Doma Raises Full Year Outlook on Heels of NYSE Debut; Q2 Earnings Reflect Accelerated Growth
More Wallet Share, More Enterprise Customers, and More Powerful Tech Lead to More Aggressive Outlook on both Retained Premiums and Fees and Adjusted Growth Profit – Before Deploying Cash Raised from Going Public
Second Quarter 2021 Business Highlights(1):
-
Total revenues of
$130 million , up 29% versus Q2 2020 - Closed orders of 31,436, up 44% versus Q2 2020
-
Retained premiums and fees of
$65 million , up 46% versus Q2 2020 -
Gross profit of
$27 million , up 22% versus Q2 2020 -
Adjusted gross profit of
$30 million , up 31% versus Q2 2020 -
Raised approximately
$350 million in proceeds gross of transaction expenses and cash paid to Doma shareholders in the business combination withCapitol Investment Corp. V (July 2021 ) -
Now publicly listed under the ticker symbol DOMA on
New York Stock Exchange (July 2021 )
2021 Full Year Outlook Raised To(1):
-
Revenue between
$475 million and$525 million and retained premiums and fees between$250 million and$260 million , up from$226 million -
Gross profit between
$83 million and$93 million and adjusted gross profit between$95 million and$105 million , up from$89 million
“It’s important to note that we are not yet projecting any upside that would result from the proceeds raised from taking the company public but are actually still tracking well ahead of our self-funded plan,” said
|
(1) |
Reconciliations of retained premiums and fees, adjusted gross profit, and the other measures used in this press release that are not calculated in accordance with generally accepted accounting principles in |
|
|
(2) |
All financial results and key operating data included in this release are for the Doma business prior to the closing of the business combination with |
What Drove Growth: More Demand, More Lenders, and Better Tech
Closed orders drove growth in the second quarter, across both the Doma Enterprise and Local channels. Increased orders at the Enterprise level reflect both new customers such as
Second Quarter Results
Total revenues of
Closed orders amounted to approximately 31 thousand in the second quarter, representing a 44% increase compared to the prior year period, with closed orders for Enterprise accounts increasing by 519% and closed orders for Local increasing by 4%, in each case from the prior year period.
GAAP gross profit of
Recent Enterprise Customer Additions:
-
On
May 18, 2021 , Doma announced the addition of Wells Fargo, the nation’s largest bank mortgage originator and servicer, as a new Enterprise customer. The Doma Intelligence platform will enable Wells Fargo to remove key points of friction and frustration involved in the traditional way of fulfilling mortgages. Wells Fargo has only just begun to leverage the Doma Intelligence platform for transactions. -
On
June 29, 2021 , Doma and Lodasoft, a Digital Workflow Platform designed by mortgage veterans to revolutionize loan origination and task automation, announced a product integration between the two companies that enables mortgage lenders to seamlessly integrate Doma’s machine intelligence and proprietary technology solutions to make real estate closings simpler and more efficient. -
On
July 15, 2021 , Doma announced the addition ofFairway Independent Mortgage Corporation , a top nationwide mortgage lender, as a new Enterprise customer. Fairway will leverage Doma’s proprietary machine intelligence technology to remove key points of friction and frustration involved in traditional mortgage closings, for both loan officers and mortgage customers.
