Real Matters Inc.

Good morning, ladies and gentlemen, and welcome to the Real Matters Q4 fiscal 2023 conference call. At this time, all lines are in a listen-only mode, but following the presentation, we will conduct a question-and-answer session. And if at any time during this call you require immediate assistance, please press star zero for the operator. Also note that this call is being recorded on Friday, November 17, 2023. And I would 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 fourth quarter and fiscal year ended September 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 months and fiscal year ended September 30th, 2023. The release, accompanying slide presentation, as well as financial statements and DNA are posted in the Investors 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 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 form for the year end of September 30th, 2022, which is available on CDR Plus and in the investor section of our website. As a reminder, we refer to non-GAAP measures in our slide presentation, including net revenue margins, adjusted EBITDA, and adjusted EBITDA margins. Non-GAAP measures are described in our MD&A for the three months of fiscal year end of September 30th, 2023, where you will also find reconciliations to near IFRS measures. With that, I'll turn the call over to Ryan. Ryan?

Thank you, Lynn. Good morning, everyone, and thank you for joining us on the call today. In fiscal 2023, Real Matters focused on preparing for scale by optimizing our network, platform, and our team, permanently transforming our cost base and making the business more efficient at scale. We've been focused on doubling down on our competitive advantage to build franchise value with key clients for the long term. We have expanded our channel penetration across all segments, deepening our relationships with customers, which should provide added leverage as the market scales. We have kept our commitment to shareholders by focusing on what we can control and running our business with a long-term view. By historical standards, 2023 was one of the most challenging markets we've faced as a company and as an industry. Inflation, rapidly rising interest rates, a sustained increase in home price appreciation, low housing inventory, and continuing economic uncertainty have driven mortgage market volumes down to levels we haven't experienced in this industry in almost three decades, and certainly in our time as a public company. We estimate there were 2.7 million purchase transactions and 600,000 refinance transactions in fiscal 2023, which is almost half the volume of the worst year in the last 28 years. We've said this before, but it bears repeating, especially in today's environment. The cyclical nature of the mortgage market is nothing new to us. It's the very reason we built a business that could weather the peaks and valleys and why we prioritize long-term objectives and profitability. It's why we focus on building market share with large blue-chip clients that are driven by performance metrics and why we created a platform that would allow us to scale up and down with a lower cost to serve than our competitors. We delivered solid results. performance in the fourth quarter, generating positive consolidated adjusted EBITDA of 600,000. We launched six new clients and we added a new channel with a tier one lender in both U.S. appraisal and U.S. title during the quarter. We reported consolidated revenues of $163.9 million in fiscal 2023, down 52% year over year as new client launches and the increase in our market share with our clients was offset by lower market volumes. We estimate that U.S. mortgage origination market volumes declined 53% year over year in fiscal 2023. Consolidated net revenue for the year was $43 million compared with $85.4 million in fiscal 2022. However, we increased consolidated net revenue margins by 100 basis points year over year. We posted a consolidated adjusted EBITDA loss of $2.4 million in fiscal 2023 with positive adjusted EBITDA in the last two quarters, in line with our focus on keeping the business EBITDA neutral in a market environment that has proven to be the most challenging in more than 28 years. We managed our cost base and improved our operational efficiency to better align with that lower market environment reducing our consolidated operating expenses by more than 41% year over year. We have permanently transformed our cost base and are now operating with the lowest cost structure we've had since going public, a prime example of what our platform is capable of delivering. In U.S. appraisal, fiscal 2023 purchase origination revenues were down 41% year over year, and refinance origination revenues were down 73% year over year. Home equity revenues were up 2% year over year as we launched in this channel with several lenders and had strong market share gains in fiscal 2023, which was offset by lower market volumes. Home equity represented almost a quarter of our U.S. appraisal revenues in fiscal 2023, and this volume, is not captured in our market share calculations. We increased U.S. appraisal net revenue margins by 530 basis points to 27.4% in fiscal 2023 as a result of our operating model, posting our highest annual net revenue margin since going public, landing squarely in the range of our fiscal 2025 target of 26 to 28%. U.S. appraisal adjusted EBITDA was $14.2 million in fiscal 2023, down from $27 million in fiscal 2022. We ended the year with 4.1% U.S. appraisal purchase market share flat from fiscal 2022 and U.S. appraisal refinance market share of 10.4% down from 12.1% in fiscal 2022. Purchase transactions continue to make up close to 80% of the volume on a market size that is extremely low by historical standards, which we believe distorts market share among lenders given the scarcity of transaction volumes. As we've discussed on previous earnings calls, our respective market shares will shift in line with the mix of business of our client base, some of whom have historically been more weighted toward refinance. We believe that our tier one lenders who account for the majority of our revenues were disproportionately impacted by the decline in the US mortgage origination market in fiscal 2023. We increased our market share with our tier one clients on an average by 10% in fiscal 2023. The tier ones are large lenders, both bank and non-bank, who value performance and they continue to represent a significant opportunity for market share growth for real matters. We posted U.S. title segment revenues of $9.5 million, down from $36.5 million in fiscal 2022, and home equity revenues accounted for more than a third of U.S. title revenues in fiscal 2023, up from 14% in fiscal 2022. Despite the 74% decline in top line revenues, we reported an adjusted EBITDA loss of $8.3 million compared with a loss of $8.1 million in the prior year, principally because we reduced our operating expenses by 61% year over year to $12.2 million. Our title business today is more efficient than ever, and we can now scale the business at a lower cost. We went live in a second channel with our tier one lender in US title at the end of the fourth quarter and ended the year with overall market share of 0.5% in US title. Our team continues to advance the pipeline with an optimistic view of adding new lenders and increasing our market share. Given the efficiency of operations, we remain well positioned for a variety of volume scenarios over the medium and long term. Canadian segment revenues were $33.5 million, down from $52.2 million in fiscal 2022. We increased net revenue margins in this segment by 480 basis points as we leveraged our field professional network in a lower market environment and at a higher mix of insurance inspection revenues. We reduced Canadian segment operating expenses by 26% year-over-year, and we recorded a 530 basis points increase in adjusted EBITDA margins year over year. In fiscal 2023, we launched five new lenders and four new channels in U.S. appraisal, five new lenders and three new channels in U.S. title, and 10 new clients and six new channels in Canada. We continue to perform at the top of lender scorecards and advance the RFP pipeline particularly in US title. Our performance continues to reinforce our relationship with lenders. We recently met with our largest clients at the MBA convention in Philadelphia, where we received high praise for our people, our network, our capabilities, and our ability to go above and beyond for lenders. In some cases, getting the job done when our competitors failed. While the economic forecast did garner a lot of attention at the convention. Our client conversations were mostly centered around capacity and ensuring that lenders have the right vendors in place for when the market recovers. Lenders continue to see us as a trusted partner, and we are leveraging our performance to ask for more of their business. With that, I'll hand it over to Rodrigo. Rodrigo?