Finance of America Companies Inc Aktie

Hello, everyone. Thank you for joining us, and welcome to the Finance of America First Quarter 2026 Earnings Call. [Operator Instructions]

I will now hand the conference over to Michael Fant, Senior Vice President of Finance. Michael, please go ahead.

Thank you, and good afternoon, everyone, and welcome to Finance of America's First Quarter 2026 Earnings Call. With me today are Graham Fleming, Chief Executive Officer; Kristen Sieffert, President; and Matt Engel, Chief Financial Officer. As a reminder, this call is being recorded, and you can find the earnings release and related presentation on our Investor Relations website at ir.financefamericacompanies.com (sic) [ [email protected] ].

Also, I would like to remind everyone that comments on this conference call may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the company's expected operating and financial performance for future periods. These statements are based on the company's current expectations and are subject to the safe harbor statement for forward-looking statements that you will find in today's earnings release. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of risks or other factors, including those that are described in the Risk Factors section of Finance of America's annual report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 13, 2026. Such risk factors may be amended and updated in our subsequent filings with the SEC.

We are not undertaking any commitment to update these statements if conditions change. Please note, today, we will be discussing interim period financials for our continuing operations, which are unaudited. In addition, we will refer to certain non-GAAP financial measures on this call. You can find reconciliations of non-GAAP to GAAP financial measures to the extent available without unreasonable efforts in our earnings press release and presentation on the Investor Relations page of our website.

Now I will turn the call over to our Chief Executive Officer, Graham Fleming. Graham?

Thank you, Michael, and good afternoon, everyone. The first quarter of 2026 was an outstanding quarter, with operational momentum in originations driving an acceleration of volumes, excellent profitability in our Portfolio Management segment, and steady improvement in our financial results, liquidity, and capital position. On our call today, I will take you through the highlights, then spend a moment commenting on the market opportunity in reverse mortgages, which we believe is significant; Kristen will dive into our originations performance; Matt will comment on the financials; and then we will take your questions.

To start with, if you turn to Slide 5 of the accompanying presentation, Finance of America generated net income of $35 million and adjusted net income of $26 million, or $1.10 per share, up 112% from last year's first quarter results. This powered a strong increase in tangible equity to $268 million, or approximately $15 per share. These results are consistent with the guidance we have issued for 2026, which Matt will update you on in a moment. From a production standpoint, we funded $596 million in the quarter, up 6% year-over-year. As you will recall, we talked about operational enhancements to our platform, driving an inflection point in results, and we are starting to see that in the March and April fundings, consistent with the volume guidance we have shared with you.

Separately, I'm excited to see us rolling out a new second-lien reverse mortgage line of credit, which is a great product to help seniors tap directly with the timing and amounts that precisely suit their needs. Regarding the previously announced PHH transaction, the transaction has been modified to close in 2 distinct phases. The first phase, consisting of the origination, marketing of our products and subservicing components, is expected to close in May. The second phase, which includes the purchase of HECM servicing rights, will follow as we continue to work with our primary regulator, Ginnie Mae, on the related approval. Additional information can be found in today's 8-K filing with the SEC.

Before turning the call over to Kristen, I would like to spend a moment on the opportunity in reverse mortgages, which are typically viewed as a niche product in the broader mortgage universe, and in our experience are not well understood by investors missing the growth potential. If you turn to Slide 6, let me share with you a snapshot on current industry volumes. As you can see from the top chart of this slide, government-insured reverse mortgages, or HECMs, have been running roughly flat for the last 3 years at approximately $4 billion per year, down significantly from the boom experienced during the pandemic, driven by refinance activity.

What is noteworthy, but is somewhat hard to see given the lack of consistently available industry data, is the market expansion related to proprietary products. This is one of the reasons we believe the equity markets have been slow to pick up on the opportunity. These proprietary products significantly expand the market by making reverse mortgages available to borrowers aged 55 and older in certain states, compared to age 62 for government-insured products, and by offering jumbo balances and a range of product structures, including first liens, second liens, and lines of credit.

For example, Finance of America's second-lien products can provide a solution for borrowers who want to access home equity while maintaining a low rate primary mortgage. These products are really important to watch because their increasing origination volumes demonstrate the growing mainstream acceptance of reverse mortgages by American seniors. Finance of America has been the market leader in proprietary reverse products for over a decade. These products have been a significant and accelerating driver of our growth over the last 3 years as they continue to gain acceptance from our customers and from our investors alike.

With this thought in mind, if you will turn to Slide 7, I will end my prepared remarks by reminding you that American seniors control a massive amount of home equity, approximately $14.6 trillion. And this equity is expected to continue to grow as homes continue to appreciate and as the population ages. Between 2024 and 2026, census data shows that over 11,000 Americans turn 65 every day. Now these are big numbers, making the addressable market more than 100x greater than the size of the entire reverse mortgage population outstanding today, and not everyone is going to become a reverse customer. However, as the proprietary product set continues to expand and American seniors turn to home equity for an ever -widening set of use cases, we believe there is a massive multiyear growth opportunity shaping up for Finance of America.

And with that, I'll turn the call over to Kristen.

Thanks, Graham, and good afternoon, everyone. Last quarter, I said we were reaching an inflection point in the platform. What we saw in the first quarter reinforces that view, and we can see it clearly in the numbers.

Turning to Slide 8. Overall originations were up 6% year-over-year, and first quarter submissions reached a new high of $918 million, which is up 20% year-over-year. Submissions represent customers who've completed their application and provided all supporting paperwork. They're one of our clearest leading indicators of future funded volume and why we remain confident in our volume guidance. Our volumes reflect a mix of both HECM and proprietary products across first and second liens.

I specifically call out our HomeSafe Second, which reached a high watermark in the quarter, increasing 32% year-over-year. And as Graham mentioned, we rolled out a new line of credit option for HomeSafe Second, further expanding the use cases for our customers. Finance of America has long been a leader in proprietary products supported by our understanding of the customer and strong capital markets relationships, which continue to support growth across both our retail and wholesale channels. While HECM is structured to a one-size-fits-all approach, FOA's industry-leading product development and partnerships allow us to better target the various and bespoke needs of our massive customer base, which will lead to continued profitable growth.

Turning to Slide 9. At the top of the funnel, momentum exiting the quarter was strong. Inquiry volume in March was up 84% versus the 2025 average, while cost per inquiry declined 19%. Opportunities, defined as qualified warm transfers to loan officers, also reached a new high in March, up roughly 58% over 2025 levels. Further down the funnel, we're seeing equally strong progress in early conversion. Borrowers opting into our digital prequalification experience more than doubled sequentially, and submissions per loan officer in March reached the highest level in the history of our retail channel, up 47% compared to 2025 levels. These improvements are being driven by the operating model we've been building.