The Tech Edge is Getting Sharper
While going through the process of going public and scaling order volume significantly, in the second quarter Doma released functional improvements to its Doma Intelligence platform that demonstrate applications of cutting-edge machine learning to deliver better customer results. In addition, the Company expanded its geographic footprint to cover over 75% of mortgage volume across the country, adding four new states served with
“Our strong first half results in 2021 reflect the inherent quality of the offering we have built, centered around our machine intelligence-powered platform. Moreover, our growth trends and profitability measures have us on track to achieve – or exceed - our long-term financial targets,” stated
Outlook Guided by Top Notch Governance, with Bigger, Bolder, Broader Board
On
Transaction with
On
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
Conference Call Information
Doma will host a conference call at
The telephonic version of the call can be accessed by dialing:
Participant Toll Free Dial-In Number: (844) 615-6508
Participant International Dial-In Number: (918) 922-3146
Conference ID: 1983057
The live webcast of the call will be accessible on the Company’s website at doma.com/investors. 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 (NYSE: DOMA) is architecting the future of real estate transactions. The Company uses machine intelligence and its patented technology solutions to transform residential real estate, making closings instant and affordable. Doma and its family of brands – States Title,
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 estimates and forecasts of financial and performance metrics, projections of market opportunity, total addressable market ("TAM"), market share and competition and potential benefits of the transactions described herein. 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 for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. 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; failure to realize the anticipated benefits of the business combination; 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 the "Risk Factors" section of the documents filed by Doma from time to time with the
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
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
|
|
(in thousands, except for open and closed order numbers) |
||||||||||||||
|
Key operating data: |
|
|
|
|
|
|
|
||||||||
|
Opened orders |
41,491 |
|
|
30,432 |
|
|
82,575 |
|
|
63,589 |
|
||||
|
Closed orders |
31,436 |
|
|
21,885 |
|
|
64,086 |
|
|
39,668 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
GAAP financial data: |
|
|
|
|
|
|
|
||||||||
|
Revenue(1) |
$ |
129,986 |
|
|
$ |
100,423 |
|
|
$ |
257,782 |
|
|
$ |
171,232 |
|
|
Gross profit(2) |
$ |
26,514 |
|
|
$ |
21,682 |
|
|
$ |
52,930 |
|
|
$ |
35,038 |
|
|
Net loss |
$ |
(23,299 |
) |
|
$ |
(6,332 |
) |
|
$ |
(35,057 |
) |
|
$ |
(22,918 |
) |
|
Non-GAAP financial data(3): |
|
|
|
|
|
|
|
||||||||
|
Retained premiums and fees |
$ |
64,805 |
|
|
$ |
44,417 |
|
|
$ |
122,263 |
|
|
$ |
82,124 |
|
|
Adjusted gross profit |
$ |
29,535 |
|
|
$ |
22,581 |
|
|
$ |
58,657 |
|
|
$ |
37,054 |
|
|
Ratio of adjusted gross profit to retained premiums and fees |
46 |
% |
|
51 |
% |
|
48 |
% |
|
45 |
% |
||||
|
Adjusted EBITDA |
$ |
(11,903 |
) |
|
$ |
(2,402 |
) |
|
$ |
(15,182 |
) |
|
$ |
(15,276 |
) |
| _______________ | ||
| n.m. = not meaningful | ||
|
(1) |
