Voxtur Analytics Corp
XTSX:VXTR
Voxtur Analytics Corp
XTSX:VXTR
Price:
0.09 CAD
-5.26%
Market Closed
Updated:
May 5, 2024
Section:
Earnings Call Analysis
Summary
Q3-2023
Q3-2023
Revenue Declines but Gross Margin Swells
Revenue fell year-over-year from $35.5 million to $27.3 million in Q3 and from $114 million to $86 million over the nine months, due largely to rising interest rates impacting appraisal services and a modified services agreement. Nonetheless, gross margin improved from 35% to 49%, attributed to reduced direct costs and higher margin offerings. Adjusted EBITDA also grew to about $954,000 in Q3 from $530,000 in Q2. Proceeds from the sale of the appraisal management business enabled a $23 million debt repayment. The company is positively transitioning towards a technology focus, developing products like Quick Check reports and enhancing mortgage asset trading platform Blue Water, anticipating revenue growth in Q4.
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Good morning, ladies and gentlemen, and welcome to the Voxtur Analytics Q3 2023 Earnings Conference Call. [Operator Instructions] Also note that the call is being recorded on Thursday, November 30, 2023.
I would now like to turn the conference over to Jordan Ross. Please go ahead, sir.
Good morning, everyone. Thank you for joining us for the Voxtur Third Quarter 2023 Earnings Call, where we will discuss our financial results and business highlights. Please note that our Q3 2023 results were released November 28, 2023, and can be accessed on SEDAR+ and on our website at voxtur.com. Joining me today are CEO, Gary Yeoman; and CFO, Robin Dyson. We will begin with prepared remarks, and then move into Q&A. If we are unable to get to your questions, you are always welcome to contact me directly at jordan@voxtur.com. Robin Dyson will begin by reviewing our financial results. After that, Gary Yeoman will provide updates as to how we are progressing towards our objectives through capital markets, organic growth, and operational efficiencies. Before we get started, please be advised that some of the information that we will share on this call may contain forward-looking statements. We caution you not to place undue reliance on forward-looking statements and undertake no duty or obligation to update any forward-looking statements as a result of new information, future events or changes in our expectations. Further, on today's call, we will report using both IFRS and non-GAAP financial measures. We use these non-GAAP financial measures internally for financial and operational decision-making purposes as we believe that they provide a meaningful measurement of financial performance and valuation. These non-GAAP financial measures are presented in addition to and not as a substitute for, financial measures calculated in accordance with IFRS. To see the reconciliation of these non-GAAP measures, please refer to our press release distributed Tuesday, November 28, 2023, and our management's discussion and analysis, both of which are available on SEDAR+. A replay of today's call will also be posted on our website.
Finally, please note that all references to amounts or currencies during today's call are to Canadian dollars unless otherwise stated. I will now turn the call over to our CFO, Robin Dyson.
Thank you, Jordan. Good morning, everyone, and thank you for joining us today. As addressed on our last earnings call, the rapid increase in the U.S. prime rate has had a negative impact on various lines of business of Voxtur, primarily with respect to our appraisal services, capital markets and title lines of business. From the beginning of 2022 to present, rates increased from 3.25% to 8.5%. As discussed on previous earnings calls, in response to market conditions, the company continues to focus on cost reductions and cash management. On November 1, the company completed the sale of its appraisal management business. In accordance with IFRS standards, as of September 30, it is highly probable that this transaction would be completed. Therefore, the sign of business has been accounted for as a discontinued operation. As such, all P&L activities related to this business for the current and prior periods has been passed out of the individual revenue and expense line items in the financial statements and have been reflected as a single line item in the presentation of each of net income loss and comprehensive income loss. The Q3 MD&A presents key financial metrics for both continuing and discontinued operations. The metrics to be discussed on today's call will be based on continuing and discontinued operations, unless otherwise noted. Moving to our discussion of revenue. Revenue decreased from $35.5 million to $27.3 million for the 3 months ended September 30, 2023, and 2022, respectively, and decreased from $114 million to $86 million for the 9 months ended September 30, 2023, and 2022, respectively. These decreases were primarily attributable to the negative impact of significantly increased interest rates on our appraisal services line of business and the negative impact on revenue of the amendments made to a services agreement with a related party effective January 1, 2023, which amendments also resulted in a significant decrease in direct operating expense to support this revenue stream. As noted on the Q2 earnings call, the related party reference is no longer a related party as of April of this year. We maintain a mutually beneficial relationship with this party, but now at arm's length. While revenue from continuing and discontinued operations for Q3 year-to-date decreased on a year-over-year basis, revenue from continuing operations increased approximately $1 million. Gross profit remained relatively stable at approximately $13.6 million for the 3 months ended September 30, 2023, and 2022, and increased to $42 million from $40 million for the 9 months ended September 30, 2023, and 2022, respectively. These increases, despite the revenue decreases discussed, are primarily attributable to decreases in direct costs required to support appraisal-related revenue, revenue increases being attributable to higher margin offerings and indirect cost improvements. On a year-over-year basis, gross margin has increased from 35% to 49%. With the disposition of the approval management business, Q3 and year-to-date gross margin of the continuing operations was 67% and 65%, respectively. Other items to highlight with respect to the third quarter include the company's achievement of positive adjusted EBITDA of approximately $954,000 for Q3 as compared to $530,000 for Q2.
