Successfully launched Upfront Title product via
a pilot program with a major mortgage software platform leader
Continues making progress towards reaching
adjusted EBITDA profitability
Core Underwriting platform continues to
demonstrate strong performance, benefitting from increased
operational efficiency and significant tech upgrades
Doma Holdings, Inc. (NYSE: DOMA) (“Doma” or the “Company”), a
leading force for disruptive change in the real estate industry,
today reported financial results and key operating data for the
three months and twelve months ended December 31, 2023.
Fourth Quarter 2023 Business Highlights (1)(2):
- Total revenues of $85 million, up 11% versus Q3 2023
- Retained premiums and fees of $17 million, up 7% versus Q3
2023
- Gross profit of $5 million, up 56% versus Q3 2023
- Adjusted gross profit of $8 million, up 29% versus Q3 2023
- Net loss of $18 million, compared to a net loss of $22 million
in Q3 2023
- Adjusted EBITDA loss of $3 million, compared to a loss of $5
million in Q3 2023
“2023 was a transformational year for Doma. As we continued to
navigate challenging market conditions, we successfully executed
significant cost reduction actions, divested our non-core local
agency operations, and streamlined our business to focus on our
core strengths and to support our invaluable customers,” said Max
Simkoff, CEO of Doma. “We narrowed our strategy to better address
the ever-growing market demand for more affordable and tech-driven
title insurance offerings, including the launch of an innovative,
new product, called Upfront Title.”
Mr. Simkoff added, “We are pleased to have successfully launched
our Upfront Title pilot program in the first quarter of this year
with one of the largest mortgage technology platforms in the
country and a major national lender customer. Housing affordability
remains a critical issue for the vast majority of Americans, and we
believe that by licensing our patented instant underwriting
technology upstream, directly to the largest mortgage market
participants in the country, while continuing to serve independent
agents through our underwriting channel, that we will be able to
ultimately lower costs for homeowners. We are already seeing
encouraging results, helping to validate that the future could
bring a transformational new configuration which can deliver both
meaningful savings and benefits to consumers and lenders alike. We
believe that based on these early results, that we are on track and
if we are successful, upon demonstrated pilot program success in
the first half of this year, we would be in a position to expand
our partnership in the second half of the year both on a geographic
basis, and also by offering a more enhanced Upfront Title product
configuration to additional lenders and mortgage technology
platforms. We do not expect revenue from this pilot program to be
material in the first half of the year; however, we are very
encouraged by the early results.”
“The public and political support for more affordable housing
outcomes being driven specifically through more innovative title
insurance solutions has grown significantly, and we believe we are
well positioned to address one specific opportunity that emerged
coming out of last week’s State of the Union Address. President Joe
Biden announced his plan to lower housing costs for the millions of
Americans who are struggling to afford the American dream of
homeownership, and he specifically mentioned a focus on reducing
title insurance costs. In a separate announcement immediately ahead
of the President’s address, The Federal Housing Finance Agency
(FHFA) announced that they have approved a pilot to waive the
requirement for lender’s title insurance on certain refinances.
FHFA’s Director Sandra Thompson further clarified that this “title
acceptance” pilot will waive the requirement for lender’s title
insurance or a legal opinion on certain low-risk refinance
transactions where there is confidence that the property is free
and clear of any prior lien or encumbrance. The pilot only impacts
the requirement for a lender’s title policy or AOL and does not
impact a borrower’s title risk, since it only applies to certain
refinance loans where the borrower has title to the property
already. We believe that Doma is one of the only companies in our
space who has the proven technology and underwriting capabilities
to participate in the pilot program announced by FHFA. We’re
excited by the actions taken by the administration, and we share a
desire and a sense of urgency to reduce closing costs for borrowers
by a wide margin compared to traditional non-technology-based
solutions. We think that based on what we’ve heard about the
announcements made last week, that it’s likely over time that the
majority of the refinance universe should qualify for our more
innovative approach to quantifying and helping the GSEs assess and
underwrite title risk, and we look forward to further exploring
this opportunity. This is a great example of the kinds of
innovation that could make a lasting impact on helping to alleviate
housing affordability challenges in this country in a safe and
appropriate manner,” said Mr. Simkoff.
