Radian Group Inc. · NYSE:RDN
Radian — Investor Presentation (June 2021)
56 slides from Radian's investor presentation, Jun 10, 2021
Slide 1: Empowering the residential real estate industry from search to close
empowering the residential real estate industry from search to close June 10, 2021 1
Slide 2: Forward Looking Statements
Forward Looking Statements All statements in this presentation that address events, developments or inventory; changes in mortgage rates; and other factors that impact maintain sufficient holding company liquidity to meet our liquidity needs; results that we expect or anticipate may occur in the fut
Slide 3: Regulatory Disclosures
Regulatory Disclosures The products and services described in this presentation are provided by one or more Radian Group Inc. affiliates. “Radian,” “homegenius,” “titlegenius,” “geneuity,” “geniusbuyer,” and “geniusprice” are brands of Radian Group Inc. and may include services provided by its licen
Slide 4: Today's presenters
Today’s presenters Rick Thornberry Brien McMahon Eric Ray Frank Hall Chief Executive Officer Senior Executive Vice Senior Executive Vice Senior Executive Vice President, Chief President, Chief Digital President and Chief Franchise Officer and Officer and Co-Head Financial Officer Co-Head of Real Est
Slide 5: Radian is a trusted partner in mortgage and real estate
Radian is a trusted partner in mortgage and real estate Established network 2020 highlights relationships Radian maintains two strategic business units: Mortgage and Real Estate 380+ +275K real estate customers agents1 Our Mortgage business derives its revenue from mortgage insurance and other mor
Slide 6: Radian is a well-established, trusted provider of mortgage and real estate products and services
Radian is a well-established, trusted provider of mortgage and real estate products and services Industry relationships spanning 6 decades Relied upon by 1,300+ financial institutions and thousands of real estate professionals A data, technology, and services company with a track record of bot
Slide 7: The opportunity across the residential real estate market is attractive and significant
We believe the opportunity across the residential real estate market is attractive and significant Today, the U.S. real estate market is: served by legacy players challenged to reinvent their business models; filled with market participants frustrated by antiquated processes, unmet promises and
Slide 8: Enter homegenius
Enter homegenius … An integrated suite of digital products and Competitively advantaged through vast property services serving real estate agents, lenders, investors data, proprietary real estate analytics, groundbreaking and consumers from search to close technology, and leading customer service Re
Slide 9: Today's agenda
Today’s agenda Key Market Introducing Product Financial homegenius trends homegenius overviews projections investment highlights Q&A 9 © 2021 Radian Group Inc. All rights reserved. This material is confidential and may not be copied, used, or distributed without the written permission of Radian Grou
Slide 10: Investment highlights
Investment highlights 10 © 2021 Radian Group Inc. All rights reserved. This material is confidential and may not be copied, used, or distributed without the written permission of Radian Group Inc. (NYSE: RDN)
Slide 11: Key Investment Highlights
Key Investment Highlights Long standing and trusted relationships with real estate Network agents, lenders, and investors Extensive real estate data through our Red Bell1 subsidiary Data and Analytics and proprietary analytics leveraging artificial intelligence (AI) and machine learning (ML) models
Slide 12: Market trends
Market trends 12 © 2021 Radian Group Inc. All rights reserved. This material is confidential and may not be copied, used, or distributed without the written permission of Radian Group Inc. (NYSE: RDN)
Slide 13: Strong real estate market creates opportunity to accelerate growth
Strong real estate market creates opportunity to accelerate growth Total home transactions are on The number of licensed real Home prices are on the rise estate agents is robust an upward trend 7.5M 1.4M $320k Projected 2021 Projected 2021 Projected 2021 home sales number of real estate agents avera
Slide 14: Select Home Buyer Pain Points
Select Home Buyer Pain Points: 90% of home buyers … Which is why real say the process is stressful due to its many pain estate agents remain at points … the center 1 Educate and plan Of home buyers use the 33% of home buyers (aged 22-30) report understanding the 97% internet to search for homes pr
Slide 15: Select Real Estate Agent and Broker Pain Points
Select Real Estate Agent and Broker Pain Points: Challenged by overwhelming choices with fragmented solutions and antiquated technology But real estate agents are still Tech solutions are overwhelming demanding them Top 3 technologies real estate agents #1 Problem facing real estate industry is keep
Slide 16: Select Lender Pain Points
Select Lender Pain Points: Majority of mortgage … and needs to develop industry has not improved loan costs or time to personalized relationships close … Direct production costs ($/loan) to ensure leads +57% $7,780 $6,522 $6,812 $7,016 Loan production costs have Local, personalized relationships inc
Slide 17: Introducing homegenius
Introducing 17 © 2021 Radian Group Inc. All rights reserved. This material is confidential and may not be copied, used, or distributed without the written permission of Radian Group Inc. (NYSE: RDN)
Slide 18: Innovation you can trust for smarter real estate solutions
Integrated and personalized solutions that empower lenders, real estate agents and brokers, innovation you consumers, and investors can trust for smarter real estate solutions Powered by big data and AI to provide enhanced intelligence, transparency, speed, and simplicity 18 © 2021 Radian Group Inc.
