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spk02: Good morning, ladies and gentlemen, and welcome to the VoxTrue Analytics Q3 2023 Earnings Conference Call. At this time, note that all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. And if at any time during this call you require immediate assistance, please press star zero for the operator. Also note that the call is being recorded on Thursday, November 30, 2023. I would now like to turn the conference over to Jordan Ross. Please go ahead, sir.
spk01: Good morning, everyone. Thank you for joining us for the Boxster Third Quarter 2023 Earnings Call, where we will discuss our financial results and business highlights. Please note that our Q3 2023 results were released November 28, 2023 and can be accessed on CDAR Plus and on our website at Boxster.com. Joining me today are CEO Gary Yeoman and CFO Robin Dyson. We will begin with 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.boxter.com. Robin Dyson will begin by reviewing our financial results. After that, Gary Yeoman will provide updates as to how we are progressing towards our objectives through capital markets, 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 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 IRFS. To see the reconciliation of these non-GAAP measures, please refer to our press release distributed Tuesday, November 28, 2023, and our management's discussion and analysis, both of which are available on CDAR+. A replay of today's call will also be posted on our website. Finally, please note that all references to amounts or currencies during today's call are to Canadian dollars unless otherwise stated. I will now turn the call over to our CFO, Robin Dyson.
spk03: Thank you, Jordan. Good morning, everyone, and thank you for joining us today. As addressed on our last earnings call, the rapid increase in the U.S. prime rate has had a negative impact on various lines of business of Voxter, primarily with respect to our appraisal services, capital markets, and title lines of business. From the beginning of 2022 to present, rates increased from 3.25% to 8.5%. As discussed on previous earnings calls, In response to market conditions, the company continues to focus on cost reductions and cash management. On November 1st, the company completed the sale of its appraisal management business. In accordance with IFRS standards, as at September 30th, it was highly probable that this transaction would be completed. Therefore, this line of business has been accounted for as a discontinued operation. As such, all P&L activity related to this business for the current and prior periods has been carved out of the individual revenue and expense line items in the financial statements and have been reflected as a single line item in the presentation of each of net income loss and comprehensive income loss. The Q3 MD&A presents key financial metrics for both continuing and discontinued operations. The metrics to be discussed on today's call will be based on continuing and discontinued operations, unless otherwise noted. Moving to our discussion of revenue. Revenue decreased from $35.5 million to $27.3 million for the three months ended September 30, 2023 and 2022, respectively, and decreased from $114 million to $86 million for the nine months ended September 30th. 2023 and 2022 respectively. These decreases were primarily attributable to the negative impact of significantly increased interest rates on our appraisal services line of business and the negative impact on revenue of the amendments made to a services agreement with a related party effective January 1st, 2023, which amendments also resulted in a significant decrease in direct operating expense to support this revenue stream. As noted on the Q2 earnings calls, the related party reference is no longer a related party as of April of this year. We maintain a mutually beneficial relationship with this party, but now at arm's length. While revenue from continuing and discontinued operations for Q3 year-to-date decreased on a year-over-year basis, revenue from continuing operations increased approximately $1 million. Gross profit remained relatively stable at approximately $13.6 million for the three months ended September 30th, 2023 and 2022, and increased to $42 million from $40 million for the nine months ended September 30th, 2023 and 2022, respectively. These increases, despite the revenue decreases discussed, are primarily attributable to decreases in direct costs required to support appraisal-related revenue, revenue increases being attributable to higher margin offerings, and indirect cost improvements. On a year-over-year basis, gross margin has increased from 35% to 49%. With the disposition of the appraisal management business, Q3 and year-to-date gross margin of the continuing operations was 67% and 65% respectively. Other items to highlight with respect to the third quarter include the company's achievement of positive adjusted EBITDA of approximately $954,000 for Q3 as compared to $530,000 for Q2. In Q3, the company closed additional tranches of a non-broker private placement initiated in Q2 for gross proceeds of approximately $8.7 million. Subsequent to the end of the quarter, Utilizing proceeds from the sale of the appraisal management business, the company paid down approximately $23 million of principal on its credit facilities. I will now turn the call over to our CEO, Gary Yeoman, to provide business updates.