In Q3, the company closed additional tranches of a non-brokered private placement initiative in Q2 for gross proceeds of approximately $8.7 million. Subsequent to the end of the quarter, utilizing proceeds from the sale of the appraisal management business, the company paid down approximately $23 million of principal on its credit facility.
I will now turn the call over to our CEO, Gary Yeoman, to provide business updates.
Thank you, Robin, and good morning, everyone, and thank you for joining us. As always, I'd like to thank our shareholders for their support during this transition period and evolution of Voxtur becoming a pure technology company. I'm delighted to share our latest financial results, marking a second consecutive quarter of having positive adjusted EBITDA, and more recently, marking a pivotal moment in our journey towards becoming a peer technology company. While navigating this transformation, we've remained dedicated to a dual focus, achieving profitability and reducing debt. Our commitment to becoming a peer technology company remains steadfast, and I'm thrilled to report recent strides in this direction. However, as we continue to evolve, our financial health remains a top priority. Our journey towards a peer technology focus has been marked by challenges along with the difficult macroeconomic conditions within the mortgage market. But each hurdle has been an opportunity for learning and growth.
We've embraced these challenges with optimism, leveraging our strengths and innovative spirit to propel us forward. The shift in the market isn't about change. It's about growth, adaptability, and embracing possibilities. By remaining agile and adaptive to market conditions and modernized processes, we fortified our position in the market while honoring our commitment to financial prudence. This combination has been pivotal in driving our progress. Now I'd like to expand further on Robin's comments with respect to the reduction of our credit facilities. We've had to make very difficult decisions, most recently with respect to the disposition of our appraisal management business. Although it came at a cost of losing a great team and top line revenue, we have prioritized reducing our debt facilities. We believe that this disposition had the greatest return for the company for a few reasons. Firstly, the return on the investment from purely a cash perspective was substantive. More specifically, we had originally acquired this business for approximately USD 9 million of cash in August of 2021, and now sold it for up to USD 30 million of cash. Secondly, we're able to retain our valuation technology platform, Anow, which has significantly higher profit margins on the appraisal management business, resulting in a less diluted valuation on that business segment.
Thirdly, we can now remove the perception of not being truly an independent valuation technology provider and subsequently have a greater ability to sell to all lenders, appraisal management companies, and valuation professionals. For clarity, we will continue to provide technology solutions to the valuation industry by way of our Voxtur Anow platform with Appraisal Direct, our appraisal management rules-based engine that connects lenders directly to valuation professionals.
