Toll Brothers reported fourth‑quarter 2025 revenue of $3.42 billion, a 3.0% year‑over‑year increase that surpassed the consensus estimate of $3.32 billion. Diluted earnings per share came in at $4.58, missing the consensus of $4.87 by $0.29 (6.2% miss). The company delivered 3,443 homes, up 0.4% from 3,431 in the same quarter a year earlier, and its net signed contract value fell to $2.53 billion from $2.66 billion, while the backlog declined to $5.5 billion from $6.5 billion.
The adjusted home‑sales gross margin contracted to 27.1% in Q4 FY2025, down from 27.5% in Q3 FY2025 and 27.9% in Q4 FY2024. The decline reflects higher input costs, a shift toward lower‑margin product lines, and the impact of a modest price‑adjustment strategy aimed at maintaining demand in a soft market.
Home deliveries rose modestly, but the backlog and signed‑contract figures indicate a slowdown in future sales. The backlog drop of $1.0 billion and the $140 million decline in net signed contracts suggest that demand is easing, even as the company continues to add new communities—its community count grew 9% year‑over‑year, adding 9 new developments that could support future growth.
CEO Douglas C. Yearley said the firm is “running the business in a disciplined manner” and is “managing spec starts and inventory on a community‑by‑community basis.” He highlighted the company’s luxury brand strength and the financial resilience of its affluent buyers, noting that these factors help offset the softness in the broader market.
For the first quarter of fiscal 2026, Toll Brothers guided to 1,800–1,900 home deliveries at an average price of $985,000–$995,000 and an adjusted gross margin of 26.25%, a slight decline from the 27.1% margin reported in Q4 FY2025. The guidance signals a cautious outlook, reflecting the company’s assessment of continued demand softness and the need to preserve profitability.
Investors reacted negatively to the earnings miss, with market sentiment turning cautious. The EPS shortfall and the decline in backlog and signed contracts were cited as key concerns, underscoring worries about the company’s ability to sustain growth in a challenging environment.
The earnings release also noted that Toll Brothers repurchased approximately 1.8 million shares during the quarter and ended with $1.26 billion in cash and cash equivalents. The company’s delayed sale of its Apartment Living business to Kennedy Wilson and the $750 million in shareholder returns—including buybacks and dividends—highlight its focus on capital allocation and shareholder value. Overall, the results paint a picture of a company that is managing headwinds through disciplined pricing and inventory control while maintaining a strong luxury brand foundation.
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