Business Wire | Nov 10, 2021 04:10PM EST

Doma's Q3 Results Continue to Outpace Mortgage Industry; Tech-Led Growth Expected to Fuel Future Out-Performance Despite Softening Market

Nov. 10, 2021

SAN FRANCISCO--(BUSINESS WIRE)--Nov. 10, 2021--Doma Holdings, Inc. (NYSE: DOMA) ("Doma" or the "Company"), a leading force for disruptive change in the real estate industry, today reported quarterly financial results and key operating data for the three and nine months ended September 30, 2021(2). Doma's results demonstrate strong growth that continues to outperform the mortgage industry as a whole, driven by the expansion and continued adoption of its proprietary machine learning technology. Because of its continued momentum in the third quarter of 2021 and an accelerating rate of growth in open order volume, Doma is now affirming that it expects full year 2021 results to be at or above the high end of its previously stated guidance ranges.

"Doma's impressive growth relative to the industry is driven by our unique technology, and we continue to gain momentum," said Max Simkoff, Founder and CEO of Doma. "Given our proven ability to grow market share, we will be heavily focused on investing in the extension of our game-changing technology to serve more of the market - specifically across home purchase transactions. As soon as possible, we want prospective homeowners to experience the same value proposition that we've been delivering to our Enterprise channel: an instant, digital home closing that is vastly more simple and more affordable," Mr. Simkoff concluded.

Third Quarter 2021 Growth Drivers

* Continued improvements to the Doma Intelligence platform helped deliver better customer outcomes through the application of cutting-edge machine learning technology. Added important new functionality to Doma Docs - which is a feature that uses machine intelligence to replace the manual and error-prone process of traditional fee collaboration - that deepens its algorithms to tackle even more complex Closing Disclosure scenarios and drive better outcomes for Doma's largest clients. Enhanced the Doma Connect integration layer to introduce important new integration functionality across several key middleware platforms used by Doma's mortgage originator customers, making those connections more seamless and fostering further expansion of wallet share. * Increased orders at the Enterprise level, despite a softening mortgage market, reflect confidence in Doma's technology by the nation's largest mortgage lenders. Total order growth in the third quarter came from both new customers starting to transact as well as increases in wallet share among existing Doma Enterprise customers, who are among the nation's leading lenders. * Home purchase transaction volume increased by a healthy 9% over the same period last year, outpacing overall market trends in Doma's Local channel. * Top talent from leading global tech companies like Amazon, Apple, Facebook, Netflix, LogMeIn, and Splunk joined the Doma team in the third quarter, in key roles across customer acquisition, account management, fulfillment, software engineering, data science, and product management, helping the Company deliver on its fast pace of innovation.

"Our strong third quarter results are reflective of the increasing demand for our differentiated technology offering, most notably by our largest Enterprise clients," stated Noaman Ahmad, CFO of Doma. "Our recent performance and momentum allow us the confidence to invest more aggressively in our product roll-out, particularly as it relates to the accelerated migration of our Local Purchase business to the Doma Intelligence platform, which we remain on track to start by year-end. We believe that the acceleration of these investments is worth any short-term trade off in margins that will likely be required to get to larger scale faster."

Non-GAAP Financial Measures

Some of the financial information and data contained in this press release, such as retained premiums and fees, adjusted gross profit and adjusted EBITDA, have not been prepared in accordance with United States generally accepted accounting principles ("GAAP"). Retained premiums and fees is defined as revenue less premiums retained by third-party agents. Adjusted gross profit is defined as gross profit, plus depreciation and amortization. Adjusted EBITDA is defined as net loss before interest expense, income taxes, depreciation and amortization, stock-based compensation, COVID-related severance costs and change in fair value of warrant and sponsor covered shares liabilities. Doma believes that the use of retained premiums and fees, adjusted gross profit and adjusted EBITDA provides an additional tool to assess operational performance and trends in, and in comparing Doma's financial measures with, other similar companies, many of which present similar non-GAAP financial measures to investors. Doma's non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial measures determined in accordance with GAAP. Because of the limitations of non-GAAP financial measures, you should consider the non-GAAP financial measures presented herein in conjunction with Doma's financial statements and the related notes thereto. Please refer to the non-GAAP reconciliations in this press release for a reconciliation of these non-GAAP financial measures to the most comparable financial measure prepared in accordance with GAAP.

Conference Call Information

Doma will host a conference call at 5:30 PM Eastern Time on Wednesday, November 10, 2021, to present its third quarter 2021 financial results.