Voxtur Connect, our business management and workflow tool for lenders to manage multiple appraisal management companies. Voxtur Data Collection and Walkthrough application, our web-based data collection tool, and Voxtur ReportsNow, our automated rules-based report builder that assists valuation professionals in generating comprehensive valuation reports, and of course, Apex Sketch, is a software application that creates exterior and interior floor plan sketches. In addition, I'd like to discuss some of the highlights and specifics within some of our business lines. Our Voxtur Data business is starting to create progress in the rollout of the flagship product Title Toolbox to the agencies or commonly known as franchises of all of the major title underwriters. This is a major growth opportunity. Historically, this application has primarily only been sold directly to the in-house business development and sales teams of the major title underwriters. Now with their endorsements, the product has the ability to become the standard in the marketplace to drive increased business. Furthermore, they have developed and rolled out their quick check reports. The reports leverage property data intelligence into a simple, easy-to-decipher report, that helps real estate professionals better evaluate real estate transactions and close more confidently. The data business has already experienced great returns on investment with this product, with revenue expected to hit in the fourth quarter of 2023. Our title business is in the transformational mold, incorporating technology now along with our new purchase transactions. Our assessment and taxation business continues to develop innovative new products, with sketch verification for counties along with our other assessment-based management service offerings. Our mortgage asset trading platform, Blue Water continues to be impacted by the volatility in the mortgage rates with buyers and sellers taking a cautious approach to pricing their mortgage assets. However, with the addition of the platform's automated and insured loan level due diligence application, it has given them a differentiator in the marketplace. This is a great competitive advantage and with growing concern for mortgage originators based on the amount of loan purchases taking place. Lastly, our journey toward becoming a pure technology company is an exciting evolution. As we navigate this transformation, our vision remains clear, to innovate, to excel, and to deliver value to our shareholders, clients and employees. Together, we'll continue this journey with enthusiasm, creating a future where our technology, prowess, and financial stability intertwine seamlessly.
Thank you for your continued trust and support as we embark on this exciting chapter, and thank you again for joining us on the call today. We appreciate your time and your interest in Voxtur. We're happy to answer any questions you may have at this time. I'll now hand it over to the operator to start the Q&A.
[Operator Instructions] And your first question will be from Fred Blondeau at Laurentian Bank Securities.
Two quick questions for me. First, on cost reductions. What is the plan for the rest of this year and 2024? And I was wondering how Blue Water was or would be impacted by these cost reductions?
Well, I'll answer the last point first. Blue Water is not impacted at all by the cost reductions. Blue Water is continuing to develop and innovate new technologies and have access to new accesses of business types in that. So the due diligence, pre and post close, reduce the bulk deals, the flow, all is continuing to develop. I don't think that we've had a bigger pipeline of business opportunities in the history of the company. It is slow going, but we're extremely confident that this is going to be a leader in Voxtur's Evolution as a technology company. I'd love for it to happen quicker. I know Al Qureshi is working as hard as he possibly can to bring these opportunities forward, but there's no impact on Blue Water. With respect to the company and our way forward, we're going to continue to evaluate all of the businesses that we have. Clearly, we've reduced our debt by 40%. And so that's had a tremendous positive impact on our balance sheet, both from a cash flow standpoint and obviously trying to get our debt into balance. When we first went into this, our interest rates were approximately 7%. They doubled almost, and the cost recurring to this debt has been extremely onerous on us.
So what we did is we sold the valuation group. That was strategic for us. As I've talked in previous, I guess, interviews in that we have indicated that there's a transitioning taking place in the valuation sector. And that is that the Fannies and the Freddies of the world are looking more towards the growth of accepting valuations that include data collection and basically floor plan layouts, sketches along the company with their ABM. And this will replace the appraisal business. Now it's not going to replace at all, but we think over the next 18 to 24 months, 50% of all of the appraisals that are taking place will probably incorporate this new method. And to that end, why we bought Apex and why we continued to develop the role of Apex is that we've built a full mobile application, cloud-based that not only has a certified data collection tool called Walkthrough, but we're able to deliver real-time sketches of floor plan layouts.
And so by having this tool that will now be marketing in the marketplace, we think we have a tremendous advantage for 2 reasons. Number one, that it is cloud-based. It is immediate so that you make a change or any changes that you make, automatically get updated on the platform. But even more importantly is that we're no longer an AMC, an appraisal management company.
And the biggest competitors that we have right now in the sketching and floor plan layout are AMCs. So if you're an appraisal management company and you need access to this technology, and I would say 90% of them will not be able to develop their own. Would you not rather go to someone that's independent, that's not biting the hand that feeds you? And so we think we have a tremendous advantage. And so we see great growth in this side of the business. And so we're very excited about that. With respect to all businesses being reviewed, Fred, we're going to continue to do that. There's no question in our mind that we're working very closely with the Bank of Montreal. They're our partners. They've been tremendous in the support of us and work through us. But we're certainly committed to reducing the debt further. If we had, our preference is, we'd love to have all the debt removed because it's based on interest rates and where they are, even though there seems to be some softening, it's a material obligation to us given that the rates have tripled over the last couple of years. So we'll continue to review what we have. We're not going to tackle our key technology businesses, but we'll continue to look at it, and it really gets down to price versus value.
And I think that any company continues to do that, from Day 1, we've said that we committed to develop and become a pure technology company. And that's what we've done. So we'll continue to review. And obviously, we need to remove the debt.
