Nelnet (NNI) Q2 2024 earnings summary

Executive summary

• Net income attributable to Nelnet, Inc. was $45.1 million for Q2 2024, up from $27.4 million in Q2 2023; six-month net income was $118.5 million, up from $53.4 million year-over-year.

• GAAP EPS for Q2 2024 was $1.23, up from $0.73 in Q2 2023; non-GAAP net income excluding derivative market value adjustments was $43.9 million ($1.20/share).

• Revenue from loan servicing and systems declined due to a new government contract with lower per-borrower rates and reduced borrower volume.

• The company is shifting its solar construction business to focus solely on commercial projects, discontinuing residential operations.

• Nelnet Bank continues to expand, with a $542.4 million loan portfolio and $1.03 billion in deposits as of June 30, 2024.

Financial highlights

• Total interest income for Q2 2024 was $242.9 million, down from $284.0 million in Q2 2023; six-month total was $511.7 million, down from $550.0 million year-over-year.

• Net interest income for Q2 2024 was $66.4 million, up from $50.9 million in Q2 2023; six-month net interest income was $140.6 million, up from $117.4 million.

• Total assets as of June 30, 2024 were $14.5 billion, down from $16.7 billion at year-end 2023 and $17.8 billion a year ago.

• Share repurchases in H1 2024 totaled 884,704 shares for $82.3 million, including 487,980 shares in Q2 at $95.10 per share.

• Board declared a Q3 dividend of $0.28 per share, payable September 13, 2024.

Outlook and guidance

• Before-tax operating margin in loan servicing is expected to remain below historical levels for the rest of 2024 until cost savings from staff reductions and new servicing revenue are realized.

• Revenue per borrower under the new government servicing contract is expected to decrease, but additional revenue is anticipated from change requests and new remote hosted servicing customers.

• Management remains focused on leveraging liquidity for market opportunities, including loan acquisitions and capital management.

• Remaining $5.5 million in technology transition charges to be recognized in H2 2024.

• Nelnet Bank expects to make additional capital contributions to support growth.