Helix is our proprietary, industry-first, end-to-end platform that connects how we acquire, evaluate, and move customers through the process, with Joy operating as the AI layer across that system. The deployment of AI is helping us in 2 ways: first, by allowing us to more consistently match customers with the right solution and improve their overall experience; and second, by improving our top-of-funnel marketing and resulting cost per lead. Incorporating AI across the platform is driving meaningful improvements that will compound as we grow and scale. Helix and Joy give us a competitive advantage over peers who rely on vendor systems, and I look forward to updating you on our progress as we build out new capabilities.

Stepping back, this is happening in a market that remains significantly underpenetrated. As Graham mentioned, today, there's less than $100 billion of reverse mortgage volume outstanding compared to an estimated $14.6 trillion of senior home equity. As the category leader with approximately 30% market share, our scale, product breadth, and operating model position us to capture more of this underpenetrated opportunity, supporting better outcomes for customers in retirement, and strengthening the durability and scalability of our earnings.

With that, I'll turn it over to Matt.

Thank you, Kristen, and good afternoon, all. Graham already gave you the headline results, so I'll give you some added color for the quarter, which you can find in today's earnings release and summarized by segment on Slide 11. As mentioned, we generated $35 million of net income and $26 million of adjusted net income. Adjusted earnings per share of $1.10 was up 112% year-over-year. Starting with Retirement Solutions, which represents our originations platform, adjusted net income was $14 million, down from the fourth quarter due to the typical seasonality in originations, but up substantially year-over-year, in fact, up by 56%. Driving these results was the higher conversion rates Kristen mentioned, as well as improved revenue margins, which increased year-over-year, reflecting the strong execution we are seeing as proprietary production continues to grow.

Portfolio Management delivered strong results for the quarter, generating $28 million in adjusted net income. Performance was driven primarily by $1.7 billion of securitization activity across both proprietary reverse and HECM buyouts. Results benefited from favorable market conditions, including tight spreads and relatively lower interest rates, as well as the timing of execution within the quarter. While timing can vary quarter-to-quarter, our results reflect the strength of our platform and our ability to consistently identify and execute on attractive capital markets opportunities.

Corporate segment adjusted earnings, which reflects overhead and interest expense on our nonfunding debt, was materially in line with prior quarters, reflecting reduced nonfunding interest expense, offset by investments in technology. Overall, these results drove a sequential increase in tangible equity to $268 million, or approximately $15 per share. With respect to our valuation, we believe the growing origination and earnings power that we continue to demonstrate will, over time, warrant a higher multiple on both an earnings and tangible equity basis.

Turning to key balance sheet metrics on Slide 12. You can see that our cash balances increased from $90 million at the end of 2025 to $108 million at the end of the first quarter, and are up by 108% year-over-year. During the quarter, we generated $58 million in cash flow from our originations and capital markets activities, and utilized $40 million to complete the repurchase of Blackstone's equity position. At this time, we view our plan to retire the $150 million balance of our senior secured corporate notes later this year as the most prudent use of our liquidity and capital in the near term. This deleveraging plan will create a very strong balance sheet, which we view as an appropriate foundation for the valuable operating franchise we have built. Having said that, given the strong results we posted this quarter, we also see considerable value in our own shares. We expect to revisit capital allocation priorities as we make progress against the deleveraging plan.

If you turn to Slide 13, I'll conclude my prepared remarks by giving you an update on our guidance. For 2026, we are maintaining our funded volume outlook of $2.8 billion to $3.1 billion. We're also increasing our guidance for full year adjusted earnings per share above our previously stated range to between $4.50 and $5.00 per share, reflecting the strong first quarter performance and the momentum we are seeing in our business.

With that, I'd like to ask the operator to open the call for questions.

[Operator Instructions] Your first question comes from the line of Timothy D'Agostino with B. Riley Securities.

Congrats on the quarter. So on origination volume, it sounds like March was a pretty strong month. And I was wondering if you could add some color as to maybe why March was stronger than February and January. And if that volume that was seen in March persisted through April and into the beginning of May?

Tim, I think a couple of things. One, I mentioned there's some normal seasonality. So our lead generation capabilities in November and December has always curtailed a little bit just from the holiday periods at the end of November and the end of December, of course. So that will lead naturally to some lower fundings in January and February. But as you start to get into the new year and start to crank that engine back up, you start to see a lead flow come in, which really starts to kick in February-March. That's just kind of normal seasonal stuff. I'll maybe let Kristen expand on the improved performance we're seeing from that marketing spend as well.

Yes, I touched on Helix, and really what we saw in March was the work that we've been doing actually producing the results that we expected it to, starting to come together in March. So we really started to hit a different speed as it relates to our origination volume in March as a result, and we expect that to continue for the year.

And then on the funded volume by product, especially thinking about the first quarter, obviously it's shifted more towards that proprietary product. But I guess regarding originations in the first quarter from the HECM product and the proprietary product, was there any changes in demand or any color you can provide on how homeowners are interacting with each product? Is the proprietary product gaining more traction? Just any color on how homeowners are interacting.

Homeowners typically choose a product that best suits their needs, which in most cases is a function of the amount of proceeds relative to the debt that they have and their home value. So where we see proprietary as natural fits are more of the jumbo home sizes on our traditional suite. But the difference for us in Q1 is we're really starting to see our second-lien product increase in originations. And those products are for people that really have a different use case in the sense that they're happy with their first mortgage, typically a low interest rate, they can afford that payment, but they have a tremendous amount of home equity that they'd like to tap and can't afford or don't want another payment to impact their cash flow. So for a HECM versus HomeSafe on the traditional side, it's typically a function of which product provides the customer access to the most funds and dependent on property value. And then on the HomeSafe second-lien, it's based on what I just described, borrowers looking for a different alternative.

[Operator Instructions] And we have a follow-up question from Timothy D'Agostino from B. Riley Securities.

Let's take the third question here. I just wanted to see if you had any more updates or just touch on anything else regarding the PHH acquisition. I know in the slide deck it was mentioned that it was progressing, but I don't know if there was any additional color you could provide.

Yes. All the additional information, Tim, will be in the 8-K that we filed after the market today. So as I said in my remarks, we've bifurcated the transactions and the originations, the marketing of our product, and subservicing, which we expect to close here in May. We have a small pool of HECM MSR in front of Ginnie Mae, which we'll work with Ginnie Mae on gaining the appropriate approvals and then close on that when the timing is correct, and we receive that approval.

We have reached the end of the Q&A session. I will now turn the call back to Graham Fleming for closing remarks.

Yes. Thank you. The takeaway from the first quarter is straightforward. We're seeing clear improvement in the underlying drivers of the business, and that improvement is starting to translate into stronger production and financial results. And with that, we look forward to updating you in August with our Q2 results. So thank you, everybody, for joining the call today.

This concludes today's call. Thank you for attending. You may now disconnect.

Ladies and gentlemen, thank you for standing by. My name is Colby and I'll be your conference operator today. At this time, I'd like to welcome you to the Finance of America Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] I will now turn the call over to Michael Fant, Senior Vice President of Finance. You may begin.

