Executive Summary

COOP delivered a solid quarter with net income of $88M ($1.35 diluted EPS), total revenues of $560M, and pretax operating income of $255M; Servicing operating EBT landed at the high end of guidance, while Originations exceeded guidance modestly .
Against S&P Global consensus, EPS (Primary) was a small beat at $2.97 vs $2.92*, while revenue missed at $560M vs $615M*; the revenue shortfall was largely driven by lower “service related” revenue and a negative MSR mark, partially offset by hedge gains (72% coverage) .
Management highlighted continued operating leverage in Servicing and momentum in DTC cash-out and second-lien products; ROTCE was 16.8% (vs 15.8% prior quarter) and the servicing portfolio ended at $1.514T (+33% y/y) .
Strategic catalyst: pending combination with Rocket Companies; COOP did not take Q&A due to the transaction and signaled no share repurchases until close (expected 4Q25) .

What Went Well and What Went Wrong

What Went Well
- Servicing execution and leverage: Pretax operating income reached $332M (vs $318M in Q4), at the high end of guidance, aided by slower CPR and lower amortization; ROTCE improved to 16.8% .
- Originations outperformance: Originations EBT was $53M vs prior guide of $30–$50M for Q1; strong momentum in cash-out refis and second liens (second liens rose from 12% to 21% of DTC) .
- Scale and quality recognition: Servicing portfolio $1.514T; Fannie Mae STAR Award across all categories; delinquency improved (60+ DPD 1.5%); COOP emphasized AI-enabled AgentIQ productivity gains .
What Went Wrong
- Revenue shortfall vs consensus: Total revenue of $560M vs S&P Global consensus $615M*, reflecting lower service-related revenue and a negative MSR mark net of hedges .
- MSR mark-down on falling rates: Other mark-to-market (net of hedges) was -$82M; coverage ratio of 72% slightly below 75% target; MSR value ended at 155 bps of UPB (5.4x multiple) .
- Legal/transition costs: $26M in transaction/transition charges for Flagstar integration and $33M legal fees tied to a prior ruling; Corporate/Other segment pressure persisted .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025
Total Revenues ($M)	$424	$654	$560
Net Income ($M)	$80	$204	$88
Diluted EPS ($)	$1.22	$3.13	$1.35
Pretax Operating Income ($M, consolidated)	$246	$235	$255
Operating ROTCE (%)	16.8%	15.8%	16.8%

Segment performance

Segment Metric	Q3 2024	Q4 2024	Q1 2025
Servicing EBT ($M)	$177	$393	$214
Servicing Operating EBT ($M)	$305	$318	$332
Originations EBT ($M)	$69	$46	$45
Originations Operating EBT ($M)	$69	$47	$53

KPIs

KPI	Q3 2024	Q4 2024	Q1 2025
Ending Servicing UPB ($B)	$1,239	$1,556	$1,514
MSR UPB Owned ($B)	$678	$736	$734
Subservicing & Other UPB ($B)	$561	$820	$780
60+ DPD (period-end)	1.5%	1.6%	1.5%
Annualized CPR	7.1%	7.5%	5.0%
Funded Volume ($B)	$6.825	$9.290	$8.319
Pull-Through Adjusted Volume ($B)	$7.491	$9.063	$8.842
Refi Recapture (%)	69%	35%	51%
Purchase Mix of Funded Volume (%)	69%	65%	72%

Estimate comparison (S&P Global consensus)

Metric	Consensus	Actual	Surprise
Revenue ($M)	614.7*	560	MISS
Primary EPS ($)	2.92*	2.97*	BEAT

Values with an asterisk (*) are retrieved from S&P Global.

Context: Company-reported GAAP diluted EPS was $1.35; S&P’s “Primary EPS” reflects SPGI methodology/adjustments and is the basis for consensus comparisons .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance/Update	Change
ROTCE (Operating)	FY2025–FY2026	16%–20% (introduced/raised in Q4 call)	Maintained; Q1 operating ROTCE at 16.8% (within range)	Maintained
Servicing EBT	Q1 2025	$315–$335M (Q4 call)	Actual $332M (high end of range)	Met (high end)
Originations EBT	Q1 2025	$30–$50M (Q4 call)	Actual $53M (above range)	Raised vs prior guide (actual)
Share Repurchases	Through close of Rocket deal	Opportunistic (implied prior)	Suspended until post-close (expected 4Q25)	Lowered/suspended
2026 Senior Notes ($500M)	Callable now	Outstanding	Early retirement under evaluation; not material to liquidity	New option disclosed

No explicit top-line, margin, OpEx, tax rate, or segment guidance beyond the items above was provided for forward quarters in the Q1 call .

