For a few months now it has been clear that changes were afoot at title firm Doma. Many of those changes came to light last week during the company’s second-quarter earnings call with investors.
Firm founder and CEO Max Simkoff revealed that Doma is exploring a new strategy and will be licensing its instant underwriting software to mortgage originators and secondary market purchasers, in addition to continuing to roll out the software to its independent title agents.
“Our goal in implementing our new strategy in this way is to not only drive some of the largest single reductions in mortgage-related fees to end-consumers that our industry has ever seen, but also to enable Doma to capture a much larger part of the overall market for mortgage transactions with a much better solution and at a much faster speed than our previous go-to market focus,” Simkoff said.
Doma executives noted that the sales of its Midwest, Texas, and Central and Northern California retail offices were prompted by this change in strategy and have helped Doma further reduce costs.
“We have now sold all of our local operation to several suitors for a total gross price in excess of $35 million,” Simkoff said. “The majority of the proceeds received were used to pay down existing debt. These executed transactions resulted in the transfer of approximately 300 employees and 60 local branches and operations to new leadership and organizations.”
Company executives believe that the sale of these branches, in addition to the new business strategy, will be enough to help the firm achieve its goal of becoming adjusted EBITDA profitable in 2023.
In Q2 2023, Doma reported an adjusted EBITDA loss of $14 million, an improvement over the adjusted EBITDA loss of $22 million reported in Q1 and the loss of $43.49 million recorded a year ago.
Overall, Doma reported revenue of $88.85 million, down from $123.744 million in Q2 2022, and a net loss of $35.88 million, an improvement over the $58.652 million loss reported a year prior. These financial results came as the number of title orders closed by Doma during the quarter dropped significantly to 7,036 from 18,799 in Q2 2022.
“We remain cautiously optimistic that achieving adjusted EBITDA profitability by year end is achievable,” Simkoff said. “We are still working tirelessly to get there in the continually challenging macro environment. The company could push the timeline modestly, but ultimately this transformation will better position us to achieve sustainable profitability.”
