NYSE$FAF

First American Financial Corp · Q4 2023 earnings

Q4 2023 earnings · · Investor relations

Briefing

First American's Q4 2023 financial performance was impacted by a cybersecurity incident, with revenue down 15% year-over-year; however, title orders and related product demand have returned to normal levels.

First American Financial Corporation reported a decrease in total revenue to $1.4 billion, a 15% decrease compared to the previous year. Earnings per diluted share were $0.33, or $0.69 on an adjusted basis. The results were materially impacted by a cybersecurity incident.

  • Results were materially impacted by the company's previously disclosed cybersecurity incident.
  • Earnings per diluted share of $0.33, or $0.69 per share on an adjusted basis.
  • Total revenue of $1.4 billion, down 15 percent compared with last year.
  • Title Insurance and Services segment pretax margin of 4.5 percent, or 7.5 percent on an adjusted basis.

Headline financials

Total Revenue

$1.43B

Previous: $1.69B-15.2%
EPS (adj)

$0.69

Previous: $1.35-48.9%
Title Open Orders

124.6K

No prior period
Title Closed Orders

100.6K

No prior period
Commercial Revenues

$172M

No prior period
Average Revenue per Order

$11K

Previous: $4.02K+173.6%
Title Insurance Pretax Margin

4.5%

Previous: 7.1%-36.6%
Home Warranty Pretax Margin

14.9%

Previous: 13.9%+7.2%
Net Income

$34.1M

Previous: $54M-36.9%
Operating Income

$38.4M

Previous: $58M-33.8%
Gross Profit

$1.17B

Previous: -$655M+278.2%
Stock-Based Comp

$8.2M

Previous: $7M+17.1%

Revenue & EPS history

First American · Revenue · Quarterly

$1.43B

Q4 2023-15.2%vs Q4 2022
Beat estimate in 5 of 14 quarters(36%)
ActualEstimate

Revenue by segment

First American · $1.63B total across 2 segments · Q3 2023

  • Title Insurance and Services
    $1.52B-19.0%
  • Home Warranty
    $108M+3.0%

Forward guidance

While difficult market conditions will likely persist this year, we do expect to benefit from modest growth in both our residential and commercial businesses, but this could change depending on the path of mortgage rates.

Tailwinds

  • Expect to benefit from modest growth in both our residential and commercial businesses
  • Continue to run our business efficiently
  • Maintain a strong balance sheet
  • Allows us to invest in strategic initiatives that support long-term growth
  • Returning capital to shareholders

Headwinds

  • Difficult market conditions will likely persist this year
  • Modest growth could change depending on the path of mortgage rates.
  • Cybersecurity incident that occurred in late December materially impacted the company's operations
  • Operating revenue line items in the current quarter were negatively impacted by the previously disclosed cybersecurity incident that occurred in late December.
  • Lower average balances in the company’s investment portfolio, escrow balances and tax-deferred property exchange balances were offset by higher interest rates.

Historical earnings impact

How earnings announcements have historically affected this stock's price.

Avg. return before/after earnings

Based on 20 quarterly earnings reports · overlaid with Q4 2023

Historical avgQ4 2023

+1.2%

Avg return

Earnings day

+1.6%

Avg return

5 days after

+1.7%

Avg return

30 days after

59%

40 / 68 earnings

Positive

+10.6%

Q1 2020

Best reaction

-7.3%

Q4 2021

Worst reaction

Earnings price reactions
QuarterReport dateReaction (Day 0)+5 days+30 days
Q1 2026+3.5%+6.1%+2.5%
Q4 2025+2.8%+5.7%+2.1%
Q3 2025+3.2%+2.3%+5.2%
Q2 2025-2.1%-1.8%+2.5%
Q1 2025+4.9%+2.8%-6.8%
Q3 2024-0.4%-0.3%+5.4%
Q2 2024-0.2%+2.9%+10.2%
Q1 2024-6.7%-6.9%-5.6%
Q4 2023-0.6%+1.5%-6.0%
Q3 2023+0.3%+2.8%+16.1%
Q2 2023+4.9%+5.1%+0.1%
Q1 2023+4.2%+3.4%-0.1%
Q4 2022-2.2%-0.6%-13.9%
Q3 2022+8.5%+8.4%+17.3%
Q2 2022+2.0%-1.5%-0.1%
Q1 2022-3.0%+0.3%+0.8%
Q4 2021-7.3%-7.4%-12.2%
Q3 2021-0.5%+0.2%+4.7%
Q2 2021+3.1%+2.8%+8.0%
Q1 2021+3.8%+6.3%+6.1%
Q4 2020+3.0%+2.6%+5.6%
Q3 2020-6.1%-9.7%-1.8%
Q2 2020-2.5%-6.0%-8.7%
Q1 2020+10.6%+17.1%+21.8%
Q4 2019+5.0%+5.4%-13.9%
Q3 2019+2.9%+1.4%+3.6%
Q2 2019+3.5%+4.2%+3.2%
Q1 2019+3.0%+1.5%-1.7%
Q4 2018-1.6%-2.7%-3.7%
Q3 2018+1.2%+3.7%+7.8%
Q2 2018+3.2%+2.8%+3.9%
Q1 2018-5.7%-5.0%-1.0%
Q4 2017-4.7%+0.1%+3.7%
Q3 2017+4.5%+6.6%+7.8%
Q2 2017+5.6%+4.7%+4.6%
Q1 2017+6.5%+4.2%+5.7%
Q4 2016-0.3%+0.1%-3.4%
Q3 2016-3.3%-2.0%-4.6%
Q2 2016+2.1%+0.6%+1.9%
Q1 2016-0.9%
Q4 2015+9.8%
Q3 2015-0.2%
Q2 2015+4.5%
Q1 2015+3.0%
Q4 2014+5.6%
Q3 2014+4.4%
Q2 2014-2.2%
Q1 2014+3.4%
Q4 2013+2.4%
Q3 2013+0.6%
Q2 2013+2.0%
Q1 2013+1.3%
Q4 2012-0.8%
Q3 2012-1.7%
Q2 2012+4.3%
Q1 2012+1.0%
Q4 2008+3.3%
Q4 2011+3.3%
Q3 2011+4.3%
Q2 2011-3.7%
Q1 2010-1.6%
Q1 2011-0.9%
Q4 2010-1.0%
Q3 2010+2.8%
Q3 2009+2.8%
Q2 2010-2.8%
Q2 2009-2.8%
Q4 2009-2.8%

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