Nelnet Reports Second Quarter 2026 Results
Rhea-AI Summary
Nelnet (NYSE: NNI) reported second-quarter 2026 GAAP net income of $66.7 million, or $1.85 per share, versus $181.5 million, or $4.97 per share, a year earlier. Non-GAAP net income excluding derivative market value adjustments was $63.9 million, or $1.77 per share, compared with $184.4 million, or $5.05 per share. The prior-year quarter included a $175.0 million pre-tax gain ($133.0 million after tax, $3.65 per share) from the partial redemption of Nelnet’s ALLO investment; excluding this, 2025 GAAP net income was $48.5 million, or $1.32 per share.
AGM acquired $3.07 billion of consumer loans, expanding the consumer portfolio to $1.21 billion from $411.5 million, and increased net interest income to $63.2 million. Nelnet Bank earned $10.5 million after tax, versus a $0.4 million loss. Loan Servicing and Systems revenue rose to $132.2 million, while Education Technology Services and Payments revenue was $118.9 million. Higher loan loss provisions and lower operating margins affected results. Nelnet repurchased 316,600 Class A shares for $40.6 million and declared a third-quarter dividend of $0.33 per share.
Positive
- Q2 2026 GAAP net income $66.7 million, $1.85 per share
- Non-GAAP net income $63.9 million, or $1.77 per share, in Q2 2026
- Consumer loan portfolio grew to $1.21 billion from $411.5 million year-over-year
- AGM net interest income increased to $63.2 million from $49.9 million
- Nelnet Bank net income of $10.5 million versus prior-year $0.4 million loss
- Loan Servicing and Systems revenue rose to $132.2 million from $120.7 million
- Share repurchases of 316,600 Class A shares for $40.6 million in first half 2026
- Quarterly dividend declared at $0.33 per share payable September 15, 2026
Negative
- Q2 2026 GAAP net income down from $181.5 million in Q2 2025, which included a $175.0 million ALLO gain
- Provision for loan losses increased to $41.1 million in Q2 2026 from $17.9 million
- Loan Servicing and Systems net income decreased to $11.3 million from $15.2 million year-over-year
- Education Technology Services and Payments net income fell to $14.7 million from $17.9 million
- Operating margins in servicing and education technology declined due to lower Department revenue and higher expenses
News Explained
At June 30, Nelnet reported $2,841,174 thousand of cash and investments against $7,043,156 thousand of bonds and notes payable.
Nelnet reported second-quarter 2026 results for the period ended
The company separates interest-earning businesses in Nelnet Financial Services from the primarily fee-based Loan Servicing and Systems and Education Technology Services and Payments divisions.
At
Key Figures
Previous Earnings Reports
| Date | Event | Sentiment | 24h Move | Catalyst |
|---|---|---|---|---|
| May 07 | First-quarter earnings | Negative | -13.4% | Quarterly net income declined year over year amid acquisition-related loan-loss provisions. |
| Feb 26 | Fourth-quarter earnings | Negative | -1.4% | Quarterly GAAP income declined despite full-year income growth and improving revenue mix. |
| Nov 06 | Third-quarter earnings | Positive | +2.2% | Quarterly earnings improved alongside servicing, investment, and portfolio growth. |
| Aug 06 | Second-quarter earnings | Positive | -0.2% | Reported earnings benefited materially from the ALLO investment redemption gain. |
| May 08 | First-quarter earnings | Positive | +5.9% | Quarterly income increased with strength across core operating segments and planned ALLO monetization. |
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Tag-specific earnings events averaged a -1.39% 24-hour move, with four of five historical reactions aligned with the reported earnings direction.