So in this context, I mean, what's left to be done in terms of noncore dispositions? Do you have like a target quarter where we could expect like a clean run rate, overall, financial performance?
Well, I think that the answer is sooner rather than later. So over the weeks and months ahead, we would hope to have some news with respect to what we're doing. It could be similar to what we did with the valuation or it could be a partnership with a strategic company that where we reduce our equity decision. We actually increase our overall valuation. And so that is a very real and viable opportunity as well. There's many companies out there that love some of the products that we have to offer, and making a commitment to us they'd like to have a piece what we're doing. So if we can sell, let's say, 25% of one of our businesses, but increased that business by 75% and it's a win-win for everybody. And so we'll continue to look at all of the opportunities, but we know that we need to do something sooner rather than later.
Okay. Sorry to -- so is it fair to say that Q2 numbers, the Q3 numbers will be pretty clean? Or is it in the plan? Or you cannot comment yet?
Are you talking about for 2024?
2024, yes.
Well, like we have so many new innovative products that we're bringing on and new areas of the marketplaces that we're tackling. I mean, if I got into it, I mean, the Appraisal Now business, our new valuation business, not only is increasing on our appraisal direct, but with the data collection tool that they have and the sketches and floor plan layouts, which is not generating any money right now, there's going to be a massive growth and contribution to our revenue on that side. And our Title business, I mean, been taken over by [ Jim Adams ], and we were losing $300,000 a month because of the marketplace and all of the transactions that have fallen off. And it was a people concentrated business and we transformed that business. We're effectively breaking even right now, but we have developed some technology. One of them is what we call a starter kit.
Every appraisal -- or sorry, a title agency needs to have data completed in the starter kit. And they typically pay $125 to $130. Ryan Marshall and team have built a technology that basically replaces the manual starter kit that they had before, we can deliver it for $65. We're literally weeks away, and we're testing it right now with our own Title purchases that we have, but we're weeks away from getting into the marketplace. And so that's a great opportunity for us to expand. I mean we're still waiting for the Ontario government to sign off on the property tax, but we believe, again, there's been no reason to not think that it's not imminent. And I could go on and on, but we've got some really innovative new technology products. And so the opportunities for them to impact our bottom line is significant. And so I would be extremely disappointed if it's flat in one and 2. I think that we had great growth in 2024 and beyond.
Next question will be from Christian Sgro at Eight Capital.
When we think of the business at the highest level, would you say the majority of it is transaction based on the residential side? Or are there new subscription components in the business that you talked about?
Well, certainly, a good portion of the business is transaction-based. There's no question about it. Obviously, our tax business that we have is not. But when we're looking at our appraisal business. We're looking at our title business. We're looking at our data business. I mean they're all transaction based. And so we -- quite frankly, we have a quiet buoyancy to think that even our refis will be coming back. And so, we think that we've been through the storm, and we're looking for material contributions going forward with the plateauing or softening of some of the interest rates.
It seems like trough levels. So the truck from the transaction model could ultimately be tailwind off. One more question, Gary, and it's on Blue Water. Just what the market exposure is there? It sounds like that the capital markets participants trading portfolios or loans. Just an update on that business and what we could look out for in the market to see how that business is performing?
Well, as I said in the offset, I mean, I don't think that our [ fresh sheets ] pipeline has ever been bigger. And so we have a lot of transactions. But in talking to a leading industry person that currently has a portfolio that they need to move, they decided to push that out to the first quarter instead of dealing in the fourth quarter. So the $1 million bottom line in revenue to us. So we know that the deals are going to happen. And there's just been some -- I guess, some reservations, not knowing what's happening with interest rates and everyone wanting to make sure that they're doing and trading at the right time, based on market influence. And so his business and the pipeline, I mean not only bulk deals, but certainly, we're starting now to get back to the flow deals, refis are a big opportunity. We're pretty optimistic that, that business is going and Al has talked about it in the marketplace. And quite frankly, there's a big move for tokenization right now. And while we don't play in the tokenization space, and while we are not a blockchain company, we have products right now that we can provide these tokenization companies with real hard assets that can generate from 10% to 15% returns on these assets, and they're extremely, extremely enticing for the tokenization company. So Al is pursuing that avenue as well.
So we're pretty excited for the future. We know that things are coming around. We know the flow deals are now starting to come. Al has a number of bulk deals in the process. We've got some massive companies that want to play and use the Blue Water technology.