Revenue is comprised of (i) net premiums written, (ii) escrow, other title-related fees and other, and (iii) investment, dividend and other income. Net loss is made up of the components of revenue and expenses. |
|
|
(2) |
Gross profit, calculated in accordance with GAAP, is calculated as total revenue, minus premiums retained by third-party 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) |
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 presents our retained premiums and fees and reconciles the measure to our gross profit, the most closely comparable GAAP financial measure, for the periods indicated:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
|
|
(in thousands) |
|
(in thousands) |
||||||||||||
|
Revenue |
$ |
129,986 |
|
|
$ |
100,423 |
|
|
$ |
257,782 |
|
|
$ |
171,232 |
|
|
Minus: |
|
|
|
|
|
|
|
||||||||
|
Premiums retained by third-party agents |
65,181 |
|
|
56,006 |
|
|
135,519 |
|
|
89,108 |
|
||||
|
Retained premiums and fees |
$ |
64,805 |
|
|
$ |
44,417 |
|
|
$ |
122,263 |
|
|
$ |
82,124 |
|
|
Minus: |
|
|
|
|
|
|
|
||||||||
|
Direct labor |
20,902 |
|
|
13,898 |
|
|
38,881 |
|
|
30,212 |
|
||||
|
Provision for claims |
6,807 |
|
|
3,040 |
|
|
10,055 |
|
|
4,823 |
|
||||
|
Depreciation and amortization |
3,021 |
|
|
899 |
|
|
5,727 |
|
|
2,016 |
|
||||
|
Other direct costs(1) |
7,561 |
|
|
4,898 |
|
|
14,670 |
|
|
10,035 |
|
||||
|
Gross Profit |
$ |
26,514 |
|
|
$ |
21,682 |
|
|
$ |
52,930 |
|
|
$ |
35,038 |
|
| _______________ | ||
|
(1) |
Includes title examination expense, office supplies, and premium and other taxes. |
|
Adjusted gross profit
The following table reconciles our adjusted gross profit to our gross profit, the most closely comparable GAAP financial measure, for the periods indicated:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
|
|
(in thousands) |
|
(in thousands) |
||||||||||||
|
Gross Profit |
$ |
26,514 |
|
|
$ |
21,682 |
|
|
$ |
52,930 |
|
|
$ |
35,038 |
|
|
Adjusted for: |
|
|
|
|
|
|
|
||||||||
|
Depreciation and amortization |
3,021 |
|
|
899 |
|
|
5,727 |
|
|
2,016 |
|
||||
|
Adjusted Gross Profit |
$ |
29,535 |
|
|
$ |
22,581 |
|
|
$ |
58,657 |
|
|
$ |
37,054 |
|
Adjusted EBITDA
The following table reconciles our adjusted EBITDA to our net loss, the most closely comparable GAAP financial measure, for the periods indicated:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
|
|
(in thousands) |
|
(in thousands) |
||||||||||||
|
Net loss (GAAP) |
$ |
(23,299 |
) |
|
$ |
(6,332 |
) |
|
$ |
(35,057 |
) |
|
$ |
(22,918 |
) |
|
Adjusted for: |
|
|
|
|
|
|
|
||||||||
|
Depreciation and amortization |
3,021 |
|
|
899 |
|
|
5,727 |
|
|
2,016 |
|
||||
|
Interest expense |
4,451 |
|
|
1,123 |
|
|
7,810 |
|
|
3,235 |
|
||||
|
Income taxes |
211 |
|
|
241 |
|
|
336 |
|
|
416 |
|
||||
|
EBITDA |
$ |
(15,616 |
) |
|
$ |
(4,069 |
) |
|
$ |
(21,184 |
) |
|
$ |
(17,251 |
) |
|
Adjusted for: |
|
|
|
|
|
|
|
||||||||
|
Stock-based compensation |
3,713 |
|
|
282 |
|
|
6,002 |
|
|
590 |
|
||||
|
COVID-related severance costs |
— |
|
|
1,385 |
|
|
— |
|
|
1,385 |
|
||||
|
Adjusted EBITDA |
$ |
(11,903 |
) |
|
$ |
(2,402 |
) |
|
$ |
(15,182 |
) |
|
$ |
(15,276 |
) |
The following table reconciles our adjusted gross profit to our adjusted EBITDA, for the periods indicated:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
|
|
(in thousands) |
|
(in thousands) |
||||||||||||
|
Adjusted Gross Profit |
$ |
29,535 |
|
|
$ |
22,581 |
|
|
$ |
58,657 |
|
|
$ |
37,054 |
|
|
Minus: |
|
|
|
|
|
|
|
||||||||
|
Customer acquisition costs |
12,192 |
|
|
8,083 |
|
|
22,087 |
|
|
16,381 |
|
||||
|
Other indirect costs(1) |
29,246 |
|
|
16,900 |
|
|
51,752 |
|
|
35,949 |
|
||||
|
