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spk08: Good day, and thank you for standing by. Welcome to the Voxer Analytics Corp. Second Quarter Financial Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Jordan Ross, Chief Investment Officer. Thank you. Please go ahead.
spk00: Thank you, Stephanie. Good morning, everyone, and welcome to the Boxster Analytics second quarter 2021 earnings call. A release announcing our results was issued after market closed yesterday. It's an MD&A on CDAR.com as well as our website. Joining us today are our Executive Chairman, Gary Yeoman, CEO, Jim Albertelli, and CFO, Angela Little. We will start with prepared remarks and then move into the Q&A session. If we are able to take your question, please feel free to contact me directly by email, jordan at voxter.com. Angela will begin by outlining our financial performance, and then you'll hear from Jim, who will provide an update on the business operations. Finally, the priorities for the remainder of the year. The information we share today may contain. We caution you not to place undue reliance on. Undertake no duty or obligation to update to update any forward looking statements as a result of new information, future events or changes in our expectations. On today's call, we will report using both IFRS and non-GAAP financial measures. We use these non-GAAP financial measures internally for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons as we believe that they provide meaningful information with respect to the financial performance and the value of the company. Non-GAAP financial measures are presented in addition to and not as a substitute for financial measures calculated in accordance with IFRS. To see the reconciliation of these non-GAAP measures, please refer to our management's discussion and analysis. Finally, please note that all references to amounts or currency during today's call are to Canadian dollars unless otherwise stated. I will now turn the call over to our CFO, Angela Little.
spk06: Thank you, Jordan, and thank you all for joining in the call this morning. We had a busy start to 2021, and Q2 was no different as the company continued to execute on our strategic growth initiatives, including completion of the ANOW acquisition. ANOW is an automated workflow management platform for the global appraisal market, servicing lenders, servicers, appraisers, and appraisal management companies. This strategic and pivotal acquisition bolstered our recurring revenue stream and accelerated the build-out of our data ingestion engine. Additionally, the company has continued to make investments in our technology platforms, as well as expand our global sales and marketing efforts. Sales pipelines gained momentum across all business units and expanded to our highest levels during Q2 2021. Notwithstanding the continued challenges related to COVID-19 and the foreclosure moratorium, the company is pleased to report that our Q2 and year-to-date 2021 revenue and gross profit increased quarter-over-quarter as well as year-over-year. Q2 2021 revenue was $18 million, which represents a 25% increase over Q1 2021 and a 301% increase over Q2 2020. Year-to-date revenue is $32 million, which represents a 238% increase over year-to-date 2020. Revenue from U.S. operations represented approximately 89% of total revenue for Q2 in year-to-date 2021, up from approximately 59% for the same time period in 2020, a result of our continued expansion into U.S. markets following the Apex and Boxster acquisitions. Turning to the balance sheet, we ended the quarter with cash and cash equivalents of $38 million. This leaves the company well-positioned to continue executing on its strategic growth plans, including the acquisitions of Zom and Benutech, which Gary Yeoman will be discussing in more detail. Looking ahead to Q3, we are seeing renewed momentum in the loan default space since the foreclosure moratorium was lifted in the U.S. on July 31st. Title and settlement, valuation, InfoX, and default services have already seen significant increases in volume during August. We expect this to continue through the second half of 2021. I will now turn the call over to CEO Jim Albertelli to highlight our operational and business success within the quarter.
spk01: Thank you, Angela. Good morning, everyone. As Angela said, we've had an active start to the year and we're proud of what we've accomplished in the first half of 2021. Our efforts have bolstered an already strong foundation and positioned Voxter for tremendous growth in the second half of the year. Before I dive into the operational and business successes of the last quarter, I want to highlight a change some of you may have already observed. That is the complete rebranding of our corporate identity. As I mentioned in the past, we began our rebranding exercise by renaming the enterprise Voxter, which is Icelandic for growth. It just seems fitting that we incorporate growth into our names. As it's part of our corporate DNA, our mission is to become the largest and most trusted provider of data, SaaS-based applications, and tech-enabled services in the PropTech space. We pride ourselves on seeing things a lot differently, and this insightfulness was the inspiration behind our new logo. We believe this new brand identity better reflects our status as the most dynamic, intelligent, and innovative source of property-related data and services in the real estate ecosystem. And at this, in turn, we'll bring greater visibility in the marketplace, more clarity for our clients, better returns for our shareholders. We're also introducing new Voxer verified stamp of quality assurance. This Voxer verified provides certainty to our clients and underscores our credibility within the industry. Now, I want to use the rest of my time today to discuss the numerous successes we experienced in the second quarter, starting with the investment in our enterprise sales efforts. we leveraged our data and technology capabilities as competitive differentiators, which translated into a healthier and more robust sales pipeline. In fact, our sales pipeline has never been bigger. We recently launched a dedicated customer success team to identify quantifiable client value propositions to increase our inside sales efforts and better support our clients. This is just one example of our continued investment in our enterprise sales model. As part of this integrated approach, will also be bringing more consistency and rigor to our sales model, our sales forecasting, our sales pipeline development, and our internal training. Many of these changes reflect the evolution of our growth as we realign and move towards a software as a service or SaaS driven model focused on recurring revenue. I'll provide the updates on each of our three main business verticals, starting with valuation, which we have grown through acquisition and by leveraging our legacy expertise and master service agreements to create both organic and inorganic revenue opportunities. As an accretive acquisition, ANOW gave us the most innovative and best-in-class valuation management platform that is rapidly becoming the industry standard. With its end-to-end encryption, detailed customizable workflow, and AI enhanced functionality, our platform