Thank you, and good afternoon, everyone, and welcome to Finance of America's Fourth Quarter and Full Year 2025 Earnings Call. With me today are Graham Fleming, Chief Executive Officer; Kristen Sieffert, President; and Matt Engel, Chief Financial Officer.

As a reminder, this call is being recorded, and you can find the earnings release and related presentation on our Investor Relations website at ir.financeofamericacompanies.com. Also, I would like to remind everyone that comments on this conference call may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the company's expected operating and financial performance for future periods.

These statements are based on the company's current expectations and are subject to the safe harbor statement for forward-looking statements that you will find in today's earnings release. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of risks or other factors, including those that are described in the Risk Factors section of Finance of America's amended annual report on Form 10-K for the year ended December 31, 2024, filed with the SEC on May 20, 2025.

Such risk factors may be amended and updated in our subsequent filings with the SEC. We are not undertaking any commitment to update these statements if conditions change. Please note, today, we will be discussing interim period financials for our continuing operations, which are unaudited. In addition, we will refer to certain non-GAAP financial measures on this call. You can find reconciliations of non-GAAP to GAAP financial measures to the extent available without unreasonable efforts in our earnings press release on the Investor Relations page of our website.

Now I'll turn the call over to our Chief Executive Officer, Graham Fleming. Graham?

Thank you, Michael, and good afternoon, everyone. As we look back at 2025, it was a year of continued strong execution for Finance of America as we delivered improving operating performance and took deliberate steps to strengthen the balance sheet and improve alignment, all while operating in a dynamic market environment.

For the full year, we reported GAAP net income of $110 million or $5.04 per share, representing a 175% improvement compared to the prior year. On an adjusted basis, which we believe is representative of our recurring earnings power, we generated full year adjusted net income of $74 million or $3.04 per share, up $60 million from 2024, representing a 429% increase and above our stated guidance range.

Lastly, the company recognized adjusted EBITDA of $143 million, a 138% increase versus 2024. These results reflect the progress we've made improving earnings quality and capitalizing on operating leverage as the platform scales. Because the securitization activity can shift between quarters, we continue to view the second half of 2025 average earnings as the best indicator of recent normalized run rate earnings power.

For the second half of the year, the company recognized $47 million in adjusted net income or $2.05 in adjusted EPS, an annualized run rate of $4.10 per share. From a production standpoint, we funded $2.4 billion of originations in 2025, representing a 24% increase from $1.9 billion in 2024. Fourth quarter volume totaled $619 million. And importantly, this growth was achieved alongside structural enhancements to our technology and operational processes, which should allow us to continue to see positive momentum in 2026.

During the fourth quarter, we continued our momentum with additional capital actions designed to strengthen the business, solidify the balance sheet and support durable growth. In November, we announced an agreement to acquire the reverse mortgage servicing portfolio and related assets from PHH Mortgage, a subsidiary of Onity Group. This transaction, which we expect to close in the second quarter, will expand our servicing platform, add experienced origination talent and pave the way for a long-term relationship with Onity that accelerates our mission to make responsible home equity access available to more homeowners aged 55 and older.

Also in December, we announced a $50 million equity investment supporting our continued growth initiatives. Stepping back, we believe home equity is increasingly becoming an important component of broader family financial planning. For many seniors, it represents not only retirement security, but also flexibility to support evolving family needs across generations. The investments we've made in our platform, product suite and capital structure position us to serve that opportunity with discipline, consistency and scale.

Overall, 2025 marked an important step forward for Finance of America, not only in what we earned, but in how repeatable and durable those earnings have become. And with that, I'll turn it over to Kristen to discuss the operational drivers behind this performance and positive early signals in '26. Kristen?

Thanks, Graham, and good afternoon, everyone. The fourth quarter marked an inflection point for the platform. 2025 was a year of disciplined investment, modernizing our technology stack, embedding AI across the customer journey and strengthening marketing precision. As we enter 2026, those investments are translating into measurable operating momentum. For the full year, we funded $2.4 billion of originations, a 24% increase compared to 2024.

Fourth quarter funded volume totaled $619 million, closing the year with strong sequential performance. In a rate-sensitive environment, this growth reflects improved funnel productivity and the durability of our category leadership. As the reverse mortgage market leader, marking the largest marketing investments in the space, we are uniquely positioned to see demand trends develop in real time. In January, inquiry volume increased more than 75% year-over-year, while speed to answer calls improved by over 60%.

These improvements drove opportunities approximately 30% above baseline while reducing cost per opportunity by 12% compared to the second half of 2025, demonstrating early operating leverage within our acquisition engine. A key structural differentiator is the rollout of Joy, our AI-powered customer ambassador. Joy is delivering more than 5x the conversion performance of our prior third-party call center while materially improving responsiveness across peak and off hours.

This is not simply a productivity improvement, it represents a permanent shift in our acquisition model, lowering variable costs while increasing scalability and conversion efficiency. Our digital acquisition engine is also accelerating performance. So far in Q1, prequalification engagement has doubled compared to Q4 of 2025. Among customers choosing the digital path, we saw a 47% increase in speed to application, a 36% improvement in speed to submission and a 77% increase in submission rate.

We expect these gains to shorten cycle times, improve pull-through and lower our cost to produce. We're also seeing external signals that reflect an increase in consumer interest in reverse mortgages. Google Trends data shows reverse mortgage-related search activity trending approximately 40% higher year-over-year at seasonal peaks, significantly outpacing prior year trends.

Given our scale and brand leadership, increased category search activity positions us well to capture incremental demand. Underpinning this progress are our people and culture. We're a team willing to challenge legacy approaches, embrace innovation and hold ourselves to a higher standard of execution. Our team is and will remain a critical driver of our performance.

As we look to the year ahead, we have clear visibility into the drivers of performance, stronger cross-functional alignment and a structurally more efficient platform. The work completed in 2025 has improved funnel productivity, reduced customer acquisition friction, expanded operating leverage and has positioned us for a breakthrough year. As volumes grow, we expect these dynamics to translate into sustained earnings expansion and margin improvement.

With that, I'll turn it over to Matt to walk through the financials.

Thank you, Kristen, and good afternoon, everyone. The fourth quarter was the latest example of solid execution at Finance of America with full year results highlighting consistent operating progress and our ability to execute effectively as opportunities arise.

For the full year, Finance of America reported GAAP net income of $110 million or $5.04 per basic share. These results reflect the impact of interest rate and credit spread movements, partially offset by changes in model assumptions on the fair value of our residual assets, which, as we've discussed previously, are noncash in nature.

On an adjusted basis, for the full year, we generated adjusted net income of $74 million or $3.04 per share, representing a 429% increase compared to 2024. We also generated adjusted EBITDA of $143 million, a 138% increase year-over-year. These results reflect our ability to realize the platform's operating leverage and continued improvement in earnings quality as the platform has scaled.