Adjusted EBITDA |
$ |
(11,903 |
) |
|
$ |
(2,402 |
) |
|
$ |
(15,182 |
) |
|
$ |
(15,276 |
) |
| _______________ | ||
|
(1) |
Includes corporate support, research and development, and other operating costs. |
|
Outlook reconciliations
The following tables reconcile the ranges of expected gross profit to expected retained premiums and fees and the ranges of expected gross profit to expected adjusted gross profit for the full year ended
|
|
Year Ended |
||||||
|
|
Low |
|
High |
||||
|
|
(in thousands) |
||||||
|
Revenue |
$ |
475,000 |
|
|
$ |
525,000 |
|
|
Minus: |
|
|
|
||||
|
Premiums retained by third-party agents |
225,000 |
|
|
265,000 |
|
||
|
Retained premiums and fees |
$ |
250,000 |
|
|
$ |
260,000 |
|
|
Minus: |
|
|
|
||||
|
Estimated adjustments(1) |
$ |
167,000 |
|
|
$ |
167,000 |
|
|
Gross Profit |
$ |
83,000 |
|
|
$ |
93,000 |
|
|
|
Year Ended |
||||||
|
|
Low |
|
High |
||||
|
|
(in thousands) |
||||||
|
Gross Profit |
$ |
83,000 |
|
|
$ |
93,000 |
|
|
Adjusted for: |
|
|
|
||||
|
Depreciation and amortization |
12,000 |
|
|
12,000 |
|
||
|
Adjusted Gross Profit |
$ |
95,000 |
|
|
$ |
105,000 |
|
| _______________ | ||
|
(1) |
Estimated adjustments include direct labor, provision for claims, depreciation and amortization, and other direct costs (which includes title examination expense, office supplies, and premium and other taxes). |
|
|
Condensed Consolidated Statements of Operations (Unaudited) |
|||||||||||||||
|
|
Three months ended |
|
Six months ended |
||||||||||||
|
(In thousands, except share and per share information) |
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
|
Revenues: |
|
|
|
|
|
|
|
||||||||
|
Net premiums written (1) |
$ |
109,271 |
|
|
$ |
86,334 |
|
|
$ |
217,263 |
|
|
$ |
143,151 |
|
|
Escrow, other title-related fees and other |
20,065 |
|
|
13,382 |
|
|
38,640 |
|
|
26,556 |
|
||||
|
Investment, dividend and other income |
650 |
|
|
707 |
|
|
1,879 |
|
|
1,525 |
|
||||
|
Total revenues |
$ |
129,986 |
|
|
$ |
100,423 |
|
|
$ |
257,782 |
|
|
$ |
171,232 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Expenses: |
|
|
|
|
|
|
|
||||||||
|
Premiums retained by third-party agents (2) |
$ |
65,181 |
|
|
$ |
56,006 |
|
|
$ |
135,519 |
|
|
$ |
89,108 |
|
|
Title examination expense |
5,500 |
|
|
3,322 |
|
|
10,353 |
|
|
7,187 |
|
||||
|
Provision for claims |
6,807 |
|
|
3,040 |
|
|
10,055 |
|
|
4,823 |
|
||||
|
Personnel costs |
53,954 |
|
|
32,737 |
|
|
97,419 |
|
|
68,455 |
|
||||
|
Other operating expenses |
17,181 |
|
|
10,286 |
|
|
31,347 |
|
|
20,926 |
|
||||
|
Total operating expenses |
$ |
148,623 |
|
|
$ |
105,391 |
|
|
$ |
284,693 |
|
|
$ |
190,499 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Loss from operations |
$ |
(18,637 |
) |
|
$ |
(4,968 |
) |
|
$ |
(26,911 |
) |
|
$ |
(19,267 |
) |
|
|
|
|
|
|
|
|
|
||||||||
|
Interest expense |
4,451 |
|
|
1,123 |
|
|
7,810 |
|
|
3,235 |
|
||||
|
Loss before income taxes |
$ |
(23,088 |
) |
|
$ |
(6,091 |
) |
|
$ |
(34,721 |
) |
|
$ |
(22,502 |
) |
|
|
|
|
|
|
|
|
|
||||||||
|
Income tax expense |
211 |
|
|
241 |
|
|
336 |
|
|
416 |
|
||||
|
Net loss |
(23,299 |
) |
|
(6,332 |
) |
|
(35,057 |
) |
|
(22,918 |
) |
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Earnings Per Share: |
|
|
|
|
|
|
|
||||||||
|
Net loss per share attributable to |
$ |
(2.00 |
) |
|
$ |
(0.64 |
) |
|
$ |
(3.06 |
) |
|
$ |
(2.24 |
) |
|
Weighted average shares outstanding |
11,667,266 |
|
|
9,950,920 |
|
|
11,457,724 |
|
|
10,231,489 |
|
||||
| _______________ | ||
|
(1) |
Net premiums written includes revenues from a related party of |
