First American Financial’s third quarter was characterized by robust growth in its commercial segment and ongoing challenges in the residential market. Management highlighted a 29% increase in commercial revenue, driven by strength in industrial and multifamily transactions, particularly data centers and logistics. CEO Mark Seaton noted, “Our commercial business delivered outstanding performance, while the residential market remains in a period of transition.” The company also benefited from improved investment income and continued expansion in its home warranty business, which helped to offset sluggish residential purchase activity.
Is now the time to buy FAF? Find out in our full research report (it’s free for active Edge members).
First American Financial (FAF) Q3 CY2025 Highlights:
- Revenue: $1.98 billion vs analyst estimates of $1.86 billion (40.7% year-on-year growth, 6.2% beat)
- Adjusted EPS: $1.70 vs analyst estimates of $1.45 (17.1% beat)
- Adjusted Operating Income: $247 million vs analyst estimates of $225 million (12.5% margin, 9.8% beat)
- Market Capitalization: $6.40 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From First American Financial’s Q3 Earnings Call
- Mark Hughes (Truist Securities) asked about the sustainability of high commercial revenue per order. CEO Mark Seaton responded that momentum remains strong, with seasonality likely to support further growth in Q4 and a robust pipeline across asset classes.
- Terry Ma (Barclays) inquired about the rollout timelines for Endpoint and Sequoia. Seaton confirmed testing is on track, with the first Endpoint office launch planned for December and Sequoia’s purchase product pilot in the first quarter, followed by a gradual national rollout.
- Bose George (KBW) questioned the margin impact of running dual technology platforms. Seaton explained that while current investments create a margin drag, shutting down old systems will eventually produce net margin benefits and unlock productivity gains.
- Geoffrey Dunn (Dowling & Partners) probed the long-term sustainability of efficiency gains from instant title and potential regulatory pressures. Seaton clarified that instant title is expected to drive both customer value and operational flexibility, with AI integration enabling strategic optionality.
- Mark DeVries (Deutsche Bank) asked about capital allocation, specifically the pause in share buybacks and potential for M&A. CFO Matthew Wajner noted the company is evaluating emerging acquisition opportunities, especially as residential market weakness prompts more sellers to approach First American.
Catalysts in Upcoming Quarters
Looking ahead, our analyst team will be watching (1) the pace and effectiveness of Endpoint and Sequoia’s rollout and their impact on productivity, (2) the commercial title segment’s ability to sustain growth as year-over-year comparisons become more challenging, and (3) the trajectory of residential purchase activity as affordability trends evolve. Additionally, regulatory developments and the impact of potential rate cuts on investment income will be key indicators.
First American Financial currently trades at $62.82, up from $61.39 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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