The telephonic version of the call can be accessed by dialing:

Participant Toll Free Dial-In Number: (844) 615-6508

Participant International Dial-In Number: (918) 922-3146

Conference ID: 5855336

The live webcast of the call will be accessible on the Company's website at investor.doma.com. Approximately two hours after conclusion of the live event, an archived webcast of the conference call will be accessible from the Investor Relations section of the Company's website for twelve months.

About Doma Holdings, Inc.

Doma (NYSE: DOMA) is architecting the future of real estate transactions. The Company uses machine intelligence and its proprietary technology solutions to transform residential real estate, making closings instant and affordable. Doma and its family of brands - States Title, North American Title Company (NATC) and North American Title Insurance Company (NATIC) - offer solutions for current and prospective homeowners, lenders, title agents, and real estate professionals that make closings vastly more simple and efficient, reducing cost and increasing customer satisfaction. Doma's clients include some of the largest bank and non-bank lenders in the United States. To learn more visit doma.com.

Forward-Looking Statements Legend

This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "estimate," "plan," "project," "forecast," "intend," "will," "expect," "anticipate," "believe," "seek," "target" or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. The absence of these words does not mean that a statement is not forward-looking. Such statements are based on the beliefs of, as well as assumptions made by information currently available to Doma management. These forward-looking statements include, but are not limited to, statements regarding estimates and forecasts of financial and performance metrics, projections of market opportunity, total addressable market ("TAM"), market share and competition. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectation of Doma's management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict, will differ from assumptions and are beyond the control of Doma.

These forward-looking statements are subject to a number of risks and uncertainties, including changes in business, market, financial, political and legal conditions; risks relating to the uncertainty of the projected financial information with respect to Doma; future global, regional or local economic, political, market and social conditions, including due to the COVID-19 pandemic; the development, effects and enforcement of laws and regulations, including with respect to the title insurance industry; Doma's ability to manage its future growth or to develop or acquire enhancements to its platform; the effects of competition on Doma's future business; the outcome of any potential litigation, government and regulatory proceedings, investigations and inquiries; and those other factors described in the "Risk Factors" section of the documents filed by Doma from time to time with the SEC.

If any of these risks materialize or Doma's assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that Doma does not presently know or that Doma currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Doma's expectations, plans or forecasts of future events and views as of the date of this press release. Doma anticipates that subsequent events and developments will cause Doma's assessments to change. However, while Doma may elect to update these forward-looking statements at some point in the future, Doma specifically disclaims any obligation to do so, except as required by law. These forward-looking statements should not be relied upon as representing Doma's assessment as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements.

Key Operating and Financial Indicators

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

(in thousands, except for open and closed order numbers)

Key operating data:

Opened orders 52,867 37,572 135,442 101,161

Closed orders 35,300 25,358 99,386 65,026



GAAP financial data:

Revenue ^(1) $ 162,582 $ 121,072 $ 420,364 $ 292,304

Gross profit ^(2) $ 28,302 $ 26,379 $ 81,232 $ 61,418

Net loss $ (34,270 ) $ (3,622 ) $ (69,327 ) $ (26,540 )

Non-GAAP financial data ^ (3):

Retained premiums and $ 70,986 $ 54,048 $ 193,249 $ 136,172 fees

Adjusted gross profit $ 30,280 $ 27,600 $ 88,937 $ 64,654

Ratio of adjusted grossprofit to retained 43 % 51 % 46 % 47 %premiums and fees

Adjusted EBITDA $ (20,109 ) $ (649 ) $ (35,291 ) $ (15,926 )

_________________

n.m. = not meaningful

Revenue is comprised of (i) net premiums written, (ii) escrow, other(1) title-related fees and other, and (iii) investment, dividend and other income. Net loss is made up of the components of revenue and expenses.

Gross profit, calculated in accordance with GAAP, is calculated as total revenue, minus premiums retained by third-party agents, direct labor expense (including mainly personnel expense for certain employees involved(2) in the direct fulfillment of policies) and direct non-labor expense (including mainly title examination expense, provision for claims, and depreciation and amortization). In our consolidated income statements, depreciation and amortization is recorded under the "other operating expenses" caption.

(3) Retained premiums and fees, adjusted gross profit and adjusted EBITDA are non-GAAP financial measures.