Total revenue increased 26% year-over-year to $497 million in 2025 and compared to $394 million in 2024. This $103 million increase in revenue directly translated into improved profitability as fixed expenses remained largely consistent year-over-year. Excluding noncash fair value changes to our balance sheet, revenue increased approximately $83 million year-over-year.

After tax, that equates to roughly $61 million of incremental earnings, which closely aligns with the $60 million year-over-year increase in adjusted net income. This demonstrates the operating leverage embedded in the platform as volume scales.

Turning to our fourth quarter. We reported a GAAP net loss of $21 million or $1.30 per basic share. While our Q4 results were impacted by fair value movements, so far in 2026, interest rates have moved lower and spreads have tightened. At current levels, we would expect our first quarter fair value adjustments to more than offset the fourth quarter impact.

On an adjusted basis for the fourth quarter, we generated adjusted net income of $14 million or $0.69 per share, representing a 180% increase compared to the fourth quarter of 2024. Adjusted EBITDA for the quarter totaled $28 million, up 56% year-over-year, reflecting continued operating momentum and improved earnings consistency as the platform has scaled.

Despite the volatility in GAAP, adjusted earnings have remained resilient, reflecting the strength of the core economics and the consistency of cash generation across the platform. As mentioned earlier, the company recognized adjusted earnings per share of $3.04 for the full year 2025, which was above our stated guidance range.

As Graham noted earlier, because securitization timing can shift between quarters, we view the second half of 2025 combined as a reasonable reference point for the underlying earnings power of the company. For the second half of 2025, the company reported adjusted net income of $47 million or adjusted earnings per share of $2.05. This would approximate $4.10 per share on an annualized basis.

Looking ahead to 2026, we continue to expect volume growth of 15% to 25% year-over-year for a range of $2.8 billion to $3.1 billion, supporting our previously communicated 2026 adjusted earnings per share guidance of $4.25 to $4.75 per share. For the full year, the company's cash and cash equivalents increased by $42 million. During 2025, Finance of America generated over $150 million in cash flows through our core origination and capital markets activities. This reflects stronger performance driven by higher funded volumes, improved operating leverage and meaningful bottom line expansion.

In addition to the $150 million generated from our core operations, we raised an additional $40 million in the form of a 0% coupon convertible note and a $50 million preferred equity investment. From these sources of cash, we paid down $117 million of corporate debt and working capital facilities, paid $40 million of interest on our nonfunding financing and used $40 million to acquire the first half of Blackstone's equity position.

Please see our earnings supplement on our Investor Relations website for further detail. In February, we completed the second half of the Blackstone purchase, fully exiting that legacy ownership position. Looking forward to 2026, we anticipate that cash flows from our core origination and asset level capital markets financing activities will be sufficient to fund both the acquisition of PHH as well as the paydown of the $150 million of senior secured notes.

Once the senior secured notes have been paid off, we'll be left with only $40 million of convertible notes and $150 million of exchangeable corporate bonds, both of which have the ability to convert to equity. Lastly, given the company's strong performance and investments made by our strategic partners, Finance of America ended 2025 with a tangible equity position 117% greater than December 2024.

With that, I'll turn it back to Graham for closing remarks.

Thank you, Matt. As we reflect on 2025, the takeaway is straightforward. The fundamentals of our business are working. Our operating platform is performing consistently. Margins remain disciplined and execution continues to improve. Finance of America's earnings power is becoming more visible and durable. As the business scales, adjusted results increasingly reflect the underlying economics of the platform and are less influenced by timing-related volatility.

We enter 2026 expecting to grow volume by 15% to 25%, generate cash flow from originations and capital markets similar to 2025 of $150 million and use these proceeds to pay down debt and delever our balance sheet. Over the coming years, we expect Finance of America to be free of all corporate debt, leaving a company better capitalized, more resilient and well positioned to expand our reach. We believe demographic trends continue to support long-term demand for responsible home equity solutions.

The progress we've made across our platform, products and capital structure enables us to meet those evolving needs with discipline and consistency. As we continue building a more scalable technology-enabled platform, we remain confident that there is a better way with FOA for our customers, our partners and our shareholders. And with that, we'll open the call for any questions.

[Operator Instructions] Your first question comes from the line of Ethan Brown with Omega.

Nice job on the quarter. I have a question just trying to clarify what you said about the balance sheet and uses of cash. I heard you can fund the PHH acquisition and pay down some senior secured notes. When you consider all the free cash that you've got coming in and you consider the share repurchase program that you've got, are you going to be able to extend the share repurchases beyond just what you bought from Blackstone? Or is that going to be a 2026 strategy for capital allocation? Or should we expect share repurchases to be larger in 2027 and going forward?

I think really, we don't have any announced share repurchase activities beyond the Blackstone repurchase, which we noted we did the first half of that in the fourth quarter, we completed that purchase in February of 2026. So that's now behind us. With that in mind, looking at the free cash flow from this year, really our focus is looking at retiring that $150 million of corporate debt. And once that has been extinguished, then I think we're in the world where we're talking about potentially doing further share repurchases into 2027. But for 2026, right now, our goal would be on paying off the $150 million of corporate debt, which, again, would be a little early. I think our latest amendments to the facility only require us to pay off $60 million by this November, and we can extend $90 million. But we have drawn up plans. We'd like to see if we can retire that full $150 million during 2026.

Just a follow-up. When would you see the $90 million -- the full $150 million or the $90 million in 2027 being paid down? And when would the gates be wide open to more aggressive share repurchases?

Yes. So again, there's a lot of long here with a lot of activity to do, but our goal would be to pay off that $60 million and the $90 million in 2026. And so the gates will be open for further share repurchase activity going into 2027.

The outside date for that payment, Ethan, will be November '27. But our expectation is we'll pay the $150 million in November '26.

Your next question comes from the line of Leon Cooperman with Omega Family Office.

Yes, I think you've answered the question through Ethan. I got a question on Bloomberg from a friend of mine. Can you ask the following question this way. Do you have enough cash generation to pay off the first lien this year in its entirety? The answer is yes. So if so, how much cash do you think you will leave you with? And do you think you'll be in a position to buy back stock this year? And you're saying you don't think about stock back this year?

Yes, I think it sounds like pretty much the question that Ethan asked as well. So again, I think the -- our goal for this year is to pay off the entire $150 million. $60 million, we've agreed to pay down this year for sure. $90 million we could extend. But based upon our plans for the year, we think we can retire the entire $150 million this year. And then next year, we would have all free cash flow to do other things with, including repurchasing shares if that was an option.

All right. And in terms of -- you have so many different measures of earnings. I've asked this before, what is the measure that you run the company by that's most important to you?