spk04: Thank you, Robin, and good morning, everyone, and thank you for joining us. As always, I'd like to thank our shareholders for their support during this transition period. and evolution of Boxster becoming a pure technology company. I'm delighted to share our latest financial results, marking a consecutive quarter of having positive adjusted EBITDA, and more recently, marking a pivotal moment in our journey towards becoming a pure technology company. While navigating this transformation, we've remained dedicated to a dual focus, achieving profitability and reducing debt. Our commitment to becoming a pure technology company remains steadfast, and I'm thrilled to report recent strides in this direction. However, as we continue to evolve, our financial health remains a top priority. Our journey towards a pure technology focus has been marked by challenges, along with the difficult macroeconomic conditions within the mortgage market. But each hurdle has been an opportunity for learning and growth. We've embraced these challenges with optimism, leveraging our strengths and innovative spirit to propel us forward. The shift in the market isn't about change. It's about growth, adaptability, and embracing possibilities. By remaining agile and adaptive to market conditions and modernized processes, we fortified our position in the market while honoring our commitment to financial prudence. This combination has been pivotal in driving our progress. Now I'd like to expand further on Robin's comments with respect to the reduction of our credit facilities. We've had to make very difficult decisions, most recently with respect to the disposition of our appraisal management business. Although it came at a cost of losing a great team and top-line revenue, we have prioritized reducing our debt facilities. We believe that this disposition had the greatest return for the company for a few reasons. Firstly, the return on the investment from purely a cash perspective was substantive. More specifically, we had originally acquired this business for approximately 9 million USD of cash in August of 2021, and now sold it for up to 30 million USD of cash. Secondly, we're able to retain our valuation technology platform. which has significantly higher profit margins than the appraisal management business, resulting in a less dilutive valuation on that business segment. Thirdly, we can now remove the perception of not being truly an independent valuation technology provider and subsequently have a greater ability to sell to all lenders, appraisal management companies, and valuation professionals. For clarity, we will continue to provide technology solutions to the valuation industry by way of our Boxster ANOW platform with Appraisal Direct, our appraisal management rules-based engine that connects lenders directly to valuation professionals. Boxster Connect, our business management and workflow tool for lenders to manage multiple appraisal management companies. Boxster Data Collection and Walkthrough Application, our web-based data collection tool. And Boxster Reports Now, our automated rules-based report builder that assists valuation professionals in generating comprehensive valuation reports. And, of course, Apex Sketch. It's software application that creates exterior and interior floor plan sketches. In addition, I'd like to discuss some of the highlights and specifics within some of our business lines. Our boxed-in data business is starting to create progress in the rollout of the flagship product title toolbox to the agencies or commonly known as franchises of all of the major title underwriters. This is a major growth opportunity. Historically, this application has primarily only been sold directly to the in-house business development and sales teams of the major title underwriters. Now with their endorsements, the product has the ability to become the standard in the marketplace to drive increased business. Furthermore, they have developed and rolled out their QuickCheck reports. The reports leverage property data intelligence into a simple, easy-to-decipher report that helps real estate professionals better evaluate real estate transactions and close more confidently. The data business is already experiencing great returns on investment with this product, with revenue expected to hit in the fourth quarter of 2023. Our title business is in a transformational mode, incorporating technology now along with our new purchase transactions. Our assessment and taxation business continues to develop innovative new products with sketch verification for counties along with our other assessment-based management service offerings. Our mortgage asset trading platform, Blue Water, continues to be impacted by the volatility in the mortgage rates with buyers and sellers taking a cautious approach to pricing their mortgage assets. However, with the addition of the platform's automated and insured loan-level due diligence application, it has given them a differentiator in the marketplace. This is a great competitive advantage and with growing concern for mortgage originators based on the amount of loan purchases taking place. Lastly, our journey toward becoming a pure technology company is an exciting evolution. As we navigate this transformation, our vision remains clear. To innovate, to excel, and to deliver value to our shareholders, clients, and employees. Together, we'll continue this journey with enthusiasm, creating a future where our technology, prowess, and financial stability intertwine seamlessly. Thank you for your continued trust and support as we embark on this exciting chapter. And thank you again for joining us on the call today. We appreciate your time and your interest in Boxster. We're happy to answer any questions you may have at this time. I'll now hand it over to the operator to start the Q&A.
