently transforming the cost to run the business at scale. This positions us well for a variety of scenarios including a lower volume environment in the short term, as well as higher expected volumes over the medium and long term. Canadian segment revenue was up 34% sequentially, and adjusted EBITDA increased to $1.3 million in the third quarter on higher volumes from market share gains. With that, I'll hand it over to Rodrigo. Rodrigo?