ELLI Stock Forecast: Ellie Mae Shows Outstanding Performance Despite Declining Industry Volume Prompts Bullish Outlook



This article was written by Kwon Sok Oh, a Financial Analyst at I Know First.



Ellie Mae Stock Forecast

As we continue to execute on our goal of automating everything automatable in the mortgage origination process, we’re pleased with the progress we’ve made to-date and remain enthusiastic about the tremendous growth opportunities we have ahead.

– Jonathan Corr, CEO, Ellie Mae, Inc.


  • Ellie Mae delivers higher than expected earnings for Q1 2018
  • TD Bank rollout with Encompass
  • Data Connect, Investor Connect available on Encompass NG

Ellie Mae is a leading cloud-based platform provider for the mortgage finance industry. Ellie Mae’s Encompass platform allows banks, credit unions, and lenders to originate, fund, and close mortgage loans. Encompass also provides a variety of functions and services, including customer relationship management, regulatory compliance, automated underwriting, and credit report services.

Ellie Mae delivers higher than expected earnings for Q1 2018

On April 23rd, Ellie Mae reported higher than expected earnings for Q1 2018 during its earnings call. Most remarkably, Ellie Mae’s revenue grew by 27% year-over-year even though industry volumes decreased by 5%. Both Ellie Mae’s core business and Velocify delivered better than expected results as Ellie Mae is smoothly integrating Velocify’s engagement, management, and distribution capabilities into Encompass solutions, providing premium digital mortgage experience to customers.

(Source: Yahoo Finance)

Ellie Mae’s revenues are mainly earned from subscriptions to the Encompass Software, the number of loans that customers close, and related professional services. Loan origination through Encompass increased by 7% year-to-year for a total of 553,000 originations during Q1 2018 through the constant addition of new platform users as well as broader service offers by Encompass. Moreover, revenue per loan grew to $213, a 18% year-over-year increase, and the number of active users grew to 191,000, a 11% year-over-year increase. Encompass’ popularity is soaring as the industry demand for a comprehensive digital mortgage platform is rising. Through integrating Velocify into Encompass solutions, Encompass allows a variety of functions related to loan origination to be merged into a single platform, including loan origination, customer relationship management, regulatory compliance, automated underwriting, and credit report services.

One final point to mention is the adaptation of the accounting standard ASC 606 as of January 1st.

Ellie Mae does not expect any major differences in future guidance under ASC 605 or ASC 606.

TD Bank rollout with Encompass

Ellie Mae announced that TD Bank has recently deployed its initial rollout on Encompass. TD wanted to expand its mortgage business for some time, but it was unable to do so because of its proprietary, yet obsolete, system. TD Bank is now switching off from the LOS platform which restrained TD Bank from ramping up its mortgage business. For the past 18 months, TD Bank worked with Ellie Mae to get into production, and TD Bank’s rollout is expected to drive loans and revenue per loan up even more.

(Source: Flickr)

TD Bank is starting out regionally but plans on expanding progressively. However, the number of seats expected to be brought with TD Bank was not provided during the earnings call. TD Asset Management increased its share holdings of Ellie Mae from 41,193 up to 62,429 during Q1 2018.

There is some concern whether Ellie Mae has enough capacity to deploy its backlog at the rate customers are expecting. Ellie Mae is still rolling out AmeriHome, which started last year. Jonathan Corr, CEO, Ellie Mae, Inc., expressed his confidence during the earnings call regarding this matter, saying that Ellie Mae has been brought up to a critical level necessary to bring more customers on board. Ellie Mae currently has Caliber Home Loans, Flagstar Bank, and Wells Fargo on its platform, with each of them doing origination of over $20 billion.

(Source: Wikipedia)

Data Connect, Investor Connect available on Encompass NG

On May 21st, Ellie Mae announced that Encompass Investor Connect and Encompass Data Connect is available for Encompass NG Lending Platform users. Encompass Investor Connect allows secure intersystem workflows between investors and respective lenders. Investors and lenders can now safely deliver precise, compliant, validated, and tamper-proofed loan documents and data. Encompass Investor Connect does this by eliminating the tedious loan package delivery procedure and automating the delivery procedure directly from the Encompass LOS to the investor. This automation significantly improves pricing tiers, purchase times, efficiency, precision, and compliance. Encompass Investor Connect replaces the role of the obsolete Encompass Data & Docs Solutions.

(Source: Creative Commons Images)

Waterstone Mortgage Corporation, one of Ellie Mae’s partners, acknowledged a four-day reduction in loan delivery to purchase without any changes in the procedure. Moreover, Waterstone Mortgage Corporation’s first-pass rate increased, which allows it to improve its tier pricing. Wells Fargo also expressed positive reviews regarding Encompass Investor Connect.

Encompass Data Connect allows mortgage lenders to make better decisions and gain greater insight more quickly using real-time data. Moreover, Encompass Data Connect also utilizes machine learning, artificial intelligence, and process automation, bringing customers closer to the True Digital Mortgage.

(Source: Flickr)

Specifically, lenders are given access to standard and custom loan data fields in real-time, allowing them to make data-driven timely decisions. This significantly increases the velocity and efficiency of their business functions and gives them comparative advantages. Furthermore, lenders are given access to encrypted cloud data whenever and wherever they want, allowing them to fully utilize current business intelligence to capture innovative business opportunities and profitability.

I Know First’s algorithm is Bullish for ELLI in the Long Run

I Know First’s algorithm has very bullish forecasts for 1-month, 3-month, and 1-year time frames, with a predictability rating of over 0.5 for the 1-year time frame. Predictability ratings of over 0.5 are considered highly probable. The forecasts for longer time horizons have stronger signals and predictabilities, further supporting the long-term bullish stance of I Know First’s algorithm.

How to interpret this diagram

Past I Know First Success with ELLI


On April 23rd, I Know First’s algorithm made a bullish 14-day forecast on ELLI stock with a signal strength of 23.69 and a predictability rating of 0.17.

As shown below, ELLI’s stock price increased 15.82% by May 7th, confirming I Know First’s algorithm’s forecast.

Current I Know First subscribers received this bullish ELLI forecast on April 23rd, 2018.

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