So we look at the adjusted EPS [ ANI, ] which was $3.04. If you recall, we gave guidance repeated guidance of between $2.60 and $3 for last year, and we finished the year at $3.04. So just over the high end of the range. This year's guidance is $4.25 to $4.75. And we're -- as we started the year here and we look at the early funnel metrics, we're confident, right, that we'll be in that range again in 2026.

So your stock is less than 4x earnings? What makes -- why do you want to wait to 2027 and buyback?

It's a good question, Lee. I think as we think about alternatives of cash, buying back shares and extinguishing debt, there's certainly arguments on both sides of that equation. I think different stakeholders have different points of view. I think certainly removing the corporate debt overhang is beneficial, helps with the rating agency's overall perception of the company, which benefits equity holders in the long term. But at these prices, I think the share repurchase options are also kind of attractive. So I mean, we'll definitely weigh both of those. But I think at this point in time, I think our focus is on retiring the corporate debt, but that could change either way as the year unfolds.

Your next question comes from the line of Eric Hagen with BTIG.

This is [indiscernible] on for Eric. Can you discuss the current warehouse financing conditions for both new originations and MSRs? And more specifically, given the consolidation we've seen in the space over the past few years, do you believe that dynamic has actually improved funding terms and availability for the remaining players in the space?

Yes. I maybe can't speak to the other players in the space. But from our own experience, I'd say that warehouse financing is ample. We have increased some of our facilities. We've added some new financing partners. Credit has been pretty readily available in the space. We've talked about in previous calls, we're pursuing financing on our mortgage servicing right asset, our HMBS asset. That's going pretty well. So I think that overall, we view credit positively in the space. As I mentioned earlier, we've seen spreads generally tighten across the spectrum. So we're seeing some benefit there as well. I would suspect others are seeing similar things, but I have no firsthand knowledge of what our competitors are seeing.

Yes. We're generally seeing is we're renewing our facilities over the course of the year that we're gaining improved terms, either higher advance rates or lower spreads. So yes, we have no concerns about -- we have ample warehouse liquidity, and we continue to increase where we can and add new participants as necessary.

And with no further questions in queue, I'd like to turn the conference back over to Graham Fleming for closing remarks.

I want to thank everybody for joining the call today. We look forward to updating you on our progress in May with our Q1 results, and have a great afternoon, everybody. Thank you.

This concludes today's conference call. You may now disconnect.

Good day, everyone, and welcome to the Finance of America Third Quarter 2025 Earnings Call.

At this time, I would like to hand the call over to Mr. Michael Fant. Please go ahead, sir.

Thank you, and good afternoon, everyone, and welcome to Finance of America's Third Quarter 2025 Earnings Call.

With me today are Graham Fleming, Chief Executive Officer; Kristen Sieffert, President; and Matt Engel, Chief Financial Officer.

As a reminder, this call is being recorded, and you can find the earnings release on our Investor Relations website at ir.financeofamericacompanies.com.

Also, I would like to remind everyone that comments on this conference call may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the company's expected operating and financial performance for future periods.

These statements are based on the company's current expectations and are subject to the safe harbor statement for forward-looking statements that you will find in today's earnings release. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of risks or other factors, including those that are described in the Risk Factors section of Finance of America's amended annual report on Form 10-K for the year ended December 31, 2024, filed with the SEC on May 20, 2025. Such risk factors may be amended and updated in our subsequent filings with the SEC. We are not undertaking any commitment to update these statements if conditions change.

Please note, today, we will be discussing interim period financials for our continuing operations, which are unaudited. In addition, we will refer to certain non-GAAP financial measures on this call. You can find reconciliations of non-GAAP to GAAP financial measures to the extent available without unreasonable efforts in our earnings press release on the Investor Relations page of our website.

Now I'll turn the call over to our Chief Executive Officer, Graham Fleming. Graham?

Thank you, Michael, and good afternoon, everyone. The third quarter of 2025 marked a period of strategic execution and strong performance for Finance of America. In a dynamic market environment, we remain focused on operational excellence, proactive balance sheet management and long-term growth.

Year-to-date, we have reported GAAP net income of $131 million or $5.78 per basic share, reflecting the benefit of lower interest rates and tighter spreads, partially offset by softer home price appreciation projections in the third quarter.

On an adjusted basis, we generated adjusted net income of $33 million for the quarter or $1.33 per share, representing a significant sequential improvement and more than double the level from a year ago. The increase was driven by improving revenues across our business with increased margins on HomeSafe and HECM products, stronger origination fee income and higher capital markets revenue as a result of the over $3 billion of notes issued in our securitizations backed by our proprietary loans during the quarter.

Compared to the first 9 months of 2024, we have seen funded volumes increase by over 28% and adjusted net income grow by more than 5x from $9 million in 2024 to $60 million in the first 9 months of 2025. This translates to $2.33 of adjusted earnings per share, a major step toward our full year guidance.

Turning to adjusted EBITDA. The company generated $114 million for the first 9 months of 2025, a 171% improvement compared to the same period a year ago.

During the quarter, we completed a series of transactions to enhance liquidity and balance sheet flexibility. We repaid $85 million of higher cost working capital facilities and entered into an agreement to repurchase the entirety of Blackstone's equity stake in FOA. We also closed our largest proprietary securitization in company history in September, a nearly $2 billion issuance.

As of September 30, these actions left the company with $110 million in cash and cash equivalents compared to $46 million as of June 30. This increase in cash provides FOA with enough liquidity to satisfy the $53 million corporate bond payments due later this month.

In addition to our strong results, in October, we announced a strategic partnership with Better.com, expanding our product offerings and enhancing our technology backbone to better serve our demographic, which Kristen will touch on in more detail.

Over the last several years, we've continued to invest in digital innovation, AI and data analytics, strengthening the foundation of our business. While still very early in the adoption of AI technology, we fully expect these investments to improve the customer experience, enhance the ROI on our marketing spend and increase the productivity of the organization, driving improved operating leverage.

Kristen will share more on the progress we've made in these areas and the impact across our platform. Kristen?

Thanks, Graham, and good afternoon, everyone. The third quarter represented a disciplined period of execution across Finance of America. We delivered solid origination performance, advanced our technology transformation and continued to strengthen the core fundamentals that position FOA for sustainable, profitable growth into 2026 and beyond.

Origination performance remained robust with funded volume reaching $603 million and submission volume reaching $887 million for the quarter compared to $764 million in the same period last year.

By the end of October, for the year 2025, we funded $1.97 billion in reverse mortgages, surpassing our entire 2024 production of $1.92 billion, and October submissions totaled $336 million, the highest month in 3 years.

Beyond headline volume, the team continues to make substantial progress in transforming the business model. We're embedding AI, digital automation and advanced data analytics across our wholesale and retail channels, driving measurable gains in efficiency and conversion.

We're already seeing tangible results from our digital-first strategy. Over 20% of customers who engaged with our new digital prequalification completed the process without loan officer intervention. The tool, which includes a soft credit pull, delivers a 3-minute prequalification experience, setting a new benchmark for speed and customer engagement in the reverse mortgage industry. This will translate into greater efficiency per loan officer, and we saw this in October's numbers as our loan officers were able to service 25% more opportunities and generated a 32% increase in monthly submission volume over the year-to-date averages.

