Mr Cooper Group (COOP) Q1 2025 earnings summary

Executive summary

• Announced a pending all-stock combination with Rocket Companies, valued at $9.4 billion, to create a scaled, integrated homeownership platform leveraging AI and technology, with integration planning underway and expected close in Q4 2025.

• Q1 2025 net income was $88 million, down from $181 million in Q1 2024, with diluted EPS of $1.35 and tangible book value per share rising to $72.53.

• The company remains the largest U.S. residential mortgage servicer, with a servicing portfolio UPB of $1.5 trillion, up 33% year-over-year.

• Integration of Flagstar, the largest acquisition in company history, is complete and delivering benefits.

• Won the 2024 Fannie Mae Star Award in all three categories and Freddie Mac's Sharp Gold Award for servicing excellence.

Financial highlights

• Net income for Q1 2025 was $88 million, with $255 million in pre-tax operating earnings and total revenues of $560 million.

• Liquidity increased to $3.9 billion, up 14% quarter-over-quarter.

• Capital ratio (tangible net worth to assets) improved to 25.5% from 24.4% last quarter.

• MSR delinquencies declined to 1.1%, down 9 basis points quarter-over-quarter.

• Pretax operating income rose to $255 million from $235 million in Q4 2024.

Outlook and guidance

• No stock repurchases expected before the Rocket transaction closes, anticipated in Q4 2025.

• Guidance range for ROTCE remains 16-20%, with return on tangible equity targeted in the high teens.

• Management expects moderate growth in the bulk pipeline and continued momentum in direct-to-consumer home equity and cash-out refinance volumes.

• Target hedge ratio for MSR remains at 75%.

• Xome and special servicing businesses positioned for counter-cyclical revenues during adverse credit cycles.