U.S. Markets open in 7 hrs 12 mins
  • S&P Futures

    3,699.75
    +29.75 (+0.81%)
     
  • Dow Futures

    29,555.00
    +212.00 (+0.72%)
     
  • Nasdaq Futures

    11,421.50
    +105.25 (+0.93%)
     
  • Russell 2000 Futures

    1,681.30
    +18.80 (+1.13%)
     
  • Crude Oil

    77.56
    +0.85 (+1.11%)
     
  • Gold

    1,641.50
    +8.10 (+0.50%)
     
  • Silver

    18.57
    +0.09 (+0.46%)
     
  • EUR/USD

    0.9653
    +0.0042 (+0.4344%)
     
  • 10-Yr Bond

    3.8780
    0.0000 (0.00%)
     
  • Vix

    32.26
    +2.34 (+7.82%)
     
  • GBP/USD

    1.0805
    +0.0121 (+1.1356%)
     
  • USD/JPY

    144.3900
    -0.2900 (-0.2004%)
     
  • BTC-USD

    20,163.67
    +1,419.88 (+7.58%)
     
  • CMC Crypto 200

    460.97
    +27.87 (+6.43%)
     
  • FTSE 100

    7,020.95
    +2.35 (+0.03%)
     
  • Nikkei 225

    26,575.34
    +143.79 (+0.54%)
     

Doma’s Q3 Results Continue to Outpace Mortgage Industry; Tech-Led Growth Expected to Fuel Future Out-Performance Despite Softening Market

·18 min read

Affirms Guidance At or Above the High End of Annual Ranges

Third Quarter 2021 Business Highlights(1):

  • Total revenues of $163 million, up 34% versus Q3 2020

  • Closed orders of 35,300, up 39% versus Q3 2020

  • Retained premiums and fees of $71 million, up 31% versus Q3 2020

  • Gross profit of $28 million, up 7% versus Q3 2020

  • Adjusted gross profit of $30 million, up 10% versus Q3 2020

  • Enterprise segment closed orders grew 386% versus Q3 2020

  • Open orders of 52,867, up 41% versus Q3 2020

2021 Full Year Outlook (1):

  • For the full year, Doma now expects to come in at or above the high end of its previous ranges for both revenue of between $475 million and $525 million and retained premiums and fees of between $250 million and $260 million

  • Similarly, Doma expects finishing the year at or above the high end of its previous ranges for both gross profit between $83 million and $93 million and adjusted gross profit between $95 million and $105 million

SAN FRANCISCO, November 10, 2021--(BUSINESS WIRE)--Doma Holdings, Inc. (NYSE: DOMA) ("Doma" or the "Company"), a leading force for disruptive change in the real estate industry, today reported quarterly financial results and key operating data for the three and nine months ended September 30, 2021(2). Doma’s results demonstrate strong growth that continues to outperform the mortgage industry as a whole, driven by the expansion and continued adoption of its proprietary machine learning technology. Because of its continued momentum in the third quarter of 2021 and an accelerating rate of growth in open order volume, Doma is now affirming that it expects full year 2021 results to be at or above the high end of its previously stated guidance ranges.

"Doma’s impressive growth relative to the industry is driven by our unique technology, and we continue to gain momentum," said Max Simkoff, Founder and CEO of Doma. "Given our proven ability to grow market share, we will be heavily focused on investing in the extension of our game-changing technology to serve more of the market - specifically across home purchase transactions. As soon as possible, we want prospective homeowners to experience the same value proposition that we’ve been delivering to our Enterprise channel: an instant, digital home closing that is vastly more simple and more affordable," Mr. Simkoff concluded.

Third Quarter 2021 Growth Drivers

  • Continued improvements to the Doma Intelligence platform helped deliver better customer outcomes through the application of cutting-edge machine learning technology.

    • Added important new functionality to Doma Docs - which is a feature that uses machine intelligence to replace the manual and error-prone process of traditional fee collaboration - that deepens its algorithms to tackle even more complex Closing Disclosure scenarios and drive better outcomes for Doma's largest clients.

    • Enhanced the Doma Connect integration layer to introduce important new integration functionality across several key middleware platforms used by Doma's mortgage originator customers, making those connections more seamless and fostering further expansion of wallet share.

  • Increased orders at the Enterprise level, despite a softening mortgage market, reflect confidence in Doma's technology by the nation's largest mortgage lenders. Total order growth in the third quarter came from both new customers starting to transact as well as increases in wallet share among existing Doma Enterprise customers, who are among the nation's leading lenders.

  • Home purchase transaction volume increased by a healthy 9% over the same period last year, outpacing overall market trends in Doma's Local channel.

  • Top talent from leading global tech companies like Amazon, Apple, Facebook, Netflix, LogMeIn, and Splunk joined the Doma team in the third quarter, in key roles across customer acquisition, account management, fulfillment, software engineering, data science, and product management, helping the Company deliver on its fast pace of innovation.