Our continued investment in and attention to the top of the funnel is driving stronger digital engagement and setting the foundation for efficient volume growth in 2026. Unique web leads increased 16% quarter-over-quarter. Customer e-mail retention increased 36% from the time of the AAG platform acquisition and leads generated through e-mail nurture from our database increased 206% quarter-over-quarter.

In the coming months, we're enhancing this digital ecosystem further with SMS engagement tools for sales teams, AI-powered call agents to provide 24/7 borrower support and AI-powered wholesale tools to improve our partner experience. These initiatives are expected to increase conversion at critical funnel points, expanding our operating leverage and the scalability of our model.

We are also continuing to advance our diversification strategy through a strategic partnership with Better.com that broadens our impact into the total addressable market. These traditional home equity products enable us to serve approximately 30% more of the potential borrowers already engaging with our brand who need higher loan-to-value solutions than our current reverse suite provides.

At FOA, we're not just adapting to the future of home equity, we're defining it. Our investments in digital automation, data infrastructure and AI are structurally enhancing unit economics, driving margin expansion and strengthening our long-term earnings power.

As home equity continues to move from the most underused retirement asset to a mainstream solution for the modern retiree, FOA is positioned at the center of this transformation, committed to unlocking opportunities for millions of Americans to realize the full potential of their retirement.

With that, I'll turn it over to Matt to review the financials. Matt?

Thank you, Kristen, and good afternoon, everyone. The third quarter reflected strategic execution and strong performance for Finance of America, highlighting both the consistent progress of our operating performance and our ability to take advantage of opportunities as they arise.

On a GAAP basis, the company reported a net loss of $29 million for the quarter as lower interest rates and tighter spreads were more than offset by softer home price appreciation projections impacting the noncash fair value of our residuals.

Year-to-date, the company is still significantly positive, reporting $131 million of pretax income for the first 9 months of 2025.

Adjusted net income for the quarter totaled $33 million or $1.33 per share, a 125% increase from the prior quarter and more than double the level from the same period last year. This improvement was driven by higher origination margins and increased capital markets activity.

For the first 9 months of 2025, we have funded approximately $1.8 billion in originations compared with $1.4 billion during the same period last year, an increase of 28% year-over-year.

Adjusted net income totaled $60 million or $2.33 per share, up meaningfully from $9 million or $0.38 per share in the same period of 2024. This improvement reflects stronger margins, increased capital markets activity and continued expense discipline across our platform.

Excluding fair value changes from market and model assumptions, Q3 revenues totaled $103 million, bringing year-to-date total revenue to $263 million, an increase of 22% year-over-year from $215 million in the first 9 months of 2024.

During the quarter, we strengthened our liquidity through the issuance of $40 million of 0% convertible notes as well as the monetization of residual assets, completing over $3 billion in securitizations, including a nearly $2 billion securitization in September, the largest in the company's history.

Additionally, we paid down $125 million of working capital and other financing facilities with $60 million remaining to be redrawn for future use. Despite these paydowns, cash levels increased from $46 million as of June 30 to $110 million as of September 30, allowing us to set aside funds for the scheduled $53 million corporate debt paydown later this month.

As announced in August, we entered into an agreement to repurchase all existing shares owned by Blackstone. In accordance with GAAP accounting rules, this agreement is seen as an obligation and therefore, accounted for as a liability and a reduction to equity as of the date of the announcement. Our September 30 balance sheet reflects this liability and reduction to equity.

Turning to guidance. We are reaffirming our full year 2025 adjusted EPS target of $2.60 to $3 and anticipate tracking toward the low end of our previously stated volume range of $2.4 billion to $2.7 billion.

Looking ahead to 2026, we expect volume growth of 20% to 25% year-over-year, supporting a 2026 adjusted earnings per share guidance of $4.25 to $4.75 per share, which is up from $2.60 to $3 in 2025.

With that, I'll turn it back to Graham for closing remarks.

Thank you, Matt. As we close the third quarter, I want to take a moment to reflect on the progress we've made. In just over a year since our transformation, we have achieved consistent profitability and expanded our leadership in reverse lending while delevering and strengthening our balance sheet.

As Kristen mentioned, we're seeing strong momentum at the top of the funnel with record lead generation, higher digital engagement and continued efficiency gains, all of which give us confidence to achieve a 60% year-over-year increase in 2026 adjusted EPS guidance.

These accomplishments demonstrate our progress in building a stronger, more efficient and more diversified Finance of America.

Our continued investment in modernization, digital innovation and AI is enhancing productivity, expanding operating leverage and positioning us to scale efficiently as demand for home equity solutions grows.

We believe we are well positioned to deliver sustained volume growth of roughly 20% annually over the coming years as we build the most trusted and technologically advanced platform for retirement-focused home equity solutions in America.

We are confident in our direction, encouraged by our results and excited about the opportunities ahead. As we look to 2026, we remain committed to driving sustainable growth, enhancing shareholder value and helping more Americans discover there is a better way with FOA.

And with that, we'll open the call for questions.

[Operator Instructions] We'll take the first question today from Doug Harter, UBS.

Just on the buyback, I guess, has that been completed yet? Or what is the updated time frame on that completion?

It has not been completed yet, Doug. It's really -- we're on track to complete it. Most likely that will begin later this month and into December perhaps.

And can you remind me the cash total of that, just as we think about kind of this, the uses of your current cash position?

It's about $80 million.

Okay. And then how do you think about what is the right level of cash to hold? Like how much of that capacity do you have to redraw do you think you need to do in the coming months?

So if you kind of piece it together, Doug, I think we ended the quarter with $110 million. We indicated we had paid down during the quarter $125 million of working capital facilities, right, which was $85 million of the kind of corporate general facilities and then other kind of warehouse debt.

So of that $125 million, $60 million of it is available really to be redrawn as necessary. So you can really kind of add that to the $110 million we had on hand at the end of September to give you the kind of the adjusted cash capacity we have heading into the fourth quarter.

Got it. And then I guess, how should we -- obviously, a strong securitization quarter, which I imagine was a big part of the cash generation. How should we think about your cadence in the coming months, quarters of securitization? And just any update on how that market is functioning right now?

Yes. I think generally, our cadence has been to do kind of one large securitization every quarter. We did accelerate. We probably accelerated, pulled one that we had planned for Q4 into Q3.

But that said, we do have a smaller securitization we expect to complete this month and it remains to be seen exactly what that timing looks like. But I do think the Q3 activity was larger than what you'd normally expect to see on a go-forward basis.

