Voxtur Analytics Corp

XTSX:VXTR

Earnings Call Transcript

[Operator]

Welcome to the Voxtur Earnings Conference Call. My name is Hilda, and I will be your operator for today's call. [Operator Instructions]. As a reminder, the conference is being recorded.

I will now turn the call over to Jordan Ross, Chief Investment Officer. Jordan, you may begin.

[Jordan Ross, executive]

Good morning, everyone. Thank you for joining us for the Voxtur second quarter earnings call, where we will discuss our financial results for the period ended June 30, 2022. Please note that our results were released yesterday, August 29, 2022, after the market closed and can be accessed on SEDAR or on our website at voxtur.com.

Joining me today are Executive Chairman, Gary Yeoman; CEO, Jim Albertelli; and CFO, Angela Little. We will begin with the prepared remarks and then move into Q&A. If we are unable to get to your question, you are always welcome to contact me directly at [email protected]. Angela Little will begin by reviewing our financial results. After that, Gary Yeoman will outline some of our strategy goals and actions for the first half of 2022 and the most recent acquisitions that we've made of Blue Water. Jim Albertelli will then update us on how we are progressing toward our objectives through 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 yesterday, August 29, 2022, and our management's discussion and analysis, both of which are available at SEDAR.com and on our website at voxtur.com.

A replay of today's call will also be posted on our website. Finally, please note that all references to amounts or currency during today's calls are to Canadian dollars unless otherwise stated.

I will now turn the call over to our CFO, Angela Little.

[Angela Little, executive]

Thank you, Jordan, and good morning, everyone. To start, I will provide a high-level summary of our second quarter performance, and then I will go into some details and key metrics relevant to Q2 and the remainder of the year.

For the quarter, Voxtur's gross revenue was $38 million, gross profit was $12.7 million and adjusted EBITDA loss was $3.9 million. For year-to-date 2022 Voxtur's gross revenue is $79 million, gross profit is $26.6 million, and adjusted EBITDA loss is $6.9 million. Revenue for Q2 2022 reflects a 111% increase over Q2 2021. Year-to-date 2022 revenue reflects a 143% increase over year-to-date 2021. Gross profit for Q2 2022 reflects a 53% increase over Q2 2021 and year-to-date 2022 gross profit reflects a 72% increase over year-to-date 2021.

For Q2 2022, approximately 96% of gross revenue was from U.S. sources and for year-to-date 2022, approximately 97% of gross revenue was from U.S. sources. These percentages are up from 89% in Q2 2021 and 88% for year-to-date 2021, reflecting the company's continued expansion into the U.S. market from strategic acquisitions made over the past year.

Revenue from software and data licenses represents approximately 16% of the year-to-date gross revenue. This percentage will continue to increase through Q3 and Q4 as the company expands product offerings and sales in the valuation, title and tax technology product space.

Additionally, the Blue Water Financial Technologies acquisition will significantly increase our SaaS-based revenue in Q4 of 2022 and going into 2023. The company ended Q2 with cash and cash equivalents of $37 million and adjusted working capital of $19.5 million. During Q2 2022, the company executed new debt covenants with Bank of Montreal Financial Group, further solidifying our partnership and their commitment to our vision and long-term strategy. The company is now fully compliant with all loan covenants and anticipates remaining compliance for the foreseeable future.

Moving on to some of the macroeconomics impacting the Q2 and year-to-date results. Throughout Q2 2022, mortgage rates continued to rise, reaching the highest level since 2008 at nearly 6%. This, coupled with housing supply shortages and general economic uncertainty, have resulted in a significant decrease in volume within the primary mortgage space with particularly significant reductions in refinance activity.

Mortgage applications dropped to the lowest level at the end of June, marking the biggest lump in 22 years. Because of Voxtur's diverse product offerings cross over, not only the primary mortgage market, but also HELOC and default servicing, the company is uniquely positioned to hedge against these type of market conditions. This diversity will be further expanded with the addition of Blue Water Financial Technologies, opening the company into the secondary and capital market space.

Default volumes have slowly started to return to pre-COVID levels during Q1 and Q2 and are anticipated to continue to rise through the remainder of the year and into 2023. The slower ramp-up is mainly related to borrowers having significant home equity as well as some CARES Act for forbearance programs extending into 2022. Despite the slower default ramp-up, coupled with the significant decreases in the primary mortgage base, Voxtur was able to maintain consistent gross revenue and gross profit from Q1 2022 to Q2 2022, which is consistent with the expectations we set out in our Q1 earnings call.

