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Four weeks after highlighting a groundbreaking software sale to a major U.S. bank, Real Matters Inc. announced on Monday that the contract was cancelled, news that knocked back the technology company’s share price.

In early May, Real Matters announced that, over the next six months, it expected to roll out mortgage-refinancing software at an unnamed U.S. bank that ranks among the country’s largest real-estate lenders. While this was Real Matters’s first sale to a Tier 1 U.S. bank, the company already sells the system to a number of smaller U.S. lenders.

On Monday, Real Matters said the U.S. bank contract “will not proceed at this time due to circumstances beyond the company’s control.” The company said it is still working with the U.S. lender. Shares in Real Matters dropped 23 per cent following release of the news, closing at $4.15 on the Toronto exchange.

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Markham, Ont.-based Real Matters went public a year ago at $13 a share, in a $157-million offering that ranked as 2017’s largest technology stock debut.

Real Matters writes software used by banks, property appraisers and agents as they buy, sell and finance residential real estate. The company was founded in 2004 by technology entrepreneur Jason Smith and is backed by private-equity funds, including Wellington Financial LP – now an arm of Canadian Imperial Bank of Commerce – Kensington Capital Partners and Whitecap Venture Partners.

The cancelled – or potentially delayed – sale to the U.S. bank is not financially material to Real Matters, a company spokesperson said on Monday, and reflected the bank’s decision to revisit its approach to mortgage lending. The decision to announce the setback was driven by the fact that Real Matters highlighted the deployment earlier this year – Mr. Smith, the CEO, called the U.S. bank a “Goldilocks customer” in a conference call because it was not too big and not too small – and therefore decided it should update investors.

Real Matters still expects to hit its financial targets, and analyst Robert Young at Canaccord Genuity Corp. played down the lost contract with the U.S. bank, as it was only expected to be a “modest contributor” to revenues. Mr. Young maintained his $12 one-year target price on the company’s shares.

The setback with the U.S. bank came in Real Matters’ unit that sells what are known as title and closing services, where the company’s technology ensures documents related to ownership of a property are in order before a lender makes a mortgage loan. Real Matters does business with 60 of the top 100 U.S. mortgage lenders, and 90 per cent of its clients are American companies; the remaining customers are Canadian lenders.

The title and closing services division accounted for US$30-million of Real Matters’ US$140-million in sales for the first six months of the company’s 2018 financial year. Sales from this unit fell 21 per cent compared with the same period a year ago.

The company’s biggest line of business is technology that helps lenders do property appraisals, and sales of this software rose by 5 per cent to US$96-million through the first six months of the year. A number of Tier 1 banks use Real Matters’s appraisal technology.

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