Slide 19: What is homegenius
What is We plan to connect key market participants from our existing search to close with products/services intelligence, transparency, Building upon our existing title, speed & simplicity valuation, and asset management services Improving the homebuying emerging breakthrough and selling experience
Slide 20: Significant addressable market ecosystem
Significant addressable market ecosystem 1.4M 600k $2B Software as a Agents Loan Officers $19B Service (SaaS)1 Title2 $6B $18.3B Valuation Real Estate business6 Tech Spend 3 $0.5B $88B Asset mgmt. Brokerage services5 6.5M 100k commissions4 Home Sales Brokerages 1. SaaS based on # of real estate agen
Slide 21: A trusted partner with a proven track record of serving customers
A trusted partner with a proven track record of serving the needs of our customers Today’s products and services (2020 metrics)… …Today’s customers are served on a national basis 200k+ broker price opinions (BPOs) 380+ total customers: Valuation 500k+ of automated valuations Many of the top U.S mo
Slide 22: homegenius is well positioned for growth
homegenius is well positioned for growth Established Property Groundbreaking Team and Radian network Intelligence technology culture Sponsorship Backed by Enabling smarter Delivering high Guided by a highly Trusted industry strong market decisions through value digital experienced team partner with
Slide 23: Established enterprise distribution network positioned for market expansion
Established enterprise distribution network positioned for market expansion and rollout of new products and services homegenius will be a digitally connected, full service, and integrated residential Real Estate Agents +275k real estate real estate network … leveraging the agents in network today ex
Slide 24: As a leader in asset management services, we qualify leads for agents
As a leader in asset management services, we qualify leads and provide revenue opportunities for real estate agents across our network What we do How it benefits real estate agents Real Estate We are the longest standing REO asset 25k closings/year Leads manager, providing support after a generating
Slide 25: Our property intelligence platform is unique
Our property intelligence platform is unique Real Estate transaction data … +152M Properties Real Estate property data … Red Bell’s real estate property +130M Property records data is updated when its 2.4B Photographs/images connected MLSs across the 558K Neighborhoods nation refresh their data, as
Slide 26: Computer vision enriches our property intelligence platform
Computer vision enriches our property intelligence platform Leveraging for the following use Data includes … cases to solve for pain points … Total predictions (B) Use room condition and select Room type 33.1 Property objects to enhance “comparable” 2.4 Historic Room condition 8.8 valuation property
Slide 27: homegenius is delivering groundbreaking technology solutions
homegenius is delivering groundbreaking technology solutions Capabilities Powered by TODAY: Artificial Machine Digital title and closing Blockchain Intelligence (AI) Learning (ML) Direct to consumer title platform Centralized title lender refinance solution Robotic Optical Process Character Computer
Slide 28: Our homegenius team is highly experienced
Our homegenius team is highly experienced Experience in: Guided by a core set of enterprise values Deliver the Brand Promise Mortgage lending Single family rental (SFR) We are a customer-centric enterprise striving to be the market leading brand as defined by our customers Mortgage servicing Data, A
Slide 29: homegenius go-to-market strategy is backed by a unique existing network
homegenius go-to-market strategy is backed by a unique existing network which we expect will lower customer acquisition costs (cac) Network is ready for new products and services Omnichannel digital go-to-market strategy including self service Growing network of +275k real estate agents and +1,300 l
Slide 30: Radian is a trusted industry partner
Radian is a trusted industry partner Radian is… ✓ A trusted partner with industry Significant capital resources relationships spanning 6 decades ✓ Relied upon by 1,300+ financial institutions Shared services to efficiently scale ✓ A digital-first company strategically leveraging technology informed