As we go into the second half of the year, the focus is on revenue growth, positive adjusted EBITDA and positive cash flow. The company is executing a cost reduction plan, which includes a reduction of approximately 10% of the workforce across the board salary reductions and a freeze on all discretionary business plans for 2022. We estimate a total savings thus far of approximately $700,000 a month to be fully recognized starting in September 2022.

Throughout the remainder of the year, we will continue to rightsize where necessary for market conditions, and we are looking for additional efficiencies through synergies, consolidation and process improvement. In addition to the cost reduction, Voxtur completed the acquisition of MTE on July 1, strengthening Voxtur's footprint in the Canadian tax assessment market. This acquisition has immediate positive EBITDA to the company on a stand-alone basis and we'll achieve additional cost synergies as we integrate MTE into Voxtur's technology infrastructure.

We anticipate significant new revenue from our attorney opinion letter product, which is currently onboarding 9 new clients. We also anticipate new revenue from tax products in the Canadian market and default processing, default title and default valuation increases. Additionally, we expect new clients across the board from our continued sales efforts.

As a result of all these factors, we remain confident in our original 2022 guidance for gross revenue of $170 million to $190 million. With regard to gross profit, our revenue mix has shifted somewhat from the original guidance, resulting in lower-than-anticipated margins for 2022. A higher percentage of revenue has been generated in the valuation space, and the onboarding of new clients and products has been delayed due to market conditions in the valuation technology and title technology space. With the upcoming acquisition of Blue Water Financial Technologies, Voxtur will have additional immediate significant margin profit as well as positive cash flow.

I will now turn the call over to our Executive Chairman, Gary Yeoman, to provide additional guidance regarding the company's strategic focus for the remainder of 2022.

[Gary Yeoman, executive]

Thank you, Angela, and good morning, everyone, and thank you for joining us. Our focus remains on data as a cornerstone for technologies that can reduce cost and inefficiencies and real estate transactions. We have advanced much in this area, and I'm pleased to discuss a few noteworthy successes from a capital markets perspective, and will turn it over to Jim to discuss the operational and organic success.

First, Voxtur completed a private placement in May of 2022 with total proceeds of approximately $12.5 million. A strategic and preexisting institutional investors contributed to this additional capital. Second, the company executed a strategic acquisition of municipal tax equity consultants and MTE Paralegal Professional Corporation, to accelerate the rollout and use of our real property tax analytics technology in Canada.

For more than 32 years, MTE has managed the assessment basis for municipal clients across Canada. Municipal clients can optimize revenue from the tax base with MTE's addition to the Voxtur enterprise. By integrating into the Voxtur technology infrastructure, this acquisition will result in increased cost synergies for the business and positive EBITDA growth.

Finally, the company most recently executed a purchase agreement to acquire Blue Water Financial Technologies as seen in our news release on August 15, 2022. Blue Water delivers SaaS-based solutions to investors trading mortgage servicing rights and whole loans to improve profitability, reduce risk and increase the liquidity of mortgage asset portfolios. Blue Water's core analytic capabilities and advanced technology solutions are critical elements in an end-to-end mortgage asset solution.

After the acquisition closes, Al Qureshi, the founder of Blue Water, will stay on with Voxtur and become the President of our Capital Markets division. At the same time, Nick Smith, CEO of Rice Park Capital, who provided the initial seed capital to Blue Water will act in as adviser to the Board. Collectively, they will receive approximately 69% of the Voxtur stock being issued as part of the consideration for the transaction.

Also, it is important to note that the stock issue will take place over approximately 48 months following the transaction's closing. With this acquisition, Voxtur's influence in the U.S. capital market will expand while accelerating the company's transformation into a pure-play technology provider for the North American mortgage market.

The acquisition provides three initial benefits: One, it allows us to diversify our revenues from the primary mortgage space, mitigating any cyclicality we are currently seeing in purchases and refinancing; Two, it is a significant EBITDA and favorable cash flow profile, which the market and our shareholders are demanding of us and ultimately what allowed us to, again, partner with BMO Financial Group on financing this transaction; and three, it creates an opportunity to make material net new revenue opportunities by integrating our existing products on the Blue Water platform, creating a singular mortgage trading platform that includes automated mortgage and property due diligence.

