Stewart Information Servs (NYSE:STC) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.

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View the webcast at https://event.on24.com/wcc/r/5420688/06F5E1659B64FC1776EA10009ACD7BA4

Summary

Stewart Information Servs reported a strong financial performance with a 26% year-to-date revenue growth and a 45% increase in adjusted pre-tax income, despite the housing market's low activity.

Strategic investments were made in personnel across various business units to drive organic growth, totaling approximately $8 million in the title segment, with anticipated impacts over the next two to four quarters.

The company saw significant growth in its National Commercial Services with a 20% increase in domestic commercial premiums and a 25% revenue growth in Agency Services, focusing on expanding talent and market share.

Real Estate Solutions business grew revenues by 75%, benefiting from previous acquisitions, while international operations saw modest growth in non-commercial and commercial revenues.

Stewart Information Servs maintains a solid financial position with ample cash reserves, and plans to deploy excess capital for acquisitions in the next 60 to 120 days, aiming to enhance earnings power.

Management remains optimistic about sustaining revenue and earnings growth, expecting a 20% revenue and 30% earnings growth for the full year, despite a challenging real estate market.

Full Transcript

OPERATOR

Hello and thank you for joining the Stewart Information Servs second quarter 2026 earnings call. At this time all participants are in a listen-only mode. Later you will have an opportunity to ask a question during the question-and-answer session. Instructions will be given at that time. Please note today's call is being recorded. Lastly, if you should require operator assistance, please press star zero. It is now my pleasure to turn today's conference over to Kat Bass, Director of Investor Relations.

Please go ahead.

Kat Bass, Director of Investor Relations

Thank you for joining us today for Stewart Information Servs second quarter 2026 earnings conference call. We will be discussing results that were released yesterday after the close. Joining me today are CEO Fred Eppinger and CFO David Hisy. To listen online, please go to the stewart.com website to access the link for this conference call. This conference call may contain forward-looking statements that involve a number of risks and uncertainties.

Please refer to the company's press release and other filings with the SEC for a discussion of the risks and uncertainties that could cause our actual results to differ materially. During our call we will discuss some non-GAAP measures. For reconciliation of these non-GAAP measures, please refer to the appendix in today's earnings release which is available on our website at stewart.com. Let me now turn the call over to Fred.

Frederick Eppinger, Chief Executive Officer

Thank you for joining us today for Stewart's second quarter 2026 earnings conference call. Yesterday we released the financial results for the second quarter. I will kick off today's call with an overview of our performance followed by our outlook on the housing market. I will then cover our results and strategic direction by business. After my remarks, I'll then turn over to David for additional commentary on the results. I am very pleased with the second quarter results.

We sustained our growth momentum in each of our business lines and strengthened our future earnings outlook by significantly investing in some additional business opportunities. Our results for the first half of the year reflect the efforts we have made to grow the company and improve earnings. Our year-to-date results demonstrated our success at growing both top and bottom lines. Year to date we have grown revenues by 26% and grew adjusted pre-tax income by 45%, all while the housing market remains at multi-decade lows.

Our momentum continued in the second quarter as we saw very strong revenue growth of over 24%. Earnings growth for the quarter was 13%, with slower growth driven by a decision to make some significant additional investments in individuals and teams to boost our organic growth initiatives. In three of our title businesses in the quarter, we made additional investments in individuals and teams of around $8 million to capture these targeted business opportunities.

I'm excited about these opportunities and believe we should see the full impact of these hires over the next two to four quarters. Even with those investments, I believe we can deliver earnings growth that will outpace revenue growth over the second half and for the full year for the overall company. I am very encouraged by our strong momentum in 2026 when considering current housing market conditions. Growth in existing home sales has been very modest again year over year, up 2% for 1H26, but still hovering around the 4 million annual units, continuing the multi-year slump.

At the onset of 2026, we expected existing home sales to improve around 6% to 8%. However, given the position of interest rates as a result of the macro and geographical conditions, we now anticipate a much softer improvement, with growth more likely topping around 2% when compared to last year, keeping us solidly in the low 4 million existing home sales range. Amid some positive existing home sales momentum, the annualized numbers remain in that 4.0 to 4.1 million range.

Home prices continue to hold and slightly increase around 1.5% for the quarter, even as we see more inventory coming into place, reflecting the demand still built into the system. The share of owners with under 3% rates continues to slowly shrink, coming in at about 19.5% from the high of 25% of outstanding mortgages several years ago. This implies that life events are slowly inciting some buyers into the marketplace. Interest rates remain a critical factor for potential home buyers.

