Walker & Dunlop (WD) Q2 2024 earnings summary

Executive summary

• Q2 2024 total transaction volume was $8.45 billion, nearly flat year-over-year, with revenues of $270.7 million, down 1% from Q2 2023.

• Net income for Q2 2024 was $22.7 million, down 18% year-over-year; diluted EPS was $0.67, also down 18%.

• Adjusted EBITDA rose 15% to $80.9 million and adjusted core EPS increased 26% to $1.23 year-over-year.

• Servicing portfolio grew 5% to $132.8 billion, with recurring revenue streams providing resilience.

• Year-to-date, total transaction volume was $14.8 billion (down 2%), revenues $498.7 million (down 2%), and net income $34.5 million (down 36%).

Financial highlights

• Q2 2024 adjusted EBITDA was $80.9 million, up 15% year-over-year; adjusted core EPS $1.23, up 26%.

• Operating margin for Q2 2024 was 10%, and return on equity was 5%, both below historical levels.

• Net income and diluted EPS for Q2 2024 decreased 18% year-over-year, mainly due to lower non-cash MSR revenues and higher loan loss provisions.

• Servicing fees grew 4% in Q2 2024 to $80.4 million, while MSR income fell 21% due to a 32% drop in Fannie Mae debt financing volume.

• Placement fees and other interest income rose 16% in Q2 2024, benefiting from higher short-term rates.

Outlook and guidance

• Management expects mid single-digit to low teens growth in diluted EPS, adjusted EBITDA, and adjusted core EPS for 2024.

• Long-term interest rates are expected to remain stable, supporting a gradual recovery in transaction activity in H2 2024.

• Multifamily lending market is forecasted to grow 25% in 2024, with most activity expected in the second half.

• GSEs are expected to deliver $100 billion in multifamily capital in 2024, boosting MSR revenues in H2.

• HUD volumes and GSE lending terms are anticipated to improve as interest rates stabilize.