Further to the above, we appreciate the BMO Financial Group for being a great partner and sharing our vision while believing in our team. This transformational transaction could not have happened without their support, diligence and assistance. We have already seen our initiatives to strategically combine our acquisitions with current Voxtur technologies, creating synergies and expanding our market share.

These integrations are materially accretive and will improve our gross profit margins. As we grow our market share and strengthen our SaaS-based products, we will continue to add value for customers, originators, servicers, investors and shareholders.

I'll now turn the call over to Jim. Thank you.

[James Albertelli, executive]

Thank you, Gary. Good morning. Good morning, everyone, and thank you for joining us. Our Q2 2022 results are indicative of current market conditions and we remain focused on the dynamic execution of our growth strategy. The current environment still demands discipline. As a result, we constantly review our priorities to ensure that we scale effectively and are well positioned for growth in the many markets we address.

Now I want to take some time to discuss the numerous advantages we experienced in the second quarter of 2022. First, let me start with our Voxtur AOL, the Fannie Mae and Freddie Mac-approved alternative to traditional title insurance. The Voxtur AOL sees increased opportunities. And since our last call, we have signed 9 independent mortgage banks and received the approval of several mortgage aggregators. These INDs and aggregator partners are currently going through the Voxtur AOL onboarding and integration process. Voxtur now offers AOL in all 50 states directly and through strategic partnerships. We are bringing even more rigor to leverage our internal and external relationships to establish a widespread distribution network.

Voxtur continues to be at the forefront of innovation. We are excited to see the adoption of the Voxtur AOL as home prices and interest rates continue to impact potential buyers in today's marketplace. Working with large financial institutions and industry partners, we can provide immediate savings to the consumer, making homeownership more affordable and more transparent.

Secondly, the market has allowed us to pivot our business to address the critical growth opportunities in front of us. We've aligned our business to address the most relevant products, best margin and ability to scale. One example of this is our home equity data set that can service the $11 trillion in tappable home equity today. We have also taken the time to rightsize the business. We have centralized our core operations and are expanding new matrix management structures to ensure maximum success.

Additionally, we clearly understand how each product and service impacts the current marketplace, so we remain focused on our key deliverables. Using defined analysis of current products and services, we consider market inefficiencies to develop more effective, transparent and lower cost options to enhance the consumer experience in all facets of our business, valuation, tax default and settlement services.

Lastly, we target ways to diversify our revenue streams through innovative disruption. We are thrilled to be combining with Blue Water Financial Technologies, digital asset capabilities with Voxtur's proprietary data stores to create a powerful new platform. The platform allows seamless integration and delivery of Voxtur's core solutions to enhance Blue Water's already powerful trading pricing and due diligence engine. Imagine real time, all the time, physical asset underwriting, imagine adding 40% to the average value of an MSR, mortgage servicing right, through the upstream application of innovations such as AOL. Imagine due diligence as a utility, imagine an automated experience with the consumer like no other. The combination of Voxtur and Blue Water Financial Technologies makes these realities today. Blue Water places Voxtur data in the center of the multitrillion-dollar capital markets universe.

Voxtur is set to further expand into the secondary market with innovative products and services, fast synergies for both Blue Water and Voxtur and a perfectly timed accretive opportunity. Further, Voxtur's nimbleness and countercyclical revenue streams have a distinct advantage in the changing marketplace as evidenced by net new revenue opportunities with high profit margins. You've heard me say it before, we're bringing Wall Street to Main Street.

Our strategic focus has always been and remains on growth. We are achieving absolute alignment here at Voxtur with strategy, goals and meaningful purpose, reinforce one another. We believe our intelligent data-driven solutions are well positioned for revenue growth in 2022 and beyond, while also navigating the changing environment by focusing on saving money for consumers and investors, while increasing shareholder equity.

Thank you for joining us on the call today. We appreciate your time and your interest. We'd be happy to answer any questions you may have at this time. I'll hand it over to the moderator to start the Q&A. Thank you.

[Operator]

[Operator Instructions] Our first question comes from Christian Sgro from Eight Capital.