Non-GAAP Financial Measures

Retained premiums and fees

The following presents our retained premiums and fees and reconciles the measure to our gross profit, the most closely comparable GAAP financial measure, for the periods indicated:

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

(in thousands) (in thousands)

Revenue $ 162,582 $ 121,072 $ 420,364 $ 292,304

Minus:

Premiums retained by 91,596 67,024 227,115 156,132 third-party agents

Retained premiums and fees $ 70,986 $ 54,048 $ 193,249 $ 136,172

Minus:

Direct labor 23,948 14,892 62,829 45,104

Provision for claims 6,685 5,242 16,741 10,065

Depreciation and 1,978 1,221 7,705 3,236 amortization

Other direct costs ^(1) 10,073 6,314 24,742 16,349

Gross Profit $ 28,302 $ 26,379 $ 81,232 $ 61,418

__________________

(1) Includes title examination expense, office supplies, and premium and other taxes.

Adjusted gross profit

The following table reconciles our adjusted gross profit to our gross profit, the most closely comparable GAAP financial measure, for the periods indicated:

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

(in thousands) (in thousands)

Gross Profit $ 28,302 $ 26,379 $ 81,232 $ 61,418

Adjusted for:

Depreciation and 1,978 1,221 7,705 3,236 amortization

Adjusted Gross Profit $ 30,280 $ 27,600 $ 88,937 $ 64,654

Adjusted EBITDA

The following table reconciles our adjusted EBITDA to our net loss, the most closely comparable GAAP financial measure, for the periods indicated:

Three Months Ended September Nine Months Ended September 30, 30,

2021 2020 2021 2020

(in thousands) (in thousands)

Net loss (GAAP) $ (34,270 ) $ (3,622 ) $ (69,327 ) $ (26,540 )

Adjusted for:

Depreciation and 1,978 1,221 7,705 3,236 amortization

Interest expense 4,531 1,193 12,341 4,428

Income taxes 170 204 506 620

EBITDA $ (27,591 ) $ (1,004 ) $ (48,775 ) $ (18,256 )

Adjusted for:

Stock-based 3,004 355 9,006 945 compensation

COVID-related - - - 1,385 severance costs

Change in fairvalue of warrantand sponsor 4,478 - 4,478 - covered sharesliabilities

Adjusted EBITDA $ (20,109 ) $ (649 ) $ (35,291 ) $ (15,926 )

The following table reconciles our adjusted gross profit to our adjusted EBITDA, for the periods indicated:

Three Months Ended September Nine Months Ended September 30, 30,

2021 2020 2021 2020

(in thousands) (in thousands)

Adjusted Gross $ 30,280 $ 27,600 $ 88,937 $ 64,654 Profit

Minus:

Customer acquisition 14,870 8,849 36,956 25,227 costs

Other indirect costs 35,519 19,400 87,272 55,353 ^(1)

Adjusted EBITDA $ (20,109 ) $ (649 ) $ (35,291 ) $ (15,926 )

__________________

(1) Includes corporate support, research and development, and other operating costs. Outlook reconciliations

The following tables reconcile the ranges of expected gross profit to expected retained premiums and fees and the ranges of expected gross profit to expected adjusted gross profit for the full year ended December 31, 2021:

Year Ended December 31, 2021

Low High

(in thousands)

Revenue $ 475,000 $ 525,000

Minus:

Premiums retained by third-party agents 225,000 265,000

Retained premiums and fees $ 250,000 $ 260,000

Minus:

Estimated adjustments ^(1) $ 167,000 $ 167,000

Gross Profit $ 83,000 $ 93,000

Year Ended December 31, 2021

Low High

(in thousands)

Gross Profit $ 83,000 $ 93,000

Adjusted for:

Depreciation and amortization 12,000 12,000

Adjusted Gross Profit $ 95,000 $ 105,000

__________________

Estimated adjustments include direct labor, provision for claims,(1) depreciation and amortization, and other direct costs (which includes title examination expense, office supplies, and premium and other taxes).

Doma Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands, except share and per share information)

2021

2020

2021

2020

Revenues:

Net premiums written (1)

$

141,491

$

103,587

$

358,754

$

246,738

Escrow, other title-related fees and other

20,452

16,742

59,092

43,298

Investment, dividend and other income

639

743

2,518

2,268

Total revenues

$

162,582

$

121,072

$

420,364

$

292,304

Expenses:

Premiums retained by third-party agents (2)

$

91,596

$

67,024

$

227,115

$

156,132

Title examination expense

5,289

4,624

15,643

11,811

Provision for claims

6,685

5,242

16,741

10,065

Personnel costs

62,410

36,197

159,829

104,652

Other operating expenses

21,693

10,210

53,038

31,136

Total operating expenses

$

187,673

$

123,297

$

472,366

$

313,796

Loss from operations

$

(25,091

)

$

(2,225

)