Consider the turbulence when they enter the market, and in the first quarter we felt the positive effects of rates moving down towards the 6% range and felt a dynamic shift as they moved back up around six and a half, which is where we were hovering throughout the second quarter. Turning to our business results, our National Commercial Services business continued to deliver strong growth in the quarter. Total domestic commercial premiums grew 20% year over year and are up 30% for the first half of the year when compared to 2025.

Energy continues to be our largest asset class, followed by strength in some of our larger asset classes such as data centers, multifamily, and industrial properties. We are proud of how we have built this business over the last two to three years and are laser focused on the continued expansion in this space. The acquisition of industry-leading talent is a critical activity for us to continue to grow our footprint, and we continue to seek opportunities to expand our talent base.

In the second quarter, we made some significant investments in hiring additional teams to address some regional and sector opportunities, spending an additional $3 to $4 million this quarter to do so. We believe in these personnel investments and anticipate we will feel the full impact of these hires over the next two to three quarters as they settle into their seat and begin to convert business. Our Direct Operations business unit grew consolidated residential, refinance, and Main Street commercial revenues by 7% in the second quarter compared to the same timeframe last year.

Residential transactions grew 3% in the quarter, slightly better than the growth in existing home sales for the quarter. Main Street commercial delivered solid growth with revenue up more than 20% due to both transaction volumes and size. We remain focused on strengthening our position in attractive MSAs through organic and inorganic efforts and have begun to see more opportunities become available in our target geographies. In the second quarter we invested approximately $2 million in incremental organic opportunities to acquire individuals and teams in support of our growth strategy in Direct Operations.

Our centralized title operations, which include centralized refinance and our bulk business, confronted some tough comparables when compared to second quarter last year, as our bulk businesses particularly can be very bumpy. These headwinds impacted our overall non-commercial direct business and drove results down about 1% when compared to 2Q25. Our Agency Services business delivered 25% revenue growth for the second quarter in a row, which we are especially pleased with given our agents confront the same headwinds as our direct operations offices.

We are focused on growing this business through winning the business of new agents and expanding wallet share of existing agents, with the emphasis on 15 target states. We are also committed to expanding our commercial footprint in agencies, and we continue to make good progress on both these priorities, with residential premiums up 30% and commercial premiums up 16% in the second quarter when compared to the same timeframe last year. In the second quarter we were also proactive in making additional investments in talent to take advantage of some disruptions we saw in a handful of our target markets.

We invested another $2 to $3 million in additional customer-facing talent, which should enable us to build significant share in these target states. Our Real Estate Solutions business grew revenues by 75% and adjusted pre-tax margins by 24% in the second quarter compared to last year, ending the quarter with a 13.6% margin. The year-over-year comparables in this segment benefit from the acquisition of MCS, our property preservation business, as well as our acquisition of NAN, our national appraisal network.

When removing those contributions to our revenue, our legacy RES business grew roughly 18%. We remain focused on continuing to expand our coverage and servicing of the top 300 lenders, and our suite of products and services is in good position and has given us even better ability to cross-sell and win business. Moving to our international operations, we are focused on profitably growing across our footprint of Canada, Australia, and the UK. In the second quarter we grew non-commercial revenue by 4% and commercial revenue by 7.

In challenged housing markets, we believe we can build on our strong position in these markets and continue to grow, continuing to grow profitable share. On the topic of inorganic growth initiatives, in 2026 we have seen a meaningful pickup in attractive opportunities in our acquisition pipeline. In late 2025 we conducted a capital raise to put ourselves in a position in 2026 to strengthen our competitive position and increase our earnings power.

The vast majority of that capital has yet to be deployed. However, we are currently working on transactions that we anticipate will close in the next 60 to 120 days and will be funded by the proceeds from our excess capital. Our significant growth in Real Estate Solutions and commercial activity throughout the business lines has resulted in an increase in our operating expense ratios. In Real Estate Solutions, our other operating expenses are the largest expense category and are a higher percent of our mix due to the mix of outside services, cost of data, and our appraisal and property preservation contract workforce.

Similarly, the commercial transactions often come with higher operating expenses given the cost of data and search fees. Throughout our journey we have prioritized thoughtful investment in ourselves and our talent to position Stewart well in the marketplace. We have some of the best leaders and employees in the industry, and we continue to add to our roster with a relentless focus on adding personnel that will help us grow the company for the future.

