Nelnet Reports First Quarter 2025 Results
- Asset Generation and Management segment earned $52.9M in loan interest income - Nelnet Bank's portfolio grew to $761.6M in loans and $872.2M in investments - Loan Servicing segment servicing $542.3B in loans for 15.6M borrowers - Education Technology Services revenue increased to $147.3M
The Board declared a Q2 dividend of $0.28 per share and authorized a new stock repurchase program for up to 5 million shares through May 2028. Additionally, Nelnet announced plans to reduce its stake in ALLO from 45% to 26%, expecting to receive $410M in cash and recognize a $175M pre-tax gain.
- Il segmento Asset Generation and Management ha generato 52,9 milioni di dollari di interessi sui prestiti
- Il portafoglio di Nelnet Bank è cresciuto fino a 761,6 milioni di dollari in prestiti e 872,2 milioni in investimenti
- Il segmento Loan Servicing gestisce 542,3 miliardi di dollari in prestiti per 15,6 milioni di mutuatari
- I ricavi dei servizi di Education Technology sono aumentati a 147,3 milioni di dollari
Il Consiglio di Amministrazione ha dichiarato un dividendo per il secondo trimestre di 0,28 dollari per azione e ha autorizzato un nuovo programma di riacquisto di azioni fino a 5 milioni di titoli entro maggio 2028. Inoltre, Nelnet ha annunciato l'intenzione di ridurre la sua partecipazione in ALLO dal 45% al 26%, prevedendo di incassare 410 milioni di dollari in contanti e di registrare un guadagno ante imposte di 175 milioni di dollari.
- El segmento de Generación y Gestión de Activos obtuvo 52.9 millones de dólares en ingresos por intereses de préstamos
- La cartera de Nelnet Bank creció a 761.6 millones de dólares en préstamos y 872.2 millones en inversiones
- El segmento de Servicios de Préstamos administra 542.3 mil millones de dólares en préstamos para 15.6 millones de prestatarios
- Los ingresos de Servicios de Tecnología Educativa aumentaron a 147.3 millones de dólares
La Junta declaró un dividendo para el segundo trimestre de 0.28 dólares por acción y autorizó un nuevo programa de recompra de acciones de hasta 5 millones de títulos hasta mayo de 2028. Además, Nelnet anunció planes para reducir su participación en ALLO del 45% al 26%, esperando recibir 410 millones de dólares en efectivo y reconocer una ganancia antes de impuestos de 175 millones de dólares.
- 자산 생성 및 관리 부문은 대출 이자 수익 5,290만 달러 달성
- Nelnet 은행의 포트폴리오는 대출 7억 6,160만 달러 및 투자 8억 7,220만 달러로 성장
- 대출 서비스 부문은 1,560만 명의 차용인을 위해 5,423억 달러의 대출을 관리
- 교육 기술 서비스 매출은 1억 4,730만 달러로 증가
이사회는 2분기 배당금을 주당 0.28달러로 선언하고 2028년 5월까지 최대 500만 주의 자사주 매입 프로그램을 승인했습니다. 또한 Nelnet은 ALLO 지분을 45%에서 26%로 줄일 계획을 발표했으며, 현금 4억 1,000만 달러를 받을 것으로 예상하고 1억 7,500만 달러의 세전 이익을 인식할 예정입니다.
- Le segment Asset Generation and Management a généré 52,9 millions de dollars de revenus d'intérêts sur prêts
- Le portefeuille de Nelnet Bank a atteint 761,6 millions de dollars en prêts et 872,2 millions en investissements
- Le segment Loan Servicing gère 542,3 milliards de dollars de prêts pour 15,6 millions d'emprunteurs
- Les revenus des services de technologie éducative ont augmenté à 147,3 millions de dollars
Le conseil d'administration a déclaré un dividende de 0,28 dollar par action pour le deuxième trimestre et a autorisé un nouveau programme de rachat d'actions pouvant aller jusqu'à 5 millions d'actions d'ici mai 2028. De plus, Nelnet a annoncé son intention de réduire sa participation dans ALLO de 45 % à 26 %, prévoyant de recevoir 410 millions de dollars en liquidités et de comptabiliser un gain avant impôts de 175 millions de dollars.