Earnings Call Themes & Trends

Topic	Q3 2024 (Prev-2)	Q4 2024 (Prev-1)	Q1 2025 (Current)	Trend
AI/Technology	Piloted AgentIQ, digital-first focus, data lake scale	Full AgentIQ rollout in servicing (400k calls/mo); cloud progress; plan rollout to originations	AgentIQ cited as productivity lever; only “scratching the surface”	Advancing deployments, widening scope
Macro/Rates & MSR	Expect rising CPRs; balanced model offsets via originations	MSR marked up; hedge coverage 85%	MSR marked down on falling rates; hedge coverage 72%	Volatile; hedge program remains effective
Originations Mix	DTC surge on rate dip; strong correspondent upgrades	Top-5 correspondent share; DTC capacity buffer; home equity runway	Cash-out 46% of DTC; second liens 21%; originations beat guide	Growing fee-like origination drivers
Servicing Scale & Quality	Portfolio $1.2T; operating leverage; FTEs down y/y	Portfolio $1.556T; SHARP Gold; subservicing lead	Portfolio $1.514T; Fannie STAR Award; leverage intact	Sustained scale/awards; slight QoQ dip due to planned deboardings
Regulatory/Legal	Monitoring Ginnie capital rules; conservative exposure	Legal accrual; corporate expense commentary	Additional $33M legal fees to close out liability	Cleaning up legacy items
Capital & Liquidity	Record liquidity; added note/debt capacity	Liquidity $3.4B; capital ratio 24.4%	Liquidity $3.9B; capital ratio 25.5%; repurchases paused; evaluate 2026 notes	Strengthening, conservative stance pre-merger
M&A/Strategic	Flagstar expected 4Q close	Flagstar completed; pipeline for bulk MSR/subservicing	Announced Rocket combination; integration teams formed	Consolidation continues; transformative combo

Management Commentary

CEO Jay Bray: “This was another strong quarter…positioned Mr. Cooper to join forces with Rocket to create the industry’s leading integrated homeownership platform… already working closely with Rocket on post-close planning” .
President Mike Weinbach: “Servicing [operating] expenses declined as a percentage of the portfolio by 36 bps y/y… AgentIQ…puts relevant prompts on the screen, allowing agents to empathetically focus on the customer while providing answers quickly and efficiently” .
CFO Kurt Johnson: “Net income was $88M which included $255M pretax operating earnings, offset by an $82M negative MSR mark… hedge gains $289M (72% coverage)… Liquidity ended the quarter at $3.9B… capital ratio 25.5%… repurchases suspended until Rocket close; evaluating early retirement of 2026 notes” .

Q&A Highlights

There was no Q&A on the Q1 2025 call due to the pending Rocket Companies combination; the company delivered prepared remarks only .
For context, the prior quarter’s Q&A emphasized: subservicing growth (capital-light), ROTCE range drivers, correspondent share gains, DTC capacity and home equity runway, bulk MSR pipeline, and cost leverage in servicing .

Estimates Context

Revenue: $560M actual vs $614.7M S&P Global consensus* → MISS .
EPS: S&P Global Primary EPS $2.97 actual vs $2.92 consensus* → BEAT; note company GAAP diluted EPS was $1.35 (different basis) .
Coverage: 7 revenue estimates and 8 EPS estimates in the period*.
Values with an asterisk (*) are retrieved from S&P Global.

Where estimates may adjust:

Expect slight downward revenue revisions given the top-line miss, offset by stable to upward EPS revisions reflecting resilient operating income and strong servicing operating leverage despite the MSR mark .

Key Takeaways for Investors

Core operating engine remains robust: Servicing operating EBT at the high end of guidance with improving ROTCE to 16.8% underscores durable fee-based earnings and operating leverage .
Originations upside lever intact: DTC cash-outs/second liens and correspondent scale provide counter-cyclical earnings and incremental optionality if rates dip; Q1 beat prior guide .
MSR volatility is managed: Negative MSR mark on falling rates was cushioned by consistent hedge performance (72% coverage), maintaining earnings predictability through cycles .
Balance sheet optionality: $3.9B liquidity, 25.5% capital ratio, and callable 2026 notes provide flexibility; buybacks paused ahead of Rocket close .
Strategic catalyst: Pending Rocket combination can expand brand-led origination funnel and accelerate AI/digital initiatives across an at-scale homeownership platform .
Near-term trading lens: Mixed headline (revenue miss, EPS beat on S&P basis) with positive qualitative tone and deal-related scarcity of Q&A; stock sensitivity likely to updates on regulatory approvals/timing for Rocket and ongoing operating leverage prints .
Medium-term thesis: Capital-light fee growth (subservicing/master servicing), disciplined MSR deployment, and AI-driven efficiency gains support sustained mid-to-high-teens ROTCE through 2025–2026, absent severe macro shocks .

Sources

Q1 2025 8-K earnings press release and exhibits .
Q1 2025 standalone press release .
Q1 2025 earnings call transcript (prepared remarks; no Q&A) .
Q4 2024 press release and 8-K (for prior-quarter comps and guidance) .
Q3 2024 press release and call (trend context) .
S&P Global consensus and actuals (Primary EPS, Revenue, estimate counts)*.