Real Matters Inc. (REAL:CA) Q1 2026 Earnings Call Transcript
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Overview
The earnings call indicates positive sentiment due to significant revenue growth, market share gains, and improved EBITDA performance. The Q&A highlights optimism about refinancing activity, Tier 1 client growth, and market recovery. While management expressed caution about short-term volume declines, they are optimistic about long-term growth and profitability. Additionally, the company is expanding into new channels and has a strong cash position. Despite some management hesitance on specifics, the overall outlook is positive, suggesting a stock price increase in the near term.
Key Financial Performance
Consolidated revenues Consolidated revenues were up 14% year-over-year, driven by gains across all three segments.
Net revenue Net revenue increased 19% year-over-year, reflecting gains across all three segments.
Consolidated adjusted EBITDA Achieved positive consolidated adjusted EBITDA of $0.1 million for the quarter, up from a loss of $1.7 million in the first quarter of 2025. This was driven by strong operating leverage in U.S. Appraisal and U.S. Title.
U.S. Appraisal revenues Revenues were $32.9 million, up 12% year-over-year. This increase was due to a 27% rise in revenues from refinance mortgage originations and a 22% increase in home equity revenues.
U.S. Appraisal net revenue Net revenue was $8.4 million, up from $7.8 million in Q1 2025. However, net revenue margins decreased by 110 basis points due to the distribution of transaction volumes across geographies, clients, and product mix.
U.S. Appraisal adjusted EBITDA Adjusted EBITDA was $3.3 million, up 36% year-over-year, with adjusted EBITDA margins increasing by 820 basis points to 39.1%.
U.S. Title revenues Revenues increased 76% year-over-year to $4.4 million, driven by a 135% rise in refinance origination revenues due to market share gains and higher refinance mortgage origination volume.
U.S. Title net revenue Net revenue was $2.8 million, up 110% year-over-year, with net revenue margins increasing to 63.9% from 53.4%.
U.S. Title adjusted EBITDA Recorded an adjusted EBITDA loss of $0.8 million, an improvement from the loss of $1.8 million in Q1 2025. Approximately 85% of the incremental net revenue flowed to the bottom line, excluding investments in title sales capabilities.
Canada revenues Revenues increased modestly to $9.2 million from $9.1 million in the prior year, driven by net market share gains in appraisal, partially offset by lower mortgage market volumes and insurance inspection services.
Canada net revenue Net revenue was up 3% to $1.8 million, while adjusted EBITDA remained flat at $1.1 million.
Cash balance Ended the quarter with a cash balance of $43.8 million, an increase from the prior quarter due to timing of collections and changes in working capital.
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Operating Highlights
New Clients: Launched 8 new clients in Q1, including 2 top 100 lenders and a new channel with a Tier 1 lender in U.S. Title.
Market Share Gains: Gained additional market share in U.S. Appraisal and U.S. Title segments, supported by favorable refinance market conditions.
Canada Expansion: Launched 3 new clients in Canada, achieving modest revenue and net revenue growth despite lower mortgage market volumes.
Revenue Growth: Consolidated revenues increased by 14% and net revenue grew by 19% year-over-year.
Operational Leverage: Achieved positive consolidated adjusted EBITDA of $0.1 million, driven by strong operating leverage in U.S. Appraisal and U.S. Title.
Cost Management: Reduced U.S. Appraisal operating expenses by 5% year-over-year, contributing to a 36% growth in adjusted EBITDA for the segment.
Scalability: Demonstrated ability to scale operations with existing cost base, particularly in U.S. Title, where incremental revenue significantly contributes to EBITDA.
Market Positioning: Focused on capacity planning and leveraging network management model to drive RFP conversations and expand U.S. Title sales pipeline.
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Risk or Challenges
Market Volatility: The company acknowledges risks related to market conditions, including the potential for fluctuations in mortgage rates and housing market volumes, which could impact refinance and purchase origination volumes.
Regulatory and Economic Uncertainty: The company faces risks from regulatory changes and economic uncertainties, such as shifts in interest rates and treasury yields, which could affect the housing financing market and overall business performance.
Operational Scaling: While the company has demonstrated operating leverage, there is a risk associated with scaling operations to meet increased volumes, particularly in the U.S. Title segment, where additional hires and investments are required.
Client Concentration: The company’s performance is tied to a few large clients, and any loss or reduction in business from these clients could materially impact revenues and profitability.
Geographic and Product Mix: Changes in the distribution of transaction volumes across geographies, clients, and product types have led to margin pressures, which could continue to pose challenges.
Seasonality: The business is subject to seasonal fluctuations, with certain periods being slower, which could impact financial performance if not managed effectively.
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Guidance & Outlook
U.S. Title Segment: The company expects net revenue margins in the U.S. Title segment to trend closer to the lower end of the target operating model range in the second quarter due to the order flow of volumes.
U.S. Mortgage Market: The company remains cautiously optimistic about improving fundamentals in the U.S. mortgage market. There is a substantial pool of refinance candidates, which could become a significant tailwind for volume growth in the years ahead.
Operating Leverage and Profitability: Higher transaction volumes on the platform have the potential to meaningfully enhance both margins and profitability as the business scales.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you provide insights into the cadence of refinancing activity during the quarter as rates declined?