[Christian Sgro, analyst]

The first area I wanted to ask about is on the guidance commentary. I'm just clarifying some of Angela's comments earlier in the script. So just so I understand the revenue guidance is unchanged for the year. And there'll be a big contribution from Blue Water in Q4. Does that mean the gross profit guide is intact as well? Or was there any change to either of those?

[Gary Yeoman, executive]

Angela, I'll let you answer that.

[Angela Little, executive]

Okay, sure. Yes. We do believe that Voxtur, even on a stand-alone basis without the Blue Water acquisition, we are on target for original gross revenue guidance. We do anticipate the gross profit to come in slightly lower than what we originally anticipated, which is just primarily due to the mix of revenue. We have quite a bit of revenue. Our valuation business is holding steady and providing a large contribution.

Some of the more SaaS-based products with the higher margins have been as delayed a little bit more into Q3 and Q4. So we are thinking that, that guidance will come in a little bit lower. Obviously, with the acquisition of Blue Water, that changes things quite a bit. And we are looking forward to once we close the acquisition, being able to provide a little more specifics on what that will look like.

[Gary Yeoman, executive]

And Christian, if I can just say just to take it into context too, a significant portion of that revenue increase will be generated from the synergies of our existing products being tax certificates, flood certificates, valuation, property reports, title reports, title insurance policies. So where Blue Water is profitable and cash flow positive on its own the synergistic benefits are going to be significant for us. And that helps augment the revenue we have, realizing this in the secondary markets where previously, most of our revenue was generated in the primary markets.

[Christian Sgro, analyst]

Okay. That's all helpful for clarifying on the guidance. And then so Blue Water, and congrats it's a large acquisition. A lot of it's probably private, you can't share too much detail. But is there any sense you could give us for the revenue contribution? If not the actuals now. Maybe what you're thinking about for next year and the way they generate revenue. My understanding is it might be largely transactional, but maybe help us unpack what to look for in the growth there?

[Gary Yeoman, executive]

Yes. Obviously, we can't give you the numbers right now because it is a private company and where we anticipate closing in and about around mid-September, we'll be able to give certainly more guidance and clarity at that time. But there's no question it is transactional. But as you can see, from the material shift from the primary market to the secondary market, where they'll be participating a significant growth in the MSR space, we expect Blue Water to increase significantly.

Also, it gives us the opportunity to participate in the HELOC or secondary loans and the whole loans nonqualified mortgages, scratch and dent mortgages, we'll have that opportunity to participate in all of those spaces. So just being and having access to business and the capital markets on the secondary side is significant for us. With respect to the revenues, again, we'll be able to bring more clarity come mid-September.

[Christian Sgro, analyst]

That's helpful. I've got two more questions here. And on the first, I wanted to poke at the challenging macro that you and peers are facing with interest rates volumes. If we're seeing industry data pointing to less origination volumes in Q3, I was just wondering how we should be thinking about the sequential move into Q3? Do you think revenues could be flattish battling those headwinds? Or how do you think the business can sort of perform different areas of the business to move from the Q2 quarter here?

[Gary Yeoman, executive]

There's some -- but actually, Jim, why don't I just turn that over to you and you can give some foresight on some of the individual businesses and how they'll be impacted.

[James Albertelli, executive]

Yes, certainly. Thank you for the question. Again, as I've mentioned, the increasing interest rate environment, while depressive on the sector as a whole, is really good tailwind for Voxtur in several regards. One, it spurs the innovation. So as I mentioned, the dearth of origination production in refinance and the constrained supply of new housing stock has led to 9 new clients being in the onboarding process.

And the onboarding process doesn't happen overnight, unfortunately. There are technology dependencies because each one of these clients that we are onboarding has the potential of somewhere between 500 and 2,000 transactions a month that are potential for Voxtur during the AOL space.

So I expect that as they come online, we'll continue to ramp up and actually increase our title production significantly through Q4. So you're going to see a nice robust growth vector for that title revenue. In the valuation space, the sales group has done a tremendous job essentially, the origination revenue where the company was primarily dependent on that has been replaced almost even more than one for one in the default space. Remember, defaulted assets also need to be mark-to-market. There needs to be periodic reviews of valuation. So there needs to be broker price opinions and in some instances, full appraisals. So the valuation appraisal business has held steady.

