Doma continues to decline
Doma , a San Francisco-based title insurer, is laying off 250 employees, according to The Real Deal. The cut comes only three months after the company executed an even larger round of layoffs, shedding 310 employees in May. The company expects the layoff of ~560 employees will lead to an annual cost savings of $70 million.
As background, Doma – formerly States Title – received a $150 million loan from HSCM Bermuda last year, which was followed by the company’s IPO at a $3 billion valuation. The company is now recovering from several workforce reductions, a reverse stock split, and has abandoned plans to enter the home warranty industry.
Several workforce reductions
In May, Doma shed 15% of its workforce (310 positions) after rising interest rates dramatically curbed its clients’ mortgage originations, driving a double-digit drop in income and a $50 million first-quarter loss. Now, the company is cutting 250 more positions – once again around 15% of its workforce.
Reverse stock split
Doma said earlier this month that it planned to complete a reverse stock split to address the problem of the company’s common stock selling for less than $1/share for 30 consecutive trading days. In other words, Doma is now in the same situation as Root and Hippo .
Home warranty
CEO Max Simkoff stated on the company’s Q4’21 earnings call that the company’s investment in home warranty is taking shape and that he intends to further describe their approach as it develops. “Nonetheless, given our outlook for the mortgage market overall in 2022, we are being prudent in our spend in other parts of the business to preserve our healthy cash position and ensure we have more than enough runway to deliver on our plan,” the company later said in its Q1’22 earnings call. “This has entailed making some tough decisions, which have included re-scoping our entry into the appraisal and home warranty adjacent markets to make better use of partner resources and provide better returns on investment. In addition, we’ve taken measures to right size our cost structure – which included a reduction in force last week. We believe these measures are necessary and will better position us to adapt to both the challenges and opportunities that arise in the future.”
In between these quarters, Doma was looking to hire a Chief of Staff for what would have been its Home Warranty unit. “As our Technical Co-Founder, you will be a get-your-hands dirty leader in building Doma’s inaugural customer-facing product-an industry-changing home services offering. You are excited by the challenge to grow an incubated business in the larger Doma family. You will mastermind and own our product roadmap, beginning with building out our MVP and V1 web interface and IOS/Android platforms. You will design, recruit, and lead Doma’s product, engineering, and data science teams. You will collaborate like a champ with our GM, Chief of Staff, and the rest of the ground-floor team. Success will be measured by your ability to bring a top-notch, sticky, and most important of all, scalable product to market in 2022.”
Doma CFO Mike Smith believes the mortgage market will continue to face significant challenges this year but he’s confident in their ability to continue to drive market share gains in both the refinance and purchase markets. “In an environment of rising interest rates and low housing inventory, Doma’s value proposition becomes even more attractive to lenders and real estate professionals who are looking to close loans faster and minimize costs for home buyers and sellers.” That’s the perspective of someone who is too close to the situation to recognize he needs to back up.
Longer-term market decline
Doma held its Q2’22 earnings call on August 9th stating that it now has a full year as a public company under its belt and that the challenges that it faces are cyclical but its investments in the home-buying processes are “structural and sustainable.”
During Q2’22, Doma earned $124 million in revenue, down from the $130 million recorded a year ago. Its GAAP net loss for the quarter was $58.65 million up from $23.3 million a year ago, and Adjusted EBITDA metric came in at a loss of $43.39 million, up from the $11.9 million reported in Q2’21.
Technology
When it comes to technology, Doma still plans on having its local purchase volume go through its Doma Intelligence platform by the end of next year – it is currently available in a couple of locations in California, as well as in Arizona and Florida. And just this last quarter, Doma released some new features and functionality to what it calls Doma Communications, which automatically reads email traffic and routes it to the right place.
Bottom Line: An Inc. Magazine’s Best Workplaces for the second consecutive year.
