Despite recording yet another quarter with a net loss, Doma executives remain steadfastly committed to reaching profitability by the end of 2023.
During the second quarter of 2022, the title underwriter earned $124 million in revenue, down from the $130 million recorded a year ago, but up 10% from the previous quarter. The firm’s GAAP net loss for the quarter was $58.65 million up from $23.3 million a year ago, and the all-important Adjusted EBITDA metric came in at a loss of $43.39 million, up from the $11.9 million reported in Q2 2021, but down from the $45 million recorded a quarter ago.
“We delivered resilient top-line results in the second quarter against the mortgage market that continued to be challenged by extremely difficult conditions for home buyers, namely rising inflation, interest rates, high home prices and unprecedented low housing inventory,” Doma CEO and founder Max Simkoff told investors during the firm’s second-quarter earnings call Tuesday evening.
As the firm looks to become profitable, executives plan to expand purchase title coverage. In the second quarter of 2022, even as mortgage rates reached some of their highest levels in over a decade, the firm saw a 16% uptick in purchase orders closed from the first quarter. Still, the total number of orders closed was down 31% compared to the first quarter, thanks to a 47% quarter-over-quarter decrease in refinance order volume. Year over year, the total number of title orders closed was also down, dropping from 31,436 during the second quarter of 2021 to 18,799 this year.
“Also affecting our closed orders were lower pull through rates, meaning fewer open orders are converting to close orders versus typical historical trends,” Simkoff said. “This behavior has now been observed across the broader purchase market with Redfin data showing that in June, purchase transaction cancellations reached 15%.”
Echoing sentiments shared during its first-quarter earnings call, Doma executives believe the expansion of the firm’s Doma Intelligence platform will be key in it increasing its purchase order volume. Simkoff said that the firm expects to have the majority of its purchase transactions on the Doma Intelligence platform by the end of 2023.
So far, the firm has rolled out the Doma Intelligence platform in California, Arizona and Florida, and it plans to expand coverage to two additional states by the end of the year.
“In terms of purchase, our market share was essentially flat versus last quarter, but should grow in the back half of the year as our investments in customer acquisition reach higher productivity and more of the purchase transactions start benefiting from our Doma Intelligence technology,” Simkoff said.
Looking ahead, Simkoff said that he expects the firm’s path to profitability will become “more obvious to the market early next year.”
“We will be one of the companies that quickly adapted to evolving market conditions while still remaining focused on our long-term strategies enabling us to emerge as a true market leader,” he said.