The market has been performing very well. Spreads have been tight. Demand has been good. One thing we've seen, especially as we started doing some larger deals. Remember, we did a $1 billion deal in July, which at the time was our largest deal ever, followed that up with a $2 billion deal in September, doubled that. Both were very well received. And that when you start talking bigger numbers, you just get a different class of investor, multiple new investors coming in. So we saw a very good reception for our bonds in those deals.

The next question is from Leon Cooperman from Omega Advisors.

There are lots of different measures of earnings. How much cash do you generate in a typical year? In other words, how much cash would you generate in a 12-month period on average?

So Leon, I'll answer that one. So in any given year, when you look at our PTI, it may -- because we create residuals in MSR, I would say within 24 to 36 months after our P&L, that number all turns green. So if we post $100 million or $120 million of PTI for this year, you would expect over the course of 3 years that, that would all become cash?

Okay. But I want to take the $100 million divide by 3, it's a typical year.

Well, we do have currently on our balance sheet, we still have roughly $300 million of residuals and retained securities, right, that over the coming years, we'll continue to monetize those residuals, and they'll continue to turn to cash. And then our new residuals -- we'll create new residuals and new MSR on a go-forward basis.

So basically, how many shares is the new capitalization going to be?

So total what we have today about 24 million shares outstanding, right? 8 million of that will be repurchased in the Blackstone transaction, which leaves you with about 16 million. And then the convertible notes, both the $150 million we have from the prior convertible notes and the $40 million notes we just added would add about 7 million plus our stock options get you back to about 24 million. So you'll see our total fully diluted share count go from what today is about 31 million, down to about 24 million on an adjusted basis going forward.

So are you suggesting that you generate about $4 a share in cash earnings?

Yes, at $100 million in PTI, that would be correct.

And everyone, at this time, there are no further questions. I'll hand the conference back to Graham Fleming for any additional or closing remarks.

Yes. Thank you, everybody, for joining. We appreciate your participation, and we look forward to updating the full year numbers in March of next year. So thank you very much, everybody.

Once again, everyone, that does conclude today's conference. We would like to thank you all for your participation today. You may now disconnect.

Thank you for standing by, and welcome to the Finance of America Second Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Michael Fant, Senior Vice President of Finance. Please go ahead.

Thank you, and good afternoon, everyone, and welcome to Finance of America's Second Quarter 2025 Earnings Call. With me today are Graham Fleming, Chief Executive Officer; Kristen Sieffert, President; and Matt Engel, Chief Financial Officer. As a reminder, this call is being recorded, and you can find the earnings release on our Investor Relations website at ir.financeofamericacompanies.com.

In addition, we will refer to certain non-GAAP financial measures on this call. You can find reconciliations of non-GAAP to GAAP financial measures to the extent available without unreasonable efforts discussed on today's call in our earnings press release on the Investor Relations page of our website. Also, I would like to remind everyone that comments on this conference call may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the company's expected operating and financial performance for future periods.

These statements are based on the company's current expectations and are subject to the safe harbor statement for forward-looking statements that you will find in today's earnings release. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of risks or other factors, including those that are described in the Risk Factors section of Finance of America's annual report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 14, 2025, and amended by Amendment No. 1 to our annual report on Form 10-K/A filed with the SEC on May 20, 2025.

Such risk factors may be amended and updated in our subsequent filings with the SEC. We are not undertaking any commitment to update these statements if conditions change. Please note, today, we will be discussing interim period financials for our continuing operations, which are unaudited. Now I would like to turn the call over to Finance of America's Chief Executive Officer, Graham Fleming. Graham?

Thank you, Michael. Good afternoon, everyone, and thank you for joining us today. The second quarter of 2025 marked another period of steady progress at Finance of America. Our performance reflects consistent execution, building momentum and ongoing validation of our long-term strategy. We funded $602 million in volume, exceeding the top end of our guidance range and representing a 35% increase from the second quarter of 2024 and a 7% increase from the prior quarter.

This marks our fifth consecutive quarter of volume growth, a testament to our ability to meet the needs of our customers regardless of market conditions. We delivered GAAP net income of $80 million or $3.16 basic earnings per share. We reported $14 million of adjusted net income or $0.55 in adjusted earnings per share and $30 million of adjusted EBITDA. We continue to deliver consistent improvement with ANI up 8% sequentially compared to the first quarter.

For additional context, the second quarter of 2024 was the first quarter following our organizational transformation in which we broke even on an adjusted net income. Since then, we have seen positive and improving performance each quarter. Year-to-date, ANI totals $27 million compared to a loss of $7 million in the first half of last year, reflecting the impact of our completed transformation. This performance brings our first half adjusted EPS to $1.07 per share, a strong result given the evolving macro backdrop.

We also recently achieved a major milestone in the capital markets. In July, we completed our first ever $1 billion-plus HomeSafe securitization. This transaction not only validates our ability to scale, but also highlights the strength of investor demand for our assets. Looking ahead, our mission remains clear: drive greater awareness and education around the power of accessing home equity through retirement, which we believe will lead to a broader adoption of our industry-leading reverse mortgage solutions.

Two strategic priorities are central to that. First, expanding scalable digital tools to improve borrower engagement; and second, enhancing the customer experience we offer to drive long-term channel growth. Ultimately, we remain deeply confident in the long-term opportunity for reverse mortgages. As more homeowners look to housing wealth to support retirement, we believe Finance of America will continue to lead the market in meeting that demand.

And now I'll turn it over to Kristen for an update on our operations. Kristen?

Thank you, Graham. Q2 was a focused high execution quarter. We remained disciplined in advancing our strategic initiatives, keeping the customer and our partners at the center of our efforts. As Graham mentioned, Q2 originations topped $600 million. Compared to the first quarter, submissions also rose nearly 11% overall, and our HomeSafe Second submissions grew by almost 23%.

Wholesale continues to be a cornerstone of our success with nearly 55% volume growth in Q2 this year relative to Q2 of 2024. We also increased our HMBS issuance market share in June to over 29%, our highest monthly share since January of 2024. Our Q2 average market share of 28% reflects a 4% improvement over the average of the prior 3 quarters. These trends reinforce confidence in our growth trajectory.

Turning to our retail platform. As of June 30, we fully transitioned to our new A Better Way with FOA campaign, concluding our long-standing partnership with Tom Selleck. Early indicators are promising. In just 90 days, TV leads signal growing appeal among younger demographics and in markets with higher home values. At the same time, our digital acquisition strategy is gaining traction with a 10% increase in leads from digital channels.

We're also making major strides in technology. In June, we launched the industry's first digital prequalification experience, paving the way for scalable, borrower-friendly engagement, especially around second-lien home equity loans. AI is playing a pivotal role here, accelerating development, boosting operational efficiency and improving analytics and document management.

Looking ahead to Q3, we're expanding this digital platform to a wider audience. By combining seamless online access with expert loan officer support, we're enhancing both scale and service. We will also be introducing our new AI-powered virtual call agent to improve off-hour engagement and elevate customer experience by the end of the year. Customers want speed and simplicity, and our digital experience is being designed to deliver both.

