Doma Raises Full Year Outlook on Heels of NYSE Debut; Q2 Earnings Reflect Accelerated Growth

More Wallet Share, More Enterprise Customers, and More Powerful Tech Lead to More Aggressive Outlook on both Retained Premiums and Fees and Adjusted Growth Profit – Before Deploying Cash Raised from Going Public

Second Quarter 2021 Business Highlights(1):

  • Total revenues of $130 million, up 29% versus Q2 2020
  • Closed orders of 31,436, up 44% versus Q2 2020
  • Retained premiums and fees of $65 million, up 46% versus Q2 2020
  • Gross profit of $27 million, up 22% versus Q2 2020
  • Adjusted gross profit of $30 million, up 31% versus Q2 2020
  • Raised approximately $350 million in proceeds gross of transaction expenses and cash paid to Doma shareholders in the business combination with Capitol Investment Corp. V (July 2021)
  • Now publicly listed under the ticker symbol DOMA on New York Stock Exchange (July 2021)

2021 Full Year Outlook Raised To(1):

  • Revenue between $475 million and $525 million and retained premiums and fees between $250 million and $260 million, up from $226 million
  • Gross profit between $83 million and $93 million and adjusted gross profit between $95 million and $105 million, up from $89 million

SAN FRANCISCO–(BUSINESS WIRE)–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, 2021(2). Doma’s results demonstrate strong growth, market share gains, and the differentiated value of its technology-first approach to real estate transactions. Because of continued momentum in the second quarter of 2021 and an accelerating rate of growth, Doma has raised its outlook for 2021 to be materially ahead of the top-line and gross profit projections shared in the proxy statement/prospectus filed by Capitol Investment Corp. V (“Capitol”) on July 2, 2021. The growth, rate of change, and updated outlook are all based on a self-funded plan that does not yet reflect the impact of the approximately $350 million in proceeds from its merger with Capitol in July 2021, gross of transaction expenses and cash paid to Doma shareholders in the business combination.

“It’s important to note that we are not yet projecting any upside that would result from the proceeds raised from taking the company public but are actually still tracking well ahead of our self-funded plan,” said Max Simkoff, Founder and CEO of Doma. “Because of our strong performance to date being led by our differentiated technology offering, we expect to drive as much or more upside than we had originally anticipated – and are thus raising guidance as we make our debut as a public company. Beyond fiscal year 2021, we look forward to achieving our vision of becoming a market leader, revolutionizing the home ownership experience to one day arrive at a place where a consumer can sign a purchase contract for a home on a Friday and move in the following Monday, with a set of integrated digital experiences processing appraisal, title, closing and warranty over the weekend.”

(1)

Reconciliations of retained premiums and fees, adjusted gross profit, and the other 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)

All financial results and key operating data included in this release are for the Doma business prior to the closing of the business combination with Capitol Investment Corp. V.

What Drove Growth: More Demand, More Lenders, and Better Tech

Closed orders drove growth in the second quarter, across both the Doma Enterprise and Local channels. Increased orders at the Enterprise level reflect both new customers such as Wells Fargo and Fairway Independent Mortgage Corporation beginning to transact, as well as increases in wallet share among existing Doma Enterprise customers such as Chase, Homepoint and PennyMac. Growth from the Enterprise channel shows the country’s largest mortgage lenders continue to choose Doma for its machine learning-powered enablement of an instant, digital closing experience. In fact, Doma now counts five of the country’s top fifteen mortgage lenders as customers. Doma Local grew over the same period last year in large part due to a significant shift in transaction mix toward home purchase transactions. In addition, more Local refinance volume was fulfilled on the Doma Intelligence platform as the Company actively transitions the majority of its residential order volume to its tech-enabled solutions.

Second Quarter Results

Total revenues of $130 million increased by $30 million, or 29%, compared to the same period in 2020. Retained premiums and fees of $65 million increased by $20 million, or 46%, compared to the prior year period.