And I expect that as we've seen in the recent chart from the federal government on savings have decreased tremendously for the American homeowner. So that's going to spur movement into the next market we were talking about made mention to, which is the home equity market. So Voxtur has again, pivoted quickly in Q2 to create unique product offerings in the home equity space. And that's in the primary mortgage market.

With the acquisition of Blue Water, and it will be the sale of those closed-end seconds and HELOCs in the marketplace. You'll also see then the beginning of the influx of the NPL and RPL market beginning to take hold and Blue Water can also handle those transactions. Those will add additional default volume and default title as well as technology.

So really, what you have that's unique to Voxtur is the countercyclicality, not only of those products I mentioned as a result of market forces, but also the fact that in the secondary market, many of the mortgage companies need to raise capital to provide the capital for their pivot. What does that mean? Well, that means that they need to sell those mortgage servicing rights. Who can do that? Blue Water can do that.

So that's why in my in my discussion, I mentioned the perfect timing. We always knew that the market was going to begin to shift out of origination default. We had placed key assets to be able to handle that vector.

Now what we have as we have an additional platform that reaches into the secondary market and provides greater cost reduction to those individuals trading MSRs and whole loans. And so what that means now is it's a low-cost leader and the ability to transact more efficiently and effectively at a time when they need liquidity with a product that they have to sell. And here we are sitting with a market-leading platform that is powered by Voxtur data.

[Christian Sgro, analyst]

Okay. Got it. And I promise one last question. I'll poke at the AOL product, which you had mentioned some 9 new clients since the last call across all 50 states now. My question on AOL would be, it looks like it's shaping up well into Q4, just from your end, how do you guys think of the visibility into these discussions into revenues into Q4?

And if we should think of transactions increasing or -- and what the drivers will be there, like one customer going full-fledged and sort of using that extensively? Or do you think it will be balanced? Like where do you think you see the AOL revenue coming in strong in Q4?

[James Albertelli, executive]

Yes. So when I think about this, I think about each one of these clients that hasn't made a change, if they've even been around over the past 70 years, which is really the monumental changes in shift that we did with Fannie and Freddie around this initiative. Now remember, we still are sitting on the desk of the secretary of the VA. I expect that the veteran should get the benefit of this product as well. And same thing with first-time homebuyers and Ginnie Mae recently said that they're going to be focused on innovation and technology. So I expect that to come behind us.

But what I think of when I think of these clients is, I believe what they'll do is it will be a slow ramp in Q4 meaning that if you're doing 500 transactions, there'll be some commitment of 10% to 20%. If you're doing 2,000 transactions, same thing. So I can see it being a 1,000 units a month with the potential to be somewhere between 6,000 and 10,000 just with the clients we have, each one of those being a top line of, let's call it, 1,200 to 1,500. So probably somewhere about [ $1.2 million ] ramping up with these clients to about $7 million top line with just these. But I don't -- it's not going to stop here.

We have national banks that are being -- that have received outreach from the GSEs and basically assertions that they're going to buy all of these loans with the AOL behind it, which, of course, they should. So I'd expect that you're going to see, before our next earnings call, a major financial institution that goes live as well, one of the top federally chartered U.S. banks. So maybe more than one.

So that's where we're at. And I think it's almost like this rocket, we're loading the fuel right now. And I think that we're going to have a significant -- we'll have a ramp in Q4 and then Q1 will just be -- will be off to the races. But you can easily see where it could be a $7 million top line.

I mean you could -- that's fairly reasonable to think of as you head into the end of Q1 of next year and then you can do the math from there. But yes, we're very bullish. We've had a lot of great support from the federal agencies and again, the consumer groups that are behind us. So everybody is poised for this change.

And again, it's a high rate environment. It's a volatile environment, and that's what we need to get people to innovate. And that's what's going to accelerate the innovation like around our acquisition with Blue Water. It's going to be that increasing cost where people are looking for something that's cost advantageous. And quite frankly, we've innovated on the front end and with Blue Waters innovations coming to it, we'll have the secondary market as well.

[Operator]

Our next question comes from Fred Blondeau from Laurentian Bank Securities.

[Frederic Blondeau, analyst]

Just a quick question from me this morning. Just on Angela comments and my predecessors question, I was wondering if you could give a bit more color on the current operating environment so far in Q3? And how should we view cash flow for Q3 and Q4, especially in the context of Blue Water, obviously? And ultimately, and more importantly, what are your views on your capital needs for, call it, for the next 6 months and then for the next 12 months? Appreciate it.

