Mortgage

Fidelity National revenue rises for fourth straight quarter

Low interest-rate environment yields results

For the fourth straight quarter, Fidelity National Financial (FNF) saw its revenue rise over the previous year’s total.

The title insurance giant reported total revenue of approximately $1.6 billion in the first quarter of 2015, up from $1.4 billion in the first quarter of 2014.

Although the first quarter marked the fourth straight quarter that Fidelity’s revenue rose year-over-year, the first quarter’s revenue total of $1.6 billion breaks a streak that saw the company report revenue of $1.7 billion in three straight quarters.

In the fourth quarter of 2014, Fidelity reported total revenue of approximately $1.7 billion, rising from $1.4 billion in 2013.

In the third quarter of 2014, Fidelity’s $1.7 billion in revenue represented a slight year-over-year increase, rising from $1.6 billion in the third quarter of 2013.

Fidelity’s third quarter revenue equaled its second quarter revenue, which also came in at $1.7 billion and was also up from $1.6 billion in the second quarter of 2013.

In the first quarter of 2015, Fidelity reported adjusted first quarter net earnings of $106 million versus adjusted net earnings of $62 million for the first quarter of 2014. The company also reported adjusted first quarter core diluted earnings per share of $0.37 versus adjusted core diluted earnings per share of $0.22 in the first quarter of 2014.

Fidelity also reported its first quarter core free cash flow used was $6 million versus $120 million used in the first quarter of 2014.

Fidelity’s chairman, William Foley, cited the year’s low interest rates as a driver of increasing revenue.

"This was a great start to the year for both our title insurance and Black Knight businesses. The significant rate decline in January helped us generate a 63% increase in refinance open orders and a 49% increase in refinance closed orders in the first quarter versus the first quarter of 2014,” Foley said.

“Additionally, purchase open orders showed improving strength, growing by 12% in February and 10% in March versus the prior year months. Consequently, we were able to achieve a solid 10.3% pre-tax title margin in what is our seasonally weakest quarter of the year,” Foley added.

“We also believe that we are well positioned to benefit from any continued seasonal improvement in the purchase market as we enter the spring and summer months, with a goal of achieving pre-tax title margins that approach or meet our 15%-20% pre-tax title margin target,” Foley said.

Foley also said that company is moving closer to the culmination of its plans to spin off Black Knight into a publicly owned company.

“We are also on track to launch and close the Black Knight initial public offering over the next several weeks and we look forward to Black Knight operating as an FNF majority-owned, publicly-traded company," Foley said.

In the title segment of Fidelity’s business, the company reported approximately $1.4 billion in total revenue, adjusted pre-tax earnings of $140 million and adjusted pre-tax title margin of 10.3% for the first quarter versus approximately $1.2 billion in total revenue, adjusted pre-tax earnings of $66 million and an adjusted pre-tax title margin of 5.5% in the first quarter of 2014.

The company also reported the following statistics about its first quarter performance:

  • Adjusted pre-tax title margin of 10.3% was a 480 basis point improvement over the first quarter 2014 adjusted pre-tax title margin of 5.5%
  • ServiceLink generated $206 million in revenue, adjusted EBITDA of $23 million, an adjusted EBITDA margin of 11%, adjusted pre-tax earnings of $18 million and an adjusted pre-tax margin of 9% for the first quarter
  • Open orders per day of 9,475 for the first quarter versus 7,689 open orders per day for the first quarter of 2014
  • Closed orders per day of 5,656 for the first quarter versus 4,836 closed orders per day for the first quarter of 2014
  • First quarter purchase orders opened and closed increased by 8% and 8%, respectively, versus the first quarter of 2014; purchase orders opened and closed increased by 7% and 6%, respectively, versus the first quarter of 2014 excluding ServiceLink default related purchase orders
  • Total commercial revenue of $213 million, a 22% increase over total commercial revenue in the first quarter of 2014; first quarter national commercial title revenue of $119 million, a 14% increase from the first quarter of 2014, driven by a 5% improvement in the commercial fee per file and a 9% increase in closed orders; open national commercial orders increased by 4% over the prior year
  • Overall first quarter average fee per file of $1,833, a 1% decrease versus the first quarter of 2014
  • Title claims paid of $60 million, a decrease of $7 million, or 10%, from the first quarter of 2014

Fidelity also said that Black Knight’s revenue grew over last year as well. Black Knight reported total revenue of $227 million, led by Servicing Technology revenue of approximately $157 million. Black Knight also saw revenue growth of 11% for the first quarter compared to the first quarter of 2014, led by Data & Analytics, RealEC and Origination Technology.

"Black Knight also had a strong start to 2015, generating 11% revenue growth, led by Data & Analytics, RealEC and Origination Technology, and an adjusted EBITDA margin of 41.9%, a 750 basis point margin improvement over the first quarter of 2014,” Foley said. “In the first quarter, we started recognizing revenue from a large, multi-year data licensing agreement with a major industry participant and had one month of revenue from a large loan origination technology contract with a large national bank.”

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