delivers valuation data elegantly and in a secure environment. Furthermore, its core workflow methodology has derivative uses across the Boxster enterprise. Post-acquisition, we continue to build on ANOW's prior momentum in the market while making accelerated adoption of its cloud-based platform a top priority. We have several material strategic partnerships in the works and expect to see the financial benefits of these partnerships before the end of the year. In addition to building partnerships, we are seeing organic growth as we are currently piloting the platform with a top mortgage lender in the U.S., The feedback has been overwhelmingly positive, and the ANOW platform is becoming an essential part of our clients' workflow. As more clients move onto the platform, adjacent growth opportunities emerge, such as growing our valuation management and our data solutions businesses. Successes aside, we still want to add to our product roadmap to drive faster adoption of ANOW. We are currently doing that by differentiating the value proposition between ANOW and our clients' legacy on-prem systems. This requires product innovation and version releases with greater functionality, including additional APIs and interoperability to facilitate enhanced workflows and collaboration. An example of this is our recently launched automated appraisal scoring tool that instantly identifies issues in appraisal reports and assigns an overall score and remediation methods. We are also innovating within our valuation management business by launching an evaluation product which serves as an upgrade for traditional appraisal products. This type of forward-looking has led to expansion of the GSE clients as well as expansion into the credit union space, resulting in more than $1 million in net new revenue within the quarter. This revenue growth is also thanks to the previously mentioned expansion of our client success team, which ensures quicker client implementations and improved day-to-day communications. Turning to our property tax business, we saw significant organic growth by adding 19 new jurisdictions as clients. More specifically, we delivered $420,000 U.S. of high-margin sketch verification revenue after combining management and sales teams from our legacy iLookAbout and Apex business, Apex being acquired in 2020. As previously mentioned, one of Our thesis for the acquisition of APEX software, which was widely considered the industry standard for residential sketching software, was to cross-sell our pre-existing desktop valuation platform into APEX's extensive client base. This thesis was confirmed when revenue from an existing APEX client grew from $7,000 per year to $100,000 per year as a result of the newly combined functionality. In addition, We saw an underinvested software asset in Apex and tremendous opportunity to modernize and innovate. An example of how we harnessed this potential was the launch of AVX, a mobile sketch software with modern drawing capabilities that allows for dynamic building layer updates within our desktop platform. This will also bolster recurring revenue within our tax business. Finally, we upgraded our image capture platform, which translated into savings of approximately 40% thanks to internal operational efficiencies. Moving on to the title and settlement business this quarter, our primary focus was finding operational efficiencies. This initiative identified 400,000 U.S. in annual savings. We credit the savings to a few factors, including implementing a new technology to drive operational efficiencies, gaining economies of scale by combining our refinance and default title and escrow teams, and establishing a more variable cost production model. the business is now poised for significant growth, which is already evidenced by the addition of three new material clients. Now, I'll turn it over to Gary to reiterate our strategic focus for the rest of the year and to explain how the proposed acquisition of Zone Valuations and Benutech fit into our long-term strategy. Gary?
spk02: Thank you, Jim. I'll build on Jim's enthusiasm by expanding on the opportunities before us, and the foundation we put in place in order to seize these opportunities. As Jim indicated, we are transitioning to a SaaS-based platform model. As veterans of the real estate business, we recognize our clients' need for services that are more accurate, affordable, and timely. This transition commenced with the acquisition of Clarosity and the fusion of its more than 150 master service agreements. This, combined with the Boxster merger in February, gave the company the most comprehensive client concentration in North America. This has allowed Voxer to turn its focus to delivering superior SaaS-based platforms for its existing clients. Last year, we continued to execute on this transition strategy by acquiring Apex, the leading sketching software platform in North America, servicing approximately 2,100 of the 3,300 counties in the U.S., along with some Canadian provinces. Integrating this software with their desktop review platform for property assessment clients has enabled Boxster to offer the first digitized mobile assessment application in North America. Additional software offerings relating to predictive assessment valuation and taxation platforms will emerge in early 2022, servicing the business-to-business, business-to-consumer, and business-to-government sectors. In the valuation sector, our Boxer Valuation Appraisal Management business and our recently announced Zone Valuations Acquisitions makes ours one of the largest valuation platforms in the industry. Recognizing the need to provide lenders with quicker, more accurate, and affordable valuations, we announced in April the acquisition of ANOW, the only fully digitized AI-enabled platform in North America. This platform allows lenders to move from an industry standard archaic PDF-enabled offering to a fully digitized platform with three times the speed and efficiency at a fraction of the cost. In the coming weeks and months, the veracity of this offering will become more evident. As previously announced, the proposed acquisition of Venutech will significantly augment our database, improve and expand our AI-enabled offerings, and will allow our property tax platform to come to fruition in the United States. We'll also increase our recurring revenue due to a subscription-based pricing model. Boxster's title and settlement business is also growing. Infusing our title ingestion engine with our expansive title offerings, including default, will separate Boxster from the competition. Incorporating our unique title alternative will distinguish us from other title providers and continue to augment our technology platform. All of these enhancements are substantively accretive and will improve our gross profit margins measurably. What we are doing here at Boxer is achieving real alignment where strategy, goals, and meaningful purpose will reinforce one another. With the exceptional leadership provided by a proven professional, Jim Albertelli, and his exceptional team, Boxer is well-served to lead the way in real estate technology for valuation, tax, and title. With that, I'll ask Jim to moderate any questions you may have for us. Thank you for listening in today.
