Real Matters Earnings Call: Growth Builds Amid Weak Market

Real Matters ((TSE:REAL)) has held its Q1 earnings call. Read on for the main highlights of the call.

Real Matters Strikes Optimistic Tone as Growth Accelerates but Macro Clouds Linger

Real Matters’ latest earnings call painted a picture of a company regaining momentum, with solid double‑digit revenue growth, sharply improved profitability metrics and a strengthening balance sheet. Management emphasized strong execution in its core U.S. Appraisal business and rapid gains in U.S. Title, while acknowledging that the title segment remains loss‑making and that mortgage market volumes are still far below prior‑cycle peaks. The overall tone was cautiously upbeat: confident in the company’s operating model and client traction, but measured about near‑term market volatility and seasonality.

Double-Digit Growth and a Swing to Positive EBITDA

Consolidated revenue rose 14% year over year in Q1 FY2026, with net revenue up a faster 19%, underscoring improving economics across the portfolio. Importantly for investors, consolidated adjusted EBITDA flipped to a positive $0.1 million from a $1.7 million loss a year ago, signaling that volume growth is beginning to drop to the bottom line despite a still‑weak housing market. Management framed these results as validation that the platform can scale profitably as volumes normalize, even as they continue to spend on growth and technology.

U.S. Appraisal: Margin Machine in a Tough Market

The U.S. Appraisal segment remained the company’s profit engine. Revenues climbed 12% year over year to $32.9 million, while net revenue increased to $8.4 million, roughly 7% higher than last year. Operating expenses fell 5%, driving a powerful operating leverage effect: adjusted EBITDA jumped 36% to $3.3 million and the segment’s adjusted EBITDA margin expanded by about 820 basis points to 39.1%. Management did note some net revenue margin pressure—about 110 basis points—due to geographic, client and product mix, but the strong EBITDA performance shows the business can expand margins even in a mixed environment.

U.S. Title: Fast Growth, Narrowing Losses

U.S. Title was the standout growth story, with revenue surging 76% year over year to $4.4 million and net revenue more than doubling to $2.8 million. Refinance origination revenue rose 135% from a depressed base, and net revenue margin improved sharply to 63.9% from 53.4%. The segment still posted an adjusted EBITDA loss of $0.8 million, but that was significantly better than the $1.8 million loss a year earlier. Management highlighted that, on the current cost base, the business could almost double its title volumes, implying high incremental margins as volumes build.

Client Wins, New Channels and Market-Share Gains

Commercial momentum was a recurring theme. Real Matters onboarded eight new clients in the quarter, including two top‑100 lenders, reflecting growing acceptance of its platform among larger institutions. In U.S. Title, the company added a new channel with a Tier 1 lender, while in Canada it launched three new clients. Management reported sequential market‑share gains with two large appraisal customers and described a healthy pipeline and RFP activity in Title, suggesting that the recent growth is not just a one‑off but part of a broader share‑gain trend.

Canada: Stable Profitability with Modest Growth

The Canadian business delivered modest growth and steady profits, providing a stabilizing counterweight to the more volatile U.S. markets. Revenue edged up to $9.2 million from $9.1 million, with net revenue up about 3% to $1.8 million. Adjusted EBITDA held flat at $1.1 million, indicating that the segment continues to generate consistent earnings even without significant top‑line expansion. For investors, Canada remains a dependable contributor rather than a growth engine.

Balance Sheet Strength Bolsters Flexibility

Real Matters closed the quarter with $43.8 million in cash and no debt, a notable position given the still‑muted housing cycle. Cash increased sequentially, driven mainly by the timing of collections and normalized working capital. This clean balance sheet gives the company room to continue investing in technology, sales and client deployments without relying on external financing, and it provides a buffer if mortgage volumes soften again.

UAD Readiness as a Competitive Edge

Management underscored its operational readiness for the industry’s new Uniform Appraisal Dataset (UAD) framework, noting the completion of its first UAD transaction and a multi‑million‑dollar investment to ensure compliance. They positioned UAD readiness as a differentiator that could help win and retain large clients as regulatory and data standards evolve. Some of these upfront investments are expected to free up later this year, potentially allowing capital to be redeployed toward other growth or efficiency initiatives.

Title Still in the Red as Costs Rise with Growth

Despite improving metrics, U.S. Title remains unprofitable in absolute terms, reflecting its early‑stage growth profile. The $0.8 million adjusted EBITDA loss was an improvement but still underscores the work ahead. Operating expenses in Title climbed 16% year over year, driven by hiring to support new client deployments and expanded sales capabilities. Management framed these higher costs as necessary to scale the business and capture share, but they do partially offset the margin gains from stronger revenue and better unit economics.

Purchase Volume Softness and Appraisal Margin Pressure

On the demand side, Real Matters saw modest weakness in purchase mortgage activity, with purchase‑related appraisal revenues declining slightly, consistent with broader industry trends. At the same time, U.S. Appraisal net revenue margins compressed by about 110 basis points, driven by changes in geographic and product mix and client‑specific factors. While these pressures did not prevent strong EBITDA growth in Appraisal this quarter, they highlight that the segment is not immune to the shifting composition of mortgage activity.

Seasonality, Depressed Market Volumes and Higher Investments

Management repeatedly reminded investors that Q1 is seasonally slow and that industry forecasts point to continued choppiness. Mortgage Bankers Association and Fannie Mae projections suggest Q2 mortgage volumes could fall about 10% quarter over quarter, even as the full‑year outlook for purchases and refinancings is more constructive. Overall mortgage activity remains roughly 70% below Q1 2022 levels, and some of the recent refinance uptick comes off a very low base. Against this backdrop, Real Matters is deliberately increasing spending—particularly in Title sales and UAD readiness—which lifts near‑term operating costs even as it positions the company for an eventual cyclical recovery.

Forward-Looking Guidance and Path to Scale

Management described their outlook as “cautiously optimistic.” They expect U.S. Title net revenue margins in Q2 to trend toward the lower end of the company’s target operating‑model range, mainly due to order‑flow timing. Industry projections indicate Q2 mortgage volumes could decline about 10% sequentially, but the company highlighted forecasts for low single‑digit growth in full‑year purchase volumes and roughly 50% growth in refinance volumes as supportive of its long‑term model. Based on that backdrop, Real Matters reiterated that Title could nearly double current volumes on its existing fixed cost base and that a high proportion of incremental Title net revenue would flow through to EBITDA. Management also noted that, under volumes similar to 2020–2021, their operating model could support adjusted EBITDA near approximately $100 million, underpinned by the current quarter’s indicators of 14% consolidated revenue growth, 19% net revenue growth, a return to positive adjusted EBITDA and a strong, debt‑free balance sheet.

In closing, Real Matters’ earnings call sketched a company that is executing well in a difficult market: growing faster than the underlying mortgage industry, expanding margins in its core appraisal business and rapidly scaling Title while narrowing losses. The balance sheet provides stability, and investments in UAD readiness and sales capacity are intended to pay off as volumes recover from historically depressed levels. While near‑term margin normalization in Title, seasonal softness and macro uncertainty remain real risks, the overall message to investors was one of disciplined growth and confidence in the platform’s ability to translate higher future volumes into substantial earnings.