Pineapple Financial Anticipates Growth Surge Amid Bank of Canada's Consecutive Rate Cuts and Rising Housing Completions

Rhea-AI Summary

Pineapple Financial Inc. (NYSE American: PAPL) is poised for significant growth following the Bank of Canada's recent 25-basis-point rate cut to 4.25%. The company's strategic position in the Canadian mortgage market is strengthened by several factors:

1. Increasing housing supply: Over 240,000 housing completions in 2023, with 260,000 more expected by the end of 2024.
2. Mortgage renewals: 1.2 million mortgages (20% of the Canadian market) set to renew in the next 12 months, representing over $440 billion in potential volume.
3. Advanced technology: PineappleONE platform utilizes real-time data analytics for targeted customer engagement.

Pineapple projects an 18-22% year-over-year revenue growth, driven by its ability to capitalize on the renewal market and new mortgage originations. The company's data-driven approach positions it as a key player in the evolving Canadian housing market.

Positive

• Bank of Canada's 25-basis-point rate cut to 4.25% is expected to boost mortgage activity
• Anticipated 18-22% year-over-year revenue growth
• 1.2 million mortgages set to renew in the next 12 months, representing $440 billion in potential volume
• Increasing housing supply with 260,000 units expected to be completed by the end of 2024
• PineappleONE platform uses real-time data analytics for targeted customer engagement

Negative

• None.

Insights

Financial Analyst

Pineapple Financial's strategic positioning amid the Bank of Canada's rate cuts and rising housing completions presents a significant growth opportunity. The projected $440 billion in potential mortgage volume from renewals alone is substantial. With an expected 18-22% year-over-year revenue growth, PAPL stands to benefit from increased mortgage activity.

However, investors should consider the competitive landscape. While Pineapple's PineappleONE platform offers advanced analytics, other fintech mortgage companies may have similar capabilities. The company's ability to convert market opportunities into actual market share gains will be crucial. Additionally, future rate cuts, while beneficial for mortgage demand, could potentially squeeze profit margins in the long term.

Market Research Analyst

The Canadian housing market dynamics present a favorable environment for Pineapple Financial. With over 240,000 housing completions in 2023 and 260,000 expected in 2024, there's a clear upward trend in housing supply. This, coupled with 20% of Canadian mortgages up for renewal, creates a robust pipeline for new business.

However, it's important to note that while lower interest rates typically stimulate mortgage activity, they don't guarantee increased profitability. Pineapple's success will depend on its ability to efficiently capture market share and maintain competitive pricing while leveraging its technology platform. Investors should monitor Pineapple's customer acquisition costs and retention rates as key performance indicators in the coming quarters.

Tech Expert

Pineapple's PineappleONE platform, leveraging real-time data analytics for customer segmentation and engagement, is a strong technological asset in the competitive mortgage market. The platform's ability to identify high-potential customers for refinancing or new products could significantly enhance operational efficiency and customer acquisition.

However, the true test will be in the platform's scalability and adaptability as market conditions evolve. Pineapple must continuously invest in and improve its technology to maintain its competitive edge. Investors should look for metrics on user engagement, conversion rates and the platform's ability to handle increased transaction volumes as indicators of its technological effectiveness in driving growth.

Toronto, Ontario--(Newsfile Corp. - September 5, 2024) - Pineapple Financial Inc. (NYSE American: PAPL), a leading digital mortgage firm with an integrated network of partner brokerages and agents across Canada is strategically positioned to capture significant market share and drive revenue growth following the Bank of Canada's recent 25-basis-point rate cut, bringing the benchmark interest rate to 4.25%. As Canada enters a period of potential housing market upswing, Pineapple's scalable data-driven technology platform and market expertise are set to capitalize on the anticipated increase in mortgage activity while streamlining the home-buying process.

Market Dynamics: A Surge in Housing Completions and Mortgage Renewals

In 2023, Canada saw over 240,000 housing completions, with an additional 260,000 units expected to be completed by the end of 2024 and increasing into 2025. This surge in housing supply is set to drive increased demand for mortgage financing as new homeowners enter the market. Additionally, approximately 1.2 million mortgages, representing 20% of the total Canadian mortgage market, are set to renew within the next 12 months.

These renewals, coupled with the influx of new mortgage originations, present a substantial business opportunity for Pineapple. With the average mortgage size in Canada at approximately $370,000, this renewal wave alone represents over $440 billion in potential mortgage volume.

Pineapple's advanced platform, PineappleONE, is designed to identify and target these opportunities with precision. By utilizing real-time data analytics, Pineapple can segment and engage customers who are most likely to benefit from refinancing or new mortgage products in this lower-rate environment. This targeted approach not only enhances customer acquisition but also maximizes retention, which is critical for sustaining growth.

