Real Matters Q1 Earnings Call Highlights

Core Insights - Real Matters reported a strong start to fiscal 2026 with double-digit year-over-year growth and a return to positive profitability in a typically slow quarter for the business [3] - The company onboarded eight new clients, including two top-100 lenders, and achieved profitability for the first time since Q1 2022 despite mortgage market volumes being approximately 70% lower than that time [2][5] Financial Performance - Consolidated revenue rose 14% year-over-year, while net revenue increased 19%, reflecting gains across all segments [2][5] - U.S. Appraisal revenue increased 12% year-over-year to $32.9 million, with refinance-related revenues rising 27% [7] - U.S. Title revenue jumped 76% to $4.4 million, driven by market share gains and a Tier-1 client launch, with net revenue increasing 110% to $2.8 million [8][9] Segment Analysis - U.S. Appraisal segment saw adjusted EBITDA rise 36% to $3.3 million, with a net revenue margin decline attributed to transaction volume distribution [7] - U.S. Title segment posted an adjusted EBITDA loss of $0.8 million, improving from a $1.8 million loss a year ago, with operating expenses rising 16% due to additional hires [9] - Canada segment revenue increased modestly to $9.2 million, supported by market share gains, while net revenue rose 3% to $1.8 million [10] Market Outlook - Management expressed cautious optimism regarding U.S. mortgage fundamentals, forecasting modest purchase growth and approximately 50% refinance upside [4][13] - There are about 13 million mortgages above 6%, indicating a longer-term refinance opportunity as the market normalizes [14] Operational Efficiency - The company has improved operating efficiencies over the past several years, which has enhanced leverage in its business model [15] - Management indicated that at similar volumes to 2020 and 2021, the company expects to perform better, with adjusted EBITDA potentially close to $100 million under the target operating model [15] Balance Sheet Strength - The company ended the quarter with no debt and $43.8 million in cash, with the increase attributed to collections timing and working capital changes [17]