We believe strongly in these investments. These investments are necessary to propel the company to the next phase, and we are continuing to see real momentum for ourselves in the marketplace. We have increased our staffing in all our segments in line with our organic growth initiatives and have grown our headcount via acquisition, which has resulted in an increase of our employee costs of about 17% year to date. Even with this increased investment, year to date, we have grown revenues by 26% and adjusted pre-tax income by 45%.

We continue to anticipate earnings growth in excess of revenue growth for the full year, but could see the ratio of revenue to earnings come in in the second half without the benefit of improved market conditions. Given our increased investment in the title segment, we continue to prioritize shaping the company for 12% adjusted margins when we get back to a 5 million-unit existing homes market and are focused on improving margins as we grow in a challenged market.

Thank you for all your time, attention, and interest in Stewart Information Servs as an enterprise. We are dedicated to being the premier title service company. We are focused on strengthening the company for lasting success through targeted multi-pronged growth plans by business to further fortify our position to our customers and agent partners. Thank you for your trust and dedication to Stewart. We are committed to serving you with excellence and to our Stewart team, thank you for your dedication and focus on growing this company.

Together. We have made great progress and I look forward to seeing what we can do together. David, I will now turn it over to you to provide an update on our results.

David Hisey, Chief Financial Officer

Good morning everyone and thank you, Fred. Thank you to our employees and customers for their continued support and partnership as we navigate a residential real estate market that remains challenging. Yesterday, Stewart Information Servs reported solid second quarter results with both revenue and profitability growth. Second quarter total revenues increased $177 million, or 25%, while net income improved $5 million, or 17%. Diluted EPS was $1.21 compared to $1.13. On an adjusted basis, net income was $43 million, or diluted earnings per share of $1.39, compared to $38 million and $1.34.

Appendix A of our press release shows adjustments to our consolidated and segment results, primarily related to net realized and unrealized gains, acquired intangible amortization, and acquisition integration expenses. In our Title segment, operating revenues increased $91 million, or 15%, driven by strong performance from our agency and domestic commercial business. Title operating expenses increased 17%, primarily due to expenses related to revenue growth and higher employee costs, as Fred noted, resulting from our continued investment in talent.

As a result, Title pre-tax income was comparable to last year. On our direct Title business, direct Title revenues increased $15 million, or 5%, primarily driven by higher commercial and refinancing transactions, while purchase orders were comparable to last year. Domestic commercial revenues grew $15 million, or 20%, driven by higher transaction volume across energy and other asset classes with continued data center benefit. Our average domestic commercial fee per file was comparable to last year at $16,900.

Average domestic residential fee per file increased 10% to $3,200, primarily due to a higher weighting of purchase transactions. Total international revenues increased 5%, primarily driven by higher transaction volumes. On our agency operations, gross agency revenues increased 25% to $377 million from $301 million last year, driven by improved residential and commercial activity across our key agency states. After agent retention, net agency revenues increased $13 million, or 26%, compared to last year.

On Title losses, the Title loss ratio improved to 3.2% in the second quarter compared to 3.6%, primarily due to continued overall favorable claims experience. We expect our Title losses for the year to average from the mid-3% to 4% range. On our Real Estate Solutions segment, total revenues increased 75% to $85 million, primarily driven by a recently acquired MCS business and growth in our credit information and valuation services business. Real Estate Solutions adjusted pre-tax income more than doubled to $27 million from $12 million, while adjusted pre-tax margin improved to 14% from 11%.

On our consolidated expenses, our employee cost ratio improved to 27% compared to 30%, primarily due to revenue growth. Our other operating expense ratio increased to 27% from 25%, primarily due to higher costs associated with increased revenues in the Real Estate Solutions segment. Due to our Real Estate Solutions segment growth, we expect our other operating expense ratio to be in the 27% to 28% range going forward. Our financial position remains strong and well positioned to support our customers, employees, and the real estate market.

Total cash and investments were approximately $400 million in excess of statutory premium reserve requirements. Total Stewart Information Servs stockholders’ equity at June 30 was approximately $1.66 billion, representing a book value of approximately $55 per share. Net cash provided by operations increased to $60 million from $53 million, primarily driven by higher net income. Again, thank you to our customers and employees for their continued support.

We remain confident in our ability to serve the real estate markets. I will now turn the call over to the operator for questions.

OPERATOR

Thank you. If you'd like to ask a question, press Star one on your keypad. To leave the queue at any time, press Star two. Once again, that is Star one to ask a question. And we'll take our first question from Bose George with KBW. Your line is open.

