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spk07: Welcome to the Vox Store earnings conference call. My name is Hilda and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press 01 on your touchstone phone. As a reminder, the conference is being recorded. I will now turn the call over to Jordan Ross, Chief Investment Officer, Jordan, you may begin.
spk00: Good morning, everyone. Thank you for joining us for the Voxter second quarter earnings call, where we will discuss our financial results for the period ended June 30, 2022. Please note that our results were released yesterday, August 29, 2022, after the market closed and can be accessed on SADAR or on our website at voxter.com. Joining me today are Executive Chairman Gary Yeoman, CEO Jim Albertelli, and CFO Angela Little. We will begin with the prepared remarks and then move into Q&A. If we are unable to get to your question, you are always welcome to contact me directly at jordan.voxter.com. Angela Little will begin by reviewing our financial results. After that, Gary Yeoman will outline some of our strategy goals and actions for the first half of 2022 and the most recent acquisitions that we've made of Bluewater. Jim Albertelli will then update us on how we are progressing toward our objectives through organic growth and operational efficiencies. Before we get started, please be advised that some of the information that we will share on this call may contain forward-looking statements. We caution you not to place undue reliance on forward-looking statements and undertake no duty or obligation to update any forward-looking statements as a result of new information, future events, or changes in our expectations. Further, on today's call, we will report using both IFRS and non-GAAP financial measures. We use these non-GAAP financial measures internally or for financial and operational decision-making purposes. as we believe that they provide a meaningful measurement of financial performance and valuation. These 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 press release distributed yesterday, August 29, 2022, and our management discussion and analysis. both of which are available at sedar.com and on our website at voxer.com. A replay of today's call will also be posted on our website. Finally, please note that all references to amounts or currency during today's calls are to Canadian dollars, unless otherwise stated. I will now turn the call over to our CFO, Angela Little.
spk08: Thank you, Jordan, and good morning, everyone. To start, I will provide a high-level summary of our second quarter performance, and then I will go into some details and key metrics relevant to Q2 and the remainder of the year. For the quarter, Boxster's gross revenue was $38 million, gross profit was $12.7 million, and adjusted EBITDA loss was $3.9 million. For year-to-date 2022, Boxster's gross revenue is $79 million, Gross profit is $26.6 million, and adjusted EBITDA loss is $6.9 million. Revenue for Q2 2022 reflects a 111% increase over Q2 2021. Year-to-date 2022 revenue reflects a 143% increase over year-to-date 2021. Gross profit for Q2 2022 reflects a 53% increase over Q2 2021, and year-to-date 2022 gross profit reflects a 72% increase over year-to-date 2021. For Q2 2022, approximately 96% of gross revenue was from US sources. And for year-to-date 2022, approximately 97% of gross revenue was from U.S. sources. These percentages are up from 89% in Q2 2021 and 88% for year-to-date 2021, reflecting the company's continued expansion into the U.S. markets from strategic acquisitions made over the past year. Revenue from software and data licenses represents approximately 16% of the year-to-date gross revenue. This percentage will continue to increase through Q3 and Q4 as the company expands product offerings and sales in the valuation, title, and tax technology product space. Additionally, the Bluewater Financial Technologies acquisition will significantly increase our SaaS-based revenues in Q4 of 2022 and going into 2023. The company ended Q2 with cash and cash equivalents of $37 million and adjusted working capital of $19.5 million. During Q2 2022, the company executed new debt covenants with Bank of Montreal Financial Group, further solidifying our partnership and their commitment to our vision and long-term strategy. The company is now fully compliant with all loan covenants and anticipates remaining compliant for the foreseeable future. Moving on to some of the macroeconomics impacting the Q2 and year-to-date results. Throughout Q2 2022, mortgage rates continued to rise, reaching the highest level since 2008 at nearly 6%. This, coupled with housing supply shortages and general economic uncertainties, have resulted in a significant decrease in volume within the primary mortgage space, with particularly significant reductions in refinance activity. Mortgage applications dropped to the lowest level at the end of June, marking the biggest slump in 22 years. Because Boxster's diverse product offerings cross over not only the primary mortgage market, but also HELOC and default servicing, The company is uniquely positioned to hedge against these types of market conditions. This diversity will be further expanded with the addition of Bluewater Financial Technologies, opening the company into the secondary and capital market space. Default volumes have slowly started to return to pre-COVID levels during Q1 and Q2 and are anticipated to continue to rise through the remainder of the year and into 2023. The slower ramp-up is mainly related to borrowers having significant home equity, as well as some CARES Act forbearance programs extending into 2022. Despite the slower default ramp-up, coupled with the significant decreases in the primary mortgage space, Boxster was able to maintain consistent gross revenue and gross profits from Q1 2022 to Q2 2022, which is consistent with the expectations we set out in our Q1 earnings call. As we go into the second half of the year, the