The stock price of Doma Holdings was down 29% on Friday afternoon after the title insurance company posted a $43.7 million GAAP loss in the fourth quarter, and a $113 million loss for the full year in 2021.
In its earnings report on Thursday, the San Francisco-based firm said it notched $138 million in revenue in the fourth quarter, up 17% year over year, and retained premiums and fees of $66 million, up 24% over the fourth quarter of 2020.
But adjusted gross profit fell to $22 million, a 10% decline, and its adjusted EBITDA was a loss of $36.3 million on the quarter, widening significantly from the $3 million adjusted EBITDA loss a year ago. For the full year of 2021, Doma recorded an adjusted EBITDA loss of $71.6 million. In 2020, the company posted a $19 million loss.
Executives at Doma on an earnings call Thursday said the company was growing across key metrics and investing heavily in machine learning technology, moves that will pay off in the coming two years.
“We finished the year in a position of strength, having consistently outperformed the objectives we set for retained premium and fees and adjusted gross profit since announcing our plans to go public last March,” said CFO Noaman Ahmad. “In terms of our plans for 2022, we are taking advantage of the momentum in our business and will focus on broadening the use and coverage of our proven Doma Intelligence platform. We will use the capital we raised from going public to expand our core machine intelligence-powered title and closing offering into purchase transactions, as well as to capture opportunities in adjacent markets.”
For all of 2021, Doma paid $55 million in customer acquisition costs and $130 million on other indirect costs, including corporate support, research and development and other operating costs. In general, its expenses ballooned in 2021 – personnel costs alone increased to $238.1 million from $143.5 million in 2020.
Looking forward to 2022, Doma is forecasting gross profit of between $118 million and $136 million with retained premiums and fees of between $300 million and $320 million.
Doma expects the ratio of adjusted gross profit to retained premiums and fees to be between 44% and 47%. Still, it will be another money-losing year in all likelihood. Doma expects adjusted EBIDTA loss of between $70 million and $90 million.
Doma has said it plans to be profitable in 2023.
The company, formerly known as States Title, went public via a special purpose acquisition company in late July. Backers of the offering said in March that they expected the SPAC merger to raise $645 million, but investors exercised their rights to redeem nearly 30 million public shares early, cutting the money raised by $295 million. Doma opened trading at $8.20 a share, but on Friday around 1 p.m. EST was trading at $2.43 a share.
Doma’s primary rivals, known as the “Big Four,” posted strong years in 2021 despite waning refi volumes.