"Our strong third quarter results are reflective of the increasing demand for our differentiated technology offering, most notably by our largest Enterprise clients," stated Noaman Ahmad, CFO of Doma. "Our recent performance and momentum allow us the confidence to invest more aggressively in our product roll-out, particularly as it relates to the accelerated migration of our Local Purchase business to the Doma Intelligence platform, which we remain on track to start by year-end. We believe that the acceleration of these investments is worth any short-term trade off in margins that will likely be required to get to larger scale faster."

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 revenue less premiums retained by third-party agents. Adjusted gross profit is defined as gross profit, plus depreciation and amortization. Adjusted EBITDA is defined as net loss before interest expense, income taxes, depreciation and amortization, stock-based compensation, COVID-related severance costs and 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 an additional tool 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 5:30 PM Eastern Time on Wednesday, November 10, 2021, to present its third quarter 2021 financial results.

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: 5855336

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 (NYSE: DOMA) is architecting the future of real estate transactions. The Company uses machine intelligence and its proprietary technology solutions to transform residential real estate, making closings instant and affordable. Doma and its family of brands – States Title, North American Title Company (NATC) and North American Title Insurance Company (NATIC) – offer solutions for current and prospective homeowners, lenders, title agents, and real estate professionals that make closings vastly more simple and efficient, reducing cost and increasing customer satisfaction. Doma’s clients include some of the largest bank and non-bank lenders in the United States. 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 estimates and forecasts of financial and performance metrics, projections of market opportunity, total addressable market ("TAM"), market share and competition. 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; 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 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

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

(in thousands, except for open and closed order numbers)

Key operating data:

Opened orders

52,867

37,572

135,442

101,161

Closed orders

35,300

25,358

99,386

65,026

GAAP financial data:

Revenue (1)

$

162,582

$

121,072

$

420,364

$

292,304

Gross profit (2)

$

28,302

$

26,379

$

81,232

$

61,418

Net loss

$

(34,270

)

$

(3,622

)

$

(69,327

)

$

(26,540

)

Non-GAAP financial data (3):

Retained premiums and fees

$

70,986

$

54,048

$

193,249

$

136,172

Adjusted gross profit

$

30,280

$

27,600

$

88,937

$

64,654

Ratio of adjusted gross profit to retained premiums and fees

43

%

51

%

46

%

47

%

Adjusted EBITDA

$

(20,109

)

$

(649

)

$

(35,291

)

$

(15,926

)

_________________

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 September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

(in thousands)

(in thousands)

Revenue

$

162,582

$

121,072

$

420,364

$

292,304

Minus:

Premiums retained by third-party agents

91,596

67,024

227,115

156,132

Retained premiums and fees

$

70,986

$

54,048

$

193,249

$

136,172

Minus:

Direct labor

23,948

14,892

62,829

45,104

Provision for claims

6,685

5,242

16,741

10,065

Depreciation and amortization

1,978

1,221

7,705

3,236

Other direct costs (1)

10,073

6,314

24,742

16,349

Gross Profit

$

28,302

$

26,379

$

81,232

$

61,418

__________________

(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 September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

(in thousands)

(in thousands)

Gross Profit

$

28,302

$

26,379

$

81,232

$

61,418

Adjusted for:

Depreciation and amortization

1,978

1,221

7,705

3,236

Adjusted Gross Profit

$

30,280

$

27,600

$

88,937

$

64,654

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 September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

(in thousands)

(in thousands)

Net loss (GAAP)

$

(34,270

)

$

(3,622

)

$

(69,327

)

$

(26,540

)

Adjusted for:

Depreciation and amortization

1,978

1,221

7,705

3,236

Interest expense

4,531

1,193

12,341

4,428

Income taxes

170

204

506

620

EBITDA

$

(27,591

)

$

(1,004

)

$

(48,775

)

$

(18,256

)

Adjusted for:

Stock-based compensation

3,004

355

9,006

945

COVID-related severance costs

1,385

Change in fair value of warrant and sponsor covered shares liabilities

4,478

4,478

Adjusted EBITDA

$

(20,109

)

$

(649

)

$

(35,291

)

$

(15,926

)

The following table reconciles our adjusted gross profit to our adjusted EBITDA, for the periods indicated:

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

(in thousands)

(in thousands)

Adjusted Gross Profit

$

30,280

$

27,600

$

88,937

$

64,654

Minus:

Customer acquisition costs

14,870

8,849

36,956

25,227

Other indirect costs (1)

35,519

19,400

87,272

55,353

Adjusted EBITDA

$

(20,109

)

$

(649

)

$

(35,291

)

$

(15,926

)

__________________

(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 December 31, 2021:

Year Ended December 31, 2021

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 December 31, 2021

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).

