Nelnet Reports First Quarter 2026 Results
Rhea-AI Summary
Nelnet (NYSE: NNI) reported GAAP net income of $71.1 million ($1.97 per share) for Q1 2026, down from $82.6 million a year earlier. Net income excluding derivative market value adjustments was $69.9 million ($1.94 per share).
Key items: acquisition of NDS Canada, $3.34 billion of loans acquired (including $2.85 billion Pay Later receivables), an initial loan-loss allowance and a $0.33 quarterly dividend payable June 15, 2026.
AI-generated analysis. Not financial advice.
Positive
- Acquired NDS Canada servicing business managing 2.7 million borrowers
- AGM loan and investment net interest income increased to $67.5M
- Nelnet Bank net income rose to $7.1M for Q1 2026
- Company declared a $0.33 per-share quarterly dividend payable June 15, 2026
Negative
- GAAP net income declined ~13.9% year-over-year to $71.1M
- Provision for loan losses rose to $48.5M in Q1 2026 from $13.0M
- Recognized $22.5M losses from solar tax equity partnerships in Q1 2026
- Recorded $10.8M of marketable equity losses during Q1 2026
Key Figures
Market Reality Check
Peers on Argus
NNI showed a slight move of -0.25% while peers were mixed: CACC -0.93%, SLM -1.05%, vs QFIN +2.08% and UPST +2.52%, indicating stock-specific dynamics rather than a unified sector trend.
Previous Earnings Reports
| Date | Event | Sentiment | Move | Catalyst |
|---|---|---|---|---|
| Feb 26 | Q4 2025 earnings | Neutral | -1.4% | Q4 2025 net income dipped year over year but full-year 2025 strengthened. |
| Nov 06 | Q3 2025 earnings | Positive | +2.2% | Q3 2025 earnings surged with major one-time benefits and stronger segments. |
| Aug 06 | Q2 2025 earnings | Positive | -0.2% | Q2 2025 results boosted by large gain from partial ALLO redemption. |
| May 08 | Q1 2025 earnings | Positive | +5.9% | Q1 2025 delivered higher GAAP net income and broad segment growth. |
| Feb 27 | Q4 2024 earnings | Positive | +9.3% | Q4 2024 marked a strong turnaround from prior-year loss with higher income. |
Recent earnings reports often highlighted solid multi-segment performance, with share-price reactions generally modestly positive but occasionally negative despite strong underlying results.
Over the last five earnings releases from Feb 27, 2025 through Feb 26, 2026, Nelnet reported steadily improving full-year profitability and strong contributions from Asset Generation, Nelnet Bank, loan servicing, and education technology. Several quarters included notable one-time items such as gains from ALLO and non-recurring servicing revenue. Share reactions to these earnings ranged from small declines to strong gains, suggesting investors weighed both recurring performance and special items when interpreting results.
Historical Comparison
In the past five earnings releases, NNI’s average one-day move was about 3.16%, with reactions spanning mild pullbacks to strong gains as investors digested multi-segment performance and one-time items.
Earnings updates since late 2024 show rising full-year profitability, growth in AGM and Nelnet Bank, expanding servicing portfolios, and ongoing dividends, alongside occasional large gains from strategic investments like ALLO.
Market Pulse Summary
This announcement highlighted Q1 2026 results with lower GAAP and non-GAAP net income versus last year, but solid underlying growth in AGM, Nelnet Bank, loan servicing, and education technology. Management emphasized diversification, Pay Later receivable expansion, and the Canadian servicing acquisition, while maintaining a $0.33 dividend. Investors may watch credit provisions, performance of acquired portfolios, and segment-level margins in coming quarters.
Key Terms
gaap financial
non-gaap financial
loan spread financial
ffel program financial
provision for loan losses financial
net interest margin financial
marketable equity securities financial
AI-generated analysis. Not financial advice.