So we're disappointed that it has been stalled under the gate, but our theory, and basically, what we're forecasting that we know it's coming around. I just wish that it would happen sooner rather than later. I do believe that in 2024, Blue Water will be leading our company in a material way as far as profits and revenues.
Next question will be from Mariusz Skonieczny at MicroCap Explosions.
I wanted to ask about the disposition, the rationale with the numbers for the disposition and the benefit to Voxtur.
Sure. Well, first of all, let me say and reiterate, we had the highest respect for Al Broadway. He ran that business. He ran a great business. He's a great individual. And we lost some really good team members. And so we're entirely grateful.
But as we have said and as everyone knows, the AMC business is heavily concentrated people business. You're lucky to get 30% gross profit margins. You're lucky to get 8% profit margins. And that 8% -- and you will see with some of the other larger AMCs, is a good number because you just need massive volumes in order to make profits in that side of the business.
We see a transformation taking place, as I just mentioned earlier, switching to sketches, floor plan layouts, data collection. And we have a leading product. It's one of the reasons why we bought Apex and with the mobile application that they've just recently completed.
So we think that -- we know that we have less than 1% of the total marketplace. And we believe that that's not a growing business and has no reflection on Al or any of the team. You got to have the market in order to drive that.
Now there's only 4% of the whole marketplace right now are using sketches. But in talks with the GSEs and the major lenders in that, we think over the next 18 to 24 months, and that could represent as much as 50% of all transactions.
So what do you do if you're an AMC and you're heavily concentrated with people? It's just going to impact the bottom line, and it's really labor-intensive. And so that's not the area we wanted to go down.
So we're able to realize a really, really good return. We sold the business at a decent price. We'll continue the valuation offerings with our sketch and floor plan layout. And quite frankly, by the reduction of debt, the profits that, that company was making is still about $4 million short of what our costs were going to be with respect to principal and interest. So on a $30 million debt facility, our costs were going to be somewhere around $11.5 million to $12 million a year in principal and interest. Well -- and I'm talking Canadian dollars. If the profit was $7 million -- I mean we're $4.5 million to the gut, to be quite frank with you. So from a cash flow standpoint, it was a no-brainer. From a technology standpoint, we think that the world is going in a different direction. And that's where we're going to promote.
And lastly, from a strategic standpoint, we're no longer conflicted, right? We're not in AMC. So all of the valuation products that we sell, we can now sell to everyone without conflict. So that's a key. The whole transaction, we think, was a very positive and shrewd opportunity for us.
Next question will be from Colin Fisher at Garrison Creek.
When you sold the new -- your division, does that -- the company to whom you sold that business, are they going to remain as a client in using of the services? Or do they have internal services and software that they're going to use?
So it was a big part of our deal, and we tried to have some kind of contractual commitment on going with that. So the answer is that we don't have that contractual commitment, but we've got a great relationship with Accurate Appraisals. We've got a great relationship with Paul, who is the CEO of the company. And we believe that our sketch and floor plan layout encompassed with our data collection will be in a very attractive opportunity. I mean alternatively, right now, they're dealing with CubiCasa, which is a Clear Capital product. They don't have much alternative. But would you rather do business with a company like us that is not a competitive AMC, where they're vying for business against each other, that we have a product that's ANSI-certified, which CubiCasa is not. We have a product that is web-based, so every time you make a change, that change is automatically updated immediately. We're not having to send that data offshore to get stitched together and pull things together. So specifically, we've got a great relationship with Accurate, a great relationship with Novacap, which is a parent company. And we have a continued agreement that we'll continue to do business and support each other. We are going to get appraisal requests -- valuation requests to be done. And we're going to work with these guys. We're going to be -- there's going to be a lot of reciprocity among each other, Colin. And so that's the plan.
With regards to the debt, now that there's been a large tranche paid off, will the remaining debt be reclassified as long-term debt or will remain as a current liability?
That's a question for -- obviously for Robin. Our hope is to continue to just whack away at it. So there'll be no question. But Robin, from a formal standpoint, do you have any comment on that?
Yes, I can comment on that. The reason that the debt is classified as current is because currently, we aren't in compliance with a couple of financial covenants and we don't have a waiver that extends for one year.
So we're currently in discussion with the bank to reestablish the covenants to something more appropriate given the current environment. And then once we are in compliance with those covenants, that's when we will be able to reclassify the debt to current and long-term portions.