Mr. Simkoff added, “Lastly, our core underwriting platform
continues to demonstrate strong performance despite continued
difficult market conditions. We continued to launch significant
tech initiatives in the Underwriting division, which have been
instrumental to our success, and which we believe will benefit our
independent agent-focused title production team by saving them time
and expense while also enabling them to improve their efficiency
through a partnership with Doma.”
“While our results fell just shy of our ambitious goal of
reaching adjusted EBITDA profitability in Q4, primarily due to the
continued degradation of the interest rate environment, we are
encouraged by the significant improvement we made in our cost
structure which allowed us to get within our striking distance of
our goal. Our adjusted EBITDA loss for continuing operations was $3
million in Q4, an improvement from our adjusted EBITDA loss for
continuing operations of $5 million in Q3 of 2023 and $11 million
in Q4 of 2022,” said Mike Smith, Chief Financial Officer of Doma.
“Looking ahead, our focus going forward is currently on growing our
revenue and expanding our margins through realization of
operational improvements.”
(1) Reconciliations of retained premiums and fees, adjusted
gross profit, and the other financial measures used in this press
release that are not calculated in accordance with generally
accepted accounting principles in the United States (“GAAP”) to the
nearest measures prepared in accordance with GAAP have been
provided in this press release in the accompanying tables. An
explanation of these measures is also included below under the
heading “Non-GAAP Financial Measures.”
(2) Doma has exited the Company’s local retail operations
nationwide. Local and associated operations are classified as
“discontinued operations” and segregated in the Company’s financial
results beginning in the third quarter ended September 30, 2023.
The financial results and key operating data highlighted today
reflect the continuing operations of Doma, excluding the
discontinued Local and associated operations.
Non-GAAP Financial Measures
Some of the financial information and data contained in this
press release, such as retained premiums and fees, adjusted gross
profit and adjusted EBITDA, have not been prepared in accordance
with United States generally accepted accounting principles
("GAAP"). Retained premiums and fees is defined as total revenue
less premiums retained by agents. Adjusted gross profit is defined
as gross profit (loss), adjusted to exclude the impact of
depreciation and amortization. Adjusted EBITDA is defined as net
income (loss) before interest, income taxes and depreciation and
amortization, and further adjusted to exclude the impact of net
loss from discontinued operations, stock-based compensation,
severance and interim salary costs, long-lived asset impairment,
accelerated contract expense, change in fair value of Local sales
deferred earnout, and the change in fair value of warrant and
sponsor covered shares liabilities. Doma believes that the use of
retained premiums and fees, adjusted gross profit and adjusted
EBITDA provides additional tools to assess operational performance
and trends in, and in comparing Doma's financial measures with,
other similar companies, many of which present similar non-GAAP
financial measures to investors. Doma’s non-GAAP financial measures
may be different from non-GAAP financial measures used by other
companies. The presentation of non-GAAP financial measures is not
intended to be considered in isolation or as a substitute for, or
superior to, financial measures determined in accordance with GAAP.
Because of the limitations of non-GAAP financial measures, you
should consider the non-GAAP financial measures presented herein in
conjunction with Doma’s financial statements and the related notes
thereto. Please refer to the non-GAAP reconciliations in this press
release for a reconciliation of these non-GAAP financial measures
to the most comparable financial measure prepared in accordance
with GAAP.
Conference Call Information
Doma will host a conference call at 5:00 PM Eastern Time today
on Tuesday, March 12, to present its fourth quarter and full year
2023 financial results.
Dial-in Details: To access the call by phone, please go to this
link (registration link) and you will be provided with dial-in
details. To avoid delays, we encourage participants to dial into
the conference call fifteen minutes ahead of the scheduled start
time.
The live webcast of the call will be accessible on the Company’s
website at investor.doma.com. Approximately two hours after
conclusion of the live event, an archived webcast of the conference
call will be accessible from the Investor Relations section of the
Company’s website for twelve months.
About Doma Holdings, Inc.
Doma is a real estate technology company that is disrupting a
century-old industry by building an instant and frictionless home
closing experience for buyers and sellers. Doma uses proprietary
machine intelligence technology and deep human expertise to create
a vastly more simple and affordable experience for everyone
involved in a residential real estate transaction, including
current and prospective homeowners, mortgage lenders, title agents,
and real estate professionals. With Doma, what used to take days
can now be done in minutes, replacing an arcane and cumbersome
process with a digital experience designed for today’s world. To
learn more visit doma.com.