spk01: Jim? Thank you, Gary.
spk07: At this time, if you would like to ask a question, please press star, then the number one on your telephone keypad. Again, that's star, then the number one to ask a question. Your first question comes from the line of Christian Scro with eight capital.
spk04: Hi, good morning. Congrats on the strong quarter and thanks for the update this morning. Plenty of good detail. The first question I'd asked is related to the June quarter. And you provided an update across settlement, valuation, and tax. It feels like everything is trending the right way. So maybe if you guys are able to quantify which of those three areas might have outperformed in Q2. And it's good to hear default is sort of coming back as the moratorium lifts. What are some trends you're seeing across the three segments into the back half of the year here?
spk01: Gary, it sounds like he was dedicating that one to you.
spk02: Oh, to me. Okay. Well, I mean, Jim, I'd actually like you to talk on the operations side of friends, and then I'll hop in after.
spk01: Yeah, no, happy to do that. I'm glad that you identified one of the tailwinds that the company is experiencing and just began really at the end of Q2 and the beginning of Q3, which is the release of the moratoria across the state and federal levels in the U.S., which impact our default technology, as well as some of our default title production. So with the release, the initial release of the moratorium, we should see an initial bump in the default related title work, as well as some additional robust growth in the default technologies. They include foreclosure management and bankruptcy technologies deployed at some of the largest banks and servicers in the US. So expect to see that to accelerate somewhat at the beginning of Q3, a level off, and then ultimately all of those plans begin to expire at the end of the year for good. So a Q1 2022 strong increase in both the default technology, just from the number of units running across the technology platforms that are deployed, as well as additional default title will occur You know, again, starting in Q3, but really gaining steam in Q1 of 2022, looking at trends across the business units. The nice thing about the market we're in today, which is switching from the streamlined refinance, which is all about rate and term refis, to refinances that involve cash out and equity in the U.S. and Canadian housing markets continues to increase. And those cash out refinances are less affected by cyclicality or seasonality. People still want their money. No matter what time of the year it is, they're going to still provide the application information necessary to do that. The other good aspect of it that may not be evident, especially if you're new to the prop tech or the real estate space, is that those refinances that are cash out related require more robust valuation. So either a full appraisal or a hybrid technology. both of those lend themselves exactly to the key functionality within ANOW. So having the end-to-end encrypted, route-optimized, AI-enabled, elegant delivery mechanism to the consumer, which is what ANOW represents for its lending partners, having that in place should continue to increase the gross margin as well as the top-line revenue as ANOW expands and proliferates in Q3 and Q4. And so we're already seeing that there are more implementations than times in the day for the ANOW product. And that's how widely received it is. And I should be able to give you some announcements on some key partnerships in the next couple, in the coming two to three weeks. So you can kind of get an idea of truly the scale and the rate of change that ANOW is bringing to the company. So that's title and that's valuation. Let's turn our attention now to tax. with the acquisition that gary mentioned of venue tech and the zone valuation piece something might not be self-evident again to to our investing group basically the the venue tech acquisition comes with a large data asset a data asset that comprises all data points across tax and title and property information the acquisition of the zone business unit serving mr cooper one of the top four mortgage servicers in the country. And if anyone listened to Jay Bray's, his earnings call, they would have listened to him speak about their tremendous growth opportunity moving to a $1 trillion portfolio. That begets great things for our Zoma acquisition, but it also comes with an amazing data asset. That data asset is the full repository of data that underpins real estate transactions today. known as the MLS system in the United States. So the combination of the Zoom data asset, the Benutech data asset, with our tax platform that is deployed already in 2,300 plus out of 3,300 plus counties in the U.S., that's an approximation, and gaining steam, like we mentioned in our earlier conversation, all of those pretend for continued growth in the tax business. It is is a quiet technology platform that just continues to grow under our leadership, and we expect to see it accelerate its growth as we add additional sales resources to focus on it, and we continue to combine the APEX and the iLookabout platforms. Now that, with this really unmatched data asset in the U.S., should give tremendous growth opportunities for us to continue to expand our the tax business, not only to municipalities and governmental entities, but also to give consumers a unique look into their tax assessment and the value of their property. So we're super excited about that as well. If you said, hey, Jim, what's your key driver? You'd go right back to looking at our software as a service, our ANOW platform, really accelerating growth with Q4 and Q1. And then you get a combination effect you get the proliferation of ANOW, you get the combination of increasing tax revenue, and you get the title coming not only from the cash-out refinance business, which we expect to be strong throughout 2022, maintaining a low-rate environment, but also with the default title of production. So each of the cylinders beginning to be fueled up, propelling us forward through 2022.