|
|
(2) |
Premiums retained by third-party agents includes expenses associated with a related party of |
|
|
Condensed Consolidated Balance Sheets (Unaudited) |
|||||||
|
(In thousands, except share information) |
|
|
|
||||
|
|
|
|
|
||||
|
Assets |
|
|
|
||||
|
Cash and cash equivalents |
$ |
158,542 |
|
|
$ |
111,893 |
|
|
Restricted cash |
1,707 |
|
|
129 |
|
||
|
Investments: |
|
|
|
||||
|
Fixed maturities |
|
|
|
||||
|
Held-to-maturity debt securities, at amortized cost |
84,181 |
|
|
65,406 |
|
||
|
Available-for-sale debt securities, at fair value (amortized cost |
— |
|
|
8,057 |
|
||
|
Equity securities, at fair value (cost |
— |
|
|
2,119 |
|
||
|
Mortgage loans |
2,936 |
|
|
2,980 |
|
||
|
Total Investments |
$ |
87,117 |
|
|
$ |
78,562 |
|
|
Receivables, net |
13,386 |
|
|
15,244 |
|
||
|
Prepaid expenses, deposits and other assets |
18,988 |
|
|
7,365 |
|
||
|
Fixed assets, net |
29,303 |
|
|
21,661 |
|
||
|
Title plants |
13,952 |
|
|
14,008 |
|
||
|
|
111,487 |
|
|
111,487 |
|
||
|
Trade names |
— |
|
|
2,684 |
|
||
|
Total Assets |
$ |
434,482 |
|
|
$ |
363,033 |
|
|
|
|
|
|
||||
|
Liabilities and Stockholders' Equity |
|
|
|
||||
|
Accounts payable |
$ |
8,013 |
|
|
$ |
6,626 |
|
|
Accrued expenses and other liabilities |
38,407 |
|
|
33,044 |
|
||
|
Senior first lien note, net of debt issuance costs and original issue discount |
135,730 |
|
|
— |
|
||
|
Loan from a related party |
— |
|
|
65,532 |
|
||
|
Liability for loss and loss adjustment expenses |
74,706 |
|
|
69,800 |
|
||
|
Total Liabilities |
$ |
256,856 |
|
|
$ |
175,002 |
|
|
|
|
|
|
||||
|
Stockholders' Equity: |
|
|
|
||||
|
Series A preferred stock, 0.0001 par value; 7,295,759 shares authorized; 7,295,759 shares issued and outstanding as of |
$ |
1 |
|
|
$ |
1 |
|
|
Series A-1 preferred stock, 0.0001 par value; 12,975,006 shares authorized; 12,975,006 and 8,159,208 shares issued and outstanding as of |
1 |
|
|
1 |
|
||
|
Series A-2 preferred stock, 0.0001 par value; 2,335,837 shares authorized; 2,335,837 shares issued and outstanding as of |
— |
|
|
— |
|
||
|
Series B preferred stock, 0.0001 par value; 2,642,036 shares authorized; 2,642,036 shares issued and outstanding as of |
— |
|
|
— |
|
||
|
Series C preferred stock, 0.0001 par value; 10,755,377 shares authorized; 10,119,484 shares issued and outstanding as of |
1 |
|
|
1 |
|
||
|
Common stock, 0.0001 par value; 54,000,000 shares authorized; 11,010,181 and 10,480,902 shares issued and outstanding as of |
1 |
|
|
1 |
|
||
|
Additional paid-in capital |
291,802 |
|
|
266,464 |
|
||
|
Accumulated deficit |
(114,180 |
) |
|
(79,123 |
) |
||
|
Accumulated other comprehensive income |
— |
|
|
686 |
|
||
|
Total Stockholders’ Equity |
$ |
177,626 |
|
|
$ |
188,031 |
|
|
Total Liabilities and Stockholders' Equity |
$ |
434,482 |
|
|
$ |
363,033 |
|
|
Condensed Consolidated Statements of Cash Flows (Unaudited) |
|||||||
|
|
Six months ended |
||||||
|
(In thousands) |
2021 |
|
2020 |
||||
|
Cash flow from operating activities: |
|
|
|
||||
|
Net loss |
$ |
(35,057 |
) |
|
$ |
(22,918 |
) |
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
||||
|
Interest expense - paid in kind |
3,929 |
|
|
3,602 |
|
||
|
Depreciation and amortization |
5,727 |
|
|
2,016 |
|
||
|
Stock-based compensation expenses |
5,256 |
|
|
590 |
|
||
|
Amortization of debt issuance costs and original issue discount |
899 |
|
|
— |
|
||
|
Provision for doubtful accounts |
477 |
|
|
267 |
|
||
|
Deferred income taxes |
250 |
|
|
349 |
|
||
|
Realized gain on available for sale debt securities |
(678 |
) |
|
— |
|
||
|