[Gary Yeoman, executive]

Thanks, Fred. We feel very comfortable from a cash flow standpoint that we're not going to need any additional capital in the -- not in the foreseeable future. With respect to Q3, I think Angela said that we expect to be reasonably flat in the third quarter. Obviously, we are transitioning significantly to the secondary market and the capital market space, and that's going to obviously increase our revenue opportunity substantially. But we have to ramp up to that.

And again, we expect most of the revenue, we're going to see with Blue Water won't be realized until the fourth quarter. So reasonably flat third quarter, certainly, we think it will be better than the second quarter. But certainly nothing too awe inspiring. But everything that we're doing in the third quarter is set up for what we believe to be a remarkable fourth. And so that's where I think we are, Fred.

[Operator]

Our next question comes from Colin Fisher from Garrison Creek.

[Colin Fisher, analyst]

I have a few questions here. With regards to the trade receivables from the related party, obviously, it went up from Q1 to Q2. I believe there was an expectation that, that was going to go down. It looks like $3.8 million was paid, which is great. And it looks like possibly as revenues are growing in the foreclosure space, that there's a timing of payment issue. How long for this receivable to be fully paid? What is the timing on the payments vis-a-vis the cash flow in terms of getting those that those payments done between when a new bit of revenue comes in the next payment and then catch up payments?

[Gary Yeoman, executive]

Angela?

[Angela Little, executive]

Yes, sure. Yes. Thanks, Colin. Yes, as we noted, we have started to receive weekly significant payments and $3.8 million has been paid since the close of Q3 -- excuse me, Q2, that will continue. And I think that in pretty short order within the next, say, 60 to 90 days that receivable will be current within the net 90 terms of the agreement.

[Colin Fisher, analyst]

Okay. That's great. And then cash flow from operations. There's a lot of noncash related items again and there's some timing issues as per the note. Can you give us some clarity on what's going on with the cash flow from operations? There's always a lot of noise in that line item.

[Gary Yeoman, executive]

Angela, why don't you deal with some of those noncash issues?

[Angela Little, executive]

Yes, sure. Yes, I'm happy to talk about that. Yes. And there was a little bit -- we did have a few items just this quarter that were a little different. Obviously, the amortization of intangibles is always a big item right now because of all of the acquisitions that we've done in the last year. There's a couple of other factors in there this quarter. We had a change in contingent consideration of about $3.5 million. That is related to the earnout of one of the acquisitions and the fluctuating stock price over this year. We have some income tax loss carry forward based on our actuals and our updated forecast through the remainder of the year. And then probably other significant item and there is just our share-based compensation expense, which was just under $5 million for the 6 months.

[Colin Fisher, analyst]

Okay. With regards to foreclosure environment, given that it looks like the business model is proving out that you have countercyclical revenues from different business units. If foreclosures was not curtailed as it is from the slow ramp in the previous extension of the moratorium, how much more impact would the foreclosure have had do you anticipate in this environment, if it was basically a normal foreclosure environment vis-a-vis revenues and gross profits?

[Gary Yeoman, executive]

Jim, I think that's best for you to answer since that's been your baby from -- for the last 20 years, so.

[James Albertelli, executive]

Well, so it sounds like what you're asking is should it -- should the market normalizes, which I don't know really what that looks like anymore, given the heavy-handed way that the government has intervened with the consumers. But if it was pre-COVID, you would expect that it would be approximately just in the pre-COVID best economy lowest unemployment of all time, maybe since 1970, then it would have been -- it would be double what it's doing now as far as the revenue is concerned. And I would think that the net component would be somewhere around $10 million to $12 million net net-net. So -- and on the top line, it would be probably that would represent 1/3 of what it would be on the top line.

So I think that there is -- there's certainly substantial growth available in the default market as things ramp up. If you look at the early indicators, now people servicers are beginning to disclose the 30, 60, 90 as it comes out of forbearance. And you're seeing a quite a spike in those numbers. I think in some Jenny pools, the FHA and VA loans, and it's really around FHA, as you could imagine, it may be as high as 7% delinquency in the 30, 60, 90.