Bose George, Analyst at KBW

Morning. Good morning. Hey guys. Good morning. Actually, first just on expenses. So you guys noted a few factors that drove the expenses higher. But just stepping back and looking at it more broadly, can you just talk about the annualized margin outlook, especially if you remain in this higher-for-longer, you know, with mortgage rates at like six and a half percent.

Frederick Eppinger, Chief Executive Officer

Thanks, Bo. So I think if I look at the whole year, right? I've told you, I've given some guidance in the whole year how to think about the changes. If we stay flat, which I think we will — I don't think we'll see any growth in the res market for the rest of the year — I believe that we'll grow revenue probably 20% and earnings 30%. That's kind of the range. I think there were some comparisons in the back half of the year — we had such extraordinary growth in commercial — that'll tighten some things, I think.

So the improvement in margin I see is about a half a point for the company year over year. Might be four-tenths, might be six-tenths. Again, it has something to do with the comparisons because we had such outsized growth in commercial last year, particularly the fourth quarter, but it's that kind of improvement. So I'm right on track. It's right where I wanted us to be. We outperformed a little bit in the first half of the year, which was great, and we've reinvested a bunch of that because I want to sustain it.

Think about — one of the things to think about — our commercial business at the end of 2023 was $208 million. Our last four quarters is $450 [million]. We've doubled that business, and so it's important for us — that's a people-driven business — and we really need to make sure we're covering sectors and geographies. The other thing you're seeing is a really significant step-up in our agency business. We've had some nice movement and we've seen a couple of markets that is disruption, so we've gone for it.

You know, we're trying to make an investment because we're facing to really kind of shift shares, and you can imagine where they are, where the best markets. But I still think with all that, as I look at our momentum — and even with the earn-out, earn-in, I'm sorry — I think we'll pick up another half a point. So we're right on. I think Title will be tighter; I think it'll be kind of the same as last year. But this overall company will be about a half a point, and I could be better than that depending on how quickly we ramp up some of these opportunities.

Also, by the way, those numbers do not include what I expect in the next 60 to 90 days. We have a number of these acquisitions we're going through due diligence that we've talked about, and obviously that would be additive, likely, to the equation. But I think we're right on track to what we thought.

Bose George, Analyst at KBW

Okay, great, thanks, that's helpful. And actually just on the acquisitions, you know, when we think about the scale, is it, you know, similar to MCS? Is it a lot of small ones? Just any color there would be great.

Frederick Eppinger, Chief Executive Officer

Yeah, sure. So when I talked about it, right — the categories we had talked about — there's a little bit of consolidation I'd like to continue to focus on in some of the res services because it's quite very good incremental margin improvement for us to do that. So we did demand, which was in that category, and there is likely to be another one over the next 12 months. Not necessarily an appraisal, but in the res services. There are also, on the agency side, as I said, a lot more activity.

And so I would see a couple, three in that category, and they could be a combination of res or commercial, depending on the transaction. And so they're in those categories that we've talked about. None of them are huge, so none of them in the MCS-size kind of category. We're at the point now where this is about mcf, msi, you know, local — like local market — trying to change the economics. And we're in kind of the business-by-business, whether it's our data business, our appraisal business, or our property press, to really just build scale in some of those areas.

So they're all active. As I said, I would guess that we'd be able to deploy the full amount of what we raised plus some in the next probably, you know, by the end of the year, is what I would say.

Bose George, Analyst at KBW

Okay, great. Actually just a quick one on commercial. You know, was there any slippage of like large deals? I mean, your fee per file was flat year over year, but obviously down at least over the last couple of quarters.

Frederick Eppinger, Chief Executive Officer

Yeah, it was very bumpy. And we had a comparison — we had a couple really big ones last year. But the mix of us and where we are, when I look at the data center mix or I look at the energy mix, it's similar. But we've had a couple — same in the fourth quarter last year, we had just a tremendous big one in New Mexico. So it's going to be a little bit bumpy. I don't see any momentum shift. The pipeline is good. What I would tell you, though, is just the comparisons are tough. I mean, we grew 30% for six months. We grew 46% or 7% last year. At the same time, we're building on big numbers. If you recall, we grew a lot faster than the rest of the industry early, and so the comparisons — last year was a big year, as I said.

Frankly, starting at the end of '23, we've been cranking, so I'm very, very comfortable with a 30 sitting on top of the 47. But I also would say that's a place — I've said time and time again — we're under-clubbed in geographies, we're under-clubbed in sectors. I've got to keep — we've got to keep — hiring talent in commercial if we want to, you know, keep closing the gap. We've gone from about, I haven't done obviously the numbers this quarter, but we've gone from about nine to — we were about 13 and a half, 14 share.