Net unrealized loss on equity securities |
119 |
|
|
150 |
|
||
|
Loss (gain) on disposal of fixed assets and title plants |
8 |
|
|
(382 |
) |
||
|
Accretion of discounts on held-to-maturity securities |
506 |
|
|
201 |
|
||
|
Change in operating assets and liabilities: |
|
|
|
||||
|
Accounts receivable |
1,142 |
|
|
2,579 |
|
||
|
Prepaid expenses, deposits and other assets |
(11,626 |
) |
|
(1,849 |
) |
||
|
Accounts payable |
1,387 |
|
|
3,060 |
|
||
|
Accrued expenses and other liabilities |
5,346 |
|
|
(7,030 |
) |
||
|
Liability for loss and loss adjustments expenses |
4,906 |
|
|
(109 |
) |
||
|
Net cash used in operating activities |
$ |
(17,409 |
) |
|
$ |
(19,474 |
) |
|
Cash flow from investing activities: |
|
|
|
||||
|
Proceeds from sales and maturities of investments: Held-to-maturity |
$ |
14,149 |
|
|
$ |
8,898 |
|
|
Proceeds from sales and maturities of investments: Available-for-sale |
7,817 |
|
|
— |
|
||
|
Proceeds from sales of investments: Equity securities |
2,000 |
|
|
— |
|
||
|
Proceeds from sales and maturities of investments: Mortgage loans |
45 |
|
|
365 |
|
||
|
Purchases of investments: Held-to-maturity |
(33,430 |
) |
|
(53,198 |
) |
||
|
Purchases of investments: Equity securities |
— |
|
|
(1,000 |
) |
||
|
Proceeds from sales of fixed assets |
307 |
|
|
123 |
|
||
|
Purchases of fixed assets |
(10,944 |
) |
|
(7,687 |
) |
||
|
Proceeds from sale of title plants and dividends from title plants |
239 |
|
|
1,183 |
|
||
|
Net cash used in investing activities |
$ |
(19,817 |
) |
|
$ |
(51,316 |
) |
|
Cash flow from financing activities: |
|
|
|
||||
|
Proceeds from issuance of Series C preferred stock, net of financing costs |
$ |
— |
|
|
$ |
70,701 |
|
|
Proceeds from issuance of senior first lien note |
150,000 |
|
|
— |
|
||
|
Payments on loan from a related party |
(65,532 |
) |
|
(27,622 |
) |
||
|
Debt issuance costs |
(579 |
) |
|
— |
|
||
|
Exercise of stock warrants |
49 |
|
|
— |
|
||
|
Exercise of stock options |
1,515 |
|
|
51 |
|
||
|
Net cash provided by financing activities |
$ |
85,453 |
|
|
$ |
43,130 |
|
|
Net change in cash and cash equivalents and restricted cash |
48,227 |
|
|
(27,660 |
) |
||
|
Cash, cash equivalents and restricted cash at the beginning period |
112,022 |
|
|
141,668 |
|
||
|
Cash and cash equivalents and restricted cash at the end of period |
$ |
160,249 |
|
|
$ |
114,008 |
|
|
Supplemental cash flow disclosures: |
|
|
|
||||
|
Cash paid for interest |
$ |
3,407 |
|
|
$ |
— |
|
|
Supplemental disclosure of non-cash investing activities: |
|
|
|
||||
|
Unrealized loss on available-for-sale debt securities |
$ |
(179 |
) |
|
$ |
(496 |
) |
|
Supplemental disclosure of non-cash financing activities: |
|
|
|
||||
|
Issuance of penny warrants related to the senior first lien note |
$ |
18,519 |
|
|
$ |
— |
|
Quarterly Results of Operations and Other Data
The following tables set forth our selected unaudited quarterly condensed consolidated statements of operations data for each of the quarters indicated. The information for each quarter has been prepared on a basis consistent with our audited consolidated financial statements, and reflect, in the opinion of management, all adjustments, which consist only of a normal, recurring nature that are necessary for a fair statement of the financial information contained in those financial statements. Our historical results are not necessarily indicative of the results that may be expected in the future. The following quarterly financial data should be read in conjunction with our consolidated financial statements.