spk02: If I may augment what Jim said, because he's 100% precise on all of the points that he's made. But I think it's really, really important that this is not something that we're trying to push on anyone. If you take a look at the business today, especially in the valuation sector, it's broken. To pay $800 for an appraisal, to wait up to 18 days in some cases to get that delivered, with low-rate mortgages today is just strictly not tolerable. And if you ask any of the lenders, the system is broken. By bringing the ANOW platform that Marty Haldane has introduced to the industry, he has proven that just trying to work within the system, he can increase the efficiency of getting timely appraisals done by up to three times faster than what is being done today. When you start incorporating tech-enabled, effusive data into that platform, then it's a game changer for everyone. If you ask any lender, what I said in my remarks, they want it timely. Obviously, 18 days no longer works. They want it more affordable. You can't continue to pay $800 in appraisal with the interest rates that are out today and make this a buoyant marketplace. And you need it to be more accurate. And we deliver all of that with the data as Jim platform that we've aggregated that Jim has talked about. And the software as a service facilitation by having everything fully digitized. I mean, no longer is it acceptable in our view, to be delivered, you know, PDF documents through XML. I mean, we need it, you know, to be proficient, use XML, be able to use all of these data sets. We're changing the industry, but this is not something we're forcing. It's something that the economy has dictated that has to be done.
spk04: That's helpful. Gary, you spoke on this in the prepared remarks, but wanted to ask about Benutech and zone valuations. the two more recently announced acquisitions. First, I was wondering, and I know the situation's fluid, but any update on the timing for the close of either? I know those conversations are in the works. And then it might be soon to start plugging it, let's say, into our financial models, but maybe there's any color you guys give on what you think, you know, the financial sort of profile could look like, or maybe more broadly to speak to the opportunity with both, you know, both seem like complementary assets.
spk02: Yeah, I'll just speak on the timeliness first and then, you know, the rationale. Obviously, it's our hope that we close on both the sooner the better, but we're targeting right now October 1st for both. We think that that's feasible. And so that's what we're all working diligently towards with respect to the zone on the feasibility of this. I mean, we're so excited about this. to have this opportunity to be able to work with a top four lender. More importantly, what people may not understand is they're now our partners. They've taken back a good portion of the acquisition and shares. They fully realize that the opportunity for them to expand and to grow without conflict is very difficult housing inside the operations of Mr. Cooper. So being able to work with us as a partner to expand and grow the client base and the services and the opportunities and putting into the investment into this technology follows very closely in hand with the thesis that Mr. Cooper has further reiterated on their earnings call. So we're really excited the fact that we can take number one, the existing valuation Boxer platform is there integrating it in with Zone to get economies of scale and efficiencies there. To be able to incorporate the ANOW digitized platform into this existing customer base is extremely critical and important for us, both from a valuation and profitability standpoint. And then thirdly, have access to that data. That integrated with the other data that we will be having access to our Venutech acquisition and also the data that we have on hand. that we've acquired from our clients and other data service providers kind of set us apart from most of the competition that we have today. With respect to the operations, how that affects, I'll turn that over to Jim.
spk01: Thank you, Gary. Yeah, as far as the operations are concerned, when you're looking at the venue tech or the zone acquisition venue tech schedule, like Gary said, we're planning on an October 1 closing there. And ZOM is imminent any day now. I'm just waiting for the final word from the TSX-V. So great shape on both of these business units. If you're new to acquisitions or M&A, it may not be readily apparent to you, but obviously these transactions take some time to get completed. And in that time, of course, you're planning for the assimilation of staff and of technology, and doing a deep dive through your due diligence process. And that occurs over many months. So we expect to quickly, on the ZOM side, we've already coalesced with the management team, identified key employees, built the transition plan, structured it, reviewed it, confirmed the benefits. All of the blocking and tackling that you'd expect us to do through the due diligence process has been completed, both legally and procedurally. Inside Voxer, we created at the beginning of the year a change management organization and a process management organization. We refer to our PMO group. They've already identified key synergies between our current tech-enabled services and the ZOM services. We've already completed a project roadmap for the integration of the ANL platform. So all of that foundational work has already been completed. I expect a very short order of And by short order, I mean within 60 days post-close in the ZOM acquisition for really the synergies to be wrung out of it, the additional work that is on the shelf to be processing through a singular platform, and us to be well underway for our digitized ANL platform to help enhance and increase the underlying tech-enabled service margin, as well as build the relationship at the top line with the Mr. Cooper organization that we're very fortunate to have built. So that's on the zone side. The Benutech side is in many ways even easier. The Benutech team is under experienced leadership. They've done a tremendous job building their platform assets and delivering those platforms to enhance the business that title companies and the lead generation that mortgage companies can glean. So that platform... will dovetail nicely into our data mesh environment. Additionally, the data asset that comprises one of Benutech's key assets in the acquisition is able to be pushed through an API, so very standard technology, that we can quickly put our front-end GUI on and then deliver in a customizable way to our consuming constituents. So both of those should happen fairly rapidly. by, you know, really before the end of Q4 for both acquisitions, but next 60 days or so for Zome. And that's what the team is focused on, and that's what the expectation of management is.