spk02: Thank you, Mr. Yeoman. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your touchtone phone. you will then hear a three-tone prompt acknowledging your request. And if you would like to withdraw from the question queue, simply press star followed by two. And if you are using a speakerphone, you will need to lift the handset first before pressing any keys. Please go ahead and press star one now if you do have any questions. And your first question will be from Fred Blondeau at Laurentian Bank Securities. Please go ahead.
spk05: Thank you and good morning. Two quick questions for me. First, on cost reductions, what is the plan for the rest of this year and 2024? And I was wondering how blue water was or will be impacted by these cost reductions?
spk04: Well, I'll answer the last point first. Bluewater is not impacted at all by the cost reductions. Bluewater is continuing to develop and innovate new technologies and have access to new accesses of business types and that. So the due diligence, pre- and post-close, reviews, the bulk deals, the flow, all is continuing to develop. I don't think that we've had a bigger pipeline of business opportunities in the history of the company. It is slow going, but we're extremely confident that this is going to be a leader in Boxer's evolution as a technology company. I'd love for it to happen quicker. I know Al Qureshi is working as hard as he possibly can to bring these opportunities forward, but there's no impact on Blue Water. With respect to the company and our way forward, we're going to continue to evaluate all of the businesses that we have. Clearly, we've reduced our debt by 40%, and so that's had a tremendous positive impact on our balance sheet. both from a cash flow standpoint and obviously trying to get our debt into balance. You know, when we first went into this, our interest rates were, you know, approximately 7%. You know, they've doubled almost. And the cost of carrying this debt has been extremely onerous on us. So what we did is we, you know, we sold the valuation group. That was strategic for us. As I've talked in previous, I guess, interviews and that, we have indicated that there's a transitioning taking place in the valuation sector. And that is that the fatties and the fatties of the world are looking more towards the growth of accepting valuations that include data collection and basically floor plan layouts. sketches along the company with their ABM. And this will replace the appraisal business. Now, it's not going to replace at all, but we think over the next 18 to 24 months, 50% of all of the appraisals that are taking place will probably incorporate this new method. And to that end, why we bought Apex and why we continue to develop the role of Apex is that we built a full mobile application system cloud-based that not only has a certified data collection tool called Walkthrough, but we're able to deliver real-time sketches of floor plan layouts. And so by having this tool that will now be marketing in the marketplace, we think we have a tremendous advantage for two reasons. Number one, that it is cloud-based. It is immediate so that you make a change or any changes that you make automatically get updated on the platform. But even more importantly is that we're no longer an AMC, an appraisal management company. And the biggest competitors that we have right now in the sketching and floor plan layout are AMCs. So if you're an appraisal management company and you need access to this technology, and I would say 90% of them will not be able to develop their own, Would you not rather go to someone that's independent, that's not biting the hand that feeds you? And so we think we have a tremendous advantage. And so we see great growth in this side of the business. And so we're very excited about that. With respect to all businesses being reviewed, Fred, you know, we're going to continue to do that. There's no question in our minds. that we're working very closely with the Bank of Montreal. They're our partners. They've been tremendous in the support of us and work through us. But, you know, we're certainly committed to reducing the debt further. You know, if we had, you know, our preferences, we'd love to have all the debt removed because, you know, based on interest rates and where they are, even though there seems to be some softening, It's a material obligation to us, given that the rates have tripled over the last couple of years. So we'll continue to review what we have. We're not going to tackle our key technology businesses, but we'll continue to look at it, and it really gets down to price. versus value. And I think that any company continues to do that. From day one, we've said that we've committed to develop and become a pure technology company. And that's what we've done. So we'll continue to review. And obviously, we need to remove the debt.