$

(52,002

)

$

(21,492

)

Other (expense) income:

Change in fair value of warrant and sponsor covered shares liabilities

(4,478

)

-

(4,478

)

-

Interest expense

(4,531

)

(1,193

)

(12,341

)

(4,428

)

Loss before income taxes

$

(34,100

)

$

(3,418

)

$

(68,821

)

$

(25,920

)

Income tax expense

(170

)

(204

)

(506

)

(620

)

Net loss

(34,270

)

(3,622

)

(69,327

)

(26,540

)

Earnings per share:

Net loss per share attributable to shareholders - basic and diluted

$

(0.14

)

$

(0.06

)

$

(0.54

)

$

(0.43

)

Weighted average shares outstanding common stock - basic and diluted

245,003,754

64,060,987

128,105,954

62,255,035

__________________

Doma Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)



Three Months Ended September 30, Nine Months Ended September 30,

(Inthousands,except share 2021 2020 2021 2020 and per shareinformation)

Revenues:

Net premiums $ 141,491 $ 103,587 $ 358,754 $ 246,738 written ^(1)

Escrow, othertitle-related 20,452 16,742 59,092 43,298 fees andother

Investment,dividend and 639 743 2,518 2,268 other income

Total $ 162,582 $ 121,072 $ 420,364 $ 292,304 revenues



Expenses:

Premiumsretained by $ 91,596 $ 67,024 $ 227,115 $ 156,132 third-partyagents ^(2)

Titleexamination 5,289 4,624 15,643 11,811 expense

Provision for 6,685 5,242 16,741 10,065 claims

Personnel 62,410 36,197 159,829 104,652 costs

Otheroperating 21,693 10,210 53,038 31,136 expenses

Totaloperating $ 187,673 $ 123,297 $ 472,366 $ 313,796 expenses



Loss from $ (25,091 ) $ (2,225 ) $ (52,002 ) $ (21,492 ) operations



Other(expense) income:

Change infair value ofwarrant andsponsor (4,478 ) - (4,478 ) - coveredsharesliabilities

Interest (4,531 ) (1,193 ) (12,341 ) (4,428 ) expense

Loss before $ (34,100 ) $ (3,418 ) $ (68,821 ) $ (25,920 ) income taxes



Income tax (170 ) (204 ) (506 ) (620 ) expense

Net loss (34,270 ) (3,622 ) (69,327 ) (26,540 )



Earnings per share:

Net loss pershareattributableto $ (0.14 ) $ (0.06 ) $ (0.54 ) $ (0.43 ) shareholders- basic anddiluted

Weightedaveragesharesoutstanding 245,003,754 64,060,987 128,105,954 62,255,035 common stock- basic anddiluted

__________________

Net premiums written includes revenues from a related party of $30.3 million and $22.9 million during the three months ended September 30, 2021(1) and 2020, respectively. Net premiums written includes revenues from a related party of $81.9 million and $64.2 million during the nine months ended September 30, 2021 and 2020, respectively.

Premiums retained by third-party agents includes expenses associated with a related party of $24.8 million and $18.4 million during the three months(2) ended September 30, 2021 and 2020, respectively. Premiums retained by third-party agents includes expenses associated with a related party of $66.6 million and $51.9 million during the nine months ended September 30, 2021 and 2020, respectively.

Doma Holdings, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share information)

September 30, 2021

December 31, 2020

Assets

Cash and cash equivalents

$

411,669

$

111,893

Restricted cash

2,021

129

Investments:

Fixed maturities

Held-to-maturity debt securities, at amortized cost

74,872

65,406

Available-for-sale debt securities, at fair value (amortized cost $7,139 at December 31, 2020)

-

8,057

Equity securities, at fair value (cost $2,000 at December 31, 2020)

-

2,119

Mortgage loans

2,920

2,980

Other invested assets

306

-

Total Investments

$

78,098

$

78,562

Receivables (net of provision for doubtful accounts of $571 at September 30, 2021 and $492 at December 31, 2020)

14,485

15,244

Prepaid expenses, deposits and other assets

22,161

7,365

Fixed assets (net of accumulated depreciation of $17,283 at September 30, 2021 and $15,065 at December 31, 2020)

35,243

21,661

Title plants

13,952

14,008

Goodwill

111,487

111,487

Trade names (net of accumulated amortization of $3,187 at December 31, 2020)

-

2,684

Total assets

$

689,116

$

363,033

Liabilities and stockholders' equity

Accounts payable

$

6,651

$

6,626

Accrued expenses and other liabilities

50,187

33,044

Senior secured credit agreement, net of debt issuance costs and original issue discount