And so that's a pretty big jump. I'd like to believe if we keep our focus and keep investing in that business, over the next couple of years we could get it to 20. Now there'll be — again, it's bumpy — so our competitors are going to have great quarters too, and they're very, very good competitors. So I look at that business as really about coverage and resource and our team. The other thing I want to do is I don't want to take on so much so fast that we can't digest it.

So it's kind of balancing that. But I think our team has done an excellent job doing that, and I continue to see good, strong pipeline and potential.

Bose George, Analyst at KBW

Okay, great. Thanks for the color.

OPERATOR

We'll move next to Oscar Nieves with Stephens Inc. Your line is open.

Frederick Eppinger, Chief Executive Officer

Hey Oscar.

Oscar Nieves, Analyst at Stephens Inc.

Hey Fred. Good morning. My first one is on the Title segment. When you look at the revenue trends in Title, agency continues to outgrow direct. So is that still consistent with the sharking story in your target MSA, or are you starting to see competitive or mix pressure show up in the amounts retained by agents? Because if we look at the ratio this quarter, it came in, yes, a little bit higher than the prior quarters. So just wanted to see.

Frederick Eppinger, Chief Executive Officer

So it's a good observation the way I'm thinking about it and our direct operations. We've now been, what, four years in a flat market on res, which is a vast majority of what's in our direct operation. We're trying to expand the what I call Main Street commercials. They've done a pretty good job. They've run at 15%. But I would argue our direct operations is probably underpenetrated in commercial still. So if you look at, I think we grew three and a half, something like that, in res.

So we're holding our own and our growth in Direct has mostly been on the commercial side. That gets us to that seven and so we've done a pretty good job. But we haven't share-shifted as much on the res side on direct ops. Now two things are changing. One, we're getting good commercial traction. But the thing I mentioned in my call, we're starting to see disruption. We're starting to hire and take teams organically. And so we spent another couple million dollars this quarter at that.

And I can see the shift. The other thing that's happening in direct is the inorganic opportunities that I keep talking about by MSA are emerging. We just announced one, a great brand in Texas, in Fort Worth–Dallas, where we were weak. And I'm really excited about this great brand, great company, not huge. But those kind of opportunities are starting and, as I said, in our pipeline we have another three or four of those. So we'll start seeing kind of that MSA-grade growth shift a little bit with res.

Now I don't see the market helping us, right. Because I was hoping this year that I'd see 6, 8, 9, kind of a little bit of res growth which would really shift for us. That's also our big margin lever because we have excess capacity in our direct operations. But to your point, compared to agency, the team has done an amazing job, right. In a 1 or 2 or 3% growth res, we grew 30%. I mean, what we're seeing is shifting share at a lot of significant agents and some really attractive markets.

Do I think that's going to come down a little bit? Sure. I think we're probably in the—that business will probably grow in the teens. The other thing they've done a really good job is on the commercial side in agency, but we are shifting share nicely on the agency side. I don't see the dynamic within the agency changing anything. I just think we're kind of shifting our share. But I would tell you again, inorganic activity, you know, there's a lot more discussions right now.

Even though the market's flat, I think it's because commercial's a little better, people's outlook is a little bit better and so they've made a little bit more money. And so we can come to an agreement on a price that's fair for both, but that is actually starting. But it's a great observation because for me, the direct operation swings. If commercial's outsized, it changes the dynamics. If we can get a little bit more res growth in direct, it would change the dynamics.

So those are the things that are moving it around. But I'm really pleased with the progress everywhere. I just, I think that direct is emerging because we're seeing this activity. That team's done an amazingly good job on expense management, data management. And so we've been able to hold or increase our margins over the last three years because of good hard work they've done, even though there's been no growth. So I think we're pretty good in both.

Oscar Nieves, Analyst at Stephens Inc.

That's super helpful. I want to double click on a couple of the things that you just mentioned. One is on commercial activity, which obviously has remained very strong. And one of your peers that reported yesterday mentioned on their press release that they are on track for a record year in commercial. So on that, can you give us your outlook for commercial revenue for the rest of the year and into ’27? And also, if you can share the underlying drivers: what are you seeing right now in terms of fee per file versus order counts?

