First American Financial (FAF) investor relations material

Executive summary

• Q3 revenue rose 5.3% YoY to $2,084.6M; net income attributable to shareholders fell to $177.0M from $189.6M, while adjusted EPS rose 5% to $1.78.

• Commercial growth and higher investment income supported results, offsetting weak residential activity, net investment losses and lower Home Warranty pretax income.

• Priorities include deploying AI-native Endpoint and Sequoia platforms, gaining share and expanding more cyclically resistant businesses.

Financial highlights

• Q3 income before taxes was $227.6M versus $247.0M; adjusted pretax income was $235.9M versus $227.8M. Adjusted net income was $183.4M versus $174.9M.

• GAAP diluted EPS was $1.72 versus $1.84; adjusted diluted EPS was $1.78. 9M revenue was $6,039.9M and net income was $520.6M, versus $5,402.5M and $409.9M.

• Investment income rose 11% to $169M; net investment losses were $2M versus gains of $26M YoY.

• 9M operating cash flow was $600.2M versus $581.5M; claim payments, net of recoveries, were $287.1M versus $261.4M.

Outlook and guidance

• FY2027 revenue is expected to be essentially flat YoY, with modest commercial growth and investment-income gains offsetting weaker residential revenue.

• Management expects little title margin expansion in 2027; margins could be stable or contract slightly, partly depending on commercial activity.

• Recent mortgage-rate increases reinforce expectations for a lower-for-longer residential origination market; available operating cash flows, liquid assets and revolving credit capacity are expected to cover needs for at least 12 months.

• Endpoint national rollout and broader Sequoia expansion are planned for 2027, targeting most direct-division revenue processed through Endpoint and most orders through Sequoia by year-end.