Condensed Consolidated Statements of Operations
|
|
Three months ended |
||||||||||||||||||||||
|
(In thousands) |
2020 |
|
2020 |
|
2020 |
|
2020 |
|
2021 |
|
2021 |
||||||||||||
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Net premiums written |
$ |
56,817 |
|
|
$ |
86,334 |
|
|
$ |
103,587 |
|
|
$ |
98,870 |
|
|
$ |
107,992 |
|
|
$ |
109,271 |
|
|
Escrow, other title-related fees and other |
13,174 |
|
|
13,382 |
|
|
16,742 |
|
|
17,977 |
|
|
18,575 |
|
|
20,065 |
|
||||||
|
Investment, dividend and other income |
818 |
|
|
707 |
|
|
743 |
|
|
663 |
|
|
1,229 |
|
|
650 |
|
||||||
|
Total revenues |
$ |
70,809 |
|
|
$ |
100,423 |
|
|
$ |
121,072 |
|
|
$ |
117,510 |
|
|
$ |
127,796 |
|
|
$ |
129,986 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Premiums retained by third-party agents |
$ |
33,102 |
|
|
$ |
56,006 |
|
|
$ |
67,024 |
|
|
$ |
64,011 |
|
|
$ |
70,338 |
|
|
$ |
65,181 |
|
|
Title examination expense |
3,865 |
|
|
3,322 |
|
|
4,624 |
|
|
4,393 |
|
|
4,853 |
|
|
5,500 |
|
||||||
|
Provision for claims |
1,783 |
|
|
3,040 |
|
|
5,242 |
|
|
5,272 |
|
|
3,249 |
|
|
6,807 |
|
||||||
|
Personnel costs |
35,718 |
|
|
32,737 |
|
|
36,197 |
|
|
38,874 |
|
|
43,464 |
|
|
53,954 |
|
||||||
|
Other operating expenses |
10,640 |
|
|
10,286 |
|
|
10,210 |
|
|
12,149 |
|
|
14,165 |
|
|
17,181 |
|
||||||
|
Total operating expenses |
$ |
85,108 |
|
|
$ |
105,391 |
|
|
$ |
123,297 |
|
|
$ |
124,699 |
|
|
$ |
136,069 |
|
|
$ |
148,623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Loss from operations |
$ |
(14,299 |
) |
|
$ |
(4,968 |
) |
|
$ |
(2,225 |
) |
|
$ |
(7,189 |
) |
|
$ |
(8,273 |
) |
|
$ |
(18,637 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Interest expense |
2,112 |
|
|
1,123 |
|
|
1,193 |
|
|
1,151 |
|
|
3,360 |
|
|
4,451 |
|
||||||
|
Loss before income taxes |
$ |
(16,411 |
) |
|
$ |
(6,091 |
) |
|
$ |
(3,418 |
) |
|
$ |
(8,340 |
) |
|
$ |
(11,633 |
) |
|
$ |
(23,088 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Income tax expense |
175 |
|
|
241 |
|
|
204 |
|
|
223 |
|
|
125 |
|
|
211 |
|
||||||
|
Net loss |
(16,586 |
) |
|
(6,332 |
) |
|
(3,622 |
) |
|
(8,563 |
) |
|
(11,758 |
) |
|
(23,299 |
) |
||||||
Reconciliation of GAAP to Non-GAAP Measures
The following tables present our reconciliation of GAAP measure to non-GAAP measures for the historical periods indicated.
