Mortgage

Fidelity National third-quarter revenue holds steady at $2 billion

Company slightly misses estimates on earnings per share

Fidelity National Financial (FNF) reported Tuesday that it posted total revenue of $2 billion in the third quarter, which equaled its revenue total from the second quarter of this year.

According to a release from the company, its third-quarter revenue rose above last year’s third quarter, when the company reported revenue of $1.7 billion.

Fidelity also reported adjusted third-quarter net earnings of $171 million compared to adjusted net earnings of $144 million for the third quarter of 2014.

Fidelity’s adjusted third-quarter diluted earnings per share was $0.60 in the third quarter, up from last year when the company posted adjusted diluted EPS of $0.51 in the third quarter of 2014.

According to a note from Briefing.com, Fidelity’s earnings per share missed the Capital IQ Consensus estimate of $0.62 EPS.

Briefing.com also stated that Fidelity’s revenue total of $1.99 billion beat the Capital IQ Consensus of $1.94 billion.

According to Fidelity’s release, the vast majority of its revenue came from its title business.

The title segment delivered approximately $1.8 billion in total revenue, adjusted pre-tax earnings of $268 million and adjusted pre-tax title margin of 14.9% for the third quarter versus approximately $1.5 billion in total revenue, adjusted pre-tax earnings of $224 million and an adjusted pre-tax title margin of 14.8% in the third quarter of 2014.

"We generated a solid 14.9% adjusted pre-tax title margin this quarter, essentially at the lower end of our normalized title margin target range," said Fidelity National Chairman William Foley.

"The commercial market remains very strong, the residential purchase market continues to steadily improve and the residential refinance market has been declining, although a recent drop in rates may provide a further period of improving refinance volumes,” Foley added. 

“We are pleased with our title margin performance this quarter, but to consistently reach and move higher in our 15%-20% normalized pre-tax title margin target range, we need to see continued improvement in the residential purchase market,” Foley continued. “Additionally, as we enter the seasonally slower fourth quarter, our title margins will have to absorb the cost and more lengthy closing process resulting from the new TILA-RESPA closing disclosure requirements.”

Fidelity also stated that Black Knight Financial Services (BKFS) reported revenue of $234 million, led by servicing technology revenue of approximately $162 million.

Black Knight’s revenue growth of 9% for the third quarter compared to the third quarter of 2014, led by strong growth in data & analytics and origination technology.

The company also reported adjusted EBITDA of $105 million and adjusted EBITDA margin of 44.7%.

"Black Knight continues to meet and exceed our high expectations, generating 9% revenue growth, $105 million in adjusted EBITDA and a 44.7% adjusted EBITDA margin in the third quarter,” Foley said. “FNF's Black Knight ownership stake is currently worth approximately $2.9 billion, or approximately $10 per FNF share, and we believe that a publicly traded Black Knight will continue to be a source of value creation for FNF shareholders in the future."

According to Fidelity, the title segment also reported:

  • Adjusted pre-tax title margin of 14.9% was a 20 basis point improvement over the third quarter 2014 adjusted pre-tax title margin of 14.8%
  • Claims loss provision was reduced to 5.5% for the third quarter driven by significantly lower title loss payments related to policy years 2009-2014
  • ServiceLink generated $220 million in revenue, adjusted EBITDA of $30 million, an adjusted EBITDA margin of 14%, adjusted pre-tax earnings of $27 million and an adjusted pre-tax margin of 12% for the third quarter
  • Open orders per day of 8,031 for the third quarter versus 7,516 open orders per day for the third quarter of 2014
  • Closed orders per day of 5,906 for the third quarter versus 5,438 closed orders per day for the third quarter of 2014
  • Third-quarter purchase orders opened and closed increased by 8% and 11%, respectively, versus the third quarter of 2014; purchase orders opened and closed increased by 9% and 11%, respectively, versus the third quarter of 2014, for FNTG only (excluding ServiceLink)
  • Total commercial revenue of $258 million, a 15% increase over total commercial revenue in the third quarter of 2014; third-quarter national commercial title revenue of $146 million, a 7% increase from the third quarter of 2014, driven by a 13% improvement in the commercial fee per file and a 5% decrease in closed orders; open national commercial orders decreased by 2% over the prior year
  • Overall third quarter average fee per file of $2,133, a 3% increase versus the third quarter of 2014
  • Title claims paid of $70 million, a decrease of $11 million, or 14%, from the third quarter of 2014

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