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 ended June 30, 2024.
Second Quarter 2024 Business Highlights (1)(2):
- Total revenues of $78 million, up 18% versus Q1 2024
- Retained premiums and fees of $15 million, up 13% versus Q1
2024
- Gross profit of $5 million, up 23% versus Q1 2024
- Adjusted gross profit of $8 million, up 15% versus Q1 2024
- Net loss of $19 million, compared to a net loss of $19 million
in Q1 2024
- Adjusted EBITDA loss of $3 million, compared to a loss of $6
million in Q1 2024
“We are pleased with the continued progress our team is making
toward achieving our strategic goals,” said Max Simkoff, Doma
CEO.
(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 its local retail
operations nationwide. Local and associated operations are
classified as “discontinued operations” and segregated in Doma’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.
Pending Transaction
As previously announced on March 28, 2024, Doma entered into a
definitive agreement and plan of merger to be acquired by Title
Resources Group (“TRG”) in an all-cash transaction for $6.29 per
share. The pending transaction would result in Doma becoming a
private company and is expected to close in the second half of
2024, subject to certain closing conditions, including the approval
of the holders of a majority of Doma’s common stock that are not
affiliated with LENX ST Investor, LLC and LEN FW Investor, LLC and
certain other persons.
In light of the pending transaction, Doma will not hold an
earnings conference call or provide forward looking guidance.
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.
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 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,
merger transaction costs, 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.
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, and the pending transaction with the Title Resources
Group. 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 our market opportunities; future global, regional or
local economic, political, market and social conditions; 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; Doma’s ability to complete the pending transaction with
Title Resources Group on the anticipated timeline, if at all; 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,
2023 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 June
30,
Six Months Ended June
30,
2024
2023
2024
2023
(Unaudited - in thousands)
GAAP financial data:
Revenue (1)
$
77,646
$
81,279
$
143,713
$
150,091
Gross profit (2)
$
5,056
$
1,972
$
9,164
$
4,073
Net loss (3)
$
(19,008
)
$
(24,253
)
$
(38,482
)
$
(55,486
)
Non-GAAP financial data (4):
Retained premiums and fees
$
15,474
$
16,509
$
29,150
$
30,784
Adjusted gross profit
$
8,131
$
4,881
$
15,224
$
9,844
Ratio of adjusted gross profit to retained
premiums and fees
53
%
30
%
52
%
32
%
Adjusted EBITDA
$
(2,665
)
$
(12,141
)
$
(8,227
)
$
(24,926
)
____________________
(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 June
30,
Six Months Ended June
30,
2024
2023
2024
2023
(Unaudited - in thousands)
Revenue
$
77,646
$
81,279
$
143,713
$
150,091
Minus:
Premiums retained by agents
62,172
64,770
114,563
119,307
Retained premiums and fees
$
15,474
$
16,509
$
29,150
$
30,784
Minus:
Direct labor
3,148
3,327
6,562
7,135
Provision for claims
1,183
5,330
1,913
8,617
Depreciation and amortization
3,075
2,909
6,060
5,771
Other direct costs (1)
3,012
2,971
5,451
5,188
Gross Profit
$
5,056
$
1,972
$
9,164
$
4,073
____________________
(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 June
30,
Six Months Ended June
30,
2024
2023
2024
2023
(Unaudited - in thousands)
Gross Profit
$
5,056
$
1,972
$
9,164
$
4,073
Adjusted for:
Depreciation and amortization
3,075
2,909
6,060
5,771
Adjusted Gross Profit
$
8,131
$
4,881
$
15,224
$
9,844
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 June
30,
Six Months Ended June
30,
2024
2023
2024
2023
(Unaudited - in thousands)
Net loss (GAAP)
$
(20,397
)
$
(35,877
)
$
(40,948
)
$
(78,000
)
Adjusted for:
Depreciation and amortization
3,075
2,909
6,060
5,771
Interest expense
7,838
5,021
14,442
8,992
Income taxes
56
156
(448
)
312
EBITDA
$
(9,428
)
$
(27,791
)
$
(20,894
)
$
(62,925
)
Adjusted for:
Loss from discontinued operations, net of
taxes
1,389
11,624
2,466
22,514
Stock-based compensation
3,784
2,833
8,487
7,826
Severance and interim salary costs
5
860
69
7,341
Long-lived asset impairment
—
441
—
441
Merger transaction costs
930
—
930
—
Change in fair value of Warrant and
Sponsor Covered Shares liabilities
66
(108
)
305
(123
)
Change in fair value of Local Sales
Deferred Earnout
589
—
410
—
Adjusted EBITDA
$
(2,665
)
$
(12,141
)
$
(8,227
)
$
(24,926
)
The following table reconciles our continuing operations
adjusted gross profit to our adjusted EBITDA, for the periods
indicated:
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
(Unaudited - in thousands)
(Unaudited - in thousands)
Adjusted Gross Profit
$
8,131
$
4,881
$
15,224
$
9,844
Minus:
Customer acquisition costs
1,495
1,687
2,970
4,023
Other indirect costs (1)
9,301
15,335
20,481
30,747
Adjusted EBITDA
$
(2,665
)
$
(12,141
)
$
(8,227
)
$
(24,926
)
____________________
(1)
Includes corporate support,
research and development, and other operating costs.
Doma Holdings, Inc.