A:Refinancing volumes were stronger at the beginning of the quarter compared to the end. The company benefited from a 'months boomlet' in September and October, with 2/3 of title growth attributed to the Tier 1 launch and 1/3 to market growth. Purchases, however, struggled.
Q:Do you expect Tier 1 lender clients to remain aggressive as mortgage rate spreads narrow?
A:Management observed that Tier 1 lenders have been aggressive in setting 30-year rates, which could be a positive tailwind. The company has been gaining market share with both bank and non-bank clients, with larger banks stepping up as spreads narrow.
Q:Can you discuss the pipeline and how prospects are reacting to the recent drop in rates?
A:The company is seeing increased RFP activity, particularly in the title segment, due to recent rate drops. Eight new clients were added in the quarter, including two top 100 customers. Progress with Tier 1 clients is ongoing, with a third Tier 1 expected to launch this year.
Q:Is the new channel with the Tier 1 in title a significant opportunity?
A:Yes, the new channel (home equity) with the Tier 1 client is a decent opportunity. The company launched well in the origination channel and is now expanding into home equity.
Q:How do you expect the business to perform in terms of profitability as volumes ramp up?
A:Management is confident in achieving the target operating model, with adjusted EBITDA close to $100 million, higher than previous cycles, due to operational efficiencies implemented over the last 5-6 years.
Q:What is the source of your cautious optimism mentioned in the prepared remarks?
A:The caution stems from the overall recovery timeline, with Q2 market volumes expected to decline by 10%. However, the full-year market is projected to grow by over 50%, and the company is optimistic about growth in the title business and new customer onboarding.
Q:How does market share gain align with market recovery?
A:Market share gains depend on outperforming competitors. Gains are more significant when volumes are high. The company has been moving the market share needle forward with larger players in appraisal and is building share in the title segment with strong performance.
Q:What are your thoughts on potential regulatory changes and their impact on the business?
A:The administration's focus on affordability, including portable mortgages, 50-year mortgages, and MBS purchases, is seen as supportive. Efforts to reduce interest rates are also expected to positively impact the market.
Q:What is your base case for market volumes for mortgages, both purchase and refinance?
A:The company uses MBA and Fannie Mae forecasts as a base, expecting single-digit purchase growth and 50% refinance growth for fiscal 2026. Q2 volumes are expected to decline by 10%, with substantial increases in Q3 and Q4.
Q:Have there been any notable changes in the competitive environment?
A:The competitive environment has been relatively stable, with some movement in ownership among competitors. The company focuses on customer growth and market share rather than relying on market rates.
Q:Does UAD readiness provide a competitive edge, and does it require significant investment?
A:Yes, UAD readiness is a differentiator. The company has invested a couple of million dollars in this area and completed its first UAD transaction. Competitors are struggling with compliance, which could drive new customer interest.
Q:Review of Unclear Management Responses
A:Management avoided providing forward-looking comments on Tier 1 lender aggressiveness and the potential performance of the home equity market. Additionally, while they expressed confidence in achieving profitability targets, specific details on mitigating factors were not provided.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Canada
Corporate Communications
MDA
President Investor
Real Matters
Relations Corporate
Title segment
Vice President
basis point
capacity
decline
expectation
gain client
income loss
insurance inspection
lender
leverage Title
market origination
market share
market volume
measure
mortgage market
mortgage origination
mortgage rate
origination volume
purchase
refinance
revenue
share gain
slide presentation
title
volume Title
CODA Transcript
Real Matters Inc. (REAL:CA) Q1 2026 Earnings Call Transcript
Positive1-29
The earnings call indicates positive sentiment due to significant revenue growth, market share gains, and improved EBITDA performance. The Q&A highlights optimism about refinancing activity, Tier 1 client growth, and market recovery. While management expressed caution about short-term volume declines, they are optimistic about long-term growth and profitability. Additionally, the company is expanding into new channels and has a strong cash position. Despite some management hesitance on specifics, the overall outlook is positive, suggesting a stock price increase in the near term.
Coda Octopus Group, Inc. (CODA) Q4 2025 Earnings Call Transcript
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The earnings call reveals strong financial performance with a 30.7% revenue increase and a 24.6% rise in gross profit, despite a slight margin decline. The Q&A highlights potential growth in Europe and strong interest in new products. While management was unclear on some aspects, the focus on acquisitions and the absence of debt are positive indicators. The overall sentiment is positive, suggesting a likely stock price increase of 2% to 8% over the next two weeks.
Coda Octopus Group, Inc. (CODA) Q3 2025 Earnings Call Transcript
Unknown9-15
The earnings call reveals mixed results: strong revenue growth and positive feedback on new products, but declining margins and dependency on defense funding. The Q&A highlights realistic revenue adjustments and limited China exposure, but management's unclear response on stock buybacks raises concerns. Overall, the financial performance and market strategy show potential, but uncertainties in expenses and defense reliance balance the sentiment to neutral.
Coda Octopus Group, Inc. (CODA) Q2 2025 Earnings Call Transcript
Unknown6-16
The earnings call reflects mixed signals: strong revenue growth, especially in Marine Technology, but declining margins and profits due to increased costs. The Q&A highlights optimism in future quarters and new product releases, but management's vague responses about program timelines and revenue contributions indicate uncertainty. The absence of shareholder returns and paused acquisitions further dampen sentiment. Overall, the positive revenue growth and future expectations are offset by current financial challenges and uncertainties, resulting in a neutral outlook.
CODA Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
