House’s net loss grows, but management raises its annual forecast

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Bye Doma Holdings’ recently publicly traded enterprise management raised its forecast on the basis of second quarter results, the company’s net income remains in the red.

Second quarter net loss of $ 23.3 million more than loss for the first quarter of $ 11.8 million and a loss a year ago of $ 6.3 million. Losses from operating activities rose to $ 18.6 million from $ 8.3 million and $ 5 million in the same period.

But Doma, formerly known as the States Title, raised its forecast for 2021 on two non-GAAP dimensions – withholding premiums and commissions and adjusted gross margin – based on year-over-year growth in open and closed orders.

Withholding premiums and fees for the quarter were $ 64.8 million, up from $ 44.4 million in the prior year, and adjusted gross profit of $ 29.5 million exceeded $ 22.6 million last year.

During the quarter, Doma added 17 new customers to its corporate channel, including Wells Fargo, and gained additional business from existing customers such as Chase, Homepoint and PennyMac, CEO Max Simkoff said in a talk about the financial results. At the end of the quarter, Doma announced that Fairway Independent Mortgage had become a corporate client.

“The slight increase in wallet share was driven by the expansion of Doma by four additional states, resulting in our geographic presence increasing the size of the US mortgage market by 75%,” Simkoff said. “Our local business has grown over the same period last year in large part due to a significant shift in the structure of our transactions towards purchase transactions.”

House’s total open orders in the second quarter, 41,491, were close to 41,000 in the first quarter, but well above the 30,432 a year earlier. All four largest title insurers reportedfewer open orders quarterly.

But House’s market share still lags far behind the larger players; Stewart, the smallest of four family underwriters, had 143,301 open orders in the second quarter.

Closed orders at the end of the quarter were 31,436, up from 33,000 in the first quarter and 21,885 in the second quarter of 2020.

Net premiums were $ 109.3 million in the second quarter, compared to $ 108 million in the first quarter and $ 86.3 million in the second quarter of 2020.

“All of our growth in 2021, as well as the continued growth that we expect until the end of the year, is driven by a self-funded plan that does not yet reflect any benefit from the $ 350 million in new revenue we just raised. when we entered the public markets on July 28th, ”Simkoff said. “These proceeds will allow us to expand our ambition and accelerate the pace of implementation to achieve positive results over the self-funded plan we described earlier.”

Doma raised $ 350 million in new capital through the proceeds of the merger with the specialist company Capitol Investment V and related public investment in private equity.

The company is in the process of finalizing a plan to leverage some of that revenue to create deeper functionality in its technology for making decisions on all aspects of the mortgage closing process using new proprietary data sources, Simkoff said.

A 519% increase in closed orders over the same period last year and a 343% increase in open orders from corporate business only gave Doma “additional confidence in our ability to significantly exceed the forecast for operating premiums and commissions,” said Noaman Ahmad, CEO. … financial director.

“Closed order growth on our local channel was 4%, and although it was modest compared to the growth of our corporate channel Doma, we saw favorable mixing trends with closed order orders up 48% year over year,” added Ahmad. This resulted in a 10% increase in the average amount of direct withholding premiums and fees in a local channel that works with smaller lenders and real estate agents.

Adjusted EBITDA declined nearly $ 10 million from the prior year to a loss of $ 11.9 million, Ahmad said as Doma invested in customer acquisition and corporate staff support through its state-owned company.

“As financial results exceeded our initial targets for the first half of 2021, and because of our recent strong open order dynamics, which is a leading indicator of held premiums, today we are raising our full-year forecast,” Ahmad said. “We now expect to receive $ 250 to $ 260 million in retained premiums and commissions and $ 95 to $ 105 million in adjusted full year 2021 gross profit.”

In a public process, Doma is forecasting $ 226 million in unallocated premiums and $ 89 million in adjusted gross margins this year.



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