Fidelity National Financial Reports Q3 Earnings
Fidelity National Financial recently released its third-quarter earnings report, providing insights into the performance of the Big Four title firms. Despite a decline in title revenue, executives at Fidelity expressed satisfaction with the segment’s performance.
Decrease in Title Revenue and Pre-Tax Earnings
Fidelity’s title revenue dropped by 18% year over year to $1.9 billion. However, this decline was in line with historical levels reported in 2018 and 2019. The pre-tax earnings of the title segment also fell from $335 million to $248 million compared to the previous year.
Reasons for the Decline
The decrease in title revenue and pre-tax earnings can be attributed to a drop in the number of title orders opened. The firm reported a decrease from 363,000 orders to 318,000 orders. Purchase orders opened on a daily basis decreased by 7%, while refinance and commercial orders dropped by 25% and 10% respectively. Despite the decline in orders, the average total fee per file remained consistent with Q3 2023 levels at $3,618.
Overall Financial Performance
Fidelity reported a 13.3% year-over-year drop in revenue, amounting to $2.778 billion. However, pre-tax earnings increased from $503 million in Q3 2022 to $603 million in Q3 2023.
Positive Outlook
Despite the decrease in title segment revenue, Fidelity executives expressed their satisfaction with the segment’s performance. CEO Mike Nolan highlighted the outstanding result, considering the challenging market conditions, such as high mortgage rates and decreased residential purchase applications.
Focus on Reducing Operating Expenses
Fidelity has been actively reducing operating expenses over the past year. This effort resulted in a 13% decrease in the total field operations employee count and a reduction in direct title office locations from approximately 1,400 offices to less than 1,300 offices.
Doma Reports Q3 Earnings
Doma, another title firm, also released its Q3 2023 earnings report. The company aims to achieve adjusted EBITDA profitability in 2023 but fell short of its goal this quarter.
Improved Financial Performance
Although Doma reported a 6% year-over-year decline in revenue to $76 million, there were positive signs in its financial performance. The net loss for Q3 2023 improved to $22 million compared to $24 million in Q3 2022. Additionally, the adjusted EBITDA loss decreased from $12 million to $5 million.
Progress Towards Profitability
Doma’s Chief Financial Officer, Mike Smith, expressed pride in the progress made towards profitability. He highlighted the sequential improvement in net loss and adjusted EBITDA loss, while acknowledging the ongoing challenges in the housing market that may impact achieving full quarter adjusted EBITDA profitability in Q4 2023 and Q1 2024.
Strategic Changes and Upfront Title
Doma has undergone significant changes in its business strategy, including selling off retail operations in various regions. The company’s latest endeavor is Upfront Title, which aims to streamline the underwriting process and provide more affordable title solutions to homebuyers.
Launch of Upfront Title
During the earnings call, Doma CEO Max Simkoff announced the launch of Upfront Title. This innovative solution will enable lenders to reduce costs and operational activities by moving the instant underwriting decision closer to the loan underwriting decision itself. Upfront Title will be available to mortgage software platforms and government-sponsored entities before the end of the year.
Simkoff expects the launch of Upfront Title to contribute to Doma’s shift towards higher-margin software licensing revenue, supporting its journey towards adjusted EBITDA profitability.
Conclusion
In conclusion, Fidelity National Financial’s third-quarter earnings report showed a decline in title revenue and pre-tax earnings, primarily due to a decrease in the number of title orders opened. However, the company expressed satisfaction with the segment’s performance, considering the challenging market conditions. Fidelity has been focused on reducing operating expenses and reported an increase in pre-tax earnings overall. On the other hand, Doma, another title firm, reported improved financial performance with a decrease in net loss and adjusted EBITDA loss. Doma’s launch of Upfront Title is expected to contribute to its shift towards higher-margin software licensing revenue and progress towards adjusted EBITDA profitability.
Photo: Xnatedawgx, CC BY-SA 4.0, via Wikimedia Commons