Key Terms
gaap financial
cecl financial
loan spread financial
derivative market value adjustments financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
Net income, excluding derivative market value adjustments1, was
Included in the operating results for the second quarter of 2025 is a gain of
"We delivered another quarter of solid results, reflecting the strength of our diversified strategy across consumer lending, servicing, payments, and technology, with a continued focus on education," said Jeff Noordhoek, chief executive officer of Nelnet. "This quarter included the first full quarter of contributions from our
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
As of June 30, 2026, AGM's loan portfolio totaled
The AGM operating segment reported loan and investment net interest income of
AGM recorded a provision for loan losses of
AGM holds interests in joint ventures engaged in the acquisition, ownership, and management of loan portfolios. During the three months ended June 30, 2026, AGM recognized income from these joint ventures of
AGM reported 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 June 30, 2026, Nelnet Bank had a loan portfolio of
Nelnet Bank recorded a negative provision for loan losses of
Nelnet Bank recognized net income after tax of
Loan Servicing and Systems
Revenue from the Loan Servicing and Systems segment was
Operating margin decreased in the second quarter of 2026 compared with the same period in 2025 due to the decrease in revenue from the Department servicing contract and amortization of intangible assets from the NDS Canada acquisition. The Loan Servicing and Systems segment reported net income after tax of
Education Technology Services and Payments
For the second quarter of 2026, revenue from the Education Technology Services and Payments operating segment was
Operating margin decreased in the second quarter of 2026 compared with the same period in 2025 due to an increase in operating expenses to support continued growth in the customer base and investments in the development of new technologies. Net income after tax for the Education Technology Services and Payments segment was
Corporate and Other Activities
During the three months ended June 30, 2026, the company recognized an unrealized gain of
Share Repurchases
During the first six months of 2026, the company has repurchased 316,600 Class A common shares for
Board of Directors Declares Third Quarter Dividend
The Nelnet Board of Directors declared a third-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, 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, Canadian, 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 U.S. GAAP. However, it also provides additional non-GAAP financial information related to specific items management believes to be important in the evaluation of its operating results and performance. Reconciliations of GAAP to non-GAAP financial information, and a discussion of why the company believes providing this additional information is useful to investors, are provided in the "Non-GAAP Disclosures" section below.
Consolidated Statements of Income (Dollars in thousands, except share data) (unaudited) | |||||||||
Three months ended | Six months ended | ||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | |||||
Interest income: | |||||||||
Loan interest | $ 164,598 | 171,024 | 172,104 | 335,622 | 338,543 | ||||
Investment interest | 40,315 | 40,202 | 40,185 | 80,517 | 81,574 | ||||
Total interest income | 204,913 | 211,226 | 212,289 | 416,139 | 420,117 | ||||
Interest expense on bonds and notes payable and bank | 108,902 | 109,583 | 132,854 | 218,485 | 257,968 | ||||
Net interest income | 96,011 | 101,643 | 79,435 | 197,654 | 162,149 | ||||
Less provision for loan losses | 41,077 | 53,244 | 17,930 | 94,321 | 33,267 | ||||
Less provision for beneficial interests | 2,441 | 4,130 | 4,977 | 6,571 | 6,487 | ||||
Net interest income after provision | 52,493 | 44,269 | 56,528 | 96,762 | 122,395 | ||||
Other income (expense): | |||||||||