Slide 31: Product overviews
Product overviews 31 © 2021 Radian Group Inc. All rights reserved. This material is confidential and may not be copied, used, or distributed without the written permission of Radian Group Inc. (NYSE: RDN)
Slide 32: homegenius products and services drive digital transformation of legacy models
homegenius products and services are focused on driving a digital transformation of legacy real estate business models Real Estate Real Estate and Property Transaction Mortgage Closing Intelligence Property Search Management Real Estate Leads Multi-channel Leveraging Enables users to be Creating a s
Slide 33: homegenius has an integrated suite of existing products
homegenius has an integrated suite of existing products For real estate For lenders For investors1 For consumers agents Award-winning investor platform to automate and organize every step of the asset management process to help execute their investment strategy We are the longest standing REO asset
Slide 34: homegenius has an integrated suite of emerging products
homegenius has an integrated suite of emerging products Expected Launch For real estate For lenders For investors1 For consumers Date agents SaaS platform for lenders to enable them to provide their customers with a qualified network of Recently Launched real estate agents and retain the mortgage op
Slide 35: Brokerage referral program empowering prospective home buyers
I A brokerage referral program empowering prospective home buyers through a network of experienced real estate agents and innovative technology solutions Traditional Manual Seamless Consumers have to reach out to real estate Concierge service matches leads to qualified agents real estate agents base
Slide 36: Property intelligence platform leveraging computer vision technology
I Property intelligence platform leveraging computer vision technology Traditional Static Personalized experience Search experience is based on set criteria New, customized experience to search for (e.g., square feet) homes based on consumer preferences Manual Efficient Real estate agents manually p
Slide 37: Smart Real Estate Workflow System
I Smart Real Estate Workflow System Traditional Disparate offerings One click technology Real estate agents refer consumers to those Real estate agents can digitally link they have relationships with (e.g., for title) consumers to other homegenius offerings (e.g., titlegenius) Multiple products Inte
Slide 38: Patent pending direct to consumer title solution on blockchain
I Patent pending direct to consumer title solution on blockchain Solution part of broader multi-channel digital strategy fully encompassing title underwriting and settlement services Traditional Expensive Competitively priced Costs on average $1,300-$2,7001 (state Consumers can save on average depen
Slide 39: Lender refinance solution
I Lender refinance solution Solution part of broader multi-channel digital strategy fully encompassing title underwriting and settlement services Traditional Expensive Competitively priced Costs on average $1,200-$1,6001 (state As an underwriter, we control product and dependent) price driving savin
Slide 40: Addressing the pain points across the real estate ecosystem
homegenius is strategically focused on addressing the pain points across the real estate ecosystem Our solution… Pain points… Reduce costs to consumers by eliminating title agent commissions, exercising control over product and price and leveraging technology Cost of closing Leverage decisioning t
Slide 41: Emerging as a full-service solution for stakeholders
Emerging as a full-service solution for stakeholders to engage with at any point Search Selection Closing Ownership Real estate network/ Closing REO/SFR SaaS/ Company archetype Exemplars Home listings brokerage RE valuation Title services services Tech platform Full-service solution for its real est
Slide 42: A trusted partner empowering participants in the residential real estate ecosystem
OWNERSHIP Kai recommends titlegenius to Reagan for an easy and transparent title process. Plus, Kai can conveniently see all his title orders in one place Reagan receives competitive title pricing and as a geniusbuyer customer gets cash back post-closing Reagan moves in! A trusted partner SELECTION
