Toll Brothers reported QQ1 2025 revenue of $1.86 billion and delivered 1,991 homes at an average price of $925,000, generating net income of $177.7 million or $1.76 per share (diluted $1.75). Adjusted gross margin reached 26.9%, beating the company’s guidance by 65 basis points, while SG&A margin of 13.1% was 40 basis points above plan. The quarterly results were pressured by impairments and a delayed sale of a stabilized apartment property within a JV, which contributed to a net earnings miss versus expectations despite solid core homebuilding execution. Net contracts signed for the quarter totaled 2,307 for $2.3 billion, up 13% in units and 12% in dollars versus the prior-year period, with deposits converted to sales at an 82% rate, well above the five-year average of 70%. The company reaffirmed full-year guidance for 2025, underscoring confidence in mix, backlog, and pricing discipline as fundamental levers. Toll also signaled a disciplined approach to land and inventory management, indicating an intent to reduce near-term spec starts in markets where inventories are rising, while remaining selective in land acquisitions and development opportunities. Liquidity remained robust, with over $2.3 billion available, including approximately $575 million of cash and $1.8 billion available under revolver facilities, complemented by a recent extension to February 2030 and an upsized revolver capacity to $2.35 billion. Management emphasized the luxury niche as a durable driver of demand, with >70% of business in luxury move-up and empty-nester cohorts. The spring selling season remains mixed across markets, prompting a targeted, community-by-community approach to pricing incentives and inventory optimization. Investors should monitor the trajectory of contracts, backlog margin embedded in the backlog, regional demand dynamics (especially North and Mid-Atlantic versus softer markets), and management’s cadence around land spend, spec inventory, and share repurchases. Overall, Toll presents a defensible growth profile anchored by its luxury positioning and land pipeline, but near-term execution hinges on navigating a mixed demand environment and translating backlog into consistent margin progression.