With regards to share-based compensation, how much of the selling of this division will have any impact at all? And how much of the share-based compensation is just preordained from previous acquisitions?
Robin, do you want to comment on that?
Sure. There would be a very nominal impact to share-based compensation resulting from the disposition of Voxtur Appraisal. A significant component relates to Blue Water.
Right. And that's just the replacement shares?
Correct, yes. That's most of [ it, yes ].
With regards to the -- now that you're not in conflict with a large swath of the industry because of no longer having an AMC, have you seen any impact vis-Ã -vis sales pipeline or conversations that have ameliorated? And when do you expect to see some sort of impact from that perception from the industry?
Yes. So Ernie Durbin, who is our Chief -- if you want to call him, Valuation Officer, I mean he's been our eyes and ears. He's a stalwart in the appraisal industry. And so he has been talking to a lot of the lenders of the Freddies, the Fannies, some of the major companies.
And like he has explained to us that they are thrilled with the advent of what we're doing with our sketches and floor plan layouts in the manner that it's in. So he is absolutely thrilled with that opportunity. And so we're excited. We think it's going to be a material impact for us.
Where -- so during this period, there has been some growth in some areas. Where is that growth coming from? And what conditions do you think have to be present for us to see material growth across all divisions? Is it just a pause in the rate? Or is it a decrease in the rate? Or is it just the rate of change, which is causing most of the duplication in sales?
Well, on a macro basis, I mean in the real estate technology space, how many companies you know are showing material growth? So I think that the interest rates have had a material impact on all of our businesses. As I said before in Christian's question, a lot of it is related around transactions, but we do see some softening. And so we think that the actual number of transactions are going to increase. But quite frankly, it's a transition for us with our new technology. Let me give you an example. We are moving towards completing a fully digitized loan officer. A loan officer right now in any transaction would charge anywhere from -- well, it could be $3,000 -- as much as $3,000 to complete a transaction. We are working towards fully digitizing that whole process. You still need a loan officer, but the cost will be substantively less, right?
And so the first step in that is our starter kits, Colin. And for example, when we were looking and talking to a bunch of the title companies and deciding what we were going to do and our way forward with title, there's not one company that I talked to that basically didn't tell me that their costs for a starter kit was at the very low up to $120 and many of them are $145. One company we talk to were doing 25,000 transactions a month.
Our -- with the evolution of these starter kits being -- hitting the marketplace, I can't tell you the margins and the profitability that we're going to generate. So we have so many new transactions. And just like all technology companies, it does take some time to adapt and transition to this new way. But this is bottom line money that is affecting everybody.
So we're excited. That's one aspect. I've talked to you about the data collection, the sketches. That's another aspect. Al Qureshi's business is coming around. And him, again, being creative and entering into other new marketplaces like the tokenization is exciting for us.
So lots of really good things. RPTA, the tax that we talked about, we're waiting for that to be endorsed and then signed off by the province. But listen, I built the largest property tax business in the world. And one thing about taxes is that there isn't cyclicality there. It's a business that's always frothy, it's always growing. And we think that we have positioned ourselves in a very strong place. Once that's going, we're very confident on the growth of that business.
So that's just a few of the things that we're touching on right now. Title Toolbox has been adjusted and created. And there's been some nice growth. And we've signed a couple of major clients that will come on. And some of that money will realize in the fourth quarter. And so Chad is doing a good job in growing that side of the business.
So every business that we have right now is focused on technology. And it comes at a cost, right? I mean it has impacted our bottom line. And as Robin has pointed out, our technology cost is a major expense for us. And even though we can amortize some of those costs, it's still material for us and will continue. But we believe that the revenue -- and we're not talking about years down the road, we're talking about 2024. You're going to see some material changes in the health of our company financially.
Can you give a little bit of color on both AOL, where that's going, what it's looking like and the foreclosure business?
So AOL is interesting. I mean we've got some pushbacks from the title insurance companies. Obviously, they don't like that. But at the same time, we think that there's a great opportunity for AOL and working closely with the real estate brokerages in that.
So lots of discussions that are going on as far as how we're going to strategically place us in the way going forward. But certainly, there's a real and viable demand for this, albeit there's always roadblocks. But Jim Albertelli talked about it in the past as far as how exciting it is, and I think that there still is a great opportunity, but it's always about timing, and it's always about impact of roadblocks. But it's certainly -- the opportunities are there. We have people talking to a number of different entities out there that may utilize that. And that's as much as I can say about that. What was the other question?
