Dream Finders Homes, Inc. (DFH) Q1 2025 Earnings Summary

Executive Summary

Q1 delivered double‑digit top-line growth and margin expansion despite affordability headwinds; homebuilding revenues rose 18% YoY to $970M and homebuilding gross margin expanded 140 bps to 19.2% as product mix and direct cost reductions offset higher land/financing costs .
EPS held roughly flat YoY at $0.54 diluted on higher SG&A (12.0% of homebuilding revenue vs. 9.7% LY) driven by forward mortgage commitment programs and a ~$4M one‑time stock acceleration expense; management expects SG&A % to normalize as 2025 volumes materialize .
Liberty Communities closed in January and contributed 107 closings (ASP ~$358K) in Q1; DFH reiterated FY25 closings guidance of ~9,250 and continued portfolio expansion (Alliant National Title and Green River Builders) to bolster growth and vertical integration .
Setup for stock reaction: narrative likely centers on maintained guidance and stronger orders/cancellations improvement vs. higher SG&A and consensus misses, plus M&A integration and Atlanta expansion as medium‑term catalysts .

What Went Well and What Went Wrong

What Went Well

Orders and demand quality improved: net new orders +18% YoY to 2,032 and cancellation rate improved 930 bps to 11.7% (one of the lowest in DFH history), supported by incentives and quick move‑in inventory .
Margin progress: homebuilding gross margin up 140 bps YoY to 19.2%; adjusted homebuilding gross margin up 150 bps YoY to 27.8% on mix and direct cost reductions (partly offset by higher land/financing) .
CEO on strategy: “another quarter of positive results… improved gross margin… Despite mortgage rate and affordability challenges,” with reiteration of ~9,250 closings guidance and confidence that M&A (Liberty, Cherry Creek Mortgage; plus Alliant Title, Green River Builders post‑quarter) will drive growth and returns .

What Went Wrong

Operating expense intensity: SG&A rose 46% YoY to $117M (12.0% of homebuilding revenue, +230 bps), primarily due to forward mortgage rate‑lock programs and higher compensation (incl. ~$4M one‑time stock acceleration) .
Purchase accounting headwind: Liberty amortization reduced Q1 homebuilding gross margin by ~19 bps; this is temporary but weighed on reported margin .
ROPE moderated: return on participating equity decreased to 28.5% from 34.9% YoY, though still robust on a TTM basis .

Financial Results

Headline P&L and Margins (oldest → newest)

Metric	Q3 2024	Q4 2024	Q1 2025
Total Revenues ($M)	$1,006.9	$1,560.8	$989.9
Homebuilding Revenues ($M)	$986.3	$1,534.2	$970.1
Diluted EPS ($)	$0.70	$1.29	$0.54
Homebuilding Gross Margin %	19.2%	17.7%	19.2%
Adjusted Homebuilding GM % (non‑GAAP)	27.6%	26.9%	27.8%
SG&A % of Homebuilding Revenues	10.3%	7.6%	12.0%

Q1 2025 Actuals vs. S&P Global Consensus

Metric	Consensus	Actual	Comment
Revenue ($M)	$1,045.2*	$989.9	Miss vs. consensus*
Primary EPS ($)	$0.585*	$0.54	Miss vs. consensus*
# of Estimates (Rev/EPS)	2/2*	—	Limited coverage*

Values marked with * retrieved from S&P Global.

Segment/Geography Activity (Closings and ASP)

Segment	Q3 2024 Units	Q3 2024 ASP	Q4 2024 Units	Q4 2024 ASP	Q1 2025 Units	Q1 2025 ASP
Southeast	592	$494,163	1,000	$468,595	687	$445,901
Mid-Atlantic	603	$461,320	890	$457,164	521	$454,581
Midwest	694	$589,087	1,118	$582,309	717	$580,221
Total	1,889	$518,553	3,008	$507,477	1,925	$498,284

Note: Liberty Communities contributed 107 closings in Q1 (90 in Southeast) with ASP ~$358,314 .

KPIs and Balance Sheet (oldest → newest)

KPI	Q3 2024	Q4 2024	Q1 2025
Net New Orders (units)	1,680	1,611	2,032
Cancellation Rate	13.8%	18.8%	11.7%
Active Communities (period end)	235	242	258
Backlog Units (period end)	3,996	2,599	2,802
Backlog Value ($M)	$2,004.1	$1,304.5	$1,387.0
Liquidity ($M)	$493	$816	$677
Controlled Lot Pipeline	44,825	54,698	60,538
Net Homebuilding Debt / Net Cap	45.6%	33.7%	40.4%
RO Participating Equity (TTM)	30.4%	29.7%	28.5%
Financial Services Pre‑Tax Income ($M)	$7 (Q3)	$11	$7

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Home Closings (units)	FY 2025	~9,250 (initiated 2/25/25)	~9,250 (maintained 5/6/25)	Maintained
Other Metrics (rev, margins, OpEx, tax, segments)	FY 2025	N/A disclosed	N/A disclosed	—

Earnings Call Themes & Trends

Note: A Q1 2025 earnings call transcript was not available in our source set as of this analysis. The themes below reflect management commentary from quarterly press releases.

Topic	Q3 2024 (Press Release)	Q4 2024 (Press Release)	Q1 2025 (Press Release/8‑K)	Trend
Mortgage rates/affordability	Using incentives; focus on growth despite margin pressure	Incentives helped demand; seasonality aided SG&A leverage	Rates/affordability challenging; incentives supported orders, cancellations improved	Stable headwind; operational levers offset
Sales incentives & demand	Incentives + quick move‑in drove orders; cancels improved	Similar dynamic; cancels down YoY	Orders +18% YoY; cancels 11.7% (low)	Improving demand quality
Margins	HB GM 19.2%; adjusted 27.6%	HB GM 17.7%; adjusted 26.9%	HB GM 19.2%; adjusted 27.8%; Liberty amortization −~19 bps	Mixed but recovering sequentially
SG&A and cost actions	SG&A % up on commitments and comp	SG&A % down on seasonality	SG&A % up to 12.0%; one‑time ~$4M stock expense; expected to normalize	Volatile; expected normalization
M&A/Integration	Jet HomeLoans consolidated 7/1/24	Initiated FY25 guidance; Liberty announced (closed Jan‑25)	Closed Liberty & Cherry Creek; post‑quarter Alliant Title, Green River Builders	Accretive platform build

Management Commentary

“During the first quarter of 2025, Dream Finders achieved another quarter of positive results… improved gross margin by 140 bps… given the continued challenging environment from a mortgage rate and affordability perspective.” — Patrick Zalupski, Chairman & CEO .
“We… closed the Liberty Communities and Cherry Creek Mortgage acquisitions during the quarter, and Alliant National Title and Green River Builders subsequent to quarter end… We reiterate our 2025 full year guidance of approximately 9,250 expected home closings.” — Patrick Zalupski .
Q1 drivers and mix: Midwest delivered the highest ASP ($580,221); Liberty contributed 107 closings (ASP ~$358K) and reduced GM by ~19 bps via purchase accounting amortization, which is temporary .

Q&A Highlights

A Q1 2025 earnings call transcript could not be located in our document set; as such, Q&A highlights and any real‑time guidance clarifications are unavailable.

Estimates Context

Consensus vs. actual: Revenue $1,045.2M* vs. $989.9M (miss); EPS $0.585* vs. $0.54 (miss). Limited coverage with two estimates for both metrics.* Values retrieved from S&P Global.
Implications: Elevated SG&A and rate‑lock costs pressured EPS despite better gross margin; maintained FY closings guidance suggests limited change to 2025 unit forecasts absent new datapoints.