Real Matters Inc.

Good morning, ladies and gentlemen, and welcome to the Real Matters Q4 and Fiscal 2024 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. 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 know that this call is being recorded on November 25, 21, 2024. At this time, I would like to turn the conference over to Lynne Beauregard. Please go ahead.

Lynne Beauregard Thank you, operator, and good morning, everyone. Welcome to Real Matters Financial Results Conference call for the fourth quarter and fiscal year ended September 30, 2024. With me today are Real Matters Chief Executive Officer Brian Lang and Chief Financial Officer Rodrigo Pinto. This morning before market open, we issued a news release announcing our results for the three months and fiscal year ended September 30th, 2024. The release, accompanying slide presentation, as well as the 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 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 detail. 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, 2023, 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 net income, adjusted net income or loss, per diluted share, adjusted EBITDA, and adjusted EBITDA margin. Non-GAAP measures are described in our MD&A for the three months and fiscal year ended September 30, 2024, where you will also find reconciliations to the nearest IFRS measures. With that, I'll now turn the call over to Brian.

Thank you, Lynn. Good morning, everyone, and thank you for joining us on the call today. In fiscal 2024, we delivered consolidated adjusted EBITDA of $1.9 million, moving the business back into positive territory as we continue to prudently manage our cost base through the year to align with the variability in mortgage origination volumes. We executed our strategy effectively, adding 16 new clients, increasing market share with our clients across all three segments, enhancing our net revenue margins, and maintaining a disciplined approach to managing operating expenses. We demonstrated our ability to scale with volumes and our financial performance showed how relative changes in the rate environment can translate into improved margins and profitability. We remain confident about the size of the opportunity that the U.S. mortgage origination market represents and that there is considerable upside for our business from here as pent-up demand continues to build. Homeowners will continue to look for sources of liquidity to finance life events as well as opportunities to lower their cost of borrowing. New household formation will also persist as younger generations pursue the ambition of home ownership as a source of financial stability. Today, there are more than 8 million outstanding mortgages with an interest rate above 6%, and the inventory of mortgages being written at higher rates continues to climb daily, growing the pool of potential future refinance candidates. To put this into context, 8 million mortgages is double the size of the entire market in 2023, which included purchase and refinance transactions. And that pool of mortgages grew by nearly 50% in the last 12 months alone. When we conducted our annual consumer mortgage survey this year, we found that 60% of consumers plan to refinance in the next two years, and 40% of future buyers plan to purchase a home when rates decline. These tailwinds, coupled with our market-leading position and available capacity, position us well for growth. We continue to maintain a readiness posture underpinned by our ability to scale and pivot, which will allow us to capitalize on these opportunities. We reported consolidated revenues of $172.7 million in fiscal 2024, up 5% year-over-year as a result of market share increases with our clients and new client launches in all three segments. Consolidated net revenue was up 8% year over year to $46.4 million, and we delivered positive adjusted EBITDA of $1.9 million, up from a loss of $2.4 million in fiscal 2023. In U.S. appraisal, revenue increased 8% from fiscal 2023 to $130.7 million, led by increases in origination and home equity volumes. We also posted year-over-year market share increases with three of our top U.S. appraisal clients, and we maintained our top position on lender scorecards. Our net revenue margins increased by 20 basis points from fiscal 2023 to 27.6%, which is at the high end of our target operating model, and net revenue increased 9% year-over-year to $36.1 million. With the increase in volumes on our platform and relatively flat operating expenses, we continued to see strong operating leverage in the business and increased our U.S. appraisal adjusted EBITDA by 18% year over year to $16.7 million, which represents an 87% conversion from net revenue to adjusted EBITDA. U.S. title segment revenue decreased to $8.6 million from $9.5 million in fiscal 2023 as a result of a decline in home equity and REO volumes. However, refinance origination revenues were up 9% year over year due to market share increases with our clients and new client volumes. With the change in our revenue mix, net revenue margins were up 570 basis points year over year, and net revenue was up 3% to $4 million. We reduced operating expenses by 11% from fiscal 2023, and we posted an adjusted EBITDA loss of $6.8 million in U.S. title compared with a loss of $8.3 million in the prior year. We launched seven new title clients and one new channel in fiscal 2024, we also increased market share with our Tier 1 client. On the sales front, we are having productive meetings with our clients, which reinforces our confidence in the ongoing progression of our pipeline. The movement in interest rates has revitalized the RFP process and brought growth back to the forefront of our discussions. It is clear to us that lenders are preparing for increased volume. Lenders are anticipating a potential decrease in rates and an uptick in refinance volumes in 2025, and we are well positioned to scale up and capture that volume. In Canada, revenue was flat year over year as net market share gains with new and existing clients for appraisal services were offset by lower market volumes and modestly lower insurance inspection revenues. Canadian net revenue margins were very strong at 18.9%, and net revenue was up 5% from fiscal 2023. The Canadian segment generated adjusted EBITDA of $4.1 million, down from $4.2 million in fiscal 2023. With that, I'll hand it over to Rodrigo to take a look at the fourth quarter. Rodrigo.