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Nelnet Reports Second Quarter 2025 Results

August 6, 2025 – Nelnet (NYSE: NNI) has announced its financial results for the second quarter of 2025, showcasing a significant jump in GAAP net income to $181.5 million, equivalent to $4.97 per share. This marks a substantial increase from the $45.1 million, or $1.23 per share, recorded in the same quarter the previous year. On an adjusted basis, the net income, excluding any impacts from derivative market value adjustments, stood at $184.4 million, or $5.05 per share—up from $43.9 million or $1.20 per share from last year.

A key highlight for this quarter includes a notable gain of $175.0 million associated with the partial redemption of Nelnet's investment in ALLO Holdings, LLC. Jeff Noordhoek, CEO of Nelnet, stated, “We delivered a strong quarter, driven by continued performance across our core businesses. As we look ahead, we remain focused on delivering superior customer experiences and investing in crucial areas such as loan servicing, consumer lending, payments, and technology.”

Nelnet operates through four main segments:
1. Asset Generation and Management (AGM)
2. Nelnet Bank
3. Loan Servicing and Systems (NDS)
4. Education Technology Services and Payments (NBS)

Asset Generation and Management

During the second quarter, AGM reported a net interest income of $49.9 million, showing an increase from $35.8 million a year earlier. This rise can be attributed to a higher loan spread and the acquisition of $143 million in consumer and other loans. However, AGM faced challenges with a provision for loan losses amounting to $11.1 million, as compared to a negative provision of $4.2 million in the same quarter from the previous year.

Nelnet Bank

As of June 30, 2025, Nelnet Bank's portfolio consisted of $827.6 million in loans and $922.7 million in investments, supported by total deposits of $1.53 billion. The bank's net interest income increased to $14.1 million from $8.5 million year-over-year, signifying growth driven by a larger loan and investment portfolio coupled with an improved net interest margin. This segment did, however, report a loss of $1.7 million related to derivative changes.

Loan Servicing and Systems

The Loan Servicing and Systems segment generated $120.7 million in revenue, up from $109.1 million in the previous year. This revenue boost is primarily due to the conversion of loan portfolios from Discover Financial Services and SoFi Lending Corp. Additionally, the segment reported a significant net income of $15.2 million for the quarter, a leap from $1.7 million during the same period in 2024. This improvement is attributed to effective cost management and increased efficiency through technology.

Education Technology Services and Payments

The segment generated $118.2 million in revenue, a slight increase from $116.9 million in Q2 2024, although the operating margin decreased due to ongoing investments in technology and customer expansion. The net income after tax for this segment was $17.9 million, showing a decline from $19.5 million last year.

Corporate Activities

In a pivotal move, Nelnet received $410.9 million for redeeming a portion of its interests in ALLO on June 4, 2025. The company acknowledged a pre-tax gain of $175.0 million as a result. Additionally, in the solar engineering sector, Nelnet faced a net loss of $13.4 million, attributed to challenging legacy projects, while implementing significant cost-cutting measures.

Shareholder Actions

The Nelnet Board of Directors has declared a third-quarter cash dividend of $0.30 per share, to be paid on September 16, 2025.

Forward-Looking Statements

While the company expresses optimism regarding future performance, it also identifies various risks and uncertainties that could affect outcomes, including regulatory changes, market conditions, and operational challenges.

Overall, Nelnet's second-quarter results highlight robust business performance and a strategic vision for continued investment in key sectors, positioning the company for future growth amid a competitive landscape.