Closed orders amounted to approximately 31 thousand in the second quarter, representing a 44% increase compared to the prior year period, with closed orders for Enterprise accounts increasing by 519% and closed orders for Local increasing by 4%, in each case from the prior year period.

GAAP gross profit of $27 million increased by $5 million, or 22%, compared to the same period in 2020. Adjusted gross profit of $30 million increased by $7 million, or 31%, compared to the prior year period. Significant growth in retained premiums and fees resulted in the increase in both gross profit and adjusted gross profit. The ratio of adjusted gross profit to retained premiums and fees was 46% in the second quarter of 2021, lower by 5% when compared to the prior year. The change in adjusted gross profit as a percentage of retained premiums and fees was driven by a reduced benefit from provision for claims releases on a year-over-year basis, as well as staffing investments made ahead of growth. This was consistent with Doma’s expectations.

Recent Enterprise Customer Additions:

  • On May 18, 2021, Doma announced the addition of Wells Fargo, the nation’s largest bank mortgage originator and servicer, as a new Enterprise customer. The Doma Intelligence platform will enable Wells Fargo to remove key points of friction and frustration involved in the traditional way of fulfilling mortgages. Wells Fargo has only just begun to leverage the Doma Intelligence platform for transactions.
  • On June 29, 2021, Doma and Lodasoft, a Digital Workflow Platform designed by mortgage veterans to revolutionize loan origination and task automation, announced a product integration between the two companies that enables mortgage lenders to seamlessly integrate Doma’s machine intelligence and proprietary technology solutions to make real estate closings simpler and more efficient.
  • On July 15, 2021, Doma announced the addition of Fairway Independent Mortgage Corporation, a top nationwide mortgage lender, as a new Enterprise customer. Fairway will leverage Doma’s proprietary machine intelligence technology to remove key points of friction and frustration involved in traditional mortgage closings, for both loan officers and mortgage customers.

The Tech Edge is Getting Sharper

While going through the process of going public and scaling order volume significantly, in the second quarter Doma released functional improvements to its Doma Intelligence platform that demonstrate applications of cutting-edge machine learning to deliver better customer results. In addition, the Company expanded its geographic footprint to cover over 75% of mortgage volume across the country, adding four new states served with Massachusetts, South Carolina, Texas, and Wisconsin. To deliver this pace of innovation, Doma has attracted and hired top talent from companies like Box, Carta, LogMeIn, Netflix, Oracle NetSuite, PayPal and Splunk across positions in software engineering, data science and product management, with the goal of increasing its technical lead in the industry.

“Our strong first half results in 2021 reflect the inherent quality of the offering we have built, centered around our machine intelligence-powered platform. Moreover, our growth trends and profitability measures have us on track to achieve – or exceed – our long-term financial targets,” stated Noaman Ahmad, CFO of Doma. “We remain confident in our ability to continue outperforming the industry due to our disruptive approach to title insurance, escrow, and closing services, and we are today raising our full year outlook which now calls for a range of $250 million to $260 million of retained premiums and fees and a range of $95 million to $105 million of adjusted gross profit.”

Outlook Guided by Top Notch Governance, with Bigger, Bolder, Broader Board

On June 15, 2021, Doma announced that Sharda Cherwoo, digital transformer and retired partner, Ernst & Young LLP; Maxine Williams, Chief Diversity Officer, Facebook; and Serena Wolfe, CFO, Annaly Capital Management, Inc. and new Audit Chair would be nominated to the public Board of Directors, marking an important step in diversifying the leadership guiding Doma through sustained and accelerating growth. With a clear path to market share gains and a differentiated, technology-first vision for creating a better, faster, and more affordable residential real estate closing experience, Doma will benefit from a Board of Directors with broad perspectives, varied professional backgrounds, and additional female leadership. The three women join an exceptionally strong Board that includes Chairman Matt Zames, formerly COO at J. P. Morgan Chase and President at Cerberus; Lawrence H. Summers, former Treasury Secretary; Karen Richardson, board member at BP; Stuart Miller, executive chairman at Lennar Corporation; Charles Moldow, General Partner at Foundation Capital; Mark Ein, Chairman and CEO at Capitol Investment Corp., and Max Simkoff, CEO at Doma.

