To our shareholders,

When we started Real Matters over a decade ago, our goal was to use technology to bring innovation and efficiencies to a segment of the mortgage lending industry where we knew there was a great opportunity for improvement. Put simply, my team and I knew that there were lender pain points that we could fix with the right combination of technology, creativity and a never-ending commitment to operational excellence.

We knew it because we spoke to our potential clients, the lenders, and they told us that they weren’t totally satisfied when they outsourced services in the underwriting process. The results in areas like appraisals were too slow and too inconsistent. What we saw was a large addressable market where we could use our expertise in technology and our knowledge of the market to effect real change. We could drive a wedge between the incumbents and their clients by doing things differently, and also a lot better. We saw an opportunity, through network management, to create a long-term competitive differentiator.

We sought to use technology to create a competitive marketplace for outsourced services that are essential to the underwriting process by focusing on finding the most qualified independent Field Agents who would deliver the highest quality product and the best possible experience for the borrower.

Today, we have established an industry-leading position serving approximately 60 of the top 100 mortgage lenders in the United States, we continue to gain market share, and we believe we have just begun to tap into the potential gains possible by doing more for our clients.

We also see substantial opportunities for growth in other segments where we can bring the same approach to bear, such as title and closing services.

This is a testament to how we think about adding value.

A Firm Commitment to Creating Long-Term Value

We may be new to the public markets, but we are not a new company. We have spent the past decade building this business to what it is today.

From day one, we have had a firm commitment to building long-term value that is fundamental to how we run our business and measure our success.

We know that our business will be subject to secular trends and seasonality, but we don’t get distracted by things we can’t control. Instead, we focus on the things we can control in order to consistently outperform our competitors, grow market share with our clients, and attract and retain franchise clients. We believe that the true value of our business will be realized by building a business that can weather the peaks and valleys and thrive over the long term.

It’s working. Over the last three years, we have more than doubled revenues, and our Adjusted EBITDA has risen nearly six-fold over that period.

Those are important achievements, but they are hardly the only measures of value creation. We have a client retention rate of approximately 95%, and many of our clients have given us more of their business year after year. These long-term relationships are the foundation of our business.

Being focused on the long term also means we have said ‘no’ to a lot of opportunities, in order to say ‘yes’ to the right ones. That is borne out in the choices we have made to grow organically, and in the businesses we have acquired along the way. It’s also why we are one of the few private companies to have built its business with a simple, common equity capital structure — because we understand the importance of aligning shareholder interests with those of the Company and its other stakeholders, including its employees and clients, over the long run.

This approach to managing the business is also reflected in our internal operating principles about people, products and plain common sense.

People

  • Culture is everything: running a high-growth business requires smart, ambitious people — not necessarily a lot of people, but the right kind of people.
  • We don’t believe in variable compensation or short-term incentives — they incent the wrong behaviour. Many of our employees have an ownership interest in the Company and are aligned to our long-term goals.
  • We recognize the importance of working with professional, qualified Field Agents and we work hard to align our success to their success.

Products

  • We build for scale — not just because our clients require it, but because it’s how we can grow profitably.
  • Customization can kill you in our business — we focus on scalable, repeatable processes.
  • We are prudent with our capital and our resources — we make trade-offs in the short-term to meet our long-term goals and to set ourselves up for continued success.

Plain Common Sense

  • Measure twice, cut once — not taking the time to make sure of what you’re doing will cost you time or money, and most likely both.
  • Fail fast, learn faster.
  • You only get one chance to make a first impression — execution is key.

These are the principles and values that have guided us so far, and that you can expect from us as we move ahead. If this aligns with your investment philosophy, we hope that you will join us on this journey.

Jason Smith
Founder, President and CEO
Real Matters Inc.