focus is on revenue growth, positive adjusted EBITDA, and positive cash flow. The company is executing a cost reduction plan, which includes a reduction of approximately 10% of the workforce across the board salary reduction and a freeze on all discretionary bonus plans for 2022. We estimate a total savings thus far of approximately $700,000 a month to be fully recognized starting in September 2022. Throughout the remainder of the year, we will continue to right-size where necessary for market conditions, and we are looking for additional efficiencies through synergies, consolidation, and process improvement. In addition to the cost reductions, FOXR completed the acquisition of MTE on July 1st. strengthening Boxster's footprint in the Canadian tax assessment market. This acquisition adds immediate positive EBITDA to the company on a standalone basis and will achieve additional cost synergies as we integrate MTE into Boxster's technology infrastructure. We anticipate significant new revenue from our attorney opinion letter product, which is currently onboarding nine new clients. We also anticipate new revenue from tax products in the Canadian market and default processing, default title, and default valuation increases. Additionally, we expect new clients across the board from our continued sales efforts. As a result of all these factors, we remain confident in our original 2022 guidance for gross revenue of $170 to $190 million. With regard to gross profit, our revenue mix has shifted somewhat from the original guidance resulting in lower than anticipated margins for 2022. A higher percentage of revenue has been generated in the valuation space, and the onboarding of new clients and products has been delayed due to market conditions in the valuation technology and title technology space. With the upcoming acquisition of Bluewater Financial Technologies, Boxster will have additional immediate significant margin profits as well as positive cash flow. I will now turn the call over to our Executive Chairman, Gary Yeoman, to provide additional guidance regarding the company's strategic focus for the remainder of 2022.
spk04: Thank you, Angela, and good morning, everyone, and thank you for joining us. Our focus remains on data as a cornerstone for technologies that can reduce costs and inefficiencies in real estate transactions. We have advanced much in this area, and I'm pleased to discuss a few noteworthy successes from a capital markets perspective. And we'll turn it over to Jim to discuss the operational and organic success. First, Boxster completed a private placement in May of 2022. with total proceeds of approximately $12.5 million, as strategic and pre-existing institutional investors contributed to this additional capital. Second, the company executed a strategic acquisition of municipal tax equity consultants and MTE Paralegal Professional Corporation to accelerate the rollout and use of our real property tax analytics technology in Canada. For more than 32 years, MTE has managed the assessment basis for municipal clients across Canada. Municipal clients can optimize revenue from their tax base with MTE's addition to the Boxer enterprise. By integrating into the Boxer technology infrastructure, this acquisition will result in increased cost synergies for the business and positive EBITDA growth. Finally, the company most recently executed a purchase agreement to acquire Blue Water Financial Technologies. as seen in our news release on August 15, 2022. Bluewater delivers SaaS-based solutions to investors trading mortgage servicing rights and hold loans to improve profitability, reduce risk, and increase the liquidity of mortgage asset portfolios. Bluewater's core analytic capabilities and advanced technology solutions are critical elements in an end-to-end mortgage asset solution. After the acquisition closes, Al Qureshi, the founder of Blue Water, will stay on with Boxster and become the president of our capital markets division. At the same time, Nick Smith, CEO of Ricebark Capital, who provided the initial seed capital to Blue Water, will act as an advisor to the board. Collectively, they will receive approximately 69% of the Boxster stock being issued as part of the consideration for the transactions. Also, it is important to note that the stock issued will take place over approximately 48 months following the transaction's closing. With this acquisition, Voctor's influence in the U.S. capital market will expand while accelerating the company's transformation into a pure play technology provider for the North American mortgage market. The acquisition provides three initial benefits. One, it allows us to diversify our revenues from the primary mortgage space, mitigating any cyclicality we are currently seeing in purchases and refinancing. Two, it is a significant EBITDA and favorable cash flow profile, which the market and our shareholders are demanding of us and ultimately would allow us to, again, partner with BMO Financial Group on financing this transaction. And three, it creates an opportunity to make material net new revenue opportunities by integrating our existing products on the Blue Water platform, creating a singular mortgage trading platform that includes automated mortgage and property due diligence. Further to the above, we appreciate the BMO Financial Group for being a great partner and sharing our vision while believing in our teams. This transformational transaction could not have happened without their support, diligence, and assistance. You have already seen our initiatives to strategically combine our acquisitions with current Boxer technologies, creating synergies and expanding our market share. These integrations are materially accretive and will improve our gross profit margins. As we grow our market share and strengthen our SaaS-based products, We will continue to add value for customers, originators, servicers, investors, and shareholders. I'll now turn the call over to Jim. Thank you.
