Question · Q3 2025
Jeffrey Dunn asked for clarification on the expectation of low-teens margins in the Real Estate Solutions (RES) segment once customer relationships mature, and whether this margin target is tied to a specific critical revenue level.
Answer
CEO Fred Eppinger clarified that low-teens margins represent the normal rate for the RES segment, following a recovery from a temporary hiccup caused by data player rate increases. He noted that in a more normalized housing market with 5 million existing home sales, margins could reach mid-teens (14-15%) due to volume leverage. CFO David Hisey added that the segment's margins had bottomed at around 7% in Q4 of the previous year and have been steadily climbing back to the low-teens range. Dunn also inquired about the sensitivity of Net Investment Income (NII) to Fed rate cuts. Hisey explained that NII sensitivity is not a direct 25 basis point correlation due to negotiated rates, and future trends will depend on the interplay between rate cuts and balance growth from increased transaction volumes.