spk05: So in this context, I mean, what's left to be done in terms of non-core dispositions? Do you have like a target quarter where we could expect a clean run rate overall of financial performance?
spk04: Well, I think that the answer is sooner rather than later. So over the weeks and months ahead, we hope to have some news with respect to what we're doing. It could be similar to what we did with the valuation, or it could be a partnership with a strategic company that where we reduce our equity position, we actually increase our overall valuation. And so that is a very real and viable opportunity as well. There's many companies out there that love some of the products that we have to offer, and making a commitment to us, they'd like to have a piece of what we're doing. So You know, if we can sell, you know, let's say 25% of one of our businesses, but increase that business by 75%, you know, it's a win-win for everybody. And so we'll continue to look at all of the opportunities, but we know that we need to do something sooner rather than later.
spk05: Okay, sorry to, so is it fair to say that Q2 numbers or Q3 numbers will be pretty clean, or is it the plan, or you cannot commit to it?
spk04: Are you talking about for 2024?
spk05: 2024, yeah.
spk04: Well, we have so many new innovative products that we're bringing on and new areas of the marketplaces that we're tackling. I mean, If I got into it, the appraisal now business, our new valuation business, not only is increasing on our appraisal draft, but with the data collection tool that they have and the sketches of floor plan layouts, which is not generating any money right now, there's going to be a massive growth and contribution to our revenue on that side. And our title business, I mean, it's been taken over by Jim Adams, and we were losing $300,000 a month because of the marketplace and all of the transactions that had fallen off. And it was a people-concentrated business. And we transformed that business. We're effectively breaking even right now, but we have developed some technology. One of them is what we call a starter kit. Every title agency needs to have data completed in a starter kit, and they typically pay $125 to $130. Ryan Marshall and team have built a technology that basically replaces the manual starter kit that they had before. We can deliver it for $65. We're literally weeks away. We're testing it right now with our own title agency, new purchases that we have, but we're weeks away from getting into the marketplace. And so that's a, you know, a great opportunity for us to expand. I mean, we're still waiting, you know, for the Ontario government to sign off on the, on the property tax, but we believe, again, we've been no reason to not think that it's not imminent. And, you know, I could, I could go on and on, but we've got some really innovative new technology products. And so we, the opportunities for them to impact our bottom line is significant. And so I would be extremely disappointed if it's flat in one and two. I think that we have great growth in 2024 and beyond.
spk05: That's helpful. Thank you so much.
spk04: You're welcome.
spk02: Thank you. Next question will be from Christian Eskrow at Ape Capital. Please go ahead.
spk07: Hi, good morning. Thanks for taking my questions. When we think of the business at the highest level, would you say the majority of it's transaction-based on the residential side, or are there any subscription components in the business that you talk about?
spk04: Well, certainly a good portion of the business is transaction-based. There's no question about it. Obviously, our tax business that we have is not. But when we're looking at our... appraisal business. We're looking at our title business. We're looking at, you know, our data business. I mean, they're all transaction-based. And so, you know, we, quite frankly, we have a quiet buoyancy to think that, you know, even our refis will be coming back. And so, We think that we've been through the storm and we're looking for, you know, material contributions going forward with the, you know, with the plateauing or softening of some of the interest rates.
spk07: I agree. This feels like trough levels. So the torque from the transaction model ultimately would be a tailwind. I'll ask one more question, Gary, and it's on blue water. Just what the market exposure is there, it sounds like that, capital markets participants trading portfolios or loans. Just an update on that business and what we could look out for in the market to see how that business is performing.
