First American Financial (FAF) Q4 2024 earnings summary

Executive summary

• 2024 was challenging for the industry, with low inventory, high home prices, and mortgage rates around 7% leading to the lowest home sales market since the mid-1990s.

• Fourth quarter 2024 revenue rose 18% year-over-year to $1.7 billion; adjusted revenue up 20%.

• Q4 net income was $72 million ($0.69 per diluted share); adjusted EPS $1.35.

• Commercial revenue surged 47% in Q4 and 16% for the year.

• Significant progress was made on strategic initiatives and expense management, with a focus on IT optimization.

Financial highlights

• Q4 title premiums and escrow revenues rose double digits across all lines, with commercial revenue up 47%.

• Title segment revenue reached $1.6 billion, up 22% year-over-year; commercial revenue was $252 million, up 47%.

• Investment income in the title segment was $155 million, exceeding expectations and up $23 million year-over-year.

• Adjusted earnings per diluted share were $1.35, excluding net investment losses and purchase-related amortization; GAAP EPS was $0.69.

• Home warranty segment revenue grew 4% with an adjusted pre-tax margin of 18.2%.

Outlook and guidance

• Modest improvement expected in residential purchase and refinance businesses for 2025, with early signs of growth: purchase orders up 1% and refinance orders up 43% for the four weeks ending February 7, year-over-year.

• Commercial business expected to have a strong year, with revenue growth weighted to the first half of 2025.

• Title revenue growth for 2025 anticipated to be in line with industry forecasts of 8–9% purchase volume growth.

• Margins expected to improve commensurate with market growth, supported by cost control and investment income.

• Company projects another year of earnings improvement as the real estate cycle turns.