Retained premiums and fees
|
|
Three Months Ended |
||||||||||||||||||||||
|
(In thousands) |
2020 |
|
2020 |
|
2020 |
|
2020 |
|
2021 |
|
2021 |
||||||||||||
|
Revenue |
$ |
70,809 |
|
|
$ |
100,423 |
|
|
$ |
121,072 |
|
|
$ |
117,510 |
|
|
$ |
127,796 |
|
|
$ |
129,986 |
|
|
Minus: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Premiums retained by third-party agents |
33,102 |
|
|
56,006 |
|
|
67,024 |
|
|
64,011 |
|
|
70,338 |
|
|
65,181 |
|
||||||
|
Retained premiums and fees |
$ |
37,707 |
|
|
$ |
44,417 |
|
|
$ |
54,048 |
|
|
$ |
53,499 |
|
|
$ |
57,458 |
|
|
$ |
64,805 |
|
|
Minus: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Direct labor |
16,314 |
|
|
13,898 |
|
|
14,892 |
|
|
17,050 |
|
|
17,979 |
|
|
20,902 |
|
||||||
|
Provision for claims |
1,783 |
|
|
3,040 |
|
|
5,242 |
|
|
5,272 |
|
|
3,249 |
|
|
6,807 |
|
||||||
|
Depreciation and amortization |
1,116 |
|
|
899 |
|
|
1,221 |
|
|
2,579 |
|
|
2,707 |
|
|
3,021 |
|
||||||
|
Other direct costs(1) |
5,137 |
|
|
4,898 |
|
|
6,314 |
|
|
4,186 |
|
|
7,109 |
|
|
7,561 |
|
||||||
|
Gross Profit |
$ |
13,357 |
|
|
$ |
21,682 |
|
|
$ |
26,379 |
|
|
$ |
24,412 |
|
|
$ |
26,414 |
|
|
$ |
26,514 |
|
| _______________ | ||
|
(1) |
Includes title examination expense, office supplies, and premium and other taxes. |
|
Retained premiums and fees
|
|
Three Months Ended |
||||||||||||||||||||||
|
(in thousands) |
2020 |
|
2020 |
|
2020 |
|
2020 |
|
2021 |
|
2021 |
||||||||||||
|
Gross Profit |
$ |
13,357 |
|
|
$ |
21,682 |
|
|
$ |
26,379 |
|
|
$ |
24,412 |
|
|
$ |
26,414 |
|
|
$ |
26,514 |
|
|
Adjusted for: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Depreciation and amortization |
1,116 |
|
|
899 |
|
|
1,221 |
|
|
2,579 |
|
|
2,707 |
|
|
3,021 |
|
||||||
|
Adjusted Gross Profit |
$ |
14,473 |
|
|
$ |
22,581 |
|
|
$ |
27,600 |
|
|
$ |
26,991 |
|
|
$ |
29,121 |
|
|
$ |
29,535 |
|
Adjusted EBITDA
|
|
Three Months Ended |
||||||||||||||||||||||
|
(in thousands) |
2020 |
|
2020 |
|
2020 |
|
2020 |
|
2021 |
|
2021 |
||||||||||||
|
Net loss (GAAP) |
$ |
(16,586 |
) |
|
$ |
(6,332 |
) |
|
$ |
(3,622 |
) |
|
$ |
(8,563 |
) |
|
$ |
(11,758 |
) |
|
$ |
(23,299 |
) |
|
Adjusted for: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Depreciation and amortization |
1,116 |
|
|
899 |
|
|
1,221 |
|
|
2,579 |
|
|
2,707 |
|
|
3,021 |
|
||||||
|
Interest expense |
2,112 |
|
|
1,123 |
|
|
1,193 |
|
|
1,151 |
|
|
3,360 |
|
|
4,451 |
|
||||||
|
Income taxes |
175 |
|
|
241 |
|
|
204 |
|
|
223 |
|
|
125 |
|
|
211 |
|
||||||
|
EBITDA |
$ |
(13,183 |
) |
|
$ |
(4,069 |
) |
|
$ |
(1,004 |
) |
|
$ |
(4,610 |
) |
|
$ |
(5,566 |
) |
|
$ |
(15,616 |
) |
|
Adjusted for: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Stock-based compensation |
308 |
|
|
282 |
|
|
355 |
|
|
1,567 |
|
|
2,289 |
|
|
3,713 |
|
||||||
|
COVID-related severance costs |
— |
|
|
1,385 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||||
|
Adjusted EBITDA |
$ |
(12,875 |
) |
|
$ |
(2,402 |
) |
|
$ |
(649 |
) |
|
$ |
(3,043 |
) |
|
$ |
(3,277 |
) |
|
$ |
(11,903 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20210812005825/en/
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