spk04: Well, as I said in the offset, I mean, I don't think that Al Qureshi's pipeline has ever been bigger. And so we have a lot of transactions. But, you know, in talking to Al, you know, a leading industry person that currently has a portfolio that they need to move, they decided to, you know, to push that out to the first quarter instead of dealing in the fourth quarter. So the million dollars bottom line in revenue to us. So we know that the deals are going to happen. And there's just been, you know, some, I guess, some reservations not knowing what's happening with interest rates and everyone wanting to make sure that they're doing and trading at the right time based on market influence. And so his business and the pipeline, I mean, not only bulk deals, but, you know, certainly we're starting now to get back to the flow deals. You know, refis are a big opportunity. I, you know, we're pretty optimistic that that business is going. And, you know, and Al has talked about it in the marketplace and, And quite frankly, there's a big move for tokenization right now. And while we don't play in the tokenization space, and while we are not a blockchain company, we have products right now that we can provide these tokenization companies with real hard assets that can generate from 10% to 15% returns on these assets. And they're extremely, extremely enticing companies. for the tokenization company. So Al is pursuing that avenue as well. So we're pretty excited for the future. We know that things are coming around. We know the flows, the flow deals are now starting to come. Al has a number of bulk deals in the process. We've got some massive companies that want to play and use the Blue Water technology. So, you know, we're disappointed that that it has been slow out of the gate, but our theory and basically what we're forecasting and that, we know what's coming around. I just wish that it would happen sooner rather than later. I do believe that in 2024, Blue Water will be leading our company in a material way as far as profits and revenues.
spk07: Okay, that's a helpful context, Gary. Thanks for taking my question this morning. You're welcome.
spk02: Thank you. Next question will be from Mariusz Konieczny at Microcap Explosion. Please go ahead.
spk09: Thank you for taking my call. I wanted to ask about the disposition, the rationale with numbers for the disposition and the benefits to Voxter.
spk04: Sure. Well, first of all, you know, let me say and reiterate, we had the highest respect for Al Broadway. He ran that business. He ran a great business. He's a great individual. And we lost some really good team members. And so we're, you know, entirely grateful. But, you know, as we have said and as everyone knows, the AMC business is heavily concentrated people business. You're lucky to get 30% gross profit margins. You're lucky to get 8% profit margins. And that 8%, and you will see with some of the other larger AMCs, is a good number because you just need massive volumes in order to make profits in that side of the business. We see a transformation taking place, as I just mentioned earlier, switching to sketches, floor plan layouts, data collection. And we have a leading product. It's one of the reasons why we bought Apex with the mobile application that they've just recently completed. So we know that we have less than 1% of the total marketplace, and we believe that that's not a growing business. And it has no reflection on Al or any of the team. You've got to have the market in order to drive that. Now, there's only 4% of the whole marketplace right now are using Sketches. But in talks with the GSEs and the major lenders in that, we think over the next 18 to 24 months, that could represent as much as 50% of all transactions. So what do you do if you're an AMC and you're heavily concentrated with people? It's just going to impact the bottom line. And it's really labor intensive. And so that's not the area we wanted to go down. So we're able to realize a really, really good return. You know, we sold the business at a decent price. We'll continue the valuation offerings with our sketch and floor plan layout. And quite frankly, by the reduction of debt, the profits of that company was making is still about $4 million short of what our costs were going to be with respect to principal and interest. So, you know, on a $30 million, you know, debt facility, our costs were going to be somewhere around $11.5 to $12 million a year, principal and interest. And I'm talking Canadian dollars. If the profit was $7 million, I mean, we're $4.5 million to the good, to be quite frank with you. So from a cash flow standpoint, it was a no-brainer. From a technology standpoint, we think that the world is going in a different direction. And that's where we're going to promote. And lastly, from a strategic standpoint, we're no longer conflicted. We're not an AMC, so all of the valuation products that we sell, we can now sell to everyone without conflict. So that's a key. The whole transaction, we think, was a very positive and shrewd opportunity for us.