Transaction with Capitol

On July 28, 2021, Doma and Capitol completed their previously announced business combination. In conjunction with this consummation, the shares of common stock and warrants of the combined company began trading on the New York Stock Exchange on July 29, 2021 under the symbols DOMA and DOMA.WS, respectively. Proceeds from the transaction are not reflected in the current projections and will be used by Doma to fuel growth, through both market expansion and the development of new products aimed to extend the strategic advantage customers receive from the Doma Intelligence platform. Capitol shareholders approved the transaction at a special meeting in lieu of its 2021 annual meeting of stockholders on July 27, 2021. CEO Max Simkoff and the rest of the Doma management team will continue to lead the combined company.

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 United States generally accepted accounting principles (“GAAP”). Retained premiums and fees is defined as revenue less third-party agent retentions. Adjusted gross profit is defined as gross profit, plus depreciation and amortization. Adjusted EBITDA is defined as net loss before interest, income taxes, depreciation and amortization, stock based compensation and COVID-related severance costs. Doma believes that the use of retained premiums and fees, adjusted gross profit and adjusted EBITDA provides an additional tool 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.

Conference Call Information

Doma will host a conference call at 5:00 PM Eastern Time on Thursday, August 12, 2021, to present its second quarter 2021 financial results.

The telephonic version of the call can be accessed by dialing:

Participant Toll Free Dial-In Number: (844) 615-6508

Participant International Dial-In Number: (918) 922-3146

Conference ID: 1983057

The live webcast of the call will be accessible on the Company’s website at doma.com/investors. Approximately two hours after conclusion of the live event, an archived webcast of the conference call will be accessible from the Investor Relations section of the Company’s website for twelve months.

About Doma Holdings, Inc.

Doma (NYSE: DOMA) is architecting the future of real estate transactions. The Company uses machine intelligence and its patented technology solutions to transform residential real estate, making closings instant and affordable. Doma and its family of brands – States Title, North American Title Company (NATC) and North American Title Insurance Company (NATIC) – offer solutions for current and prospective homeowners, lenders, title agents, and real estate professionals that make closings vastly more simple and efficient, reducing cost and increasing customer satisfaction. Doma’s clients include some of the largest bank and non-bank lenders in the United States. To learn more visit doma.com.

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 estimates and forecasts of financial and performance metrics, projections of market opportunity, total addressable market (“TAM”), market share and competition and potential benefits of the transactions described herein. 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 for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. 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; failure to realize the anticipated benefits of the business combination; risks relating to the uncertainty of the projected financial information with respect to Doma; future global, regional or local economic, political, market and social conditions, including due to the COVID-19 pandemic; 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; and those other factors described in the “Risk Factors” section of the documents filed by Doma from time to time with 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

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

 

(in thousands, except for open and closed order numbers)

Key operating data:

 

 

 

 

 

 

 

Opened orders

41,491

 

 

30,432

 

 

82,575

 

 

63,589

 

Closed orders

31,436

 

 

21,885

 

 

64,086

 

 

39,668

 

 

 

 

 

 

 

 

 

GAAP financial data:

 

 

 

 

 

 

 

Revenue(1)

$

129,986

 

 

$

100,423

 

 

$

257,782

 

 

$

171,232

 

Gross profit(2)

$

26,514

 

 

$

21,682

 

 

$

52,930

 

 

$

35,038

 

Net loss

$

(23,299

)

 

$

(6,332

)

 

$

(35,057

)

 

$

(22,918

)

Non-GAAP financial data(3):

 

 

 

 

 

 

 

Retained premiums and fees

$

64,805

 

 

$

44,417

 

 

$

122,263

 

 

$

82,124

 

Adjusted gross profit

$

29,535

 

 

$

22,581

 

 

$

58,657

 

 

$

37,054

 

Ratio of adjusted gross profit to retained premiums and fees

46

%

 

51

%

 

48

%

 

45

%

Adjusted EBITDA

$

(11,903

)

 

$

(2,402

)

 

$

(15,182

)

 

$

(15,276

)

_______________
n.m. = not meaningful

(1)

Revenue is comprised of (i) net premiums written, (ii) escrow, other title-related fees and other, and (iii) investment, dividend and other income. Net loss is made up of the components of revenue and expenses.