Doma Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands, except share and per share information)

2021

2020

2021

2020

Revenues:

Net premiums written (1)

$

141,491

$

103,587

$

358,754

$

246,738

Escrow, other title-related fees and other

20,452

16,742

59,092

43,298

Investment, dividend and other income

639

743

2,518

2,268

Total revenues

$

162,582

$

121,072

$

420,364

$

292,304

Expenses:

Premiums retained by third-party agents (2)

$

91,596

$

67,024

$

227,115

$

156,132

Title examination expense

5,289

4,624

15,643

11,811

Provision for claims

6,685

5,242

16,741

10,065

Personnel costs

62,410

36,197

159,829

104,652

Other operating expenses

21,693

10,210

53,038

31,136

Total operating expenses

$

187,673

$

123,297

$

472,366

$

313,796

Loss from operations

$

(25,091

)

$

(2,225

)

$

(52,002

)

$

(21,492

)

Other (expense) income:

Change in fair value of warrant and sponsor covered shares liabilities

(4,478

)

(4,478

)

Interest expense

(4,531

)

(1,193

)

(12,341

)

(4,428

)

Loss before income taxes

$

(34,100

)

$

(3,418

)

$

(68,821

)

$

(25,920

)

Income tax expense

(170

)

(204

)

(506

)

(620

)

Net loss

(34,270

)

(3,622

)

(69,327

)

(26,540

)

Earnings per share:

Net loss per share attributable to shareholders - basic and diluted

$

(0.14

)

$

(0.06

)

$

(0.54

)

$

(0.43

)

Weighted average shares outstanding common stock - basic and diluted

245,003,754

64,060,987

128,105,954

62,255,035

__________________

(1)

Net premiums written includes revenues from a related party of $30.3 million and $22.9 million during the three months ended September 30, 2021 and 2020, respectively. Net premiums written includes revenues from a related party of $81.9 million and $64.2 million during the nine months ended September 30, 2021 and 2020, respectively.

(2)

Premiums retained by third-party agents includes expenses associated with a related party of $24.8 million and $18.4 million during the three months ended September 30, 2021 and 2020, respectively. Premiums retained by third-party agents includes expenses associated with a related party of $66.6 million and $51.9 million during the nine months ended September 30, 2021 and 2020, respectively.

Doma Holdings, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share information)

September 30, 2021

December 31, 2020

Assets

Cash and cash equivalents

$

411,669

$

111,893

Restricted cash

2,021

129

Investments:

Fixed maturities

Held-to-maturity debt securities, at amortized cost

74,872

65,406

Available-for-sale debt securities, at fair value (amortized cost $7,139 at December 31, 2020)

8,057

Equity securities, at fair value (cost $2,000 at December 31, 2020)

2,119

Mortgage loans

2,920

2,980

Other invested assets

306

Total Investments

$

78,098

$

78,562

Receivables (net of provision for doubtful accounts of $571 at September 30, 2021 and $492 at December 31, 2020)

14,485

15,244

Prepaid expenses, deposits and other assets

22,161

7,365

Fixed assets (net of accumulated depreciation of $17,283 at September 30, 2021 and $15,065 at December 31, 2020)

35,243

21,661

Title plants

13,952

14,008

Goodwill

111,487

111,487

Trade names (net of accumulated amortization of $3,187 at December 31, 2020)

2,684

Total assets

$

689,116

$

363,033

Liabilities and stockholders' equity

Accounts payable

$

6,651

$

6,626

Accrued expenses and other liabilities

50,187

33,044

Senior secured credit agreement, net of debt issuance costs and original issue discount

138,684

Loan from a related party

65,532

Liability for loss and loss adjustment expenses

78,671

69,800

Warranty liabilities

24,440

Sponsor covered shares liability

8,610

Total liabilities

$

307,243

$

175,002

Stockholders' equity:

Series A preferred stock, 0.0001 par value; 0 shares authorized at September 30, 2021; 0 shares and 43,737,586 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

$

$

1

Series A-1 preferred stock, 0.0001 par value; 0 shares authorized at September 30, 2021; 0 shares and 48,913,906 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

1

Series A-2 preferred stock, 0.0001 par value; 0 shares authorized at September 30, 2021; 0 shares and 14,003,187 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

Series B preferred stock, 0.0001 par value; 0 shares authorized at September 30, 2021; 0 shares and 15,838,828 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

Series C preferred stock, 0.0001 par value; 0 shares authorized at September 30, 2021; 0 shares and 60,665,631 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

1

Common stock, 0.0001 par value; 2,000,000,000 shares authorized at September 30, 2021; 321,544,052 and 62,832,307 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

33

1

Additional paid-in capital

530,290

266,464

Accumulated deficit

(148,450

)

(79,123

)

Accumulated other comprehensive income

686

Total stockholders’ equity

$

381,873

$

188,031

Total liabilities and stockholders' equity

$

689,116

$

363,033

Doma Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Nine Months Ended September 30,

(In thousands)

2021

2020

Cash flow from operating activities:

Net loss

$

(69,327

)

$

(26,540

)

Adjustments to reconcile net loss to net cash used in operating activities:

Interest expense - paid in kind

6,353

5,085

Depreciation and amortization

7,705

3,236

Stock-based compensation expense

8,447

945

Amortization of debt issuance costs and original issue discount

1,429

Provision for doubtful accounts

562

304

Deferred income taxes

377

535

Realized gain on debt securities

(908

)

(141

)

Net unrealized loss on equity securities

119

10

...