- Der Bereich Asset Generation and Management erzielte 52,9 Mio. USD an Darlehenszinsen
- Das Portfolio der Nelnet Bank wuchs auf 761,6 Mio. USD an Darlehen und 872,2 Mio. USD an Investitionen
- Der Bereich Loan Servicing betreut Darlehen in Höhe von 542,3 Mrd. USD für 15,6 Mio. Kreditnehmer
- Die Umsätze im Bereich Education Technology Services stiegen auf 147,3 Mio. USD
Der Vorstand erklärte eine Dividende von 0,28 USD je Aktie für das zweite Quartal und genehmigte ein neues Aktienrückkaufprogramm von bis zu 5 Millionen Aktien bis Mai 2028. Zusätzlich kündigte Nelnet Pläne an, seinen Anteil an ALLO von 45 % auf 26 % zu reduzieren, wobei ein Barertrag von 410 Mio. USD erwartet wird und ein Vorsteuergewinn von 175 Mio. USD verbucht wird.
- GAAP net income increased 12.5% YoY to $82.6M ($2.26 per share)
- Expected $410M cash proceeds and $175M pre-tax gain from ALLO stake reduction
- AGM loan spread increased, with $832.6M in new loans acquired
- Education Technology Services revenue grew to $147.3M from $143.5M YoY
- Private loan servicing revenue increased to $22.7M from $12.6M YoY
- FFELP loan portfolio continues expected runoff, with average loans decreasing from $11.6B to $9.5B YoY
- Loan loss provisions increased to $13.0M from $6.5M YoY
- Revenue from Loan Servicing segment decreased to $120.7M from $127.2M YoY
- Lower per-borrower revenue under new USDS contract compared to legacy contract
Insights
Nelnet posted strong Q1 results with 29.7% adjusted income growth, solid performance across segments, and announced a major $410M liquidity event.
Nelnet delivered impressive Q1 2025 results with GAAP net income of
The Asset Generation segment showed resilience with net interest income increasing to
Nelnet Bank continues its growth trajectory with a
The Loan Servicing segment showed operational efficiency improvement, growing net income to
A transformative transaction with ALLO will deliver approximately
Management's confidence is further evident in the new 5-million share repurchase authorization and the
Net income, excluding derivative market value adjustments1, was
"We're pleased with Nelnet's strong operating results to kick off 2025," said Jeff Noordhoek, chief executive officer of Nelnet. "In a challenging and uncertain economic environment, all our core businesses are performing well and contributing to this momentum. We enhanced our already strong capital and liquidity positions, allowing us to be ready to strategically invest in opportunities that we believe will drive long-term success and value creation."
Nelnet has four reportable operating segments, earning interest income on loans in its Asset Generation and Management (AGM) and Nelnet Bank segments, both part of the company's Nelnet Financial Services (NFS) division, and fee-based revenue in its Loan Servicing and Systems (referred to as Nelnet Diversified Services (NDS)) and Education Technology Services and Payments (referred to as Nelnet Business Services (NBS)) segments. Other business activities and operating segments that are not reportable and not part of the NFS division are combined and included in Corporate Activities.
Asset Generation and Management
The AGM operating segment reported loan and investment net interest income of
AGM recognized a provision for loan losses in the first quarter of 2025 of
In addition, AGM recognized a loss of
1 | Net income, excluding derivative market value adjustments, is a non-GAAP measure. See "Non-GAAP Performance Measures" at the end of this press release and the "Non-GAAP Disclosures" section below for explanatory information and reconciliations of GAAP to non-GAAP financial information. |
2 | Loan spread represents the spread between the yield earned on loan assets and the costs of the liabilities and derivative instruments used to fund the assets. |
Nelnet Bank
As of March 31, 2025, Nelnet Bank had a
Nelnet Bank recognized a provision for loan losses in the first quarter of 2025 of
Nelnet Bank recognized net income after tax for the quarter ended March 31, 2025 of
Loan Servicing and Systems
Revenue from the Loan Servicing and Systems segment was
As of March 31, 2025, the company was servicing
The Loan Servicing and Systems segment reported net income after tax of
Education Technology Services and Payments
For the first quarter of 2025, revenue from the Education Technology Services and Payments operating segment was
Net income after tax for the Education Technology Services and Payments segment was
This segment is subject to seasonal fluctuations. Based on the timing of when revenue is recognized and when expenses are incurred, revenue and operating margin are higher in the first quarter compared with the remainder of the year.