spk09: Thank you very much. I don't have any more questions.
spk04: Thank you.
spk02: Next question will be from Colin Fisher at Garrison Creek. Please go ahead.
spk06: Good morning. Good morning. When you sold your division, the company to whom you sold that business, are they going to remain as a client in using of the services, or do they have internal services and software that they're going to use?
spk04: So it was a big part of our deal, and we tried to have some kind of contractual commitment on going with that. So the answer is that we don't have that contractual commitment, but we've got a great relationship with Accurate Appraisals. We've got a great relationship with Paul, who is the CEO of the company. And we believe that our sketch and floor plan layout encompassed with our data collection will be a very attractive opportunity. I mean, alternatively, right now they're dealing with Cubicasa, which is a clear capital product. They don't have much alternative. But would you rather do business with a company like us that is not a competitive AMC where they're buying for business against each other, that we have a product that's ANSI certified, which Cubicasa is not, We have a product that is web-based, so every time you make a change, that change is automatically updated immediately. We're not having to send that data offshore to get stips together and pull things together. So specifically, we've got a great relationship with Acura, a great relationship with NovoCaf, which is a parent company. and we have a continued agreement that we'll continue to do business and support each other. We are going to get appraisal requests, you know, valuation requests to be done, and we're going to work with these guys. There's going to be a lot of reciprocity among each other, Colin. And so, you know, that's the plan.
spk06: With regards to the debt, now that there's been a large tranche paid off, will the remaining debt be reclassified as long-term debt or will it remain as a current liability?
spk04: That's a question for, you know, obviously for Robin. You know, our hope is to continue to just whack away at it. So, you know, there'll be no question. But Robin, from a formal standpoint, do you have any comment on that?
spk03: Yes, I can comment on that. The reason that the debt is classified as current is because currently we aren't in compliance with a couple of financial covenants and we don't have a waiver that extends for one year. So we're currently in discussion with the bank to reestablish the covenants to something more appropriate given the current environment. And then once we are in compliance with those confidence, that's when we will be able to reclassify the debt to current and long-term portions.
spk06: Thank you. With regards to share-based compensation, how much of the selling of this division will have any impact at all? And how much of the share-based compensation is just preordained from previous acquisitions?
spk04: Robin, do you want to comment on that?
spk03: Sure. There would be a very nominal impact to share-based compensation resulting from the disposition of rock share appraisal. A significant component relates to blue water.
spk06: Right, and that's just the replacement shares?
spk03: Correct, yeah, that's most significant.
spk06: With regards to the, now that you're not in conflict with a large swath of the industry because it's no longer having an AMT, have you seen any impact vis-a-vis sales pipeline or conversations that have ameliorated, and when do you expect to see some sort of impact from that perception from the industry?
spk04: Yeah, so Ernie Durbin, who is our chief, If you want to call him valuation officer, I mean, he's been our eyes and ears. He's a stalwart in the appraisal industry. And so he has been talking to a lot of the lenders, to the Freddies, the Fannys, some of the major companies. And, like, he is, you know, he has explained to us that they are thrilled with the advent of what we're doing with our sketches and floor plan layouts and the manner that it's in. So he is absolutely thrilled, you know, with that opportunity. And so I'm, you know, we're excited. We think it's going to be a material, you know, impact for us.
spk06: We're... So during this period, there has been some growth in some areas. Where is that growth coming from? And what conditions do you think have to be present for us to see material growth across all divisions? Is it just a pause in the rate? Or is it a decrease in the rate? Or is it just the rate of change which is causing most of the dislocation in sales?
