The CEO of legal software company Dye & Durham Ltd. offered a strong defence of his company’s recent controversial price hikes, arguing it has the best product on the market and the expense represents only a small portion of a home’s closing costs.
The company has announced big price increases in 2022 for one of its main products, the software lawyers use to handle real estate transactions such as home purchases, refinancings and intergenerational transfers. Those fees are passed on to home buyers as a closing cost.
Late last month, a Toronto litigation firm launched a $200-million class-action lawsuit against D&D for allegedly violating federal competition laws by reneging on a promise last year to freeze prices for three years.
“We believe our platform is by far the most advanced real estate financing software in the world,” chief executive officer Matthew Proud said Tuesday evening on an investor conference call. “We also believe customers should pay a fair price for a best-in-class product that significantly enhances their practice and also drives real financial values for their business as well.”
Dye & Durham accused in class-action lawsuit of misleading customers on price freeze
D&D clients in Ontario learned last month that their Unity software would rise to $199 to $249 per transaction, amounting to as much as a 900-per-cent increase in just over one year. The per-transaction price was $25 in 2020, but was increased to $129 after D&D acquired DoProcess LP, Canada’s largest provider of real estate practice-management software, from Teranet Inc. in late 2020 for $530-million.
In November, D&D told roughly 1,000 B.C. law firms that it was increasing the price to $199 a file, up from the $30 to $75 they’d been paying since the last increase in 2017. That translates to hikes of 165 per cent to 563 per cent.
Mr. Proud said the increased prices “support the significant product enhancement and product investments we’ve made in the platform during the past year.”
“We deliver a highly efficient means for our customers to execute transactions, and the fee we charge is a relatively small portion of the total closing costs in a real estate transaction to ensure an efficient and secure housing transaction – which is likely the most important transaction in most Canadians’ lives.”
Mr. Proud made his comments as part of the company’s release of earnings for the quarter ended Dec. 31. Sales were $109.6-million, an increase of 225 per cent from the prior year. The company credited already completed acquisitions for the jump. The average analyst expectation for sales was $113.3-million, according to Refinitiv.
The company reported a net loss of $3.98-million, narrowed significantly from a loss of $21.52-million in the prior-year quarter.
D&D is highly acquisitive, having made more than a dozen deals since it went public on the Toronto Stock Exchange in July, 2019.
Last year, it bought Telus Communications Inc.’s payment solutions unit for $500-million. It then announced in December its biggest deal to date: a $3.2-billion offer for Link Administration Holdings Ltd., a financial data and analytics firm with operations in Australia and Britain. Adding Link would expand Dye & Durham’s global reach, with 55 per cent of company sales coming from Australia and New Zealand.
It would also broaden the company’s offerings beyond real estate and legal software into two new areas: providing financial data products to pension and superannuation funds and millions of their members in Australia, New Zealand and Britain; and cloud-based software for corporate issuers, including shareholder management and analytics.
Tuesday, Mr. Proud said the Telus and Link deals were helping D&D achieve its “Build to a Billion” growth strategy. The company reported adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, of $62.6-million, up 267 per cent from the prior-year period.
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