Forward-Looking Statements Legend
This press release includes “forward-looking statements” within
the meaning of the “safe harbor” provisions of the United States
Private Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by the use of words such as
"estimate," "plan," "project," "forecast," "intend," "will,"
"expect," "anticipate," "believe," "seek," "target" or other
similar expressions that predict or indicate future events or
trends or that are not statements of historical matters. The
absence of these words does not mean that a statement is not
forward-looking. Such statements are based on the beliefs of, as
well as assumptions made by information currently available to Doma
management. These forward-looking statements include, but are not
limited to, statements regarding our ability to offer our
technology through, and enter into commercial relationships with,
mortgage technology platforms (including any specific partner
mentioned), primary and/or secondary mortgage market participants
and/or their customers, estimates and forecasts of financial and
performance metrics, projections of market opportunity, total
addressable market ("TAM"), market share and competition, the
ability to expand our product offerings geographically and/or add
additional partners, and the impact of FHFA’s recently announced
“title acceptance” pilot and/or our level of participation, if any,
in such pilot. These statements are based on various assumptions,
whether or not identified in this press release, and on the current
expectation of Doma’s management and are not predictions of actual
performance. These forward-looking statements are provided to allow
potential investors the opportunity to understand management’s
beliefs and opinions in respect of the future so that they may use
such beliefs and opinions as one factor in evaluating an
investment. These statements are not guarantees of future
performance and undue reliance should not be placed on them. Actual
events and circumstances are difficult or impossible to predict,
will differ from assumptions and are beyond the control of
Doma.
These forward-looking statements are subject to a number of
risks and uncertainties, including changes in business, market,
financial, political and legal conditions; risks relating to the
uncertainty of the projected financial information with respect to
Doma; future global, regional or local economic, political, market
and social conditions, including due to the COVID-19 pandemic; the
development, effects and enforcement of laws and regulations,
including with respect to the title insurance industry; Doma’s
ability to manage its future growth or to develop or acquire
enhancements to its platform; the effects of competition on Doma’s
future business; the outcome of any potential litigation,
government and regulatory proceedings, investigations and
inquiries; and those other factors described in Part I, Item 1A -
“Risk Factors” of our Annual Report on Form 10-K for the year ended
December 31, 2022 and any subsequent reports filed by Doma from
time to time with the U.S. Securities and Exchange Commission (the
“SEC”).
If any of these risks materialize or Doma’s assumptions prove
incorrect, actual results could differ materially from the results
implied by these forward-looking statements. There may be
additional risks that Doma does not presently know or that Doma
currently believes are immaterial that could also cause actual
results to differ from those contained in the forward-looking
statements. In addition, forward-looking statements reflect Doma’s
expectations, plans or forecasts of future events and views as of
the date of this press release. Doma anticipates that subsequent
events and developments will cause Doma’s assessments to change.
However, while Doma may elect to update these forward-looking
statements at some point in the future, Doma specifically disclaims
any obligation to do so, except as required by law. These
forward-looking statements should not be relied upon as
representing Doma’s assessment as of any date subsequent to the
date of this press release. Accordingly, undue reliance should not
be placed upon the forward-looking statements.
Key Operating and Financial Indicators from Continuing
Operations
Three months ended December
31,
Year ended December
31,
2023
2022
2023
2022
(Unaudited - in thousands)
GAAP financial data:
Revenue (1)
$
84,612
$
88,875
$
310,943
$
399,978
Gross profit (2)
$
4,795
$
6,629
$
11,947
$
9,332
Net loss (3)
$
(17,563
)
$
(66,281
)
$
(95,288
)
$
(187,297
)
Non-GAAP financial data (4):
Retained premiums and fees
$
16,557
$
20,130
$
62,766
$
92,937
Adjusted gross profit
$
7,755
$
11,142
$
23,620
$
24,409
Ratio of adjusted gross profit to retained
premiums and fees
47
%
55
%
38
%
26
%
Adjusted EBITDA
$
(2,832
)
$
(10,740
)
$
(33,035
)
$
(99,932
)
____________________
(1)
Revenue is comprised of (i) net premiums
written, (ii) escrow, other title-related fees and other, and (iii)
investment, dividend and other income.