spk04: Well, on a macro basis, I mean, in the real estate technology space, how many companies do you know are showing material growth? So I think that the interest rates have had material impact on all of our businesses. As I said before in Christian's question, a lot of it has related around transactions. but we do see some softening, and so we think that the actual number of transactions are going to increase. But quite frankly, it's a transition for us with our new technology. Let me give you an example. We are moving towards completing a fully digitized loan officer. A loan officer right now in any transaction would charge anywhere from, Well, it could be $3,000 as much as $3,000 to complete a transaction. We are working towards fully digitizing that whole process. You still need a loan officer, but the cost will be substantively less. And so the first step in that is our starter kits, Colin. And for example... When we were looking and talking to a bunch of the title companies and deciding what we were going to do on our way forward with title, there's not one company that I talked to that basically didn't tell me that their costs for a starter kit was at the very lowest $120 and many of them $145. One company we talked to, we're doing 25,000 transactions a month. With the evolution of these starter kits hitting the marketplace, I can't tell you the margins and the profitability that we're going to generate. We have so many new transactions, and just like all technology companies, it does take some time to adapt and transition to this new way, but this is bottom-line money that is affecting everybody. So, we're excited. That's one aspect. I've talked to you about the data collection, the sketches. That's another aspect. Al Qureshi's business is coming around, and him, you know, again, being creative and entering into other new marketplace like this organization is exciting for us. So, you know, lots of really good things. RPTA, the tax that we've talked about, we're waiting for that to be endorsed and signed off by the province, but You know, listen, I built the largest property tax business in the world. And, you know, one thing about taxes is that, you know, there is encyclicality there. It's a business that's always frothy. It's always growing. And we think that we have positioned ourselves in a very strong place. Once that's going, we're very, you know, confident on the growth of that business. So that's just a few of the things that we're touching on right now. You know, Title Toolbox has been, you know, adjusted and created, and, you know, there's been some nice growth, and we've signed a couple of major clients that will come on, and some of that money will realize in the fourth quarter. And so Chad is doing a good job in growing that side of the business. So every business that we have right now is focused on technology. And, you know, it comes at a cost, right? I mean, it has impacted our bottom line. And, you know, as Robin has pointed out, our technology cost is a major expense for us. And even though we can, you know, amortize some of those costs, it's still material for us and, you know, will continue. But we believe that the revenue, and we're not talking about years down the road, we're talking about, you know, 2024. You're going to see some material changes in the health of our company financially.
spk06: Can you give a little bit of color on both AOL, where that's going, what it's looking like, and the foreclosure business?
spk04: So AOL is interesting. I mean, we've got some pushbacks from the title insurance companies. Obviously, they don't like that. But at the same time, we think that there's a great opportunity for AOL and working closely with the real estate brokerages in that. So lots of discussions that are going on as far as how we're going to strategically place this, you know, in the way going forward. But, you know, certainly there's a, you know, a real and viable demand for this, albeit, you know, there's always roadblocks. But, you know, Jim Valbertelli said, talked about it in the past as far as how exciting it is, and I think that there still is a great opportunity, but it's always about timing, and it's always about impact and roadblocks, but it's certainly the opportunities are there. We have people talking to a number of different entities out there that may utilize that, and that's as much as I could say about that. What was the other question, Colin? Closures. Well, I mean, it's never really happened, has it, in the three years since we took over the business. I mean, real estate prices have increased substantively, and people, through overall yield, have generated good equity pieces in the company. So rather than being faced with foreclosure, they just sell the property because they do have equity that they don't want to lose. I think that what you're seeing right now is the trending seems to be happening where foreclosures and bankruptcies, we're seeing that they're starting to increase. And quite frankly, with what has happened in the marketplace and with real estate prices falling, I think that it is leading to a more prevalence of foreclosure. We're working with a major bank right now on a bankruptcy platform that we have developed, and we continue to work with them, and we're hoping that we'll be able to utilize that platform in the spring. But we've seen some rises in that area, and so we remain optimistic that that business will prosper. excuse me, welcome back. And, you know, we have a settlement services business that will, you know, can ride the tide and alter that. We've got a great title leader right now in Jim Adams that will take advantage of that. So we're just growing. We're growing that business, but we're growing with a profitable, in a profitable way. And, you know, I think that, and it certainly wasn't Jim Albertalli's fault, but his business and title was phenomenal. you know, pretty much 100% focused on foreclosure and hence the lack of profitability in that area. So we've just repositioned the whole title company and now we're basically breaking even. We're going to bring new technology into that. We think it's going to be a material profitable section of our company going forward.