spk04: That's great, Jim. I'm going to ask just one more question today. And it was encouraging to hear all the work you guys are doing in the background on, you know, the technical side of things and product enhancements. I was just wondering... when you think about the business, whether that's your own direction, Jim, or feedback from your team or clients, what guides the product roadmap? How do you allocate resources? And would you say now is maybe the focus currently on product development, or are there other areas you're building out the platform, building the technology to get ahead for the back half of this year and next year?
spk01: Yes. Well, as you can imagine, and Gary outlined, the client need The client needs to drive innovation and drive expectations, which ultimately lead to allocations. And so the key need, the essential, one of the essential proponents of loan production is the valuation of the asset. There's the valuation of the human, and there's valuation of the asset, and the two of those come together and they fulfill GSC promulgated standards, and then you loan money on those standards. So essentially, the lack of sufficient... human supply and appropriate management of the land valuation through the appraisal network has led to greater demand and proliferation of that platform. Our ability then to white label it, to end-end encrypt it, put it in a secure environment and elegantly deliver to a consumer an additional touch point for our lender is a big deal. So now they have, through the ANI platform, the ability to reduce the turn time for their appraisal, to put it in a secure, digitized environment, to deliver that to a consumer on a white-label experience. That's the need, and that's kind of the sine qua non of a loan, is that key valuation point, meaning that on every transaction, whether it is successful or not, and every engagement with a consumer, our platform our digital highway of value property value is in play and what that allows us to do with the master services agreements is then append additional services that we may not be the exclusive provider for so coming in with the exclusive providing of our digital platform and then being able to what we say land and expand the key one of the key drivers of organic growth is to add the title and the tax data to it so ADOW is getting its fair share of, I'll say, additional investment. Other platforms are receiving and continuing to be deployed as well and receive additional investment because we also see ourselves being the leader in the municipal tax space, and we see some unique offerings in our title world as well.
spk04: Thanks for taking my question this morning.
spk01: Thank you.
spk07: Thank you. Your next question comes from the line of Gavin Fairweather with Cormark.
spk05: Oh, hey guys. Good morning. Morning. Nice to hear that the ANOW pipeline is building nicely here. I guess I'm just kind of curious, what kind of deal sizes you're starting to see in the pipe relative to what ANOW would have been seeing, I guess, prior to your acquisition?
spk01: Well, and I'll take the first stab at that. Prior to our acquisition, The ANAL was growing its units pretty well in Canada, but where it lacked was some key infrastructure. If you look at Gary's history and my history, you'll see that Gary has built billion-dollar companies that have deployed resources to large financial institutions. I come from the regulatory world, not only in creating my own originator and servicer that I ultimately sold, but building a multi-state Fannie, Freddie, Jenny, no objection, law practice that serves financial institutions. What that means is that we're acutely aware of the need for compliance and auditability. And so what we brought were two things in the U.S. market that ANOW just didn't have. It didn't have My 25 plus years experience serving the largest financial institutions as a known quantity with the head of mortgage servicing of your major banks, the Wells Fargo, the Bank of America, the JPMorgan Chase of the world. So having the ability to serve that level of clientele and be able to withstand the audits and still deliver services at scale is a key driver that gives servicing and mortgage executives confidence. So we were able to inject that confidence And we were also able to support it with the infrastructure. So when you're thinking about the deal size, it's a whole new ballgame if you're a baseball player. It's like going from, you know, single A to the major leagues. And the deal size will grow exponentially on the ANL platform. The really genius piece of the platform or part of the genius piece is the way that Marty architected the technology in such a way that it has immense scalability. So we don't have to add tremendous dollars in the retention of the data and the imaging and the extraction. The architecture has been well thought out and well placed, and that's what we found in our due diligence. So really taking that entrepreneurial spirit, bolting on knowledge and relationships with the largest banks and servicers, which lead to master services agreement, which lead to SOW statements of work that you can append, gives you the ability to take in many more units. And Gary and I are looking at some of the deals right in front of us and looking ahead to our market share in the valuation space. And we think we're going to be a large part of all valuations by the end of 2022. So excited about the growth, the opportunity, and really the combination of the technology within our enterprise structure with the discipline and the auditability allows for the proliferation and the tackling of really large bank and non-bank clients.