(2)
Gross profit, calculated in accordance
with GAAP, is calculated as total revenue, minus premiums retained
by agents, direct labor expense (including mainly personnel expense
for certain employees involved in the direct fulfillment of
policies) and direct non-labor expense (including mainly title
examination expense, provision for claims, and depreciation and
amortization). In our consolidated income statements, depreciation
and amortization is recorded under the “other operating expenses”
caption.
(3)
Net loss is made up of the components of
revenue and expenses.
(4)
Retained premiums and fees, adjusted gross
profit and adjusted EBITDA are non-GAAP financial measures.
Non-GAAP Financial Measures
Retained premiums and fees
The following table reconciles our continuing operations
retained premiums and fees to our gross profit, the most closely
comparable GAAP financial measure, for the periods indicated:
Three months ended December
31,
Year ended December
31,
2023
2022
2023
2022
(Unaudited - in thousands)
Revenue
$
84,612
$
88,875
$
310,943
$
399,978
Minus:
Premiums retained by agents
68,055
68,745
248,177
307,041
Retained premiums and fees
$
16,557
$
20,130
$
62,766
$
92,937
Minus:
Direct labor
2,862
5,126
13,286
37,312
Provision for claims
2,810
880
14,764
14,781
Depreciation and amortization
2,960
4,513
11,673
15,077
Other direct costs (1)
3,130
2,982
11,096
16,435
Gross Profit
$
4,795
$
6,629
$
11,947
$
9,332
____________________
(1)
Includes title examination expense, office
supplies, and premium and other taxes.
Adjusted gross profit
The following table reconciles our continuing operations
adjusted gross profit to our gross profit, the most closely
comparable GAAP financial measure, for the periods indicated:
Three months ended December
31,
Year ended December
31,
2023
2022
2023
2022
(Unaudited - in thousands)
Gross Profit
$
4,795
$
6,629
$
11,947
$
9,332
Adjusted for:
Depreciation and amortization
2,960
4,513
11,673
15,077
Adjusted Gross Profit
$
7,755
$
11,142
$
23,620
$
24,409
Adjusted EBITDA
The following table reconciles our continuing operations
adjusted EBITDA to our net loss, the most closely comparable GAAP
financial measure, for the periods indicated:
Three months ended December
31,
Year ended December
31,
2023
2022
2023
2022
(Unaudited - in thousands)
Net loss (GAAP)
$
(20,788
)
$
(109,418
)
$
(124,414
)
$
(302,209
)
Adjusted for:
Depreciation and amortization
2,960
4,513
11,673
15,077
Interest expense
5,836
3,775
20,323
14,106
Income taxes
62
(1,712
)
528
(1,055
)
EBITDA
$
(11,930
)
$
(102,842
)
$
(91,890
)
$
(274,081
)
Adjusted for:
Loss from discontinued operations, net of
taxes
3,225
43,137
29,126
114,912
Stock-based compensation
4,656
5,572
17,141
29,679
Severance and interim salary costs
828
9,434
10,287
16,130
Long-lived asset impairment
86
29,524
1,499
29,524
Change in fair value of Warrant and
Sponsor Covered Shares liabilities
(67
)
(786
)
(453
)
(21,317
)
Accelerated contract expense
—
5,221
1,268
5,221
Change in fair value of Local Sales
Deferred Earnout
370
—
(13
)
—
Adjusted EBITDA
$
(2,832
)
$
(10,740
)
$
(33,035
)
$
(99,932
)
The following table reconciles our continuing operations
adjusted gross profit to our adjusted EBITDA, for the periods
indicated:
Three months ended December
31,
Year ended December
31,
2023
2022
2023
2022
(Unaudited - in thousands)
Adjusted Gross Profit
$
7,755
$
11,142
$
23,620
$
24,409
Minus:
Customer acquisition costs
1,573
2,785
7,071
19,486
Other indirect costs (1)
9,014
19,097
49,584
104,855
Adjusted EBITDA
$
(2,832
)
$
(10,740
)
$
(33,035
)
$
(99,932
)
____________________
(1)
Includes corporate support, research and
development, and other operating costs.
Doma Holdings, Inc.