spk05: Thank you, Gary. Good morning. Good morning, everyone, and thank you for joining us. Our Q2 2022 results are indicative of current market conditions, and we remain focused on the dynamic execution of our growth strategy. The current environment still demands discipline. As a result, we constantly review our priorities to ensure that we scale effectively and and are well positioned for growth in the many markets we address. Now, I want to take some time to discuss the numerous advantages we experienced in the second quarter of 2022. First, let me start with our Voxer AOL, the Fannie Mae and Freddie Mac approved alternative to traditional title insurance. The Voxer AOL sees increased opportunities, and since our last call, we have signed nine independent mortgage banks and received the approval of several mortgage aggregators. These IMVs and aggregator partners are currently going through the Boxer AOL onboarding and integration process. Boxer now offers AOL in all 50 states directly and through strategic partnerships. We are bringing even more rigor to leverage our internal and external relationships to establish a widespread distribution network. Boxer continues to be at the forefront of innovation. We are excited to see the adoption of the Boxer AOL as home prices and interest rates continue to impact the potential buyers in today's marketplace. Working with large financial institutions and industry partners, we can provide immediate savings to the consumer, making home ownership more affordable and more transparent. Secondly, the market has allowed us to pivot our business to address the critical growth opportunities in front of us. We've aligned our business to address the most relevant products, best margin, and ability to scale. One example of this is our home equity data set that can service the $11 trillion in tappable home equity today. We have also taken the time to right-size the business. We've centralized our core operations and are expanding new matrix management structures to ensure maximum success. Additionally, we clearly understand how each product and service impacts the current marketplace, so we remain focused on our key deliverables. Using defined analysis of current products and services, We consider market inefficiencies to develop more effective, transparent, and lower-cost options to enhance the consumer experience in all facets of our business, valuation, tax, default, and settlement services. Lastly, we target ways to diversify our revenue stream through innovative disruption. We are thrilled to be combining with Blue Water Financial Technologies' digital asset capabilities with Boxster's proprietary data stores to create a powerful new platform. The platform allows seamless integration and delivery of Boxster's core solutions to enhance Bluewater's already powerful trading, pricing, and due diligence engine. Imagine real-time, all-the-time physical asset underwriting. Imagine adding 40% to the average value of an MSR, a mortgage servicing right, through the upstream application of innovations such as AOL. Imagine due diligence as a utility. Imagine an automated experience for the consumer like to no other. The combination of Voxer and Bluewater financial technologies makes these realities today. Bluewater places Voxer data in the center of the multi-trillion dollar capital markets universe. Voxer is set to further expand into the secondary market with innovative products and services, fast synergies for both Bluewater and Voxer, and a perfectly timed accretive opportunity. Further, Voxer's nimbleness and counter-cyclical revenue streams have a distinct advantage in the changing marketplace. as evidenced by net new revenue opportunities with high profit margins. You've heard me say it before, we're bringing Wall Street to Main Street. Our strategic focus has always been and remains on growth. We are achieving absolute alignment here at Voxter, where strategy, goals, and meaningful purpose reinforce one another. We believe our intelligent, data-driven solutions are well-positioned for revenue growth in 2022 and beyond, while also navigating the changing environments. focusing on saving money for consumers and investors while increasing shareholder equity. Thank you for joining us on the call today. We appreciate your time and your interest. We'd be happy to answer any questions you may have at this time. I'll hand it over to the moderator to start the Q&A. Thank you.
