Revenue growth has been robust, yet gross margins remain highly unstable, fluctuating between a low of 31.9% in 2025Q1 and a peak of 91.6% in 2026Q1 due to fair value adjustments.
| Sales/Revenue | 688.55M | - | - | - | - | - | - | - | - | - | - |
| Revenue Growth % | - | - | - | - | - | - | - | - | - | - | - |
| Cost of Goods Sold | 0 | - | - | - | - | - | - | - | - | - | - |
| COGS % of Revenue | - | - | - | - | - | - | - | - | - | - | - |
| Gross Profit | 472.14M | 681.04M | 210.56M | 131.72M | 90.03M | 75.61M | 60.9M | 53.12M | 45.4M | 33.22M | 23.19M |
| Gross Margin % | 68.57% | 95.32% | 43.62% | 100% | 36.25% | 41.7% | 36.72% | 34.77% | 37.36% | 34.99% | 30.73% |
| Gross Profit Growth % | - | 223.44% | 59.86% | 46.3% | 19.08% | 24.16% | 14.63% | 17.01% | 36.67% | 43.24% | - |
| Operating Expenses | 96.45M | 169.75M | 114.17M | 54.87M | 45.48M | 35.81M | 37.77M | 27.73M | 26.15M | 19.23M | 16.39M |
| OpEx % of Revenue | - | 23.76% | 23.65% | 41.66% | 18.31% | 19.75% | 22.77% | 18.15% | 21.52% | 20.26% | 21.72% |
| Selling, General & Admin | 46.48M | 6.1M | 74.55M | 52.99M | 35.93M | 24.04M | 25.23M | 22.8M | 21.45M | 16.73M | 12.99M |
| SG&A % of Revenue | - | 0.85% | 15.44% | 40.23% | 14.46% | 13.26% | 15.21% | 14.93% | 17.65% | 17.62% | 17.21% |
| Research & Development | 0 | - | - | - | - | - | - | - | - | - | - |
| R&D % of Revenue | - | - | - | - | - | - | - | - | - | - | - |
| Other Operating Expenses | 0 | - | - | - | - | - | - | - | - | - | - |
| Operating Income | 375.69M | 511.29M | 96.39M | 76.85M | 44.55M | 39.79M | 23.13M | 25.4M | 19.25M | 13.99M | 6.8M |
| Operating Margin % | 54.56% | 71.56% | 19.97% | 58.34% | 17.94% | 21.95% | 13.95% | 16.62% | 15.84% | 14.74% | 9.01% |
| Operating Income Growth % | - | 430.43% | 25.43% | 72.49% | 11.96% | 72.05% | -8.93% | 31.94% | 37.6% | 105.81% | - |
| EBITDA | 370.24M | 513.31M | 98.39M | 79.14M | 46.67M | 42.2M | 25.57M | 27.87M | 20.68M | 15.18M | 7.31M |
| EBITDA Margin % | 53.77% | 71.85% | 20.38% | 60.09% | 18.79% | 23.28% | 15.42% | 18.24% | 17.02% | 15.99% | 9.69% |
| EBITDA Growth % | 157.23% | 421.7% | 24.32% | 69.59% | 10.58% | 65.02% | -8.22% | 34.73% | 36.25% | 107.63% | - |
| D&A (Non-Cash Add-back) | 1.41M | 2.02M | 2M | 2.3M | 2.12M | 2.41M | 2.45M | 2.47M | 1.43M | 1.19M | 514K |
| EBIT | 360.18M | 511.29M | 96.39M | -2.3M | 44.55M | 39.79M | 23.13M | 25.4M | 19.25M | 13.99M | 6.8M |
| Net Interest Income | 198.11M | 185.78M | 159.63M | 112.94M | 83.15M | 75.97M | 67.45M | 59.01M | 48.8M | 36.54M | 27.59M |
| Interest Income | 591.09M | 550.83M | 406.84M | 315.97M | 240.34M | 181.97M | 167.32M | 157.53M | 124.72M | 97.83M | 78.42M |
| Interest Expense | 392.98M | 365.05M | 247.22M | 203.02M | 157.19M | 106M | 99.88M | 98.52M | 75.92M | 61.29M | 50.83M |
| Other Income/Expense | 0 | - | - | - | - | - | - | - | - | - | - |
| Pretax Income | 150.22M | 146.24M | 96.39M | 71.13M | 44.55M | 39.79M | 23.13M | 25.4M | 19.25M | 13.99M | 6.8M |
| Pretax Margin % | 21.82% | 20.47% | 19.97% | 54% | 17.94% | 21.95% | 13.95% | 16.62% | 15.84% | 14.74% | 9.01% |
| Income Tax | 41.59M | 41.26M | 27.93M | 18.83M | 12.03M | 10.57M | 5.35M | 8.11M | 11.62M | 0 | 0 |
| Effective Tax Rate % | 27.68% | 28.21% | 28.97% | 26.48% | 27.01% | 26.56% | 23.14% | 31.92% | 60.36% | 0% | 0% |
| Net Income | 108.53M | 105.05M | 68.42M | 52.27M | 32.21M | 29.22M | 17.78M | 17.29M | 7.63M | 13.99M | 6.8M |
| Net Margin % | 15.76% | 14.7% | 14.17% | 39.69% | 12.97% | 16.12% | 10.72% | 11.32% | 6.28% | 14.74% | 9.01% |
| Net Income Growth % | 55.99% | 53.55% | 30.89% | 62.28% | 10.22% | 64.39% | 2.8% | 126.6% | -45.45% | 105.81% | - |
| Net Income (Continuing) | 108.63M | 105.05M | 68.47M | 52.29M | 32.52M | 29.22M | 17.78M | 17.29M | 7.63M | 13.99M | 6.8M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 3.06M | 3.15M | 3.27M | 3.43M | 3.69M | 3.38M | 0 | 0 | 0 | 0 | 920.74M |
| EPS (Diluted) | 2.77 | 2.75 | 1.91 | 1.52 | 0.93 | 0.86 | -1.55 | 0.86 | 0.90 | 1.19 | 0.58 |