138,684

-

Loan from a related party

-

65,532

Liability for loss and loss adjustment expenses

78,671

69,800

Warranty liabilities

24,440

-

Sponsor covered shares liability

8,610

-

Total liabilities

$

307,243

$

175,002

Stockholders' equity:

Series A preferred stock, 0.0001 par value; 0 shares authorized at September 30, 2021; 0 shares and 43,737,586 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

$

-

$

1

Series A-1 preferred stock, 0.0001 par value; 0 shares authorized at September 30, 2021; 0 shares and 48,913,906 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

-

1

Series A-2 preferred stock, 0.0001 par value; 0 shares authorized at September 30, 2021; 0 shares and 14,003,187 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

-

-

Series B preferred stock, 0.0001 par value; 0 shares authorized at September 30, 2021; 0 shares and 15,838,828 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

-

-

Series C preferred stock, 0.0001 par value; 0 shares authorized at September 30, 2021; 0 shares and 60,665,631 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

-

1

Common stock, 0.0001 par value; 2,000,000,000 shares authorized at September 30, 2021; 321,544,052 and 62,832,307 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

33

1

Additional paid-in capital

530,290

266,464

Accumulated deficit

(148,450

)

(79,123

)

Accumulated other comprehensive income

-

686

Total stockholders' equity

$

381,873

$

188,031

Total liabilities and stockholders' equity

$

689,116

$

363,033

Doma Holdings, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share information) September 30, December 31, 2021 2020



Assets

Cash and cash equivalents $ 411,669 $ 111,893

Restricted cash 2,021 129

Investments:

Fixed maturities

Held-to-maturity debt securities, at amortized 74,872 65,406 cost

Available-for-sale debt securities, at fair value - 8,057 (amortized cost $7,139 at December 31, 2020)

Equity securities, at fair value (cost $2,000 at - 2,119 December 31, 2020)

Mortgage loans 2,920 2,980

Other invested assets 306 -

Total Investments $ 78,098 $ 78,562

Receivables (net of provision for doubtfulaccounts of $571 at September 30, 2021 and $492 14,485 15,244 at December 31, 2020)

Prepaid expenses, deposits and other assets 22,161 7,365

Fixed assets (net of accumulated depreciation of$17,283 at September 30, 2021 and $15,065 at 35,243 21,661 December 31, 2020)

Title plants 13,952 14,008

Goodwill 111,487 111,487

Trade names (net of accumulated amortization of - 2,684 $3,187 at December 31, 2020)

Total assets $ 689,116 $ 363,033



Liabilities and stockholders' equity

Accounts payable $ 6,651 $ 6,626

Accrued expenses and other liabilities 50,187 33,044

Senior secured credit agreement, net of debt 138,684 - issuance costs and original issue discount

Loan from a related party - 65,532

Liability for loss and loss adjustment expenses 78,671 69,800

Warranty liabilities 24,440 -

Sponsor covered shares liability 8,610 -

Total liabilities $ 307,243 $ 175,002



Stockholders' equity:

Series A preferred stock, 0.0001 par value; 0shares authorized at September 30, 2021; 0 sharesand 43,737,586 shares issued and outstanding as $ - $ 1 of September 30, 2021 and December 31, 2020,respectively

Series A-1 preferred stock, 0.0001 par value; 0shares authorized at September 30, 2021; 0 sharesand 48,913,906 shares issued and outstanding as - 1 of September 30, 2021 and December 31, 2020,respectively

Series A-2 preferred stock, 0.0001 par value; 0shares authorized at September 30, 2021; 0 sharesand 14,003,187 shares issued and outstanding as - - of September 30, 2021 and December 31, 2020,respectively

Series B preferred stock, 0.0001 par value; 0shares authorized at September 30, 2021; 0 sharesand 15,838,828 shares issued and outstanding as - - of September 30, 2021 and December 31, 2020,respectively

Series C preferred stock, 0.0001 par value; 0shares authorized at September 30, 2021; 0 sharesand 60,665,631 shares issued and outstanding as - 1 of September 30, 2021 and December 31, 2020,respectively

Common stock, 0.0001 par value; 2,000,000,000shares authorized at September 30, 2021;321,544,052 and 62,832,307 shares issued and 33 1 outstanding as of September 30, 2021 and December31, 2020, respectively

Additional paid-in capital 530,290 266,464

Accumulated deficit (148,450 ) (79,123 )