spk07: Thank you. We will now begin the question and answer session. If you have a question, please press 01 using your touchtone phone. If you wish to be removed from the question queue, please press 02. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press 01 on your touchstone phone. Our first question comes from Christian Sacro from Aid Capital. Please go ahead.
spk01: Hi, good morning, and thanks for taking my questions. The first area I wanted to ask about is on the guidance commentary. Just clarifying some of Angela's comments earlier in the script. So just so I understand, the revenue guidance is unchanged for the year. There'll be a big contribution from Blue Water in Q4. Does that mean the gross profit guide is intact as well, or was there any change to either of those?
spk03: Angela, I'll let you answer that.
spk08: Okay, sure. Yes, we do believe that Voxter, even on a standalone basis without the Blue Water acquisition, we are on target for original gross revenue guidance. We do anticipate the gross profit to come in slightly lower than what we originally anticipated, which is just primarily due to the mix of revenue. We have quite a bit of revenue. Our valuation business is holding steady. and providing a large contribution. Some of the more SaaS-based products with the higher margins have been delayed a little bit more into Q3 and Q4. So we are thinking that that guidance will come in a little bit lower. Obviously, with the acquisition of Blue Water, that changes things quite a bit. And we are looking forward to, you know, once we close the acquisition, being able to provide a little more specifics on what that will look like.
spk04: And Christian, if I can just say, just to take it into context too, a significant portion of that revenue increase will be generated from the synergies of our existing products being tax certificates, flood certificates, valuation, property reports, title reports, title insurance policies. So where Blue Water is profitable, and cash flow positive on its own, the synergistic benefits are going to be significant for us. And that helps augment the revenue we have, realizing this in the secondary markets where, you know, previously most of our revenue was generated in the primary markets.
spk01: Okay, that's a helpful thing for clarifying on the guidance. And then, so Blue Water, congrats, it's a large acquisition company. A lot of it's probably private. You can't share too much detail, but is there any sense you could give us for the revenue contribution, if not the actuals now, maybe what you're thinking about for next year and the way they generate revenue? My understanding is it might be largely transactional, but maybe help us unpack what to look for in the growth there.
spk04: Yeah. Obviously, we can't give you the numbers right now because it is a private company and where we anticipate closing soon. you know, in and around mid-September, we'll be able to give, you know, certainly more guidance and clarity at that time. But there's no question it is transactional. But as you can see from the material shift from the primary market to the secondary market, where there'll be participating significant growth in the MSR space, you know, we expect blue water to increase significantly. Also, it gives us the opportunity to participate in the HELOC or secondary loans, in the whole loans, non-qualified mortgages, scratch and dent mortgages, we'll have that opportunity to participate in all of those spaces. So just being and having access to business in the capital markets on the secondary side is significant for us. With respect to the revenues, again, we'll be able to bring more clarity come mid-September.
spk01: I've got two more questions here. And on the first, I want to poke at the challenging macro that you and peers are facing with interest rates volumes. If we're seeing industry data pointing to, you know, less origination volumes in Q3, I was just wondering how we should be thinking about the sequential move into Q3. You know, do you think revenues can be flattish battling those headwinds? Or how do you think, you know, the business can sort of perform different areas of the business to move from the Q2 quarter here?
spk04: We think there's some proof, but actually, Jimmy, why don't I just turn that over to you and you can give some foresight on some of the individual businesses and how they'll be impacted.
