FirstService (NASDAQ: FSV) revenue rises 6% but quarterly earnings per share slide

What happened

FirstService Corporation (NASDAQ: FSV) grew third-quarter revenue 6% to $1.53 billion, yet diluted earnings per share fell to $0.99 from $1.24 a year earlier.

The company reported the results on Oct. 30. Revenue rose $84.1 million by OptimistFi's calculation, but net earnings attributable to the company dropped to $42.9 million from $57.2 million. The added sales did not lift profit.

Adjusted EBITDA rose to $169.7 million from $164.8 million. The nine-month total reached $437.1 million versus $425.2 million. Operating earnings fell to $107.4 million from $115.6 million. Operating margin slipped to 7.0% from 8.0%, and Adjusted EBITDA margin to 11.1% from 11.4%.

Key numbers

Metric	Latest	Change	Source
Q3 revenue	$1.53 billion	from $1.45 billion, +6%	SEC 6-K, Exhibit 99.1 MD&A
Q3 diluted earnings per share	$0.99	from $1.24, -20.2%	Calculated from SEC 6-K
Q3 operating earnings	$107.4 million	from $115.6 million, -7.1%	Calculated from SEC 6-K
Q3 Adjusted EBITDA	$169.7 million	from $164.8 million, +3.0%	Calculated from SEC 6-K
Q3 net earnings attributable to the company	$42.9 million	from $57.2 million, -24.9%	Calculated from SEC 6-K
Q3 net cash from operating activities	$84.2 million	from $126.4 million, -33.4%	Calculated from SEC 6-K

Read more: FirstService (FSV) company research

Where the quarter slipped

The decline traces to FirstService Brands, the segment that includes Paul Davis Restoration, Century Fire Protection and California Closets. The MD&A blames Brands performance for the lower earnings margin.

Brands revenue rose to $898.4 million from $842.1 million. Operating earnings fell 18.6% to $60.0 million from $73.7 million, by OptimistFi's calculation.

Part of that gap is a comparison effect. The year-earlier quarter was affected by fair value reversals to earn-out structures tied to recent Brands acquisitions. Brands acquisition-related items were a $6.1 million recovery then and a $4.0 million expense now. That is a $10.1 million swing against the $13.7 million drop in Brands operating earnings.

FirstService Residential, the property-management segment, moved the other way. Revenue rose to $633.3 million from $605.4 million. Operating earnings rose to $58.0 million from $53.3 million.

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Buybacks, debt and cash

Repurchases softened the per-share result. FirstService spent $311.6 million buying back shares in the quarter and $560.0 million over nine months. Shares outstanding fell to 41,910,827 on Sept. 30 from 45,722,486 on Dec. 31, 2025.

The weighted basic share count fell 4.9% from a year earlier. Net earnings attributable to the company fell 24.9%, so diluted earnings per share dropped 20.2%, by OptimistFi's calculation.

The cash cost shows on the balance sheet. Non-current long-term debt rose to $1.54 billion from $1.07 billion at Dec. 31, 2025. The company drew $307.2 million of new long-term debt in the quarter. Shareholders' equity fell to $936.8 million from $1.38 billion.

Cash generation softened too. Operating cash flow was $84.2 million in the quarter against $126.4 million a year earlier, a 33.4% drop by OptimistFi's calculation. Receivables used $39.7 million and inventories $37.2 million. A year earlier they brought in $34.6 million and $2.0 million.

Why it matters

OptimistFi has argued that FirstService works only if its scale turns local, recurring service demand into cash and per-share earnings, not just larger revenue. This quarter delivered the revenue and higher Adjusted EBITDA. Cash flow and per-share earnings were weaker, so the case stays mixed.

Some demand signals are firm. Backlog stood at $1.12 billion on Sept. 30 against $1.03 billion on Dec. 31, 2025. The company expects to recognize most of it over the next 12 months. It also completed seven acquisitions in the nine months, six in Brands and one in Residential, for $73.2 million of cash net of cash acquired.

The caveat sits in Brands. In its annual goodwill test, the company found no impairment at one Brands reporting unit with $380.3 million of goodwill. Fair value exceeded carrying value by less than 5%, with less headroom than in the test as of Dec. 31, 2025. The filing says a 0.5x lower EBITDA multiple would cut that fair value by about 5%.

What's next

The next quarterly report, covering the quarter ending Dec. 31, 2026, will show whether revenue growth turns into steadier operating and Adjusted EBITDA margins.

Brands operating earnings and operating cash flow would confirm or undercut the case. A rebound in both would suggest scale is converting into cash again. Another quarter of falling per-share earnings despite buybacks would weaken the case.

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