spk06: And just the last question, just to round up sort of the marketplace, how is home equity lines of credit and how is that impacting your business?
spk04: Well, I mean, you know, Al Qureshi will tell you that it's, you know, affected him tremendously. So, you know, when that comes back, obviously it'll augment his business, but that's, you know, I mean, that impacts everything. It impacts title, it impacts valuation, it impacts, you know, Al Qureshi's transactional side of the business. So... I really don't have a material comment, but we obviously think that that will start coming back with the softening of the interest rates. Listen, we've been through a hell of a storm. It's not just us. All real estate technology companies have been through a storm because I don't know how you can get around transactional-based technology. It has to happen. People need it. There's Some things that we have that's not transactional, but by and large, it's pretty difficult to avoid, right? And so, you know, anything that with the softening of rates is going to, you know, help our business. We've been through the storm. We've adapted. We're transitioning now to pure tech. So we'll be less affected by it. I mean, we went from 450 people to 190 people call in. Like, we're at bare bones right now. And so, you know, our costs have been reduced significantly. And I think that on a way going forward, when you get these major shifts, we're going to be less impacted in the future because, you know, a lot of the material costs, you know, in the real estate side are very much dependent on the costs of manpower. And if you can let technology take over, you can mitigate those risks.
spk06: Right. I have one last question, and this is it. It's for Robin. How does amortization of intangibles look going forward past the selling of that division?
spk03: Certainly, it will decrease given there was a significant amount of intangible assets there. Off the top of my head, I don't have a specific number quantified. But that was a large portion of our amortization.
spk06: Okay, that's it. Thank you very much.
spk02: As a reminder, ladies and gentlemen, if you do have any questions, please press star followed by one on your touchtone phone. And your next question will be from Brandon O'Dwyer at Holt Brothers. Please go ahead.
spk08: Hey, thanks for taking my question. I touched upon it, but I was just wondering if Fannie recently abandoning the title insurance program. What's the future of AOL if Fannie's not going to be on board?
spk04: I don't believe that that's correct. Certainly in our discussions with them, I don't believe that they have abandoned it, certainly as late as even last week. So it really depends on the context of how that was defined. But AOL is still on the table. AOL will save the purchasers substantial amounts of money, as much as $1,000 to $2,000, depending upon the state that you're in. They haven't abandoned AOL. I mean, you know, as late as, you know, two weeks ago when I talked to a senior representative, they still remain excited and they get frustrated by a lot of the misinformation that keeps getting thrown out around there. So, you know, we're not swayed at all by whatever innuendo is thrown out there. Okay, thank you. You're welcome, Brendan. Thanks for calling in.
spk02: Thank you. And at this time, Mr. Yeoman, we have no further questions. Please proceed.
spk04: Okay. Well, again, thank you all very much for joining the call today. Thank you to all the shareholders that continue to support us. Again, you know, I'm extremely apologetic that we've been through this storm. You know, we haven't given you the returns that you want, certainly as far as share price. And only know that... that it has affected us significantly, not only because we're large shareholders in the company as well, management, you know, continues to own a very large portion of the company. And, you know, we're just working as hard as we possibly can to turn this company around. We're confident it's going to happen. Lots of exciting things. You know, we're not dissuaded at all by, you know, some of the challenges. We've met them head on and we think that, you know, we have a very exciting future. So, Thank you all again for joining, and we'll now terminate the meeting.
spk02: Thank you, sir. Ladies and gentlemen, you're welcome. This does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines. Enjoy the rest of your day.
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