spk05: Yes, certainly. Thank you for the question. Again, as I've mentioned, the increasing interest rate environment, while depressive on the sector as a whole, is really good tailwind for Boxter. in several regards. One, it spurs the innovation. So as I mentioned, the dearth of origination production and refinance and the constrained supply of new housing stock has led to nine new clients being in the onboarding process. And the onboarding process doesn't happen overnight, unfortunately. There are technology dependencies because each one of these clients that we are onboarding has the potential of somewhere between 500 and 2,000 transactions a month that are potential for Voxter in the AOL space. So I expect that as days come online, we'll continue to ramp up and actually increase our title production significantly through Q4. So you're going to see a nice, robust growth vector for that title revenue. In the valuation space, the sales group has done a tremendous job Essentially, the origination revenue where the company was primarily dependent on that has been replaced almost even more than one for one in the default space. Remember, defaulted assets also need to be marked to market. There needs to be periodic reviews of valuation, so there needs to be broker price opinions and, in some instances, full appraisals. So the valuation appraisal business has held steady. And I expect that as we've seen in the recent chart from the federal government on savings, savings have decreased tremendously for the American homeowner. So that's going to spur movement into the next market we were talking about and made mention to, which is the home equity market. So Voxter has, again, pivoted quickly in Q2 to create unique product offerings in the home equity space. And that's in the primary mortgage market. With the acquisition of Bluewater, it will be the sale of those closed-end seconds and HELOCs on the marketplace. You'll also see then the beginning of the influx of the NPL and RPL market beginning to take hold. Bluewater can also handle those transactions. Those will add additional default volume and default title as well as technology. So really what you have that's unique to Voxter is the countercyclicality, not only of those products I mentioned as a result of market forces, but also the fact that in the secondary market, many of the mortgage companies need to raise capital to provide the capital for their pivot. What does that mean? Well, that means that they need to sell those mortgage servicing rights. Who can do that? Bluewater can do that. So that's why in my discussion, I mentioned the perfect timing We always knew that the market was going to begin to shift out of origination default. We had placed key assets to be able to handle that vector. Now what we have is we have an additional platform that reaches into the secondary market and provides greater cost reduction to those individuals trading MSRs and whole loans. And so what that means now is it's a low cost leader in the ability to transact more efficiently and effectively. at a time when they need liquidity with a product that they have to sell. And here we are sitting with a market-leading platform that is powered by Voxter Data.
spk01: Okay, got it. Thank you, Jim. And I promise one last question. I'll poke at the AOL product, which you had mentioned. So nine new clients since the last call across all 50 states now. My question on AOL would be, it looks like it's shaping up well into Q4. Just curious, From your end, how do you guys think of the visibility into these discussions, into revenues into Q4? And if we should think of transactions increasing or what the drivers will be there? One customer going full-fledged and sort of using it extensively, or do you think it'll be balanced? Ways that you see the AOL revenue coming in strong in Q4? Yeah, so...
spk05: When I think about this, I think about each one of these clients that hasn't made a change if they've even been around over the past 70 years, which is really the monumental change and shift that we did with Fannie and Freddie around this initiative. Now, remember, we still are sitting on the desk of the secretary at the VA. I expect that the veterans should get the benefit of this product as well. Same thing with first-time homebuyers and Ginnie Mae recently said that they're going to be focused on innovation and technology, so I expect that to come behind this. But what I think of when I think of these clients is I believe what they'll do is it'll be a slow ramp in Q4, meaning that if you're doing 500 transactions, there'll be some commitment of 10% to 20%. If you're doing 2,000 transactions, same thing. So I can see it being 1,000, units a month with the potential to be somewhere between six and ten thousand just with the clients we have um each one of those being a top line of of let's call it um you know you know 1200 to 1500 so probably somewhere about a million two um ramping up with these clients to about seven million top line with just these but i don't it's not going to stop here uh we have national banks that have received outreach from the GSEs and basically assertions that they're going to buy all of these loans with the AOL behind it, which, of course, they should. So I'd expect that you're going to see, before our next earnings call, a major financial institution that goes live as well, one of the top federally chartered U.S. banks, so maybe more than one. So that's where we're at. And I think, you know, it's almost like this rocket. We're loading the fuel right now, and I think that we're going to have a significant, you know, we'll have a ramp in Q4, and then, you know, Q1 will just be off to the races. But you can easily see where it could be a $7 million top line. I mean, that's fairly reasonable to think of. as you head into the end of Q1 of next year. And, you know, then you can do the math from there. But, yes, we're very bullish. We've had a lot of great support from the federal agencies and, again, the consumer groups that are behind us. So everybody's poised for this change. And, again, it's a high-rate environment. It's a volatile environment. And that's what we need to get people to innovate. And that's what's going to accelerate the innovation process like around our acquisition with Blue Water. It's going to be that increasing cost where people are looking for something that's cost advantageous. And quite frankly, you know, we've innovated on the front end, and with Blue Water's innovations coming to it, we'll have the secondary market as well.
spk01: That's all very helpful, Jim. Thanks for taking my questions this morning. Thank you.
spk07: Thank you. Our next question comes from Fred Lundahl from LaRation Bank Securities. Please go ahead.
spk02: Thanks, and good morning. Just a quick question for me this morning. Just on Angela's comments and my predecessor's questions, I was wondering if you could give a bit more color on the current operating environment so far in Q3, and how should we view cash flow for Q3 and Q4, especially in the context of blue water, obviously, and ultimately, and more importantly, what are your views on your capital needs for the next six months and then for the next 12 months? Appreciate it.