(2)

Gross profit, calculated in accordance with GAAP, is calculated as total revenue, minus premiums retained by third-party 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)

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 presents our retained premiums and fees and reconciles the measure 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,

 

2021

 

2020

 

2021

 

2020

 

(in thousands)

 

(in thousands)

Revenue

$

129,986

 

 

$

100,423

 

 

$

257,782

 

 

$

171,232

 

Minus:

 

 

 

 

 

 

 

Premiums retained by third-party agents

65,181

 

 

56,006

 

 

135,519

 

 

89,108

 

Retained premiums and fees

$

64,805

 

 

$

44,417

 

 

$

122,263

 

 

$

82,124

 

Minus:

 

 

 

 

 

 

 

Direct labor

20,902

 

 

13,898

 

 

38,881

 

 

30,212

 

Provision for claims

6,807

 

 

3,040

 

 

10,055

 

 

4,823

 

Depreciation and amortization

3,021

 

 

899

 

 

5,727

 

 

2,016

 

Other direct costs(1)

7,561

 

 

4,898

 

 

14,670

 

 

10,035

 

Gross Profit

$

26,514

 

 

$

21,682

 

 

$

52,930

 

 

$

35,038

 

_______________

(1)

Includes title examination expense, office supplies, and premium and other taxes.

Adjusted gross profit

The following table reconciles our 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,

 

2021

 

2020

 

2021

 

2020

 

(in thousands)

 

(in thousands)

Gross Profit

$

26,514

 

 

$

21,682

 

 

$

52,930

 

 

$

35,038

 

Adjusted for:

 

 

 

 

 

 

 

Depreciation and amortization

3,021

 

 

899

 

 

5,727

 

 

2,016

 

Adjusted Gross Profit

$

29,535

 

 

$

22,581

 

 

$

58,657

 

 

$

37,054

 

Adjusted EBITDA

The following table reconciles our 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,

 

2021

 

2020

 

2021

 

2020

 

(in thousands)

 

(in thousands)

Net loss (GAAP)

$

(23,299

)

 

$

(6,332

)

 

$

(35,057

)

 

$

(22,918

)

Adjusted for:

 

 

 

 

 

 

 

Depreciation and amortization

3,021

 

 

899

 

 

5,727

 

 

2,016

 

Interest expense

4,451

 

 

1,123

 

 

7,810

 

 

3,235

 

Income taxes

211

 

 

241

 

 

336

 

 

416

 

EBITDA

$

(15,616

)

 

$

(4,069

)

 

$

(21,184

)

 

$

(17,251

)

Adjusted for:

 

 

 

 

 

 

 

Stock-based compensation

3,713

 

 

282

 

 

6,002

 

 

590

 

COVID-related severance costs

 

 

1,385

 

 

 

 

1,385

 

Adjusted EBITDA

$

(11,903

)

 

$

(2,402

)

 

$

(15,182

)

 

$

(15,276

)

The following table reconciles our adjusted gross profit to our adjusted EBITDA, for the periods indicated:

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

 

(in thousands)

 

(in thousands)

Adjusted Gross Profit

$

29,535

 

 

$

22,581

 

 

$

58,657

 

 

$

37,054

 

Minus:

 

 

 

 

 

 

 

Customer acquisition costs

12,192

 

 

8,083

 

 

22,087

 

 

16,381

 

Other indirect costs(1)

29,246

 

 

16,900

 

 

51,752

 

 

35,949

 

Adjusted EBITDA

$

(11,903

)

 

$

(2,402

)

 

$

(15,182

)

 

$

(15,276

)

_______________

(1)

Includes corporate support, research and development, and other operating costs.