Revenue Impact: Translating Market Opportunities into Growth

Given the anticipated volume of mortgage renewals and originations, Pineapple is well-positioned to experience significant revenue growth while driving continuous margin improvement. We project an increase of 18-22% year-over-year revenue growth, driven by our ability to capitalize on the renewal market, cross-selling opportunities, and the enhanced customer acquisition made possible through our data-driven technology platform. This growth is underpinned by our strategic focus on retaining customers and expanding our market share in both renewals and new mortgage originations.

Outlook: Future Rate Cuts and Continued Expansion

The Bank of Canada's recent rate cuts signal the potential for further easing if economic conditions warrant it. Should additional rate cuts occur, the affordability of mortgages will improve, likely leading to even greater demand for refinancing and new mortgages. Pineapple is prepared to adapt to these market conditions, positioning itself as a key player in the Canadian mortgage market.

Pineapple offers a compelling growth story grounded in market dynamics that is disrupting the traditional mortgage brokerage model by empowering agents and their clients with a scalable data driven technology platform tailored to fit their diverse needs. Our ability to harness data, coupled with a robust pipeline of mortgage renewals and new originations, positions us to drive significant revenue growth in the coming quarters. As the Canadian housing market continues to evolve, Pineapple is poised to deliver strong, sustainable returns.

Footnote and references

1. Mortgage Renewal Volume:
   1. Canadian Mortgage and Housing Corporation (CMHC) reports
   2. Industry reports from mortgage institutions and financial analysts
2. Housing Completions:
   1. CMHC housing starts and completions data
   2. Statistics Canada: Residential construction and housing completions data
3. Interest Rate Cuts and Macroeconomic Trends:
   1. Bank of Canada monetary policy updates and rate
   2. Global News, Bloomberg
4. Canadian Mortgage Market Potential:
   1. CMHC Mortgage Market Review

About Pineapple Financial Inc.

Pineapple Financial Inc. is an award-winning fintech and leading Canadian mortgage brokerage network, focusing on both the long-term success of agents and brokerages, as well as the overall experience of homeowners. With approximately 700 brokers within the network, Pineapple creates cutting-edge cloud-based tools and AI-driven systems to enable its brokers to help Canadians realize their dream of owning a home. Pineapple is active within the community and is proud to sponsor charities across Canada to improve the lives of fellow Canadians.

Forward-Looking Statements

Certain statements in this announcement are forward-looking statements, including, but not limited to, the Company's proposed Offering. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company's current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs, including the expectation that the Offering will be successfully completed. Investors can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "is/are likely to," "potential," "continue" or other similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations that arise after the date hereof, except as may be required by law. These statements are subject to uncertainties and risks including, but not limited to, the uncertainties related to market conditions and the completion of the initial public offering on the anticipated terms or at all, and other factors discussed in the "Risk Factors" section of the registration statement filed with the SEC. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and other filings with the SEC. Additional factors are discussed in the Company's filings with the SEC, which are available for review at www.sec.gov.

Follow us on social media:
Instagram: @pineapplemortgage @empoweredbypineapple
Facebook: Pineapple Mortgage
LinkedIn: Pineapple Mortgage

Related Links:
https://gopineapple.com
http://empoweredbypineapple.com

Media Contact:
For media inquiries, please contact Alexandria Guo, Marketing Manager at Pineapple
Email: alexandria@gopineapple.com

Investor Relations Contact:
For investor relations inquiries, please contact Shubha Dasgupta, Chief Executive Officer, at Pineapple
Email: shubha@gopineapple.com
Phone: +1 (416) 669-2046

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/222174

FAQ

How will the Bank of Canada's recent rate cut affect Pineapple Financial Inc. (PAPL)?

The recent 25-basis-point rate cut to 4.25% is expected to boost mortgage activity, positioning Pineapple Financial Inc. (PAPL) for significant growth in the Canadian mortgage market.

What is the projected revenue growth for Pineapple Financial Inc. (PAPL) in the coming year?

Pineapple Financial Inc. (PAPL) projects an 18-22% year-over-year revenue growth, driven by its ability to capitalize on the renewal market and new mortgage originations.

How many mortgages are expected to renew in Canada over the next 12 months, and what opportunity does this present for PAPL?

Approximately 1.2 million mortgages, representing 20% of the Canadian mortgage market, are set to renew in the next 12 months. This represents over $440 billion in potential mortgage volume for Pineapple Financial Inc. (PAPL).

What is the expected housing completion rate in Canada for 2024, and how might this affect PAPL?

Canada expects 260,000 housing units to be completed by the end of 2024. This surge in housing supply is likely to drive increased demand for mortgage financing, presenting a growth opportunity for Pineapple Financial Inc. (PAPL).