Frederick Eppinger, Chief Executive Officer

Yeah, they're solid. So again, my whole thing is just the comparisons for me, because we had a bunch of quarters, as you know, in the last two years, we grew 50%, 47%, 50%. And that's a hard comparison. But we had a nice pipeline. We grew 30% the first six months this year. I don't, you know, I believe we continue to grow. I'm a little bit suspicious about the fourth quarter because we had such a big year in the fourth quarter last year. But to your point, we've had two record years in a row.

Like, and with this last four quarters, doubled the business. So we see the same thing. The market is attractive, we hit our stride and our skill set got better at the right time. We were fortunate. They call us lucky. So we've been seeing this for the last couple of years, but we don't see, again, it's bumpy for us because we're smaller. So, you know, if you have one of these mega deals like we had in New Mexico, we had another one in Louisiana, I think it affects us a little bit.

But I don't, you know, I like the breadth of our pipeline. I like what's happening. I would say kind of what we did, you know, could I see the percent growth be a little less because of the comparisons? Yeah, but it's not because the market's not good. It's not because the pipeline. And you can see our order count in our numbers. Now, the one unknown, probably always with commercial, you just have to keep in mind is if there's a disruption in the marketplace and, you know, the financing costs change, sometimes they'll kick it to the next quarter or they'll, you know, accelerate it or something.

So it tends to be—these tend to be longer deals. They tend to be a little bit fickle about kind of timing and closing. But I'd be surprised if this year's not the best year we've ever had after last year being the best year we've ever had. And so we just gotta keep after it. But I do think a little bit of difference with us and some of the, you know, the two big competitors are very big. And for me, I'm building capacity as fast as I can build capacity.

So there's a little bit of a gate for us because I don't want to be stupid, I want to do it well. I want us to be considered excellent. And so there is this staffing that we got to continue to do because we are, you know, we're a lot bigger than we were. But I feel really good about the market. There's nothing about the market that I'm worried about the industry. The early estimates in the market were about a 12% growth in commercial that you see in these forecasts.

Obviously the first half is way, you know, is much bigger than that. And I don't see anything changing the trends. I just, like, I think they're all kind of similar. So we'll see. There's nothing to kind of report to say I'm worried about it.

David Hisey, Chief Financial Officer

And Oscar, that 17,000 fee per file is probably more indicative. As Fred said, we had some really big deals in prior, but the 17 is probably more indicative.

Oscar Nieves, Analyst at Stephens Inc.

Right? Yeah. All right. That was going to be my next one because, yeah, it was a significant step down versus the prior two quarters. And I do have one last one: you recently announced the Radican acquisition and just wondered if you could share some details on the size of the deal.

Frederick Eppinger, Chief Executive Officer

It's what I call a micro deal a little bit because it's basically a small deal, it's not a big deal. The reason we announced it nationally is because their brand is amazing and it's one of the oldest and best-known agents in Texas. It has an amazing commercial position and so we felt it was important to, you know, recognize the family and make the announcement nationally. But it is what I would call—it's a small—again, it fills in Dallas as a way for us to think about that.

And the ones we're doing following are bigger. A little bit bigger. So a little bit different nature. But we're very pleased with it because Fort Worth has been a real—we have a really good position in Dallas, but it's been a hole. And this is about as great as it can be as filling out that city for us.

David Hisey, Chief Financial Officer

And Oscar, if you just think about the industry data, right, most agents are under $10 million in revenue. And so when you have a single-market agent, that's probably the area that they're in.

Oscar Nieves, Analyst at Stephens Inc.

Okay. Yeah, that's a brilliant thing. I'll get back in the queue because I have an infinite list of questions, but I'm going to give other people a chance to speak to you.

Frederick Eppinger, Chief Executive Officer

Thank you.

OPERATOR

And as a reminder for your questions, that is star one. We'll pause for a moment to allow further questions to queue. One moment while we queue. And we'll take a question from Michael Rendos with Stonex. Your line is—

Frederick Eppinger, Chief Executive Officer

Hey, Michael.

Michael Rendos, Analyst at Stonex

Hey, good morning, everybody.

Frederick Eppinger, Chief Executive Officer

Good morning.

Michael Rendos, Analyst at Stonex

Hey, just drilling further into the commercial, can you talk about your win rate and the direction of win rate over the past couple quarters, and how competitive is the market on pricing and which direction is that going?

Frederick Eppinger, Chief Executive Officer

Yeah, again, so we don't—typically you have a lead player in those deals and you achieve those. It's not really a competitive—on a particular deal they typically get referred. And as you get better at certain categories, you tend to lead more. And then what ends up happening in some of the big deals is you share the deals given the scale and the size and the need for the surplus. As far as the price sensitivity, there really isn't a lot of price sensitivity.