spk02: Gavin, if I can add to, I mean, there's a number of things that are happening here that maybe not quite are as evident. Number one, there's not enough hours in the day with respect to the demonstrations that we are lining up all day, every day, with the number of clients that are wanting the demonstrations and the number of clients that are wanting to onboard this new technology. And it's a game changer. And as I said in my statement, the veracity of the success of this new platform will be seen in the coming weeks and months ahead with significant new clients that will move on board. But most importantly, we're also providing this platform to appraisal companies so that they can not only use it for updating technology and getting away from the PDFs and using like JSON file applications, but also in our review model. I mean, Right now, we've totally eliminated the whole manual component that we can do a whole review of the valuations in less than minutes, in portfolios in less than minutes. It changes everything. This is not only offered to the appraisers, but we're offering it to the AMCs as well because not every AMC has the capabilities to be able to take on a project of this size. I think that some of the larger clients have looked at this and basically know that it's going to cost them millions of dollars in years to get to the point where ANOW is right now as far as potential offering. So we're not basically setting aside our clients. We're talking about embracing them, allowing AMCs to use this technology, allowing, obviously, the lenders to use it. And also individual appraisal groups that have no ability whatsoever to take on that type of commitment as far as the service offering. So we do separate ourselves, but at the same time, we're embracing and acknowledging the infrastructure that's out there and continue to grow it.
spk05: That's very helpful. Just secondly for me, I was looking for an update on your alternative title insurance product. I know that you've been working kind of behind the scenes in terms of discussions with the insurers for the blanket insurance with lenders and also the GSEs. Maybe you can just provide us with an update on how those discussions are moving forward.
spk01: Sure. Without naming any names in the process, we're continuing to move down the pathway. We've identified clients that would be willing participants in a pilot. This includes a top 10 bank as well as two top 20 non-bank mortgage originators. So part of the process is just simply education, which we're doing, and letting them see that we have scale with our data ingestion engine, what we can deploy. Also, great support from a number of different AMBEST A-rated insurance providers, which would give us tremendous scale as we roll this out. So we're laying really the groundwork to be in production at scale. I've named a senior former mortgage executive to head up that charge, and he has spearheaded a number of initiatives for me over the past 10 years. He's been He's built scale at multiple large organizations over the past 25 or so years. So we really have been focused in on continuing the educational process. I'm hoping that I will have an announcement in the near future, within the next quarter, meaning really before the end of the year, that we can get this into a production pilot. in some key jurisdictions. And I think it's going to be very meaningful for us as a company. So I just can't get into any additional details on that now.
spk05: Yeah, that's fair. And good to hear that that's, you know, moving ahead nicely. I guess just next for me on, on zone acquisition, if I kind of dig into Mr. Cooper's financials, the note, the zone services division had both, $70 million of revenue in H-1. I think that there was other kind of components to that business. Can you help us at all think about the relative size of the valuation asset within that division?
spk01: Sure. Over the past, I'll say, 12 months, you're looking at approximately $60 million of top line. So you're going to see this increase In 2022, we expect the zone acquisition for us to be worth approximately $84 million top line in 2022, and that's U.S. It could be as much as nearly $100 million Canadian, depending on the exchange rate. So that's where we expect the zone valuation component to be. And of course, I think Gary mentioned this already, but really, Two other strategic components that come with that deal is the complete data asset of all the MLS data, which you're going to see us populate across our platform. You'll see the data show up in tax analysis. You'll see the data show up in valuation. I think it's going to be extremely helpful to allow our appraisers and data scientists to be that much more efficient. So you'll see that. But hopefully that gives you an idea of what the scale is, of the ZOMA acquisition and what we believe it's going to mean to us in 2022.
spk05: Yeah, that's super helpful.
spk02: Gavin, I was just going to add to that. I was just going to add, again, back to our thesis. We're having an opportunity to, you know, ingest, you know, the technology. We're acquiring more master service agreements in place so that, you know, as you know, Part of the game is having the best product in the marketplace. The other is to go through the rigorous process of getting accepted by the large lenders. One of our strategies is making sure that we have a large portfolio of master service agreements in place so that we don't have to wait months and years to be able to go through all the various testings that take place. You know, once that is done, you know, adding, you know, our technology and also taking advantage of the synergistic opportunities with our other business unit offerings. You know, it's kind of what we do in every deal. One thing is to be a creative. The second thing is to adjust new technology. But it's also, you know, the synergies that go with it. You know, every one of these lending entities would love a predictive analytics tool for property tax. which they have great exposure to. So, you know, it's, you know, the whole philosophy, which, you know, I've certainly talked with you about in the past, but having synergistic, accretive opportunities are very appealing as part of our strategic process.
spk05: That's helpful. And just maybe a follow-up on Zoom and, you know, it was great to, that was some great color on kind of the scale of the operations. In terms of the transaction volume that's running through there, how should we think about the different buckets of transactions? Obviously, Mr. Cooper, I think, is pretty big in refinance. So would that be kind of the biggest bucket of volume there?
spk01: Yeah, today – and this is Jim Albuquerque again – today, the largest bucket of transactions is in the refinance arena. But you should expect – and when I went from the – let's call it – approximately $60 million of top line for 2021 for that business unit and moving it to $84 million. That large factor in that growth is the release of the moratorium. So seeing broker's price opinions and seeing hybrids, other evaluation products that are used to mark your book to market, you'll see that increase substantially in 2022 and drive a lot of that additional growth. By the way, it also has a higher margin. So all of those components should come together for 2022.
