Real Matters delivered an impressive financial performance in the second quarter of fiscal year 2026, building on previous momentum. The company saw substantial gains across its U.S. Appraisal and U.S. Title operations, with increased transaction volumes, successful client integrations, and enhanced operational efficiency. These results underscore Real Matters' effective strategy in a dynamic market environment.

The company's CEO, Brian Lang, and CFO, Rodrigo Pinto, detailed the key factors contributing to this success during their earnings call. Consolidated revenue climbed to CAD 47.2 million, a 27% increase year-over-year, and net revenue reached CAD 13.6 million, up 35%. Notably, consolidated adjusted EBITDA turned positive at CAD 0.9 million, marking the strongest performance in seven quarters, a testament to robust revenue growth and operational leverage.

U.S. Operations Drive Significant Growth and Profitability

Real Matters' U.S. operations were central to its strong second-quarter performance. The U.S. Title segment reported a remarkable 268% year-over-year increase in originations and a 127% rise in segment revenue to CAD 5.1 million. This rapid expansion significantly narrowed the adjusted EBITDA loss to CAD 0.4 million, pushing the segment closer to profitability. Meanwhile, the U.S. Appraisal business saw revenue grow 26% to CAD 33.7 million, with adjusted EBITDA jumping 41% to CAD 3.6 million, achieving a robust 41.1% margin. The company plans strategic investments to scale the U.S. Appraisal segment, which has reached full capacity, leveraging its debt-free status and strong cash reserves.

The U.S. market presented a mixed backdrop, with initial robust momentum in the mortgage sector due to declining interest rates, followed by a slowdown in March caused by geopolitical tensions and rising rates. Despite these fluctuations, Real Matters capitalized on a modest mid-quarter rate decline, driving growth in refinance originations. The company noted a substantial pool of approximately 13 million mortgages with interest rates exceeding 6%, suggesting significant refinance potential. The U.S. Appraisal segment's net revenue margin experienced a slight decline due to shifts in transaction distribution across geographies, clients, and product mix, while operating expenses saw a modest increase primarily due to higher staffing costs. However, the overall improvement in adjusted EBITDA margins across both U.S. segments highlighted the company's ability to achieve operating leverage and efficiency.

Strategic Client Expansion and Capacity Management

Real Matters' growth strategy includes aggressive client acquisition and leveraging its existing client base. The company successfully onboarded seven new clients in the quarter, including a major non-bank servicer in the U.S. Title sector, and three new clients in Canada. Post-quarter, Real Matters further expanded its U.S. Title business by securing a third Tier 1 lender and another top 100 lender. These achievements are largely attributed to cross-selling efforts, where the company leverages its strong reputation as an appraisal provider to secure new title clients, and strategic investments in its sales force.

Regarding capacity, Real Matters has fully utilized its previously idle capacity in both appraisal and title services, with the business now operating at full capacity. Future capacity expansion will be tied to client onboarding and volume growth, requiring strategic investments that may temporarily impact the flow-through rate of net revenue to adjusted EBITDA. However, management anticipates that adjusted EBITDA margins will improve over time as revenue growth outpaces operating expenses. The company also clarified that capacity investments are not expected to affect net revenue margins, focusing instead on operating expense and adjusted EBITDA timing. In Canada, revenue remained consistent at CAD 8.4 million, with net revenue rising 5% to CAD 1.7 million, supported by improved net revenue margins. Real Matters maintains a strong financial position with no debt and CAD 41.7 million in cash, positioning it well for future investments and sustained growth in the evolving mortgage market.