#USA #Lincoln, Nebraska #Financial Services #Q1 2025 #Nelnet

Nelnet Q1 2025 Financial Highlights

Nelnet (NYSE: NNI) has shared its results for the first quarter of 2025, showcasing a notable increase in net income, reaching $82.6 million, or $2.26 per share. This marks a significant rise from the $73.4 million, or $1.98 per share, reported for the same period in the previous year. Excluding derivative market value adjustments, the net income was even more impressive at $87.4 million, translating to $2.39 per share, up from $67.4 million ($1.81 per share) in 2024.

CEO Jeff Noordhoek expressed optimism about the company's performance, emphasizing that despite the challenging economic environment, all core businesses are thriving and contributing positively to Nelnet's momentum. He noted the improvement in capital and liquidity positions, allowing the firm to strategically invest in future opportunities aimed at long-term success and value generation.

Business Segments Performance

Nelnet operates through several segments, primarily categorized under its Financial Services division, encompassing:

• - Asset Generation and Management (AGM)
• - Nelnet Bank
• - Loan Servicing and Systems (NELNET Diversified Services)
• - Education Technology Services and Payments (Nelnet Business Services)

Asset Generation and Management (AGM)

In the AGM segment, there was a rise in loan and investment net interest income to $52.9 million, up from $40.6 million in Q1 2024. This growth was attributed to a better loan spread, although it faced some pressure due to the expected decline of the Federal Family Education Loan Program (FFELP) portfolio. Notably, AGM acquired $832.6 million in loans, including $702.8 million comprising FFELP loans. A provision for loan losses also increased to $13.0 million, reflecting an adjustment based on newly acquired loans.

Nelnet Bank

As of March 31, 2025, Nelnet Bank reported a loan portfolio of $761.6 million and an investment portfolio of $872.2 million. The segment achieved a net interest income of $12.4 million, growing from $7.6 million a year earlier. A reduced loss relating to the fair value of derivatives was recorded, signaling improvements in financial management. The net income after tax for this segment was $1.5 million, compared to $0.9 million last year.

Loan Servicing and Systems

This segment reported revenue of $120.7 million, down from $127.2 million in Q1 2024. This decline was primarily due to the transition to a new Unified Servicing and Data Solution (USDS) contract with the Department of Education, which is expected to have lower revenue per borrower compared to the legacy contract. However, private education loan servicing has seen an uptick, earning $22.7 million as the company transitioned various loan portfolios. The net income for this segment grew to $14.1 million, up from $12.2 million in the previous year.

Education Technology Services and Payments

The Education Technology Services and Payments segment generated revenue of $147.3 million, a slight uptick from $143.5 million in Q1 2024. The operating margin improved in part due to seasonal fluctuations that favor the first quarter. The segment's net income was stable at $36.1 million.

Corporate Developments

In a strategic move, Nelnet's Board of Directors declared a $0.28 per share cash dividend scheduled for payment on June 16, 2025. Alongside this, a new stock repurchase program authorizing the buyback of up to five million shares of Class A common stock over the next three years was also introduced.

Looking Ahead

While Nelnet’s first-quarter results demonstrate robust growth and resilience, the firm faces ongoing challenges related to loan servicing contracts, borrower demand, and economic uncertainty. Nevertheless, with a strong foundation and strategic investments, Nelnet is poised to navigate these complexities and sustain its upward trajectory in the upcoming quarters.

Overall, these results underscore Nelnet's commitment to growth and its ability to adapt to changing market conditions while maintaining a focus on enhancing shareholder value. As the company moves forward, it remains vigilant in monitoring economic indicators and adjusting its strategies accordingly to continue driving performance.