Corporate Activities
Included in Corporate Activities are the operating results of the company's 45 percent voting membership interest in ALLO Holdings LLC, a holding company for ALLO Communications LLC (ALLO). During the first quarter of 2024, the company recognized a loss on its ALLO voting membership interest investment of
As previously announced in April 2025, Nelnet entered into an agreement with ALLO pursuant to which ALLO will redeem certain of its membership interests from Nelnet. Upon closing, Nelnet expects to receive aggregate cash proceeds of approximately
Board of Directors Declares Second Quarter Dividend and Authorizes New Stock Repurchase Program
The Nelnet Board of Directors declared a second-quarter cash dividend on the company's outstanding shares of Class A common stock and Class B common stock of
In addition, the Board of Directors has authorized a new stock repurchase program to purchase up to five million shares of the company's Class A common stock during the three-year period ending May 8, 2028. The five million shares authorized under the new program includes the remaining unpurchased shares from the prior repurchase program, which expires on May 8, 2025. Shares may be repurchased under the new program from time to time in the open market or private transactions (including with related parties), and the timing and amount of repurchases will depend on market conditions, share prices, trading volumes, and other factors, including compliance with credit agreements and securities laws.
Forward-Looking and Cautionary Statements
This press release contains forward-looking statements within the meaning of federal securities laws. The words "anticipate," "assume," "believe," "continue," "could," "ensure," "estimate," "expect," "forecast," "future," "intend," "may," "plan," "potential," "predict," "scheduled," "should," "will," "would," and similar expressions, as well as statements in future tense, are intended to identify forward-looking statements. These statements are based on management's current expectations as of the date of this release and are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results and performance to be materially different from any future results or performance expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to: risks related to the ability to successfully maintain and increase allocated volumes of student loans serviced by the company under existing and future servicing contracts with the Department, risks related to unfavorable contract modifications or interpretations, risks related to consistently meeting service requirements to avoid the assessment of performance penalties, and risks related to the company's ability to comply with agreements with third-party customers for the servicing of Federal Direct Loan Program, FFEL Program, private education, and consumer loans; loan portfolio risks such as credit risk, prepayment risk, interest rate basis and repricing risk, risks related to the use of derivatives to manage exposure to interest rate fluctuations, uncertainties regarding the expected benefits from purchased securitized and unsecuritized FFELP, private education, consumer, and other loans, or investment interests therein, and initiatives to purchase additional FFELP, private education, consumer, and other loans; financing and liquidity risks, including risks of changes in the interest rate environment; risks from changes in the terms of education loans and in the educational credit and services markets resulting from changes in applicable laws, regulations, and government programs and budgets; risks related to a breach of or failure in the company's operational or information systems or infrastructure, or those of third-party vendors, including disclosure of confidential or personal information and/or damage to reputation resulting from cyber breaches; risks related to use of artificial intelligence; uncertainties inherent in forecasting future cash flows from student loan assets, including investment interests therein, and related asset-backed securitizations; risks related to the ability of Nelnet Bank to achieve its business objectives and effectively deploy loan and deposit strategies and achieve expected market penetration; risks related to the expected benefits to the company from its continuing investment in ALLO and Hudl, and risks related to solar tax equity investments, including risks of not being able to realize tax credits which remain subject to recapture by taxing authorities; risks and uncertainties related to other initiatives to pursue additional strategic investments (and anticipated income therefrom) including venture capital and real estate investments, reinsurance, acquisitions, solar construction, and other activities (including risks associated with errors that occasionally occur in converting loan servicing portfolios to a new servicing platform), including activities that are intended to diversify the company both within and outside of its historical core education-related businesses; risks and uncertainties associated with climate change; risks from changes in economic conditions and consumer behavior; risks related to the company's ability to adapt to technological change; risks related to the exclusive forum provisions in the company's articles of incorporation; risks related to the company's executive chairman's ability to control matters related to the company through voting rights; risks related to related party transactions; risks related to natural disasters, terrorist activities, or international hostilities; and risks and uncertainties associated with litigation matters and maintaining compliance with the extensive regulatory requirements applicable to the company's businesses, including changes to the regulatory environment from the change in presidential administration, and uncertainties inherent in the estimates and assumptions about future events that management is required to make in the preparation of the company's consolidated financial statements.