So we're expecting additional rate tightening. I think you've seen that from the Fed, additional rates going up. We're seeing additional contraction. It's a wonky labor market, but there are additional layoffs that are coming. And of course, there's a money multiplier effect. So the one layoff spurs 0.8 layoff in this job, 0.6 in that job, 0.5 in this job. And ultimately, you have from one layoff, several.

So I would imagine that you're going to see through Q4, and there's usually a little pause around the holidays. And then you're going to see somewhere in Q1 and Q2 beginning to really ramp up, especially if we expect as we do that the labor market is going to soften somewhat and the interest rates are going to continue to increase, which is going to drive some pullback in the application of capital and the increasing of the economy as a whole.

So with those macroeconomic headwinds and just some normalcy, quite frankly. I think the government has given away about as much as it can give to people now with the student debt forgiveness plan, training people not to pay debts. So I would expect all of those psychological, financial, macroeconomic factors to bring us back to a more normal or a pre-COVID default level over the next 6 to 8 months.

[Colin Fisher, analyst]

Okay. That's great. With regards to RPTA and wealth, how are they rolling out? What's the expansion plan for RPTA south of the border? Or I guess I'll say, the U.S. just for the Americans, so they don't get confused. And for wealth, Voxtur Wealth as well. Is there any sort of color you can provide on those two?

[James Albertelli, executive]

Sure. The RPTA in the U.S., as you can imagine, there are there was additional complexities in the -- not only in the state level, but then you got into the municipal and then even more narrowly tailored into the county level. And so you have local and state applications of RPTA. So what we've sought to achieve and what we've achieved now is really the culmination of all the research we've done in the local markets to fair it out in the servicing portfolio is something that hasn't been done, right, never in the history of mortgage servicing have the individuals that are being serviced had their taxes analyzed for accuracy.

They've had dynamic taxes received from the municipalities, but no one is an access really to the depth of knowledge that Voxtur brings with it with the Apex sketch, from the company that was acquired out of San Antonio, to all the analytics that were brought to bear in the modeling that had been done in the provinces. So that's just taken -- that took some work to do, but it's been well worth it.

So now we're sitting here at this point with our beta created for the U.S. market, capturing things we talked about your property tax too high, too low by how much, but there are also independent factors that I think are just as meaningful to consumers. For example, if you're over 55, then there's a tax benefit. If you're a veteran, there's a tax benefit. If it's a home -- if you own one home and you haven't applied for your homestead, that could be substantial savings for the consumer. Those consumer attributes are contained within the servicing portfolios.

So we made the strategic decision to basically ferret out all of the benefits on a local level. I think that we now have our data analytics on north of 80% of the total U.S. population. So this next, let's call it, 30, 60, 90 days with RPTA will be the test client looking at the portfolio analysis and retention and doing these analyses on the people that are in the servicing portfolio. And then I would expect that we'll do the same thing like we're doing with the AOL, which is begin the onboarding process in Q4 and launch it in Q1 in earnest, but also having tested it with several smaller services. So that's the planned rollout.

Voxtur Wealth, as you know, is the culmination of all of the Voxtur data. That product was completed recently. And now we're in discussions with several different constituents for consuming the Voxtur Wealth platform. We talked to a major auction provider about a way to retain their clientele by putting them in Voxtur Wealth, uploading all of their information and being they can then manage their physical asset. So Voxtur Wealth, you'll see it really proliferate in two ways. Again, I think that's a Q4, Q1 initiative.

You're going to see it proliferate directly to invest in consumers and high net worth individuals. But you're also going to see really the same thing supporting the portfolio analysis in the secondary market, right? All the culmination of all the data, the valuation, the tax, the title, all of that information plus the ability to pull things like MERS, records, the Mortgage Electronic Registration Services, data et cetera, that need to be appended to portfolios in the pre-trade, the trade post-trade process.

So I think you're going to see that variation of Voxtur Wealth, which is a complete data file, a complete physical asset underwrite, you're going to see it proliferate in those two ways in capital markets and directly to consumer but through business partnerships in Q1.

[Colin Fisher, analyst]

With regards to that, just as a sort of a follow-on to -- sorry, go ahead.

[Gary Yeoman, executive]

I just going to say just one more question, Colin, if you can, in the interest of time. But I just want to add just one -- a couple of more things to that. We fully expect to have the Province of Ontario on as a client, hopefully, any day now. And with respect to the U.S., there is one major client that has multiples of thousands of assets on it that we'll probably be announcing within the next few weeks as well. So Version 1.0 was done on the wealth platform. So we're pretty excited about that.

