Finance Of America 2025 Q1 Earnings Strong Return to Profitability with 469% Net Income Surge

Finance Of America (FOA) reported its fiscal 2025 Q1 earnings on May 20th, 2025, showcasing a significant rebound in profitability with a net income of $75 million, marking a 469.4% positive swing from the net loss of $20.3 million in 2024 Q1. The company exceeded expectations, reaffirming its full-year guidance for funded volumes and adjusted EPS. FOA's strategic initiatives and operational improvements have positioned it well for continued growth. The positive results reflect the company's effective business strategies and robust financial management.

Revenue
Finance Of America's revenue reached $165.69 million in 2025 Q1, a remarkable increase of 121.9% from $74.68 million in the same quarter the previous year. The Retirement Solutions segment contributed $51.72 million, while Portfolio Management added $129.01 million. The Corporate and Other segment saw a negative contribution of $14.91 million, with Eliminations accounting for a minor reduction of $123,000, culminating in the total revenue figure.

Earnings/Net Income
Finance Of America reported an EPS of $2.97, a significant turnaround from a loss of $0.78 per share in 2024 Q1, representing a 480.8% positive change. This reflects a robust improvement in net income, with the company achieving $75 million, underscoring a strong financial recovery and operational success.

Post-Earnings Price Action Review
The strategy of purchasing FOA stock after a revenue miss and holding for 30 days proved unsuccessful, with a backtest indicating a substantial loss of -36.36%. The strategy also showed an excess return of -64.39% and a Sharpe ratio of -0.13, highlighting its failure to yield positive returns or offer risk-adjusted benefits. This result suggests the strategy may need re-evaluation, as it did not align with the company's recent performance improvements. Investors should consider alternative strategies that better capture FOA's potential growth and resilience in the market.

CEO Commentary
Graham Fleming, CEO, emphasized the company's achievement in exceeding guidance with $561 million in funded volume, marking a 32% year-over-year improvement. He highlighted the successful repositioning of reverse mortgages and expressed confidence in meeting full-year guidance, driven by strong operational performance and effective product integration.

Guidance
Finance Of America reaffirmed its full-year guidance, targeting funded volumes between $2.4 billion to $2.7 billion and adjusted EPS between $2.60 and $3. For Q2, the company anticipates funded volumes ranging from $575 million to $600 million.

Additional News
During the past weeks, Finance Of America announced a change in leadership with the promotion of Jon Scarpati to Chief Production Officer, aiming to enhance growth in the reverse mortgage industry. The company also launched a new marketing initiative, "A Better Way with FOA," designed to reposition reverse mortgages as a mainstream financial tool. This campaign reflects a strategic shift from traditional endorsements to storytelling that resonates with the real-life goals of homeowners aged 55 and up. These developments signify FOA's commitment to innovation and market leadership in home equity solutions.