Net income, excluding derivative market value adjustments[1], was
"We're off to a strong start in 2026, with every business segment performing at a high level," said Jeff Noordhoek, chief executive officer of Nelnet. "We completed our Canadian acquisition in February, and integration is proceeding well, expanding our loan servicing reach and supporting our long-term diversification strategy focused on core strengths. This year, our focus is simple: Go. Technology is accelerating, innovation cycles are compressing, and the pace of change continues to increase. Our job is to move with speed—to be decisive and to keep pushing forward for our customers."
Nelnet operates through three divisions: Nelnet Financial Services (NFS), Loan Servicing and Systems [referred to as Nelnet Diversified Services (NDS)], and Education Technology Services and Payments [referred to as Nelnet Business Services (NBS)]. NFS includes the company's Asset Generation and Management (AGM) and Nelnet Bank reportable operating segments, which earn interest income on loans and investments. NDS and NBS generate primarily fee-based revenue through loan servicing, education technology, and payment services. Business activities not included in these divisions are combined and reported within Corporate Activities.
Nelnet Financial Services
AGM
The AGM operating segment reported loan and investment net interest income of
AGM recorded a provision for loan losses of
AGM holds interests in certain joint ventures engaged in the acquisition and management of loan portfolios. During the three months ended March 31, 2026, AGM recognized
AGM recognized net income after tax 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 used to fund the assets. |
Nelnet Bank
As of March 31, 2026, Nelnet Bank had a
Nelnet Bank recognized net income after tax for the quarter ended March 31, 2026 of
Loan Servicing and Systems
Revenue from the Loan Servicing and Systems segment was
As previously disclosed, on February 2, 2026, the company acquired a Canadian student loan servicing business ("NDS Canada") that delivers technology-enabled student loan servicing for governments and financial institutions, managing 2.7 million borrowers on proprietary platforms. Beginning on the acquisition date, the operating results of NDS Canada are included in the Loan Servicing and Systems operating segment.
The Loan Servicing and Systems segment reported net income after tax of
Education Technology Services and Payments
For the first quarter of 2026, 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 and Other Activities
During the three months ended March 31, 2026, the company recognized
Included in Corporate Activities are the company's equity interests held in partnerships that invest in solar tax equity projects. The company recognized
Board of Directors Declares Second Quarter Dividend
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
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," "focus," "forecast," "future," "intend," "may," "objective," "plan," "potential," "predict," "pursue," "scheduled," "should," "strategy," "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 of Education, 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, Canada Student 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 residual 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 residual 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 company's solar tax equity partnerships, including risks of not being able to realize tax credits which remain subject to recapture by taxing authorities and risks from the impact of the enactment of the One Big Beautiful Bill that accelerates the expiration and phase out of solar energy credits; risks and uncertainties related to other initiatives (and anticipated income therefrom) including venture capital, real estate, reinsurance, acquisitions, and other activities, 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, maintaining compliance with the extensive regulatory requirements applicable to the company's businesses, 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, | December 31, | March 31, | |||
Interest income: | |||||
Loan interest | $ 171,024 | 184,825 | 166,439 | ||
Investment interest | 40,202 | 40,559 | 41,389 | ||
Total interest income | 211,226 | 225,384 | 207,828 | ||
Interest expense on bonds and notes payable and bank deposits | 109,583 | 118,273 | 125,114 | ||