Consolidated Statements of
Operations
Three Months Ended June
30,
Six Months Ended June
30,
(Unaudited - in thousands, except share
and per share information)
2024
2023
2024
2023
Revenues:
Net premiums written (1)
$
75,408
$
78,962
$
138,921
$
145,732
Escrow, other title-related fees and
other
922
798
1,993
1,762
Investment, dividend and other income
1,316
1,519
2,799
2,597
Total revenues
$
77,646
$
81,279
$
143,713
$
150,091
Expenses:
Premiums retained by agents (2)
$
62,172
$
64,770
$
114,563
$
119,307
Title examination expense
1,173
1,241
2,031
1,974
Provision for claims
1,183
5,330
1,913
8,617
Personnel costs
13,174
17,434
27,789
42,842
Other operating expenses
10,992
11,247
21,600
23,215
Long-lived asset impairment
—
441
—
441
Total operating expenses
$
88,694
$
100,463
$
167,896
$
196,396
Operating loss from continuing
operations
$
(11,048
)
$
(19,184
)
$
(24,183
)
$
(46,305
)
Other (expense) income:
Change in fair value of Warrant and
Sponsor Covered Shares liabilities
(66
)
108
(305
)
123
Interest expense
(7,838
)
(5,021
)
(14,442
)
(8,992
)
Loss from continuing operations before
income taxes
$
(18,952
)
$
(24,097
)
$
(38,930
)
$
(55,174
)
Income tax benefit (expense)
(56
)
(156
)
448
(312
)
Loss from continuing operations, net of
taxes
$
(19,008
)
$
(24,253
)
$
(38,482
)
$
(55,486
)
Loss from discontinued operations, net
of taxes
(1,389
)
(11,624
)
(2,466
)
(22,514
)
Net loss
$
(20,397
)
$
(35,877
)
$
(40,948
)
$
(78,000
)
Earnings per share:
Net loss from continuing operations per
share attributable to stockholders - basic and diluted
$
(1.36
)
$
(1.82
)
$
(2.78
)
$
(4.18
)
Net loss per share attributable to
stockholders - basic and diluted
$
(1.46
)
$
(2.69
)
$
(2.95
)
$
(5.88
)
Weighted average shares outstanding common
stock - basic and diluted
13,992,669
13,324,215
13,864,422
13,259,894
____________________
(1)
Net premiums written includes
revenues from a related party of $38.0 million and $33.5 million
during the three months ended June 30, 2024 and 2023, respectively.
Net premiums written includes revenues from a related party of
$72.1 million and $63.5 million during the six months ended June
30, 2024 and 2023, respectively.
(2)
Premiums retained by agents
includes expenses associated with a related party of $30.7 million
and $27.1 million during the three months ended June 30, 2024 and
2023, respectively. Premiums retained by agents includes expenses
associated with a related party of $58.2 million and $51.2 million
during the six months ended June 30, 2024 and 2023,
respectively.
Doma Holdings, Inc.
Consolidated Balance
Sheets
(Unaudited - in thousands, except share
information)
June 30, 2024
December 31, 2023
Assets
Cash and cash equivalents
$
69,098
$
65,939
Restricted cash
3,999
5,228
Investments:
Fixed maturities
Held-to-maturity debt securities, at
amortized cost (net of allowance for credit losses of $5 at June
30, 2024 and $125 at December 31, 2023)
7,445
18,179
Available-for-sale debt securities, at
fair value (amortized cost $41,978 at June 30, 2024 and $58,516 at
December 31, 2023)
41,727
58,032
Mortgage loans
45
45
Total investments
$
49,217
$
76,256
Trade and other receivables (net of
allowance for credit losses of $2,024 at June 30, 2024 and $1,802
at December 31, 2023)
23,364
24,452
Prepaid expenses, deposits and other
assets
8,613
4,614
Lease right-of-use assets
3,457
4,175
Fixed assets (net of accumulated
depreciation of $33,991 at June 30, 2024 and $26,272 at December
31, 2023)
27,902
30,945
Title plants
2,716
2,716
Goodwill
23,413
23,413
Assets held for disposal
1,893
2,563
Total assets
$
213,672
$
240,301
Liabilities and stockholders’
deficit
Accounts payable
$
5,248
$
1,798
Accrued expenses and other liabilities
11,762
12,700
Lease liabilities
7,322
8,838
Loan and Security Agreement, net of debt
issuance costs and original issue discount
168,530
154,087
Liability for loss and loss adjustment
expenses
74,817
81,894
Warrant liabilities
92
26
Sponsor Covered Shares liability
325
86
Liabilities held for disposal
5,546
6,783
Total liabilities
$
273,642
$
266,212
Commitments and contingencies
Stockholders’ deficit:
Common stock, 0.0001 par value; 80,000,000
shares authorized at June 30, 2024; 14,074,805 and 13,524,203
shares issued and outstanding as of June 30, 2024 and December 31,
2023, respectively
$
1
$
1
Additional paid-in capital
600,430
593,772
Accumulated deficit
(660,149
)
(619,201
)
Accumulated other comprehensive income
(252
)
(483
)
Total stockholders’ deficit
$
(59,970
)
$
(25,911
)
Total liabilities and stockholders’
deficit
$
213,672
$
240,301
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240813799648/en/
Investor Contact: Dave DeHorn | Chief Strategy Officer
and Interim Head of Investor Relations for Doma | ir@doma.com
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