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FO

Finance of America Companies Inc. (FOA)·Q3 2025 Earnings Summary

Executive Summary

  • Adjusted EPS of $1.33 beat consensus $0.67, while revenue of $80.8M missed consensus $101.9M; GAAP loss of $(29)M was driven by negative fair value adjustments tied to softer home price appreciation assumptions . Consensus values retrieved from S&P Global.*
  • Funded volume remained strong at $603M (+18% YoY), and adjusted net income rose to $33M (+136% QoQ, +120% YoY), supported by improved origination gains, fee income, and capital markets activity .
  • Liquidity improved materially: cash increased to $110M from $46M, aided by securitizations (including a nearly $2B proprietary deal) and paydown of $125M in facilities; FOA expects to cover $53M corporate bond payments due in November .
  • Management reaffirmed FY2025 adjusted EPS guidance of $2.60–$3.00 and guided FY2026 adjusted EPS to $4.25–$4.75 on 20–25% volume growth; tracking toward the low end of FY2025 volume $2.4–$2.7B .
  • Strategic catalysts: agreement to repurchase Blackstone’s stake (~$80M cash outlay) and a Better.com partnership to offer HELOCs/HELOANs leveraging Tinman AI, enhancing product breadth and digital capabilities .

What Went Well and What Went Wrong

What Went Well

  • Adjusted EPS and adjusted net income improved sharply: $1.33 EPS (+142% QoQ) and $33M adjusted net income (+136% QoQ), reflecting better margins and stronger capital markets monetization .
  • Origination momentum: funded volume $603M (+18% YoY); submission volume $887M with October submissions at $336M, highest in three years .
  • Liquidity and balance sheet actions: cash up to $110M; paydown of $125M working capital and other facilities; largest proprietary securitization (~$2B) broadened investor base .

Direct quote: “We closed our largest proprietary securitization in company history in September, a nearly $2 billion issuance.” – CFO Matt Engel .

What Went Wrong

  • GAAP loss of $(29)M in Q3 as negative fair value changes on residuals outweighed lower rates/tighter spreads; revenue fell sequentially (to $80.8M from $177.4M) as fair value marks swung negative vs Q2 .
  • Portfolio Management posted a pre-tax loss of $(11)M vs $108M prior quarter due to negative fair value adjustments from market inputs/model assumptions .
  • Total equity declined to $366M from $473M, largely due to accounting for the Blackstone share repurchase as treasury stock at quarter-end .

Financial Results

Core P&L (Actuals; $USD Millions and $USD per share)

MetricQ1 2025Q2 2025Q3 2025
Total Revenues ($MM)$165.7 $177.4 $80.8
Adjusted Net Income ($MM)$13.0 $14.0 $33.0
Adjusted EPS ($USD)$0.52 $0.55 $1.33
Basic EPS from Continuing Ops ($USD)$3.17 $3.16 $(0.98)
Diluted EPS from Continuing Ops ($USD)$2.56 $2.13 $(1.22)

Margins

MetricQ1 2025Q2 2025Q3 2025
Net Income Margin %18.23%*19.69%*−11.77%*

Values retrieved from S&P Global.*

Versus Estimates (Consensus vs Actuals)

MetricQ1 2025 ActualQ1 2025 Consensus*Beat/MissQ2 2025 ActualQ2 2025 Consensus*Beat/MissQ3 2025 ActualQ3 2025 Consensus*Beat/Miss
Adjusted/Primary EPS ($)$0.52 0.423*—$0.55 0.608*Miss$1.33 0.671*Beat
Revenue ($MM)$165.7 85.1*Beat$177.4 97.0*Beat$80.8 101.9*Miss

Values retrieved from S&P Global.*

Segment Breakdown (Continuing Ops; $USD Millions)

Segment MetricQ1 2025Q2 2025Q3 2025
Retirement Solutions – Total Revenue$52 $62 $68
Retirement Solutions – Pre-tax Income$3 $10 $17
Retirement Solutions – Adjusted Net Income$9 $15 $20
Portfolio Management – Total Revenue$129 $130 $27
Portfolio Management – Pre-tax Income (Loss)$105 $108 $(11)
Portfolio Management – Adjusted Net Income$20 $16 $30

KPIs and Balance Sheet Highlights

KPIQ1 2025Q2 2025Q3 2025
Funded Volume ($MM)$561 $602 $603
Assets Under Management ($MM)$29,418 $29,907 $30,362
Cash and Cash Equivalents ($MM)$52 $46 $110
Total Equity ($MM)$395 $473 $366
Submission Volume ($MM)——$887 (Q3); $336 in Oct.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPS ($)FY 2025$2.60–$3.00 $2.60–$3.00 Maintained
Volume ($B)FY 2025$2.4–$2.7 Tracking low end of $2.4–$2.7 Maintained (low end)
Adjusted EPS ($)FY 2026Prior not specified$4.25–$4.75 Introduced/Raised vs FY25
Securitization cadenceQ4 2025~1 large per quarter Smaller deal expected in Nov. Lower Q4 size