spk04: Thanks, Fred. We feel very comfortable from a cash flow standpoint that we're not going to need any additional capital in the foreseeable future. With respect to Q3, I think Angela said that we expect to be reasonably flat in the third quarter. Obviously, we are transitioning significantly to the secondary quarter. market and the capital market space, and that's going to obviously increase our revenue opportunities substantially. But we have to ramp up to that. Again, we expect most of the revenue we're going to see with Blue Water won't be realized until the fourth quarter, so reasonably flat third quarters certainly we think could be better than than the second quarter, but certainly nothing too awe-inspiring. But everything that we're doing in the third quarter is set up for what we believe to be a remarkable fourth. So that's where I think we are, Brett.
spk02: That's great. Thank you.
spk04: Thank you.
spk07: Thank you. Our next question comes from Colin Fisher from Garrison Creek. Please go ahead.
spk06: Good morning, everybody. Thanks for taking my call. I have a few questions here. With regards to the trade receivables from the related party, obviously it went up from Q1 to Q2. I believe there was an expectation that that was going to go down. It looks like $3.8 million was paid, which is great. And it looks like possibly as revenues are growing in the foreclosure space, there's a timing of payment issue. How long... for this receiver to be fully paid? What are the timing on the payments vis-a-vis the cash flow in terms of getting those payments done between when a new bit of revenue comes in in the next payment and then catch-up payments?
spk03: Angela?
spk08: Yeah, sure. Yeah, thanks, Colin. Yeah, as you noted, we have started to receive weekly significant payments, and $3.8 million has been paid since the close. of Q3, or excuse me, Q2, that will continue. And I think that in, you know, pretty short order within the next, you know, say 60 to 90 days, that receivable will be current within the net 90 terms of the agreement.
spk06: Okay, that's great. And then cash flow from operations, there's a lot of non-cash flow items again, and there's some timing issues as per the note. Can you give some clarity on what's going on with the cash flow from operations? There's always a lot of noise in that line item.
spk04: Ang, why don't you deal with some of those non-cash issues?
spk08: Yeah, sure. Yeah, I'm happy to talk about that. Yeah, and there was a little bit, you know, we did have a few items this quarter that were a little different. You know, obviously the amortization of intangibles is always a big item right now because of all of the acquisitions that we've done in the last year. There's a couple of other factors in there this quarter. We had a change in contingent consideration of about $3.5 million. That is related to the earn out of one of the acquisitions and the fluctuating stock price over this year. We have some income tax loss carry-forwards based on our actuals and our updated forecast through the remainder of the year. And then probably the other significant item in there is just our share-based compensation expense, which was just under $5 million for the six months.
spk06: Okay, thanks very much. With regards to foreclosure environment, Given that it looks like the business model is proving out that you have counter-cyclical revenues from different business units, if foreclosures was not curtailed as it is from the slow ramp in the previous extension of the moratorium, how much more impact would the foreclosure have had, do you anticipate, in this environment if it was basically a normal foreclosure? foreclosure environment vis-a-vis revenues and gross profits.
spk04: Jim, I think that's best for you to answer since that's been your baby for the last 20 years.
spk05: Yeah, well, so it sounds like what you're asking is should the market normalize, which I don't know really what that looks like anymore given the heavy-handed way the government has intervened um, with the consumers. But if it was, you know, if it was pre COVID, um, you know, you would expect that it would be approximately just in the pre COVID best economy, lowest unemployment of all time, maybe since 1970. Um, then it would have been two, it would be double what it was, what it's doing now, um, as far as the revenue is concerned. And, um, And I would think that the net component would be somewhere around 10 to 12 million. That's the net, net, net. And on the top line, that would represent a third of what it would be on the top line. So I think that there is certainly substantial growth available in the default market as As things ramp up, if you're looking at the early indicators, you know, now people, now people, servicers are beginning to disclose the 30, 60, 90 as it comes out of, out of forbearance. So, and you're seeing a quite spike in those numbers. I think in some, in some genie pools, you know, the FHA and VA loans, and it's really around FHA, as you could imagine, you know, it may be as high as 7% delinquency. in the 30, 60, 90. So we're expecting additional rate tightening. I think you've seen that from the Fed, additional rates going up. We're seeing additional contraction. It's a wonky labor market, but there are additional layoffs that are coming. And of course, there's a money multiplier effect. So the one layoff spurs, you know, 0.8 layoff in this job, 0.6 in that job, 0.5 in this job. And ultimately you have from one layoff to several. So I would imagine that you're going to see through Q4, and there's usually a little pause around the holidays, and then you're going to see somewhere in Q1 and Q2 beginning to really ramp up, especially if we expect, as we do, that the labor market is going to soften somewhat and the interest rates are going to continue to increase, which is going to drive some pullback in the application of capital and the increasing of the economy as a whole. So with those macroeconomic headwinds and just some normalcy, quite frankly, you know, I think the government's given away about as much as it can give to people now with the student debt, forgiveness plan, training people not to pay debts. So I would expect all of those psychological, financial, uh, macroeconomic factors to, to bring us back to a more normal, um, or a pre COVID default level over the next six to eight months.