For more information, see the "Risk Factors" sections and other cautionary discussions of risks and uncertainties included in documents filed or furnished by the company with the Securities and Exchange Commission. All forward-looking statements in this release are as of the date of this release. Although the company may voluntarily update or revise its forward-looking statements from time to time to reflect actual results or changes in the company's expectations, the company disclaims any commitment to do so except as required by law.
Non-GAAP Performance Measures
The company prepares its financial statements and presents its financial results in accordance with
Consolidated Statements of Income (Dollars in thousands, except share data) (unaudited) | ||||||
Three months ended | ||||||
March 31, 2025 | December 31, 2024 | March 31, 2024 | (1) | |||
Interest income: | ||||||
Loan interest | $ 166,439 | 178,434 | 216,724 | |||
Investment interest | 41,389 | 42,815 | 52,078 | |||
Total interest income | 207,828 | 221,249 | 268,802 | |||
Interest expense on bonds and notes payable and bank deposits | 125,114 | 141,170 | 194,580 | |||
Net interest income | 82,714 | 80,079 | 74,222 | |||
Less provision for loan losses | 15,337 | 22,057 | 10,828 | |||
Net interest income after provision for loan losses | 67,377 | 58,022 | 63,394 | |||
Other income (expense): | ||||||
Loan servicing and systems revenue | 120,741 | 137,981 | 127,201 | |||
Education technology services and payments revenue | 147,330 | 108,335 | 143,539 | |||
Reinsurance premiums earned | 24,687 | 18,673 | 12,780 | |||
Solar construction revenue | 3,995 | 13,828 | 13,726 | |||
Other, net | 23,694 | 27,794 | 4,082 | |||
Gain (loss) on sale of loans, net | 909 | 42 | (141) | |||
Derivative market value adjustments and derivative settlements, net | (5,578) | 14,879 | 9,721 | |||
Total other income (expense), net | 315,778 | 321,532 | 310,908 | |||
Cost of services and expenses: | ||||||
Loan servicing contract fulfillment and acquisition costs | 1,633 | 1,497 | — | |||
Cost to provide education technology services and payments | 48,047 | 38,658 | 48,610 | |||
Cost to provide solar construction services | 7,828 | 28,558 | 14,229 | |||
Total cost of services | 57,508 | 68,713 | 62,839 | |||
Salaries and benefits | 138,223 | 147,229 | 143,875 | |||
Depreciation and amortization | 9,255 | 12,544 | 16,769 | |||
Reinsurance losses and underwriting expenses | 22,212 | 16,180 | 11,317 | |||
Other expenses | 48,226 | 50,681 | 45,528 | |||
Total operating expenses | 217,916 | 226,634 | 217,489 | |||
Impairment expense and provision for beneficial interests | 1,591 | 5,764 | 37 | |||
Total expenses | 277,015 | 301,111 | 280,365 | |||
Income before income taxes | 106,140 | 78,443 | 93,937 | |||
Income tax expense | (25,010) | (15,016) | (23,181) | |||
Net income | 81,130 | 63,427 | 70,756 | |||
Net loss (gain) attributable to noncontrolling interests | 1,430 | (268) | 2,652 | |||
Net income attributable to Nelnet, Inc. | $ 82,560 | 63,159 | 73,408 | |||
Earnings per common share: | ||||||
Net income attributable to Nelnet, Inc. shareholders - basic and diluted | $ 2.26 | 1.73 | 1.98 | |||
Weighted average common shares outstanding - basic and diluted | 36,478,426 | 36,461,513 | 37,156,971 | |||
(1) | During the second quarter of 2024, the company identified certain immaterial errors in the previously issued consolidated financial statements that have been corrected to conform to the March 31, 2025 presentation. Refer to the company's quarterly report on Form 10-Q for the three months ended March 31, 2025 that was filed with the Securities and Exchange Commission on May 8, 2025 for additional information. |
Condensed Consolidated Balance Sheets (Dollars in thousands) (unaudited) | ||||||
As of | As of | As of | ||||
March 31, 2025 | December 31, 2024 | March 31, 2024 | (1) | |||
Assets: | ||||||
Loans and accrued interest receivable, net | $ 10,422,704 | 9,992,744 | 11,829,078 | |||
Cash, cash equivalents, and investments | 2,523,067 | 2,395,214 | 2,112,999 | |||
Restricted cash | 611,610 | 736,502 | 761,141 | |||
Goodwill and intangible assets, net | 192,832 | 194,357 | 200,699 | |||
Other assets | 441,745 | 458,936 | 470,295 | |||
Total assets | $ 14,191,958 | 13,777,753 | 15,374,212 | |||
Liabilities: | ||||||
Bonds and notes payable | $ 8,656,157 | 8,309,797 | 10,582,513 | |||
Bank deposits | 1,313,407 | 1,186,131 | 802,061 | |||
Other liabilities | 859,385 | 982,708 | 753,918 | |||
Total liabilities | 10,828,949 | 10,478,636 | 12,138,492 | |||
Equity: | ||||||
Total Nelnet, Inc. shareholders' equity | 3,419,523 | 3,349,762 | 3,297,190 | |||
Noncontrolling interests | (56,514) | (50,645) | (61,470) | |||
