As the housing market continues to slow, Doma is the latest industry firm to undergo layoffs. In a Securities and Exchange Commission filing from December 2 and posted on December 6, the title insurer announced that it was eliminating 515 positions, or roughly 40% of the company.
In the filing, Doma said the layoff was part of the firm’s “reduction plan,” which is “designed to improve local branch-level profitability, and focus resources on its instant underwriting capabilities.”
The firm said it expects the plan to generate an “estimated annualized compensation expense savings of between $85 million – $90 million and additional long-term facility related expense savings, beginning in the first quarter of 2023.”
As part of the plan, Doma said it expects to incur between $9 million and $10 million in employment-related charges, including expenditures for employee benefits, salary continuation, severance payments, payroll taxes and related costs offset by forfeitures of bonus and stock-based compensation.
The firm said it expects the execution of the reduction plan, including cash payments, will be “substantially complete” in the first quarter of 2023.
“Any decision to part with even a single teammate is a difficult one, and this was no exception,” a Doma spokesperson wrote in an email. “It was a tough day, and Doma is extremely sensitive to those impacted.”
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This is Doma’s second major layoff this year. In May, the firm announced it had cut 15% of its workforce.
During the third quarter, Doma saw revenue drop 13% year over year to $107.8 million as its net loss jumped from $34.3 million in Q3 2021 to $84.1 million this year. The drop in revenue and net loss came as the number of closed orders for the quarter fell from 35,300 in 2021 to 15,302 in Q3 2022.
Despite these challenges, the firm is maintaining its promise to achieve profitability and positive adjusted EBITDA in 2023, and executives noted that they are hoping to reach this milestone earlier next year than previously communicated.
“We know how important reaching adjusted EBITDA profitability is, especially as we’re facing a set of circumstances that seem to be pointing the housing market toward recession,” said Max Simkoff, the CEO of Doma, on the firm’s third quarter earnings call with investors.
“We believe we are the only company in our space with the proven technology and distribution opportunities to meaningfully drive transactions for homeowners that are better, faster, and cheaper. It is more important now than it ever has been to continue to deliver on our mission and to do so at scale, which is why we are committed to achieving adjusted EBITDA profitability sooner than the late 2023 timeline which we had previously communicated.”