spk06: Okay. That's great. Um, with regards to RPT and, uh, RPTA and wealth, how are they rolling out? What's the expansion plan for RPTA south of the border? Um, or I guess I'll say the U.S., just for the Americans so they don't get confused. And for wealth, Voxter wealth as well, is there any sort of color you can provide on those two?
spk05: Sure. Sure. The RPTA in the U.S., as you can imagine, there was additional complexities not only in the state level, but then you got into the municipal and then even state. more narrowly tailored into the county level. And so you have local and state applications of our PTA. So what we've sought to achieve and what we've achieved now is really the culmination of all the research we've done in the local markets to ferret out in the servicing portfolio something that hasn't been done, right? Never in the history of mortgage servicing. have the the individuals that are being serviced had their taxes analyzed for accuracy they've had dynamic taxes received from the municipalities but no one is at access really the depth of knowledge that voxer brings with it with the apex sketch from the company that was acquired out of san antonio to all the analytics that were brought to bear in the modeling that had been done in the provinces so So that took some work to do, but it's been well worth it. So now we're sitting here at this point with our beta created for the U.S. market, capturing things. We talked about your property tax is too high, too low, by how much, but there are also independent factors that I think are just as meaningful to consumers. For example, if you're over 55, then there's a tax benefit. If you're a veteran, there's a tax benefit. If you own one home and you haven't applied for your homestead, that could be substantial savings for the consumer. Those consumer attributes are contained within the servicing portfolios. So, you know, we made the strategic decision to basically ferret out all of the benefits on a local level. You know, I think we now have our data and analytics on north of 80% of the total U.S. population. So, So this next, let's call it 30, 60, 90 days with RBJ will be the test client looking at portfolio analysis and retention and doing these analyses on the people that are in the servicing portfolio. And then I would expect that we'll do the same thing like we're doing with the AOL, which is begin the onboarding process in Q4 and launch it in Q1 in earnest. But but also having tested it with several smaller servicers. So that's the plan rollout. Voxer Wealth, as you know, is the culmination of all of the Voxer data. That product was completed recently, and now we're in discussions with several different constituents for consuming the Voxer Wealth platform. We talked to a major... auction provider about a way to retain their clientele by putting them in Boxster Wealth, uploading all of their information, and they can then manage their physical asset. So, you know, Boxster Wealth, you'll see it really proliferate in two ways. Again, I think that's a Q4, Q1 initiative. You're going to see it proliferate directly to, you know, investing consumers and high net worth individuals, but you're also going to see really the same thing supporting, you know, the portfolio analysis in the secondary market, right? All the culmination of all the data, the valuation, the tax, the title, all of that information, plus the ability to pull things like MERS records, the mortgage electronic registration services, data, etc., that need to be appended to portfolios in the pre-trade, the trade, post-trade process. So, So I think you're going to see that variation of Oxford Wealth, which is a complete data file, a complete physical asset underwrite. You're going to see it proliferate in those two ways, in capital markets and directly to consumer, but through business partnerships in Q1.
spk06: With regards to that, just as a sort of a follow-on to – sorry, go ahead.