There are some segments of the market where there'd be joint venture businesses between the generators of the business and the underwriters. So there's some kind of sharing, if you will, of those deals that occur in pockets—say in a New York City is one place you might have that—but we don't see that business being overly competitive. It has a lot to do with kind of your skill set, particularly on some of the rural land stuff. And we tend to be very good at places like energy because it's a lot of rural stuff and it's in New Mexico or Indian reservations, whatever. So they tend to skew towards the people with skill.

And again, for all of us, I would guess—I don't know—but it's a higher-margin business for everybody. You know, for us it used to be subscale, so it wasn't. But we're now in the same category with all the others. Because the other thing that comes with commercial is float, right? So you have the escrow and the float and the investment income as well. So again, that tends to be a little bit higher-margin business. It tends to be a very stable market.

I would tell you right now the issue is we're skewing to larger accounts just because of the nature of what's happening with data centers, energy development, etc. And in those you're seeing more shared accounts, right? They're just big, so you have to have more shared. And so there's a lead and then there's following. And so we're doing a lot more leading than we've had historically because we're bigger, but there's a lot more shared transactions because of the nature of the business and the size of the business.

So, again, I like the business, it's very attractive and again I feel like for us it's really important to be a bigger presence in commercial—and I mean in all our sectors. So more in our direct operations. I want more Main Street commercial, I want more international commercial, I want more agency commercial. Because again in that business, you know, the three of us, the oligopoly is even tighter. Obviously Old Republic's got some of it too. But it's because our skill sets are unique and our capital base is strong.

That tends to be a business that's, you know, the vast majority is going to be the three of us and we need to be more present across the spectrum.

Michael Rendos, Analyst at Stonex

Gotcha. Okay, and how long does it take from an order open to an order close in commercial on average? And what's the direction there and what does that tell us, if anything?

Frederick Eppinger, Chief Executive Officer

Not much. It's tough to call. So I tell people like in commercial you could have a two-year deal, right? So again, the complexity, the size, you don't have a lot of 60-day deals, right? These deals are kind of going to be 3/4 or so to a year. But again we've had some of these complicated ones can take multiple quarters. And as I said, the other thing about them is they're very business oriented. So there's a trigger when they do the business. Case if something happens with their carrying costs and stuff, they might kick it forward, they might kick it back, they might want to close the quarter with it.

So they tend to be a little fickle about exactly when they close. But this is why, by the way, our growth, we sometimes have excess expenses as we're a lot of the search fees and stuff like that. What happens is you do a lot of that work and you don't get compensated till those deals close. So there can be a lag in those businesses of a lot of costs and expenses that you have while you're doing the work before they close. Just the nature of the business.

Now over time, that evens out. But for somebody like us, that's been challenging because we're growing, like when you're growing 40%, you know, the revenue you're chasing, all that work you're doing for the revenue that hasn't landed. So we've had to manage ourselves properly to kind of to do that with staffing and stuff like that. But again, it could be all over. That's why I tell people if you look at the ratios of open to closed, right, you can look at refi, you can almost call it, right, 65, 75 days.

Res will take about the same. And so. But commercial, it's all over, right? You can have a rush of orders and then closes get kicked out. That particularly was true for us early days with alternative energy where there was the signing of the bill that incented it. We had all these opens and a lot of those deals took a very long time. And the nature of what the project was changed over time. So that's why it's not an easy, straightforward answer. But they tend to be longer, kind of, I would say the year.

Not a bad way to think about it, but they're all over the map. Yeah, it's a good question and it's something, you know, you all read all about, whether it's Maine or other communities. That said, not in my community, it may have some impact. It's hard to know. We're such above average right now that could we be—have been, could we be more robust than we have? But it's hard to really say. My prediction is that if we need it, they'll work it out. It's like cell towers, right? They'll find places to locate them.

If we need the demand, it'll happen. Matter of fact, in my view, some of the readings about people going on premise and having smaller data centers to kind of control security center, that trend could take off and we could continue. We could see the profile of these data centers. So again, it could, but I don't because it's so robust. And it's more than we've ever historically seen. And we don't see stuff slowing down per se. It's hard to say for me.

And again it's, I look at it and say if the demand's there, they're going to figure out how to address it. And so we're just prepared to kind of respond to the opportunity. Again, I would say as David said, the average size, I think there's some chance that it reduces and you see the mega, mega deals and, you know, the size gets a little bit more distributed. But I don't know that for a fact. I just kind of read what you read, trying to understand all that.