Net interest income | 101,643 | 107,111 | 82,714 | ||
Less provision for loan losses | 53,244 | 38,147 | 15,337 | ||
Less provision for beneficial interests | 4,130 | 2,679 | 1,510 | ||
Net interest income after provision | 44,269 | 66,285 | 65,867 | ||
Other income (expense): | |||||
Loan servicing and systems revenue | 127,842 | 116,573 | 120,741 | ||
Education technology services and payments revenue | 154,436 | 112,314 | 147,330 | ||
Reinsurance premiums earned | 22,536 | 33,539 | 24,687 | ||
Solar construction revenue | — | 3,379 | 3,995 | ||
Other, net | 10,437 | 16,749 | 24,603 | ||
Derivative market value adjustments and derivative settlements, net | 2,167 | 2,330 | (5,578) | ||
Total other income (expense), net | 317,418 | 284,884 | 315,778 | ||
Cost of services and expenses: | |||||
Loan servicing contract fulfillment and acquisition costs | 2,087 | 2,056 | 1,633 | ||
Cost to provide education technology services and payments | 49,953 | 38,654 | 48,047 | ||
Cost to provide solar construction services | — | 12,326 | 7,828 | ||
Total cost of services | 52,040 | 53,036 | 57,508 | ||
Salaries and benefits | 139,371 | 141,086 | 138,223 | ||
Depreciation and amortization | 9,170 | 9,365 | 9,255 | ||
Reinsurance losses and underwriting expenses | 23,605 | 25,715 | 22,212 | ||
Other expenses | 61,840 | 75,589 | 48,307 | ||
Total operating expenses | 233,986 | 251,755 | 217,997 | ||
Income before income taxes | 75,661 | 46,378 | 106,140 | ||
Income tax expense | (20,061) | (7,691) | (25,010) | ||
Net income | 55,600 | 38,687 | 81,130 | ||
Net loss attributable to noncontrolling interests | 15,526 | 19,084 | 1,430 | ||
Net income attributable to Nelnet, Inc. | $ 71,126 | 57,771 | 82,560 | ||
Earnings per common share: | |||||
Net income attributable to Nelnet, Inc. shareholders - basic and diluted | $ 1.97 | 1.60 | 2.26 | ||
Weighted-average common shares outstanding - basic and diluted | 36,076,912 | 36,088,994 | 36,478,426 | ||
Condensed Consolidated Balance Sheets (Dollars in thousands) (unaudited) | |||||
As of | As of | As of | |||
March 31, 2026 | December 31, 2025 | March 31, 2025 | |||
Assets: | |||||
Loans and accrued interest receivable, net | $ 10,009,471 | 10,006,695 | 10,422,704 | ||
Cash, cash equivalents, and investments | 2,717,368 | 2,643,954 | 2,523,067 | ||
Restricted cash | 590,518 | 677,563 | 611,610 | ||
Goodwill and intangible assets, net | 301,506 | 187,312 | 192,832 | ||
Other assets | 559,054 | 548,259 | 441,745 | ||
Total assets | $ 14,177,917 | 14,063,783 | 14,191,958 | ||
Liabilities: | |||||
Bonds and notes payable | $ 7,699,400 | 7,780,927 | 8,656,157 | ||
Bank deposits | 1,744,527 | 1,669,173 | 1,313,407 | ||
Other liabilities | 1,127,978 | 1,036,454 | 859,385 | ||
Total liabilities | 10,571,905 | 10,486,554 | 10,828,949 | ||
Equity: | |||||
Total Nelnet, Inc. shareholders' equity | 3,731,291 | 3,685,792 | 3,419,523 | ||
Noncontrolling interests | (125,279) | (108,563) | (56,514) | ||
Total equity | 3,606,012 | 3,577,229 | 3,363,009 | ||
Total liabilities and equity | $ 14,177,917 | 14,063,783 | 14,191,958 | ||
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, | |||
2026 | 2025 | ||
GAAP net income attributable to Nelnet, Inc. | $ 71,126 | 82,560 | |
Realized and unrealized derivative market value adjustments (a) | (1,587) | 6,324 | |
Tax effect (b) | 381 | (1,519) | |
Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments | $ 69,920 | 87,365 | |
Earnings per share: | |||
GAAP net income attributable to Nelnet, Inc. | $ 1.97 | 2.26 | |
Realized and unrealized derivative market value adjustments (a) | (0.04) | 0.17 | |
Tax effect (b) | 0.01 | (0.04) | |
Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments | $ 1.94 | 2.39 | |
(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 respective 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 majority of the company's derivative instruments do not qualify for hedge accounting in the consolidated financial statements. As a result, the change in fair value for the derivative instruments that do not qualify for hedge accounting 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 generally 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. Consequently, 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 and represents what earnings would have been had these derivatives qualified for hedge accounting. 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. | |
(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.