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
AI/Technology initiativesBrand and digital campaign launch; focus on modern retirement platform Continued digital reach and engagement; profitability improvements Embedding AI, digital automation, data analytics; 3-minute digital prequal; AI call agents and SMS tools planned Accelerating adoption and measurable conversion gains
Capital markets/securitizationPositive fair value adjustments; $129M segment revenue Strong fair value marks; pre-tax $108M; $1B deal in July Nearly $2B issuance in Sept; broadened investor base Scaling size and investor participation
Liquidity/deleveragingEquity to $395M; cash $52M Equity to $473M; agreement to repurchase Blackstone stake; paydown facilities Cash $110M; paydown $125M; planned $53M bond payment; Blackstone buyback ~$80M Liquidity strengthened; capital structure simplification
Volume/OriginationFunded $561M (+32% YoY) Funded $602M (+35% YoY) Funded $603M (+18% YoY); submissions $887M Sustained growth; funnel metrics improving
GuidanceN/AN/AFY25 adj. EPS $2.60–$3.00; FY26 $4.25–$4.75; volume low end FY25 Visibility improving; multi-year targets introduced

Management Commentary

  • “Year-to-date, we have reported GAAP net income of $131 million… On an adjusted basis, we generated adjusted net income of $33 million for the quarter for $1.33 per share.” – CEO Graham Fleming .
  • “We completed… a nearly $2 billion issuance… cash… $110 million… provides FOA with enough liquidity to satisfy the $53 million corporate bond payments due later this month.” – CFO Matt Engel .
  • “Over 20% of customers… completed [digital prequalification] without loan officer intervention… 3-minute prequalification experience.” – President Kristen Sieffert .
  • “We are reaffirming our full-year 2025 adjusted EPS target of $2.60–$3.00… expect volume growth of 20%–25% year-over-year… 2026 adjusted EPS $4.25–$4.75.” – CFO Matt Engel .

Q&A Highlights

  • Blackstone stake repurchase timing and size: not yet completed; expected to begin later in November into December; ~$80M cash .
  • Cash capacity and facility redraws: $110M cash at quarter-end plus ~$60M available redraw on facilities .
  • Securitization cadence: typically one large per quarter; Q3 pulled forward a deal from Q4; expect a smaller deal this month; tight spreads and strong demand with new investors in larger bonds .
  • Share count outlook: fully diluted expected to decline from ~31M to ~24M post buyback and convert notes; adjusted outstanding ~16M after buyback plus ~7M converts/options .
  • Cash earnings power: at ~$100M PTI, implied cash earnings of ~$4/share over time given residuals/MSR monetization cycle .

Estimates Context

  • Q3: Adjusted/Primary EPS $1.33 vs consensus $0.67 – beat; revenue $80.8M vs consensus $101.9M – miss . Consensus values retrieved from S&P Global.*
  • Q2: Adjusted/Primary EPS $0.55 vs consensus $0.61 – miss; revenue $177.4M vs consensus $97.0M – beat . Consensus values retrieved from S&P Global.*
  • Q1: Adjusted/Primary EPS $0.52 vs consensus $0.42 – beat; revenue $165.7M vs consensus $85.1M – beat . Consensus values retrieved from S&P Global.*

Implication: Given multi-quarter EPS outperformance and reaffirmed FY25 EPS guidance, sell-side EPS likely needs upward adjustment to reflect improved origination margins and capital markets execution, while revenue forecasts should incorporate volatility from fair value marks and securitization timing .

Key Takeaways for Investors

  • Mixed print: strong adjusted EPS beat but revenue miss; underlying operational metrics (funded volume, submissions, fee income) are trending positively .
  • Balance sheet actions and securitization scale bolstered liquidity (cash $110M), supporting near-term debt service and strategic flexibility .
  • Portfolio Management volatility remains a swing factor due to fair value sensitivities to market inputs and home price assumptions; watch marks and spreads each quarter .
  • Structural improvements in digital funnel and AI tools are raising conversion and productivity, supporting margin expansion into 2026 .
  • Capital structure simplification (Blackstone buyback, converts) reduces diluted share count, enhancing per-share economics over time .
  • Guidance confidence: FY25 adjusted EPS maintained at $2.60–$3.00 and FY26 introduced at $4.25–$4.75 on 20–25% volume growth; monitor Q4 securitization sizing and cadence .
  • Near-term trading lens: stock-sensitive catalysts include completion of the buyback, Q4 securitization execution, and evidence of sustained origination margin strength; revenue line will be more susceptible to fair value swings .

Additional references:

  • Q3 press release and 8-K 2.02 with detailed financials .
  • Better.com/FOA partnership expanding into HELOC/HELOAN via Tinman AI .
  • Q2 press release for prior-quarter trend analysis .

Values retrieved from S&P Global.*