Foreclosure.
Well, I mean it's never really happened, has it, in the 3 years since we took over the business. I mean real estate prices have increased substantively. And people through overall yield have generated good equity pieces in the company. So rather than being faced with foreclosure, they just sell the property because they do have equity that they don't want to lose.
I think that what you're seeing right now is the trending seems to be happening where foreclosures and bankruptcies, we're seeing that they're starting to increase. And quite frankly, with what has happened in the marketplace and with real estate prices falling, I think that it is leading to more prevalence of foreclosure.
We're working with a major bank right now in a bankruptcy platform that we have developed, and we continue to work with them. And we're hoping that, that will -- we'll be able to utilize that platform in the spring. But we've seen some rises in that area. And so we remain optimistic that, that business will come back. And we have a settlement services business that can ride the tide and alter that. We've got a great title leader right now in Jim Adams that will take advantage of that.
So we're just growing. We're growing that business, but we're growing with a profitable -- in a profitable way. And I think that -- and certainly wasn't Jim Albertelli's fault, but his business in title was pretty much 100% focused on foreclosure. And hence, the lack of profitability in that area. So we've just repositioned the whole title company, and now we're basically breaking even. We're going to bring new technology into that. We think it's going to be a material profitable section of our company going forward.
And just the last question, just to round out some of the marketplace, how is home equity lines of credit? And how is that impacting your business?
Well, I mean Al Qureshi will tell you that it's affected him tremendously. So when that comes back, obviously, it will augment his business, but that's -- I mean that impacts everything. It impacts title. It impacts valuation. It impacts Al Qureshi's transactional side of the business. So I really don't have a material comment, but we obviously think that, that will start coming back with the softening of the interest rates.
So listen, we've been through a hell of a storm, and it's not just us. All real estate technology companies have been through a storm because I don't know how you can get around transactional-based technology. It has to happen. People need it. There's some things that we have that's not transactional, but by and large, it's pretty difficult to avoid, right?
And so anything that -- with the softening of rates is going to help our business. We've been through the storm. We've adapted. We're transitioning now to pure tech. So we will be less affected by it. I mean we went from 450 people to 190 people, Colin. Like we're bare-bones right now.
And so our costs have been reduced significantly. And I think that on a way going forward, when you get these major shifts, we're going to be less impacted in the future because a lot of the material costs in the real estate side are very much dependent on the cost of manpower. And if you can let technology take over, you can mitigate those risks.
Right. I have one last question, and this is it, and it's for Robin. How does amortization of intangibles look going forward past the selling of that division?
Certainly, it will decrease given there was a significant amount of intangible assets there. Off the top of my head, I don't have a specific number quantified. But that was a large portion of our amortization.
[Operator Instructions] And your next question will be from Brendan O'Dwyer at Hold Brothers.
You touched upon it, but I was just wondering if -- Fannie recently abandoning the title insurance program, what's the future of AOL if Fannie is not going to be on board?
I don't believe that that's correct, and certainly in our discussions with them, they -- I don't believe that they have abandoned that certainly as late as even last week. So it really depends on the context of how that was defined.
But AOL is still on the table. AOL will save the purchasers substantive amounts of money, as much as $1,000 to $2,000 depending upon the state that you're in. They haven't abandoned AOL. I mean as late as 2 weeks ago when I talked to senior representatives, they still remain excited and they get frustrated by a lot of the misinformation that keeps getting thrown out around there. So we're not swayed at all by whatever innuendo is thrown out there.
And at this time, Mr. Yeoman, we have no further questions. Please proceed.
Okay. Well, again, thank you all very much for joining the call today. Thank you to all the shareholders that continue to support us. Again, I'm extremely apologetic that we've been through this storm. We haven't given you the returns that you want and certainly saw our share price and only know that it has affected us significantly, not only because we're large shareholders of the company. As well, the management continues to own a very large portion of the company.
And we're just working as hard as we possibly can to turn this something around. We're confident it's going to happen. Lots of exciting things. We're not dissuaded at all by some of the challenges. We've met them head on, and we think that we have a very exciting future.
So thank you all again for joining, and we'll now terminate the meeting. Thank you.
Thank you, sir. Ladies and gentlemen...
Thank you.
You're welcome. This does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines. Enjoy the rest of your day.