spk04: I was just going to say, just one more question, Colin, if you can, in the interest of time. But I just want to add just a couple more things to that. We fully expect to have the province of Ontario on as a client, hopefully any day now. And with respect to the U.S., there is one major client that has multiples of thousands of assets on it that we'll probably be announcing within the next few weeks as well so version 1.0 was done on the wealth platform so we're pretty excited about that and Jim is absolutely bang on with respect to the culmination of everything we do is basically encapsulated in the wealth platform so it's going to be a major contributor for us it's called repurposing the assets and the products that we have and generating further revenue
spk06: Okay, so I'm going to cheat a little bit and ask two questions at once. Don't stop me. Vis-a-vis the AOL, RPT, and wealth, you've done a fairly heavy lift. Is there going to be any sort of rationalization in the IT sector or your IT department in terms of costs and whatnot? And then I also know that there's a lot of people who are very interested in and about getting an update on the TSX uplifting.
spk04: Yeah. Okay. You want to tackle the... You know, the IT piece, Jim? Sure. I'll deal with the TSX.
spk05: Yeah, so you're right on the heavy lift of the arranging of the data within the database to address the various needs, you know, depending on if it's an RPTA component or if it's really property-related look-back. and an automated ingestion engine around the supporting proliferation of the AOL to allow for scale. The database architecture is pulling together and we're reducing the cost of data storage in combining the contracts of the various companies. So I think from an infrastructure perspective, we're reducing those core costs. So that's what you should expect there. From marshalling the technical resources, though, these are true SaaS plays. So once the product is deployed or the data is deployed in such a way as the consumers can digest it, and in some cases it's completely self-explanatory information, then there really isn't any more lift. What there is is config or configuring an API to deliver that data into the the requisite location. Um, so for example, you know, in, in the blue water world, when we're looking at a pre-trade portfolio, for example, we're doing the portfolio analysis and we want to monitor it for runoff, right? So you, you agree to sell or get servicing rights and you say, Hey, I don't call on these customers, but we want to understand during the, the, the settlement of the trade with it, where the, the, um, homes are going in for what reason, right? So what Boxer would do is, like for Blue Water, it's a pretty easy lift. We've already defined the data elements. We'll now map the API to where they want to receive it on their side so their consumer can hit what I call the easy button, what we call portfolio protect. We've already named it. And all that data then goes in real time and monitors all of those assets, and then identifies the key attributes for runoff. But again, the underlying technology hasn't changed. The configuration is what has to happen. So really, a lot of R&D has been done and completed in RPTA and in AOL and in Voxer Wealth. Those products are built. So now the question is, is it a white-label configuration? Is it an API delivery configuration? What does the schema look like? But we're already in a position to do that. On the infrastructure side, we are reducing costs around data and data storage, and we are pushing towards, you know, depending on the company, some are already in a SOC 2, Type 2 environment, but bringing those standards to market. the subsidiaries or some of our suppliers that might not be. So that's where we're spending the money is really in the data security integrity compliance component.
spk04: I hope that helps. With respect to the TSX, if not for Blue Water and me and Jim and I completely dominating the legal department, time and energy, A prospective prospectus would have been filed by now, but it is imminent, and so we will be forward with that. The circular has already been filed, and so it is our intent, as soon as humanly possible, is to, once they have been filed, of course, we've got to include the blue water acquisition as part of that in our prospectus. Once that has been done, which is in the not-too-distant future, then obviously we'll be seeking TSX, you know, an application to go on the major board. Though, you know, obviously, I guess your next question is what does that mean for NASDAQ? You know, I think there has to be some right sizing with respect to our share price or, you know, obviously the You know, the investors understand, you know, what our service offerings is right now, the improvement of our revenue and profitability, which you're going to see, you know, starting in the fourth quarter and beyond. We think that there should be a significant change with respect to how, you know, our company is valued and the current valuation that is there. And so we need to see some change first before we move forward, you know, with the NASDAQ application. certainly we have some time based on that application to be able to you know allow all of those new offerings that come to bear and improve our overall market cap that has to happen before we move forward with that application and and we feel that we're in you know a very strategic position by now as i said before entering into the secondary market so that we've got that total counter cyclicality that none of our competitors have that benefit of offering right now. So that's where we are there in the capital markets.
spk06: Okay, thank you very much. I'd also just like to say congratulations to Jim for not saying sine qua non in the entire call. Congratulations. There's still time.
spk03: Back to you, Operator.
spk07: Thank you. And at this moment, we have no further questions. Thank you, ladies and gentlemen. This concludes today's conference. We thank you for participating. You may now disconnect.
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