Accumulated other comprehensive income - 686

Total stockholders' equity $ 381,873 $ 188,031

Total liabilities and stockholders' equity $ 689,116 $ 363,033

Doma Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Nine Months Ended September 30,

(In thousands)

2021

2020

Cash flow from operating activities:

Net loss

$

(69,327

)

$

(26,540

)

Adjustments to reconcile net loss to net cash used in operating activities:

Interest expense - paid in kind

6,353

5,085

Depreciation and amortization

7,705

3,236

Stock-based compensation expense

8,447

945

Amortization of debt issuance costs and original issue discount

1,429

-

Provision for doubtful accounts

562

304

Deferred income taxes

377

535

Realized gain on debt securities

(908

)

(141

)

Net unrealized loss on equity securities

119

10

Gain on disposal of fixed assets and title plants

(11

)

(281

)

Accretion of discounts on held-to-maturity securities

901

369

Change in fair value of warrant and sponsor covered shares liabilities

4,478

-

Change in operating assets and liabilities:

Accounts receivable

(284

)

(261

)

Prepaid expenses, deposits and other assets

(14,799

)

(6,166

)

Accounts payable

(274

)

2,658

Accrued expenses and other liabilities

13,813

472

Liability for loss and loss adjustments expenses

8,872

3,374

Net cash used in operating activities

$

(32,547

)

$

(16,401

)

Cash flow from investing activities:

Proceeds from sales, calls and maturities of investments: Held-to-maturity

$

23,514

$

15,394

Proceeds from sales, calls and maturities of investments: Available-for-sale

7,817

18

Proceeds from sales of investments: Equity securities

2,000

-

Proceeds from sales and principal repayments of investments: Mortgage loans

60

378

Purchases of investments: Held-to-maturity

(33,650

)

(57,624

)

Purchases of investments: Equity securities

-

(1,000

)

Proceeds from sales of fixed assets

306

246

Purchases of fixed assets

(18,842

)

(12,670

)

Proceeds from sale of title plants and dividends from title plants

482

1,349

Net cash used in investing activities

$

(18,313

)

$

(53,909

)

Doma Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



Nine Months Ended September 30,

(In thousands) 2021 2020

Cash flow from operating activities:

Net loss $ (69,327 ) $ (26,540 )

Adjustments to reconcile net loss to net cash used in operating activities:

Interest expense - paid in kind 6,353 5,085

Depreciation and amortization 7,705 3,236

Stock-based compensation expense 8,447 945

Amortization of debt issuance costs and original 1,429 - issue discount

Provision for doubtful accounts 562 304

Deferred income taxes 377 535

Realized gain on debt securities (908 ) (141 )

Net unrealized loss on equity securities 119 10

Gain on disposal of fixed assets and title plants (11 ) (281 )

Accretion of discounts on held-to-maturity 901 369 securities

Change in fair value of warrant and sponsor 4,478 - covered shares liabilities

Change in operating assets and liabilities:

Accounts receivable (284 ) (261 )

Prepaid expenses, deposits and other assets (14,799 ) (6,166 )

Accounts payable (274 ) 2,658

Accrued expenses and other liabilities 13,813 472

Liability for loss and loss adjustments expenses 8,872 3,374

Net cash used in operating activities $ (32,547 ) $ (16,401 )

Cash flow from investing activities:

Proceeds from sales, calls and maturities of $ 23,514 $ 15,394 investments: Held-to-maturity

Proceeds from sales, calls and maturities of 7,817 18 investments: Available-for-sale

Proceeds from sales of investments: Equity 2,000 - securities

Proceeds from sales and principal repayments of 60 378 investments: Mortgage loans

Purchases of investments: Held-to-maturity (33,650 ) (57,624 )

Purchases of investments: Equity securities - (1,000 )

Proceeds from sales of fixed assets 306 246

Purchases of fixed assets (18,842 ) (12,670 )

Proceeds from sale of title plants and dividends 482 1,349 from title plants

Net cash used in investing activities $ (18,313 ) $ (53,909 )

Doma Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Nine Months Ended September 30,

(In thousands)

2021

2020

Cash flow from financing activities:

Proceeds from issuance of Series C preferred stock, net of financing costs

$

-

$

70,701

Proceeds from issuance of senior secured credit agreement

150,000

-

Payments on loan from a related party

(65,532

)

(28,092

)

Debt issuance costs

(579

)

-

Exercise of stock warrants

48

-

Exercise of stock options

1,690

92

Redemptions of redeemable common and preferred stock

(294,856

)

-

Net proceeds from Business Combination and PIPE Investment

624,952

-

Payment of costs directly attributable to the issuance of common stock in connection with Business Combination and PIPE Investment