Loan servicing and systems revenue | 132,244 | 127,842 | 120,724 | 260,086 | 241,465 | ||||
Education technology services and payments revenue | 118,884 | 154,436 | 118,184 | 273,319 | 265,515 | ||||
Reinsurance premiums earned | 40,625 | 22,536 | 26,112 | 63,161 | 50,799 | ||||
Solar construction revenue | — | — | 1,259 | — | 5,254 | ||||
Other, net | 18,399 | 10,437 | 22,976 | 28,836 | 47,579 | ||||
Gain on partial redemption of ALLO investment | — | — | 175,044 | — | 175,044 | ||||
Derivative market value adjustments and derivative | 3,852 | 2,167 | (3,122) | 6,019 | (8,701) | ||||
Total other income (expense), net | 314,004 | 317,418 | 461,177 | 631,421 | 776,955 | ||||
Cost of services and expenses: | |||||||||
Loan servicing contract fulfillment and acquisition costs | 2,087 | 2,087 | 1,845 | 4,174 | 3,478 | ||||
Cost to provide education technology services and | 39,183 | 49,953 | 39,844 | 89,136 | 87,891 | ||||
Cost to provide solar construction services | — | — | 14,050 | — | 21,878 | ||||
Total cost of services | 41,270 | 52,040 | 55,739 | 93,310 | 113,247 | ||||
Salaries and benefits | 152,664 | 139,371 | 134,699 | 292,035 | 272,922 | ||||
Depreciation and amortization | 10,142 | 9,170 | 7,624 | 19,312 | 16,879 | ||||
Reinsurance losses and underwriting expenses | 32,809 | 23,605 | 25,662 | 56,414 | 47,874 | ||||
Other expenses | 64,199 | 61,840 | 56,617 | 126,038 | 104,924 | ||||
Total operating expenses | 259,814 | 233,986 | 224,602 | 493,799 | 442,599 | ||||
Income before income taxes | 65,413 | 75,661 | 237,364 | 141,074 | 343,504 | ||||
Income tax expense | (19,942) | (20,061) | (59,510) | (40,003) | (84,521) | ||||
Net income | 45,471 | 55,600 | 177,854 | 101,071 | 258,983 | ||||
Net loss attributable to noncontrolling interests | 21,191 | 15,526 | 3,605 | 36,717 | 5,035 | ||||
Net income attributable to Nelnet, Inc. | $ 66,662 | 71,126 | 181,459 | 137,788 | 264,018 | ||||
Earnings per common share: | |||||||||
Net income attributable to Nelnet, Inc. shareholders - | $ 1.85 | 1.97 | 4.97 | 3.82 | 7.24 | ||||
Weighted-average common shares outstanding - basic | 36,037,509 | 36,076,912 | 36,485,605 | 36,057,102 | 36,482,035 | ||||
Condensed Consolidated Balance Sheets (Dollars in thousands) (unaudited) | |||||
As of | As of | As of | |||
June 30, 2026 | December 31, 2025 | June 30, 2025 | |||
Assets: | |||||
Loans and accrued interest receivable, net | $ 9,802,215 | 10,006,695 | 10,155,483 | ||
Cash, cash equivalents, and investments | 2,841,174 | 2,643,954 | 2,330,692 | ||
Restricted cash | 793,884 | 677,563 | 576,023 | ||
Goodwill and intangible assets, net | 302,838 | 187,312 | 191,307 | ||
Other assets | 534,953 | 548,259 | 457,583 | ||
Total assets | $ 14,275,064 | 14,063,783 | 13,711,088 | ||
Liabilities: | |||||
Bonds and notes payable | $ 7,043,156 | 7,780,927 | 7,903,561 | ||
Bank deposits | 2,219,249 | 1,669,173 | 1,382,042 | ||
Other liabilities | 1,377,223 | 1,036,454 | 942,792 | ||
Total liabilities | 10,639,628 | 10,486,554 | 10,228,395 | ||
Equity: | |||||
Total Nelnet, Inc. shareholders' equity | 3,770,539 | 3,685,792 | 3,574,983 | ||
Noncontrolling interests | (135,103) | (108,563) | (92,290) | ||
Total equity | 3,635,436 | 3,577,229 | 3,482,693 | ||
Total liabilities and equity | $ 14,275,064 | 14,063,783 | 13,711,088 | ||
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 June 30, | |||
2026 | 2025 | ||
GAAP net income attributable to Nelnet, Inc. | $ 66,662 | 181,459 | |
Realized and unrealized derivative market value adjustments (a) | (3,686) | 3,866 | |
Tax effect (b) | 885 | (928) | |
Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments | $ 63,861 | 184,397 | |
Earnings per share: | |||
GAAP net income attributable to Nelnet, Inc. | $ 1.85 | 4.97 | |
Realized and unrealized derivative market value adjustments (a) | (0.10) | 0.11 | |
Tax effect (b) | 0.02 | (0.03) | |
Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments | $ 1.77 | 5.05 | |
(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. |
(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.