spk05: Got it. And then just lastly for me, the gross margins in Q2, just a little bit from you, I didn't see a big change in the mix. So curious if there was any commentary there and maybe can help us out as we're thinking about gross margins, you know, into the back half and into the 22 as the moratorium is lifted with the new acquisitions that you've announced and as your software offerings continue to grow.
spk01: Yeah, sure. So a lot of times, you know, the gross margin may dip upon the assimilation of acquisition and some of the additional costs that go into the evaluation and proliferation of the acquisition. So you may have a little margin constraint initially, not a long term, but certainly maybe for 60, 90 days, a quarter perhaps. But as we've talked about, the the margins for the ANOW product are north of 70%. So as ANOW proliferates, and Gary mentioned, as it expands throughout the marketplace as we sign some of the top lending institutions and build relationships with some of the most prolific point-of-sale other technology partners, you're going to see that margin of north of 70% become a greater preponderant part of our future revenue. You're also going to see with additional scale, even tech-enabled services margins go up. So bringing all the zone units and combining it with what was known as Cloroxy and became Vox Revaluation, so the tech-enabled service, you're going to see that increase. And then similar margins are found in the bankruptcy technology space. So each of those default technology, the ANOW platform and its continued expansion, and some additional scale in the tech-enabled services will will provide really that margin growth as we move through 2021, Q4 of 2021, and into 2022. And that's where we'll really see some significant growth in that margin.
spk05: Great. That's it for me. Thanks so much.
spk01: Thank you.
spk07: Your next question comes from the line of Colin Fisher with Garrison Creek.
spk03: Good morning. Can you guys hear me?
spk01: Yeah, Scott, we hear you fine.
spk03: So first, congratulations on the quarter. It looks like it's pretty good or excellent, I guess. With regards to the Zome acquisition, how long will it take? Should we be looking at this as basically it's going to be running on the ANOW rails? And if so, how long will it take to sort of port the business that's currently running in zone over to the ANO platform? And then should we also assume that you're going to be, I mean, I looked at your numbers. It looks like it's 81% in the notes in terms of gross margin. So what should we be looking at the zone business basically having expansion in gross margins?
spk01: Yeah, so the implementation of the Zone platform, of the ANOW platform into the Zone business unit, I'm going to give you a very lawyerly response. It depends. And so you're probably going to say, well, what are these dependencies? You know, you speak up, Jim. Well, the dependency is a couple of things. One, we are... going to we've got some additional announcements to make. So we have some tremendous implementation schedule ahead of us. Several of those clients have even more volume than Mr. Cooper. So I'm chuckling because this is a great problem for us to have. Right. The problem for us to have is, hey, how many additional engineers and architects can you hire? to accelerate the growth of your platform within the client suite. So I expect that we are prioritizing, as you would imagine, the largest volume first. And there's probably, I'll say, at least a four or five Xer over the current Mr. Cooper volume ahead of it. And then there's some key strategic players that we're closely aligned with that could be very meaningful in that implementation. So what does it look like? Back to it. Q1 of 2022 is a good time to say, hey, the technology would be transitioned to an ANL platform to extract additional economies of scale and efficiencies. with our technology. And so I think that's what you should target. Could it happen sooner? It could. And that's just going to depend on some of these other integrations that are lined up ahead of it. Again, a great problem to have. I'm not complaining. It's been tremendously well received. And again, I hope I can give you some more particular color and then you can use those numbers to back in. But then you'll understand why I said It looks like a Q1 of 2022 implementation in this environment.
spk02: Colin, the other thing too is that Mr. Cooper is not unlike most lenders. As I said before, 18 days and $800 is not a solution for anyone. The quicker the transition in order to be able to deliver timely, affordable uh, valuations to them, you know, augment, you know, the, the platform that they are increasing in that's in the lending side of the business. So, uh, I think it will be a welcome, uh, you know, introduction for all of our, and not just.
spk03: Right. I just, I'm trying to, I guess I don't, I'm not necessarily trying to nail you down to a transition period, but, but just more to how to look at the zone acquisition. We should be looking at it through. the a now, uh, uh, uh, gross margin and profitability lens on a go forward once everything's poor, more what I'm looking for. Okay. So, um, the second thing is, um, with regards to the, uh, apex acquisition and the, uh, so I want to just sort of get some color as to the benefits of once these companies hit your, uh, platform. So if I could get some color on how the apex has grown. And I know there's only a short quarter of A now in there, but can you give some color as to how the revenues have accelerated through the quarter, maybe even month over month?