Consolidated Statements of
Operations
(Unaudited)
Year ended December
31,
(In thousands, except share and per share
information)
2023
2022
Revenues:
Net premiums written (1)
$
301,703
$
385,253
Escrow, other title-related fees and
other
3,342
11,694
Investment, dividend and other income
5,898
3,031
Total revenues
$
310,943
$
399,978
Expenses:
Premiums retained by agents (2)
$
248,177
$
307,041
Title examination expense
3,859
8,142
Provision for claims
14,764
14,781
Personnel costs
71,074
163,604
Other operating expenses
46,460
72,449
Long-lived asset impairment
1,499
29,524
Total operating expenses
$
385,833
$
595,541
Operating loss from continuing
operations
$
(74,890
)
$
(195,563
)
Other (expense) income:
Change in fair value of Warrant and
Sponsor Covered Shares liabilities
453
21,317
Interest expense
(20,323
)
(14,106
)
Loss from continuing operations before
income taxes
$
(94,760
)
$
(188,352
)
Income tax benefit (expense)
(528
)
1,055
Loss from continuing operations, net of
taxes
$
(95,288
)
$
(187,297
)
Loss from discontinued operations, net
of taxes
(29,126
)
(114,912
)
Net loss
$
(124,414
)
$
(302,209
)
Earnings per share:
Net loss from continuing operations per
share attributable to stockholders - basic and diluted
$
(7.14
)
$
(14.36
)
Net loss per share attributable to
stockholders - basic and diluted
$
(9.32
)
$
(23.17
)
Weighted average shares outstanding common
stock - basic and diluted
13,342,913
13,041,337
____________________
(1)
Net premiums written includes revenues
from a related party of $139.2 million and $134.9 million for the
years ended December 31, 2023, and 2022, respectively.
(2)
Premiums retained by agents includes
expenses associated with a related party of $112.0 million and
$108.4 million during the years ended December 31, 2023, and 2022,
respectively.
Doma Holdings, Inc.
Consolidated Balance
Sheets
(Unaudited)
December 31,
(In thousands, except share
information)
2023
2022
Assets
Cash and cash equivalents
$
65,939
$
78,450
Restricted cash
5,228
2,933
Investments:
Fixed maturities
Held-to-maturity debt securities, at
amortized cost (net of allowance for credit losses of $125 at
December 31, 2023 and $440 at December 31, 2022)
18,179
90,328
Available-for-sale debt securities, at
fair value (amortized cost of $58,516 at December 31, 2023 and
$59,191 at December 31, 2022)
58,032
58,254
Mortgage loans
45
297
Total investments
$
76,256
$
148,879
Trade and other receivables (net of
allowance for credit losses of $1,802 and $1,413 at December 31,
2023 and 2022, respectively)
24,452
20,541
Prepaid expenses, deposits and other
assets
4,614
6,687
Lease right-of-use assets
4,175
4,724
Fixed assets (net of accumulated
depreciation of $26,272 and $16,685 at December 31, 2023 and 2022,
respectively)
30,945
37,024
Title plants
2,716
2,716
Goodwill
23,413
23,413
Assets held for disposal
2,563
53,141
Total assets
$
240,301
$
378,508
Liabilities and stockholders’
(deficit) equity
Accounts payable
$
1,798
$
2,407
Accrued expenses and other liabilities
12,700
23,347
Leases liabilities
8,838
10,793
Senior secured credit agreement, net of
debt issuance costs and original issue discount
154,087
147,374
Liability for loss and loss adjustment
expenses
81,894
81,873
Warrant liabilities
26
347
Sponsor Covered Shares liability
86
219
Liabilities held for disposal
6,783
30,356
Total liabilities
$
266,212
$
296,716
Commitments and contingencies
Stockholders’ (deficit)
equity:
Common stock, 0.0001 par value; 80,000,000
shares authorized at December 31, 2023 and 2022; 13,524,203 and
13,165,919 shares issued and outstanding as of December 31, 2023
and 2022, respectively
1
1
Additional paid-in capital
593,772
577,515
Accumulated deficit
(619,201
)
(494,787
)
Accumulated other comprehensive income
(483
)
(937
)
Total stockholders’ (deficit)
equity
$
(25,911
)
$
81,792
Total liabilities and stockholders’
(deficit) equity
$
240,301
$
378,508
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240312587194/en/
Investor Contact: Dave DeHorn | Chief Strategy
Officer and Interim Head of Investor Relations for Doma |
ir@doma.com
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