Outlook reconciliations

The following tables reconcile the ranges of expected gross profit to expected retained premiums and fees and the ranges of expected gross profit to expected adjusted gross profit for the full year ended December 31, 2021:

 

Year Ended December 31, 2021

 

Low

 

High

 

(in thousands)

Revenue

$

475,000

 

 

$

525,000

 

Minus:

 

 

 

Premiums retained by third-party agents

225,000

 

 

265,000

 

Retained premiums and fees

$

250,000

 

 

$

260,000

 

Minus:

 

 

 

Estimated adjustments(1)

$

167,000

 

 

$

167,000

 

Gross Profit

$

83,000

 

 

$

93,000

 

 

 

Year Ended December 31, 2021

 

Low

 

High

 

(in thousands)

Gross Profit

$

83,000

 

 

$

93,000

 

Adjusted for:

 

 

 

Depreciation and amortization

12,000

 

 

12,000

 

Adjusted Gross Profit

$

95,000

 

 

$

105,000

 

_______________

(1)

Estimated adjustments include direct labor, provision for claims, depreciation and amortization, and other direct costs (which includes title examination expense, office supplies, and premium and other taxes).

Doma Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

Three months ended June 30,

 

Six months ended June 30,

(In thousands, except share and per share information)

2021

 

2020

 

2021

 

2020

Revenues:

 

 

 

 

 

 

 

Net premiums written (1)

$

109,271

 

 

$

86,334

 

 

$

217,263

 

 

$

143,151

 

Escrow, other title-related fees and other

20,065

 

 

13,382

 

 

38,640

 

 

26,556

 

Investment, dividend and other income

650

 

 

707

 

 

1,879

 

 

1,525

 

Total revenues

$

129,986

 

 

$

100,423

 

 

$

257,782

 

 

$

171,232

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

Premiums retained by third-party agents (2)

$

65,181

 

 

$

56,006

 

 

$

135,519

 

 

$

89,108

 

Title examination expense

5,500

 

 

3,322

 

 

10,353

 

 

7,187

 

Provision for claims

6,807

 

 

3,040

 

 

10,055

 

 

4,823

 

Personnel costs

53,954

 

 

32,737

 

 

97,419

 

 

68,455

 

Other operating expenses

17,181

 

 

10,286

 

 

31,347

 

 

20,926

 

Total operating expenses

$

148,623

 

 

$

105,391

 

 

$

284,693

 

 

$

190,499

 

 

 

 

 

 

 

 

 

Loss from operations

$

(18,637

)

 

$

(4,968

)

 

$

(26,911

)

 

$

(19,267

)

 

 

 

 

 

 

 

 

Interest expense

4,451

 

 

1,123

 

 

7,810

 

 

3,235

 

Loss before income taxes

$

(23,088

)

 

$

(6,091

)

 

$

(34,721

)

 

$

(22,502

)

 

 

 

 

 

 

 

 

Income tax expense

211

 

 

241

 

 

336

 

 

416

 

Net loss

(23,299

)

 

(6,332

)

 

(35,057

)

 

(22,918

)

 

 

 

 

 

 

 

 

Earnings Per Share:

 

 

 

 

 

 

 

Net loss per share attributable to Doma Holdings, Inc. shareholders – basic and diluted

$

(2.00

)

 

$

(0.64

)

 

$

(3.06

)

 

$

(2.24

)

Weighted average shares outstanding Doma Holdings, Inc. common stock – basic and diluted

11,667,266

 

 

9,950,920

 

 

11,457,724

 

 

10,231,489

 

Contacts

Investor Contact: Chris Mammone | The Blueshirt Group for Doma | ir@doma.com
Media Contact: Martha Shaughnessy | The Key PR for Doma | press@doma.com

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