And Jim is absolutely bang on with respect to the culmination of everything we do is basically encapsulated in the wealth platform. So it's going to be a major contributor for us. It's called repurposing the assets and the products that we have and generating further revenue.

[Colin Fisher, analyst]

Okay. So I'm going to cheat a little bit and ask two questions at once, so don't stop me. Vis-a-vis the AOL, RPTA and Wealth, you've done a fairly heavy lift. Is there going to be any sort of rationalization in the IT sector or your IT department in terms of costs and whatnot? And then I also know that there's a lot of people who are very interested in about getting an update on the TSX uplifting.

[Gary Yeoman, executive]

Okay. Do you want to tackle the IT piece, Jim? I'll deal with the TSX.

[James Albertelli, executive]

Yes. So you're right on the heavy lift the ranging of the data within the database to address it's various needs, depending on if it's an RPTA component or if it's really property-related look back and an automated ingestion engine around the supporting proliferation of the AOL to allow for scale. The database architecture is pulling together and we're reducing the cost of data storage in combining the contracts of the various companies.

So I think from a from an infrastructure perspective, we're reducing those core costs. So that's what you should expect there. For marshaling the technical resources, though, these are true SaaS play. So once the product is deployed or the data is deployed in such a way as the consumers can digest it. And in some cases, it's completely self-explanatory information, then there really isn't any more lift. What there is, is config or configuring an API to deliver that data into the requisite location.

So for example, in the Blue Water world, when we're looking at a pre-trade portfolio, for example, we're doing a portfolio analysis and we want to monitor it for runoff, right? So you agree to sell mortgage servicing rights and you say, hey, I don't call on these customers, but we want to understand during the settlement of the trade where the homes are going and for what reason, right?

So what Voxtur would do is like for Blue Water, it's a pretty easy lift. We've already defined the data elements. We'll now map the API to where they want to receive it on their side, so the consumer can hit what I call the easy button, what we call portfolio protect. We've already named it.

And all that data then goes in real time and monitors all of those assets and then identifies the key attributes for runoff. But again, the underlying technology hasn't changed, the configuration is what has to happen. So really, a lot of R&D has been done and completed in RPTA and in AOL and in Voxtur Wealth, like those products are built. So now the question is, is it a white label configuration? Is it an API delivery? What does the schema look like? But we're already in a position to do that.

On the infrastructure side, we are reducing costs around data and data storage. And we are pushing towards the -- depending on the company, some are already in a SOC 2 Type 2 environment, but bringing those standards to the subsidiaries or some of our suppliers that might not be. So that's my -- is where we're spending the money is really in the -- is the data security integrity compliance component. I hope that helps.

[Gary Yeoman, executive]

With respect to the TSX, if not for Blue Water and me, and Jim and I completely dominating the legal department, time and energy, a perspective -- prospectus would have been filed by now, but it is imminent. And so we will be forward with that. The circular has already been filed. And so it is our intent, as soon as humanly possible is to -- once they have been filed, and of course, we've got to include the Blue Water acquisition as part of that in our perspective. So once that has been done, which is in the not-too-distant future. And obviously, we'll be seeking TSX an obligation to go on the major board.

Obviously, I guess your next question is, what does that mean for NASDAQ? I think there has to be some rightsizing with respect to our share price or obviously, the investors to understand what our service offerings is right now, the improvement of our revenue and profitability, which you're going to see starting in the fourth quarter and beyond.

We think that there should be a significant change with respect to how our company is valued in the current valuation that is there. And so we need change first before we move forward with the NASDAQ application. Certainly, we have some time based on that application to be able to allow all of those new offerings that come to bear and improve our overall market cap. That has to happen before we move forward with that application.

And we feel that we're in a very strategic position by now as I said before, entering into the secondary market, so that we've got that total countercyclicality that none of our competitors have that benefit of offering right now. So that's where we are over there in the capital markets.

[Colin Fisher, analyst]

I'd also just like to say congratulations to Jim to -- for not saying sine qua non in the entire call. Congratulations.

[Operator]

And at this moment, we have no further questions. Thank you, ladies and gentlemen. This concludes today's conference. We thank you for participating. You may now disconnect.