So I feel good about where we are and the trends that we see. Sure. So typically a title thing is somewhere between 4 to 6 EBITDA. Right. If you have higher margin service businesses that can get all the way to 8 EBITDA. We, as we think about them, they're all the IRRs for us where we think about it, 15% plus. And when we price these deals, we tend not to include the underwriting. And so what's really advantageous to us buying agents is our competitors have much higher share in the agency channel. So they, if they buy an agent, they're buying their own underwriting back.

We actually get that for free and shift share in a high margin part of the business. So, so again the economics for us are relatively attractive for these kind of transactions. And the other thing I said when we talked about raising the money in December, I just could see all the activity. I mean the amount activity is significant. There were a lot of people outside the industry in 21 and 22 that were either doing roll-ups in services or they thought they could do roll-ups of agencies, which is not a practical thing with no renewals.

And a lot of those people have all said I'm getting out. Right. And you can see it. And so what's happening now in my view is we started getting to conversations where pricing got realistic. It wasn't high prices that they may have paid. And so I just, you can see all this activity right now. And so what we have to do is be very selective and very thoughtful. But again we have opportunities to enhance our portfolio and improve our margins. And so I could, you know, we could see it.

Now I will tell you that these are taking a little bit, you know, 60 or so days longer to get to close than I thought. So could we have raised the money in March instead of December? Probably I wouldn't have had the overhang, but it's all come through. We're going to deploy the, we're going to deploy the excess capital nicely and I'm very comfortable with kind of what we did and what we're doing now with it. And so. But I do think this, it's not going to stop, by the way.

I just, I mentioned, I just think there's going to be some really interesting properties likely to be on the market in the next 18 months. And again I just, you can see how people are thinking about it and some of these are very attractive. And so we just got to be prepared to assess and understand whether that makes sense for us. But there's some really positive opportunity. The other thing I would tell you is that we're in a phase because of this, the rate long kind of down market.

I do not see a lot of capital from outside of the industry coming in. This is one of those situations. If you're in the business, it's really good. The economics are great. If you're not in the business, I'm not sure it's that attractive. And that's why this is an interesting time in the industry and we'll see how these things play out. Because I just, you know, everybody that put their toe in the water, I can't see any of them putting more money in water.

I might be wrong. Maybe AI changes that into the areas, but I don't see it. And so we should just be paying attention, thoughtful and try to take advantage of some of these. Typically the competitive nature of these transactions is very light. Let me just say that.

OPERATOR

We'll take a follow-up from Bose George with KBW. Your line is open.

Bose George, Analyst at KBW

Hey guys. Yeah, just a quick follow-up. Fred, you'd mentioned the centralized title and some challenges there. Can you just elaborate on that a little bit?

Frederick Eppinger, Chief Executive Officer

Sure. So we, we have a centralized unit, but we have the place. We have our centralized refi, which is a small business for us. We also have our specialty businesses. So we have our reverse business in there and we have our bulk business. Both of those. Yeah, the investor business that, you know, we talked about, we bought that bulk business is very bouncy. And so last second quarter you could see the, like, you just look at the orders. We closed a lot of orders in the second quarter, but it's just.

It's the nature of that business. We'll get big deals, they'll come. And if you look at our open orders, you see that they're way up, you know, for the next quarter. So it's kind of bumpy. It's kind of the nature of that business. You know, I think it's important for us to build the skill of centralized transaction given potential technology-affecting trends and having more centralized purchase. And so we built that. We built it around specialty businesses.

And it's a good business, but it is bumpy. Right. So we probably saw a 20% reduction kind of in that business, which had some, obviously some impact on earnings growth too, in the 2 or 3 million range. But it's the nature of that business. And I see it coming right. Again, you can maybe order, remember in that investor business, that executive order limiting institutional buying, and then also that's included in the Road to Housing Act. So the market's normalizing for all that.

Bose George, Analyst at KBW

Okay, great. That's helpful. Thanks.

OPERATOR

I show no further questions at this time. I would now like to turn the call back to Fred for any additional or closing remarks.

Frederick Eppinger, Chief Executive Officer

I want to thank everybody for their interest. As I said earlier, I'm just thrilled about our momentum as a company. I think we're investing in the right places. I want to thank our folks for their effort because it's been very, very busy. But I'm very encouraged about our progress and we will continue to be very thoughtful, making sure that we're trying to increase our earnings more than our revenue, and we will continue to do that as we march forward.

Thank you very much. Appreciate it.

OPERATOR

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

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