spk02: Jim, is it okay if I maybe hop in here? Obviously, I've been in the assessment and tax business for 40 years. I wish I was a lot younger and had 40 years ahead of me. But this business is extremely exciting for us because we're offering and are offering right now as we speak the first mobile assessment application in North America. For the assessor to get out in the field with an iPad and be able to draw his sketch with his finger and have the calculations of the square footage in front of him immediately, with him being able to put input in and interface with the valuation assessment-based valuation platform that that particular county is using, to be able to have that valuation in front of them, and writing it on a piece of paper with graph paper, going back to the office, transporting it, finding out half the time when they go back that they've left things out and have to go back again. We've increased the abilities for all counties in the U.S. to increase our productivity as much as five times. And so essentially, you know, where Apex has a very voracious appetite for the sketching and it's being adapted by many large, not just lenders, but, you know, counties as well, But we're integrating it in with the other platforms that we're offering, which is desktop management platform, imagery, and NRGVP, which is GeoViewport software as a service application. So it's, you know, it's essentially what we're doing is we're going down there, and while they do have individual businesses, we're integrating this total offering, and it's being accepted by with an extreme amount of enthusiasm. We've realized that in new counties that we have signed up since this acquisition. Again, sometimes when you integrate, sometimes when you acquire, you know that the base business is going to continue, but the synergistic benefits do take sometimes six to nine months to basically integrate and start realizing these benefits. And we're starting to realize that now. I'm not prepared to say exactly how much is APEX, but I do know that it's an extremely accretive opportunity for us both in profit and revenue. And we're very excited about this offering.
spk03: Thank you for that. One last question is with regards to how you're breaking down your revenue from, you know, your SaaS-based businesses and your solutions, and the gross margins, you know, you know, there's a, I think there needs to be an education of the investing community. I mean, I saw one of the reports that was out there where you're getting compared to a $68 billion market cap company whose top line revenues has been dropping over the last three years, but they happen to sort of notionally be relevant to technology. And I'm wondering if what you guys are going to do to sort of, make sure that the linguistics of your projections with the, uh, with the analyst community in Canada, that you get a better mix of comps, uh, closer to a SAS based and cloud delivered, uh, technology group, rather than archaic dying companies in the tech space or in the real estate base, I should say.
spk02: Colin, it's a, it's a challenge, you know, it's a challenge, you know, in getting that education out there because. most people on the TSX-V are from Missouri and they say, show me. And as opposed to, if you take a look at companies that we think are very comparable to us as far as technology offerings and that, I mean, you're seeing multiples that exist there as much as 35 to 40 times revenue. And, you know, we absolutely know that we are in that category as far as the type of work that they're doing and the type of growth that is going forward. But also, I'll say this concurrently, that it's not for us to value our business. That's for our investors out there. And I think that we have two things to do. Number one, as you said, continue to educate and demonstrate how technology is taking over our industry that we're in and how much It's affecting the opportunities for all of the businesses of our clients to be able to grow and be more affordable. And so, you know, that obviously has to take place. I also think that, you know, we also need to do a better job with respect to looking at the investor community and certainly getting more institutions involved and institutions that understand technology and understand the nuances of technology and how you grow your business and you know the timing that it takes and we need you know investors to be able to you know buy into that and afford you the time and the patience to allow that business to go i mean i think it was like 30 years before rogers ever made a profit um but you know they're one of the larger companies in the world today and so You know, we know that we're growing. We know that we're going to be profitable. We know that we are clearly transitioning to a software as a service business. We've given you all the evidence before us. And part of this, you know, attracting the larger institutionals, it's for us to be able to transition from a venture exchange and whether we, you know, move to the TSX or a U.S.-based entity such as NASDAQ or New York Stock Exchange, I think inevitably that has to take place because, you know, some of the larger institutions, you know, can't invest unless it's a $5 stock. So, you know, obviously we think we're going to get there based on where we are and what we're doing. But, you know, it's a whole investment community. It's a combination of obviously executing on what we have and educating at the same time. and getting the world to understand that that we're not a services company we're not you know boots on the ground company we have we have 300 people you know you take a look at altus which which i found it i mean you know when i left we had over 4 000 people um we're not you know a typical appraisal management company we're transitioning to you know a technology platform that's going to drive that and so You know, we're mitigating and we'll continue to mitigate the number of people that we have and transition to, you know, software as a service where technology is going to be the driver of the bus. So it's time and it's execution. And there's strategy with respect to who the investor group is and how we take the community that we have right now that we're grateful for and respect very much, but integrate that with more institutions that understand the long-term vision of who we are.
spk03: Perfect. Listen, I'm going to throw my hat in the ring and say I'd love it if you go to the TSX before you start making big moves to the U.S., but just because I think it's easier and quicker. But listen, congratulations on everything. Well done, all of you. And I'm going to pass the line. Thank you.
spk07: At this time, we have reached the allotted time for questions. I would like to turn it back over to management for closing remarks.
spk02: Jim?
spk01: Yep. Hold on. I just had a technical glitch over here. So you're back on. Thank you, Gary. I'd just like to thank all of our all of our investors and analysts for their time and attention today, really digging into what our growth strategy that you heard from Gary, what our key business drivers that you heard from me and our financial results from Angela. So again, we appreciate you as investors and analysts watching the stock, investing in us. And in the future, we're vested in this company. long-term, and we believe that it's going to continue to grow extremely well throughout the end of the year and into 2022. So thank you so much for your time, and we look forward to talking to you again in the future.
spk07: Thank you. This concludes today's conference call. You may now disconnect. Speakers, please hold the line.
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