| EPS Growth % | 46.6% | 43.98% | 25.66% | 63.44% | 8.14% | 155.48% | -280.23% | -4.44% | -24.37% | 105.17% | - |
| EPS (Basic) | - | 2.81 | 2.07 | 1.60 | 0.99 | 0.90 | -1.55 | 0.86 | 0.65 | 1.19 | 0.58 |
| Diluted Shares Outstanding | 39.17M | 38.18M | 35.76M | 34.48M | 34.13M | 33.98M | 20.09M | 113.59M | 11.75M | 11.75M | 11.75M |
| Basic Shares Outstanding | 38.63M | 36.85M | 32.65M | 32.21M | 31.91M | 22.81M | 20.09M | 113.59M | 11.75M | 11.75M | 11.75M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | - | - | - | - |
High securitization market dependency
As indicated by the quarterly financial data, Velocity Financial has demonstrated significant top-line expansion, with revenue climbing from $98.6 million in 2024Q1 to $167.9 million by 2026Q1, reflecting a robust capture of market share within the specialized small-balance commercial mortgage lending niche.
The revenue trajectory suggests that the company is successfully leveraging its broker-only distribution model to scale origination volumes. However, investors should monitor whether this growth is sustainable or merely a byproduct of cyclical demand in the fix-and-flip real estate segment.
Based on reported income statements, Velocity Financial exhibits extreme quarterly fluctuations in gross margins, which swung from 31.9% in 2025Q1 to 91.6% in 2026Q1, highlighting the sensitivity of the firm's profitability to fair value adjustments and interest rate environments.
The wide variance in margins suggests that the company's core profitability is heavily influenced by non-cash accounting treatments rather than pure operational efficiency. This volatility warrants caution, as it obscures the underlying health of the interest spread business.
According to the provided financial filings, the company maintains a high operating margin of 71.56% on average, yet the significant delta between operating income and net income suggests that interest expenses and debt-related costs exert substantial pressure on bottom-line performance.
While the firm appears to scale its administrative overhead effectively, the reliance on high-cost warehouse financing limits the conversion of operating profit into net income. This structure implies that the company is highly sensitive to shifts in the cost of capital.
As reported in recent financial statements, the net income margin of 14.70% appears disconnected from the high operating margins, suggesting that non-operating items and fair value adjustments on securitized assets are significantly impacting the quality of reported earnings per share.
Investors should look past headline EPS figures to assess the cash-generative capacity of the loan portfolio. The presence of stock-based compensation and potential fair value volatility suggests that reported earnings may not fully reflect the firm's underlying economic reality.
Based on the reported 9.68x debt-to-equity ratio, the company's reliance on the ABS market for liquidity presents a structural risk, as any disruption in securitization execution could rapidly impair the firm's ability to recycle capital and sustain its current growth trajectory.
Short-sellers may focus on the potential for margin compression if credit spreads widen or if the broker network pivots to more stable lenders. The company's high leverage suggests that it lacks the balance sheet flexibility to weather a prolonged credit market dislocation.
Quick answers to the most common questions about buying VEL stock.
Velocity Financial, Inc. (VEL) is profitable, generating $105.1M in net income for the fiscal year ending 2025 with a net profit margin of 14.7%.
Velocity Financial, Inc. (VEL) reported an operating income of $511.3M, resulting in an operating profit margin of 71.6%. This margin reflects the operational efficiency of the business before interest and taxes.
Velocity Financial, Inc. (VEL) generated $681.0M in gross profit for the year, representing a gross profit margin of 95.3%. This demonstrates the company's core pricing power and production efficiency.