Total equity | 3,363,009 | 3,299,117 | 3,235,720 | |||
Total liabilities and equity | $ 14,191,958 | 13,777,753 | 15,374,212 | |||
(1) | During the second quarter of 2024, the company identified certain immaterial errors in the previously issued consolidated financial statements that have been corrected to conform to the March 31, 2025 presentation. Refer to the company's quarterly report on Form 10-Q for the three months ended March 31, 2025 that was filed with the Securities and Exchange Commission on May 8, 2025 for additional information. |
Non-GAAP Disclosures
(Dollars in thousands, except share data)
(unaudited)
Non-GAAP financial measures disclosed by management are meant to provide additional information and insight relative to business trends to investors and, in certain cases, to present financial information as measured by rating agencies and other users of financial information. These measures are not in accordance with, or a substitute for, GAAP and may be different from, or inconsistent with, non-GAAP financial measures used by other companies. The company reports this non-GAAP information because the company believes that it provides additional information regarding operational and performance indicators that are closely assessed by management. There is no comprehensive, authoritative guidance for the presentation of such non-GAAP information, which is only meant to supplement GAAP results by providing additional information that management utilizes to assess performance.
Net income, excluding derivative market value adjustments
Three months ended March 31, | |||
2025 | 2024 | ||
GAAP net income attributable to Nelnet, Inc. | $ 82,560 | 73,408 | |
Realized and unrealized derivative market value adjustments (a) | 6,324 | (7,964) | |
Tax effect (b) | (1,519) | 1,911 | |
Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market | $ 87,365 | 67,355 | |
Earnings per share: | |||
GAAP net income attributable to Nelnet, Inc. | $ 2.26 | 1.98 | |
Realized and unrealized derivative market value adjustments (a) | 0.17 | (0.22) | |
Tax effect (b) | (0.04) | 0.05 | |
Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market | $ 2.39 | 1.81 | |
(a) | "Derivative market value adjustments" includes both the realized portion of gains and losses (corresponding to variation margin received or paid on derivative instruments that are settled daily at a central clearinghouse) and the unrealized portion of gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP. "Derivative market value adjustments" does not include "derivative settlements" that represent the cash paid or received during the current period to settle with derivative instrument counterparties the economic effect of the company's derivative instruments based on their contractual terms. |
The accounting for derivatives requires that changes in the fair value of derivative instruments be recognized currently in earnings, with no fair value adjustment of the hedged item, unless specific hedge accounting criteria are met. Management has structured all of the company's derivative transactions with the intent that each is economically effective; however, the company's derivative instruments do not qualify for hedge accounting in the consolidated financial statements. As a result, the change in fair value of derivative instruments is reported in current period earnings with no consideration for the corresponding change in fair value of the hedged item. Under GAAP, the cumulative net realized and unrealized gain or loss caused by changes in fair values of derivatives in which the company plans to hold to maturity will equal zero over the life of the contract. However, the net realized and unrealized gain or loss during any given reporting period fluctuates significantly from period to period. | |
The company believes these point-in-time estimates of asset and liability values related to its derivative instruments that are subject to interest rate fluctuations are subject to volatility mostly due to timing and market factors beyond the control of management, and affect the period-to-period comparability of the results of operations. Accordingly, the company's management utilizes operating results excluding these items for comparability purposes when making decisions regarding the company's performance and in presentations with credit rating agencies, lenders, and investors | |
(b) | The tax effects are calculated by multiplying the realized and unrealized derivative market value adjustments by the applicable statutory income tax rate. |
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SOURCE Nelnet, Inc.
FAQ
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