Slide 43: Products and services will amplify value of network
Products and services will amplify value of network by driving long- term relationships BPOs & REOs Annually we generate Provides qualified leads Brokers/real estate Brokers/agents will Real estate agents will significant revenue to real estate agents for agents will subscribe to subscribe to save t
Slide 44: Financial Projections
Financial Projections 44 © 2021 Radian Group Inc. All rights reserved. This material is confidential and may not be copied, used, or distributed without the written permission of Radian Group Inc. (NYSE: RDN)
Slide 45: homegenius clear path to profitability
homegenius starts from a place of strength with a clear path to profitability through increased market penetration, product expansion, technology-driven efficiency, and scale Historical Projected 2020 2021 2022 2025 Revenue $102M ~$150M $225 - $275M $650M - $1B Adjusted Gross Profit1, 2 $39M ~$58M $
Slide 46: Revenue mix and margin expansion
Margin expansion is driven by both increasing scale within our existing title business and growth across high-margin SaaS products Historical Projected 2020 2021 2022 2025 Revenue mix Title 45% 50% - 55% 50% - 55% 50% - 55% SaaS1 8% 5% - 10% 15% - 20% 30% - 35% SFR/REO/Other 47% 35% - 40% 35% - 40%
Slide 47: titlegenius unit economics
titlegenius unit economics titlegenius Illustration Projected titlegenius closed orders Intended to illustrate the relationships of the cost components to a unit of revenue vs actual price per unit ~330k Today Future 2021 2025 Revenue $1,000 Product Mix $1,233 Direct Non-Labor1 (375) Scale (392)
Slide 48: SaaS unit economics
SaaS unit economics SaaS1 Illustration Projected SaaS users Intended to illustrate the relationships of the cost components to a unit of revenue vs actual price per unit ~220k Today Future 2021 2025 Revenue $1,000 Mix $1,261 Platform costs (1,620) Scale (530) Adjusted Pre-tax (620) 731 Operating
Slide 49: Customer lifetime value
Customer lifetime value Estimated Lifetime Value of Customer with Multiple Products Illustration1 ~$10k ~$1k 1 Product 2 Products 3 Products Multiple product adoption drives lifetime value 49 1. Does not include BPOs or REOs © 2021 Radian Group Inc. All rights reserved. This material is confidential
Slide 50: Enterprise value-to-revenue multiple
Companies addressing the needs of the industry are being rewarded with higher valuations compared to traditional players Market Comparable Universe Enterprise value-to-revenue multiple1 Data / tech-driven Brokerage / services focused 18.7x 11.3x 8.0x 7.4x2 6.9x 4.6x 3.2x 3.0x 2.6x 2.4x2 1.5x 0.9x So
Slide 51: In summary, homegenius is
In summary, homegenius is… An integrated suite of digital products and services serving real estate agents, lenders, investors and consumers from search to close during the homebuying and selling process Competitively advantaged through vast property data, proprietary real estate analytics, grou
Slide 52: Q&A
Q&A 52 © 2021 Radian Group Inc. All rights reserved. This material is confidential and may not be copied, used, or distributed without the written permission of Radian Group Inc. (NYSE: RDN)
Slide 53: homegenius by Radian
**homegenius by Radian
Slide 54: Glossary of terms
Glossary of terms AI Artificial intelligence BPO Broker price opinion Computer vision Field of artificial intelligence that trains computers to interpret and understand the visual world CRM Customer relationship management E2E End-to-end GAAP GAAP Generally accepted accounting principles in the U.S.
Slide 55: Glossary of terms
Glossary of terms Radian’s “Network” of agents, comprised of real estate agents and brokers (most all of whom are unaffiliated with Radian or Real estate network its Red Bell subsidiary) who have accessed or otherwise utilized Radian’s real estate offerings in performing services for Radian or third
Slide 56: Non-GAAP Financial Reconciliation
Non-GAAP Financial Reconciliation Projected $ in millions 2020A 20 A 2021F 21 F 2022F 22 F 2025F 25 F Adjusted Pre-tax Operating Income ($23) ~($19) $15 - $25 $180 - $280 (Loss)1,2 Less impact of reconciling income (expense) items: Allocation of corporate operating expenses $13 ~$16 ~$15 ~$20 Adjust