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Canadian real estate tech company Real Matters has hired a new chief financial officer with more than 20 years of experience as it continues to pursue a long-term goal of expanding its U.S. residential real estate appraisal and title networks in the face of dwindling revenue.
Rodrigo Pinto joins Real Matters from Royal Lepage Real Estate Services where, as vice president of finance, he led a team responsible for financial reporting, budgeting, forecasting and taxation, and also played a key role in Royal Lepage’s long-term strategy and acquisitions.
Pinto, who will succeed outgoing CFO Bill Herman on April 10, is a “well-rounded and deeply experienced leader with extensive financial and real-estate industry experience, and I’m confident that his expertise will be an asset to the team,” Real Matters CEO Brian Lang said in a statement Thursday.
Lang credited outgoing CFO Bill Herman for providing “critical leadership and guidance” through the company’s 2017 initial public offering, and for “helping navigate the business through a number of mortgage market cycles.”
“I am proud to have been part of Real Matters, to work alongside such a talented team and to have witnessed the Company’s accomplishments since our IPO,” Herman said. “With a solid strategy and strong balance sheet, I am confident that the company is well-positioned to achieve its long-term objectives and I look forward to watching its continued success in the coming years.” said Herman.
In 2016, Markham, Ontario-based Real Matters launched an ambitious expansion plan to provide appraisal and title services to U.S. mortgage lenders after raising $100 million (Canadian) in common equity financing.
The plan at the time was for Real Matters to become a top five independent provider of mortgage title and closing services in the U.S., with 95 percent of the company’s revenue eventually expected to come from its U.S. operations.
To grow its title business, Real Matters subsidiary Solidifi acquired U.S.-based Linear Title and Closing Ltd. in 2016, giving Real Matters a presence in Buffalo, New York; Middletown, Rhode Island and Cincinnati. Real Matters went public on the Toronto Stock Exchange (TSX) in May 2017, giving it the ability to raise additional money by issuing new shares.
Real Matters’ revenue down 64% over last year
Today, the Cincinnati office is no more, and Real Matters has seen its revenue shrink by 64 percent in the last year. As rising mortgage rates curtailed mortgage refinancings that the company has focused its services on, revenue slipped from $107.8 million during the last quarter of 2021 to $38.2 million in the final months of 2022.
Revenue generated by Real Matters’ U.S. title business has declined by 85 percent over that time, to $2.4 million, while revenue from its U.S. appraisal business was down 64 percent, to $28.3 million. By the end of the year, Real Matters was depending on the residential real estate appraisal and insurance inspection services it provides in Canada for nearly 20 percent of revenue, up from 11 percent the year before.
Real Matters posted a $4.6 million net loss during the final three months of the year, compared to a $2.6 profit during the same quarter of 2021. But the company ended the year with $45.1 million in cash and cash equivalents, and onboarded new lenders in all three of its business lines (U.S. appraisals, U.S. title, and Canadian appraisals and inspections).
“Real Matters has a strong balance sheet which provides us with the flexibility needed to manage the business through the current mortgage market downturn,” Lang said in a Jan. 27 earnings announcement. “As we look forward to a recovering mortgage market, we feel confident in our ability to scale back up in both appraisal and title. We remain positive about the size of the opportunity for our business and our ability to grow market share and achieve our fiscal 2025 objectives.”
In 2020, Real Matters set a goal of handling between 7 percent and 9 percent of appraisals conducted in the U.S. to facilitate purchase loans by Sept. 30, 2025 (the end of the company’s fiscal year). It expected to be handling 17 percent to 19 percent of appraisals conducted in conjunction with refinancings.
In the title business, Real Matters set a more modest goal of facilitating title insurance on 6 percent to 8 percent of U.S. mortgage refinancings, and did not set a market share target for providing title insurance for purchase loans.
The company says its network management services platform is capable of scaling up and down in response to market demand, utilizing proprietary technology to manage tens of thousands of independent professionals.
Headquartered in Buffalo, Real Matters subsidiary Solidifi operates a technology-based marketplace where independent professionals including appraisers, property inspectors, notaries, abstractors and other closing agents compete for business.
“Our proprietary technology, which we believe is unique in our industry, combined with our network management capabilities, drives greater efficiency by reducing manual processes through robust quality control mechanisms, logistics management capabilities, capacity planning tools and end-to-end transaction management for our clients,” the company’s management said in a Jan. 26 analysis.
In Canada, Real Matters provides residential mortgage appraisal services to the majority of the country’s five biggest banks in Canada, and residential and commercial property insurance inspection services to insurance carriers through its iv3 brand.