According to HMDA, subordinate-lien loans for senior borrowers grew 20% year-over-year, reaching $49 billion in volume. Finance of America is meeting this demand through our HomeSafe Second product, while a significant opportunity remains ahead as we continue to expand its reach through digital integration. Overall, Q2 marked continued progress toward our long-term vision to become the most trusted brand for homeowners entering the next chapter of life.

We're building a smarter, scalable and service-led retirement solutions platform, and we're confident these investments will drive sustainable growth through 2025 and beyond. Before I wrap, I want to recognize the incredible impact of Finance of America Cares, our employee-funded nonprofit, celebrating 8 years of service. To date, Cares has granted over $3.2 million to our local communities and employees in crisis, donated 12,000 hours of service and positively impacted more than 2 million lives. This speaks volumes about our culture, and we're just getting started. Thank you to every team member who contributes.

With that, I'll turn it over to Matt to walk through the financials. Matt?

Thank you, Kristen, and good afternoon, everyone. Q2 was another strong quarter marked by continued growth and financial discipline. Our funded volume totaled $602 million, up 7% from the $561 million in Q1 of '25 and 35% above the $447 million in the second quarter of last year. This marks our fifth consecutive quarter of volume growth. We continue to see meaningful improvement in our GAAP results this quarter.

For Q2, the company reported GAAP net income of $80 million or approximately $3.16 per basic share compared to a loss of $5 million in the same period last year. These results were driven by steady production momentum and enhanced operating leverage. Fair value marks also remained positive, supported by tighter deal spreads, declining index rates and stable home price assumptions. Adjusted net income came in at $14 million, $1.1 million or 8% higher than the first quarter of $12.9 million with adjusted EBITDA of $30 million for the quarter, reflecting strength in both top line performance and margin discipline.

Our adjusted EPS for Q2 was $0.55, bringing first half of 2025 adjusted EPS to $1.07. Based on our current trajectory, we remain on track to deliver within our full year guidance range of $2.60 to $3 a share in adjusted EPS with continued operating leverage positioning us for a higher run rate exiting the year. Revenue, excluding fair value changes from market inputs or model assumptions totaled $84.8 million in Q2, up 6% quarter-over-quarter from $79.9 million in Q1 and up 22% year-over-year from $69.4 million.

This sequential and annual improvement reflects the commitment to our growing originations platform. On the expense side, we remain disciplined. Our cost structure continues to align with our current scale, and we are realizing improved operating leverage as we grow. Compared to the prior quarter, total expenses were higher by approximately $2.7 million. While variable expenses, including variable compensation, loan production and portfolio expense and marketing increased in line with higher volume and strategic marketing investments.

This was somewhat offset by continued reductions in our fixed cost base. Compared to Q2 of last year, fixed expenses were lower by $4 million with significant decreases in professional fees and technology-related expenses. These 2 categories underscore recent efforts by the team to negotiate continued reductions and vendor-related spend. Turning to the balance sheet, we ended the quarter with $275 million in tangible net worth, up from $187 million in Q1, driven by our retained earnings.

Book equity totaled $473 million at quarter end. On the capital markets front, we securitized over $800 million in proprietary loans during the second quarter. In July, we built on that momentum by closing a $1.2 billion transaction, our largest to date and the first in company history to exceed the $1 billion mark. This milestone not only reinforces the strength of investor demand for diverse assets, but also positions us well to execute on our broader capital plan. We reaffirm our full year guidance of $2.4 billion to $2.7 billion in originations and $2.60 to $3 in adjusted EPS. For the third quarter, we expect funded volume in the range of $600 million to $630 million.

With that, let me hand it back to Graham for closing remarks.

Thank you, Matt. Before we open the call for questions, as announced yesterday, we have paid off our higher cost working capital facility and entered into an agreement with Blackstone to acquire the remaining equity stake in Finance of America. This marks a natural evolution in our journey, and I want to take a moment to thank our long-time partners at Blackstone for their support over the last 10 years.

Their belief in our team and our vision played a meaningful role in shaping the company we are today. Looking forward, we are excited for the further support of long-time investors and bondholders through a new convertible debt facility. We are well positioned to aggressively pursue our next chapter of growth. As we mark this turning point in our ownership, it's an appropriate moment to step back and reflect on how far we have come.

Just 1 year ago, we were exiting a period of transformation. Since then, we've delivered 5 consecutive quarters of volume growth, regained profitability, launched a national brand campaign and stabilized our balance sheet. More importantly, we're helping more people understand that there is a better way, a better way to age, a better way to manage financial uncertainty and a better way to tap into the value they built through homeownership. There is a better way with FOA.

And with that, we'll open the call for questions.

[Operator Instructions] And your first question comes from the line of Doug Harter with UBS.

I wanted to get clarity on your reiterated guidance. And does that factor in paying off the working capital line and the impact of the buyback?

So not specifically, Doug, I think we were on track to kind of meet that target even without that. But to get that in context, you hit on 2 important points, which I think should help us obviously meet that target as well, right? So the first impact on the payoff of the higher cost working capital lines. In gross numbers, we retired $85 million of working capital line at 15% rate of interest.

And we replaced it with $40 million of exchangeable notes that bear 0% interest and a $20 million working capital line at 10%. So we're going to see about a $10 million annualized reduction in our interest expense just from that transaction. Then the timing on the share count, we've got a window between 105 and 120 days out, which puts that somewhere around the end of November, right? So you'd expect to see that reduced share count partially in our Q4 numbers, but more important as we project into 2026.

Great. Appreciate that, Matt. And then can you just talk about how you're thinking about kind of the sources and uses to pay off the working capital line and then to fund the buyback later this year?

Yes, absolutely. So the convertible deal closed yesterday, and the working capital was paid off yesterday. So that's done. We have a series of transactions between now and the end of the year that will fund not just the repurchase of the equity, but also the amortizing payment to the bondholders that's due at the end of November.

Great. Appreciate that. If I could just get one more, like how are you thinking about the long term? What is the right capital structure for the business? What's the right leverage level to kind of making good progress on your transition here?

I mean it's a fair question, Doug. I think first things first for us is to think about how to retire the debt we have on hand, right? So remember, a year ago, we exchanged that $350 million of debt for $200 million, which $50 million being paid back this November. With this latest support agreement and amendment, we'll pay back $60 million of that by November of '26 and the remaining $90 million in November of '27. So that's kind of our first order of business in the capital structure thinking. The remaining $150 million convertible note, I think eventually will convert to equity. So I think once we get a line of sight to just getting past those milestones, we'll have some additional thoughts as to the capital structure going forward.

There is no further question at this time. I will now turn the call over to Graham Fleming for closing remarks.

Thank you, everybody, for joining the call. Another great quarter for Finance of America, and we look forward to updating you on our Q3 numbers later this year. So thank you very much.

That concludes today's call. You may now disconnect.