(63,195

)

-

Net cash provided by financing activities

$

352,528

$

42,701

Net change in cash and cash equivalents and restricted cash

301,668

(27,609

)

Cash and cash equivalents and restricted cash at the beginning period

112,022

141,668

Cash and cash equivalents and restricted cash at the end of period

$

413,690

$

114,059

Supplemental cash flow disclosures:

Cash paid for interest

$

5,347

$

1

Supplemental disclosure of non-cash investing activities:

Unrealized loss on available-for-sale debt securities

$

(179

)

$

(53

)

Supplemental disclosure of non-cash financing activities:

Issuance of penny warrants related to the senior secured credit agreement

$

(18,519

)

$

-

Warrant liabilities recognized in conjunction with the Business Combination

$

19,240

$

-

Net liabilities assumed in the Business Combination

$

9,517

$

-

Quarterly Results of Operations and Other Data

The following tables set forth our selected unaudited quarterly condensed consolidated statements of operations data for each of the quarters indicated. The information for each quarter has been prepared on a basis consistent with our audited consolidated financial statements, and reflect, in the opinion of management, all adjustments, which consist only of a normal, recurring nature that are necessary for a fair statement of the financial information contained in those financial statements. Our historical results are not necessarily indicative of the results that may be expected in the future. The following quarterly financial data should be read in conjunction with our consolidated financial statements.

Condensed Consolidated Statements of Operations

Doma Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



Nine Months Ended September 30,

(In thousands) 2021 2020

Cash flow from financing activities:

Proceeds from issuance of Series C preferred $ - $ 70,701 stock, net of financing costs

Proceeds from issuance of senior secured credit 150,000 - agreement

Payments on loan from a related party (65,532 ) (28,092 )

Debt issuance costs (579 ) -

Exercise of stock warrants 48 -

Exercise of stock options 1,690 92

Redemptions of redeemable common and preferred (294,856 ) - stock

Net proceeds from Business Combination and PIPE 624,952 - Investment

Payment of costs directly attributable to theissuance of common stock in connection with (63,195 ) - Business Combination and PIPE Investment

Net cash provided by financing activities $ 352,528 $ 42,701

Net change in cash and cash equivalents and 301,668 (27,609 ) restricted cash

Cash and cash equivalents and restricted cash at 112,022 141,668 the beginning period

Cash and cash equivalents and restricted cash at $ 413,690 $ 114,059 the end of period

Supplemental cash flow disclosures:

Cash paid for interest $ 5,347 $ 1

Supplemental disclosure of non-cash investing activities:

Unrealized loss on available-for-sale debt $ (179 ) $ (53 ) securities

Supplemental disclosure of non-cash financing activities:

Issuance of penny warrants related to the senior $ (18,519 ) $ - secured credit agreement

Warrant liabilities recognized in conjunction $ 19,240 $ - with the Business Combination

Net liabilities assumed in the Business $ 9,517 $ - Combination

Quarterly Results of Operations and Other Data

The following tables set forth our selected unaudited quarterly condensed consolidated statements of operations data for each of the quarters indicated. The information for each quarter has been prepared on a basis consistent with our audited consolidated financial statements, and reflect, in the opinion of management, all adjustments, which consist only of a normal, recurring nature that are necessary for a fair statement of the financial information contained in those financial statements. Our historical results are not necessarily indicative of the results that may be expected in the future. The following quarterly financial data should be read in conjunction with our consolidated financial statements.

Condensed Consolidated Statements of Operations

Three months ended

(In March 31, June 30, September 30, December 31, March 31, June 30, September 30,thousands) 2020 2020 2020 2020 2021 2021 2021

Revenues:

Net premiums $ 56,817 $ 86,334 $ 103,587 $ 98,870 $ 107,992 $ 109,271 $ 141,491 written

Escrow, othertitle-related 13,174 13,382 16,742 17,977 18,575 20,065 20,452 fees andother

Investment,dividend and 818 707 743 663 1,229 650 639 other income

Total $ 70,809 $ 100,423 $ 121,072 $ 117,510 $ 127,796 $ 129,986 $ 162,582 revenues



Expenses:

Premiumsretained by $ 33,102 $ 56,006 $ 67,024 $ 64,011 $ 70,338 $ 65,181 $ 91,596 third-partyagents

