Real Matters Posts Lower Q4 Profit, Shares Dip

Shares of Real Matters (REAL) plunged 10.9% in early trading Wednesday after the company posted a decline in profits in the fourth quarter.

Real Matters provides services for the mortgage lending and insurance industries. (See Analysts’ Top Stocks on TipRanks)

Revenues & Earnings

Real Matters’ consolidated revenues came in at $125.6 million in the quarter ended September 30, an increase of 0.9% from $124.4 million in the fourth quarter of 2020.

Consolidated net revenue decreased by 37.8% to $35 million, and adjusted EBITDA decreased 50.5% to $11 million from Q4 2020.

Q4 2021 profit was $9.1 million ($0.11 per diluted share), down 3.6% from $12.7 million ($0.14 per diluted share) in Q4 2020.

On an adjusted basis, Real Matters earned $7.5 million ($0.09 per diluted share) in the fourth quarter, down from $15.6 million ($0.18 per diluted share) a year ago.

In Q4 2021, Real Matters launched eight new lenders in U.S. Appraisal and four new lenders in U.S. Title.

CEO Commentary

Real Matters CEO Brian Lang said, “We closed out fiscal 2021 with record results in our U.S. Appraisal business. We also marked a milestone year for U.S. Title with the launch of our first Tier 1 and the rollout of a new Tier 2 lender, achieving double-digit market share in the retail channel with both of these title clients, based on our strong performance.”

Lang added that the company continues to execute its plan with a long-term business vision and is expected to meet its targets for fiscal 2025, which includes doubling its U.S. Appraisal market share and tripling its U.S. Title market share from fiscal 2020 levels.

Wall Street’s Take

On October 25, National Bank analyst Richard Tse maintained a Hold rating on REAL but lowered its price target to C$12 (from C$15.50). This implies 43.7% upside potential.

Overall, the consensus on the Street is that REAL is a Hold based on two Holds. The average Real Matters price target of C$13 implies an upside potential of about 55.7% to current levels.