Titleexamination 3,865 3,322 4,624 4,393 4,853 5,500 5,289 expense

Provision for 1,783 3,040 5,242 5,272 3,249 6,807 6,685 claims

Personnel 35,718 32,737 36,197 38,874 43,464 53,954 62,410 costs

Otheroperating 10,640 10,286 10,210 12,149 14,165 17,181 21,693 expenses

Totaloperating $ 85,108 $ 105,391 $ 123,297 $ 124,699 $ 136,069 $ 148,623 $ 187,673 expenses



Loss from $ (14,299 ) $ (4,968 ) $ (2,225 ) $ (7,189 ) $ (8,273 ) $ (18,637 ) $ (25,091 ) operations



Other income (expense):

Change infair value ofwarrant and - - - - - - (4,478 ) sponsorearnoutliabilities

Interest (2,112 ) (1,123 ) (1,193 ) (1,151 ) (3,360 ) (4,451 ) (4,531 ) expense

Loss before $ (16,411 ) $ (6,091 ) $ (3,418 ) $ (8,340 ) $ (11,633 ) $ (23,088 ) $ (34,100 ) income taxes



Income tax (175 ) (241 ) (204 ) (223 ) (125 ) (211 ) (170 ) expense

Net loss (16,586 ) (6,332 ) (3,622 ) (8,563 ) (11,758 ) (23,299 ) (34,270 )

Reconciliation of GAAP to Non-GAAP Measures

The following tables present our reconciliation of GAAP measure to non-GAAP measures for the historical periods indicated.

Retained premiums and fees

Three Months Ended

(In March 31, June 30, September December March 31, June 30, Septemberthousands) 2020 2020 30, 31, 2021 2021 30, 2020 2020 2021

Revenue $ 70,809 $ 100,423 $ 121,072 $ 117,510 $ 127,796 $ 129,986 $ 162,582

Minus:

Premiumsretained by 33,102 56,006 67,024 64,011 70,338 65,181 91,596 third-partyagents

Retainedpremiums and $ 37,707 $ 44,417 $ 54,048 $ 53,499 $ 57,458 $ 64,805 $ 70,986 fees

Minus:

Direct labor 16,314 13,898 14,892 17,050 17,979 20,902 23,948

Provision 1,783 3,040 5,242 5,272 3,249 6,807 6,685 for claims

Depreciationand 1,116 899 1,221 2,579 2,707 3,021 1,978 amortization

Other direct 5,137 4,898 6,314 4,186 7,109 7,561 10,073 costs^(1)

Gross Profit $ 13,357 $ 21,682 $ 26,379 $ 24,412 $ 26,414 $ 26,514 $ 28,302

__________________

(1) Includes title examination expense, office supplies, and premium and other taxes.

Adjusted gross profit

Three Months Ended

(in March 31, June 30, September December March 31, June 30, Septemberthousands) 2020 2020 30, 31, 2021 2021 30, 2020 2020 2021

Gross Profit $ 13,357 $ 21,682 $ 26,379 $ 24,412 $ 26,414 $ 26,514 $ 28,302

Adjusted for:

Depreciationand 1,116 899 1,221 2,579 2,707 3,021 1,978 amortization

Adjusted $ 14,473 $ 22,581 $ 27,600 $ 26,991 $ 29,121 $ 29,535 $ 30,280 Gross Profit

Adjusted EBITDA

Three Months Ended

(in March 31, June 30, September December 31, March 31, June 30, 2021 September 30,thousands) 2020 2020 30, 2020 2020 2021 2021

Net loss $ (16,586 ) $ (6,332 ) $ (3,622 ) $ (8,563 ) $ (11,758 ) $ (23,299 ) $ (34,270 ) (GAAP)

Adjusted for:

Depreciationand 1,116 899 1,221 2,579 2,707 3,021 1,978 amortization

Interest 2,112 1,123 1,193 1,151 3,360 4,451 4,531 expense

Income taxes 175 241 204 223 125 211 170

EBITDA $ (13,183 ) $ (4,069 ) $ (1,004 ) $ (4,610 ) $ (5,566 ) $ (15,616 ) $ (27,591 )

Adjusted for:

Stock-based 308 282 355 1,550 2,289 3,713 3,004 compensation

COVID-relatedseverance - 1,385 - - - - costs

Change infair value ofwarrant andsponsor - - - - - - 4,478 coveredsharesliabilities

Adjusted $ (12,875 ) $ (2,402 ) $ (649 ) $ (3,060 ) $ (3,277 ) $ (11,903 ) $ (20,109 ) EBITDA

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CONTACT: Investor Contact: Chris Mammone | The Blueshirt Group for Doma | ir@doma.com Media Contact: Martha Shaughnessy | The Key PR for Doma | press@doma.com