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Mr. Cooper Group Inc. (COOP)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered strong operating performance but mixed headline results: total revenues were $608M while diluted EPS was $3.04; operating ROTCE rose to 17.2% from 16.8% in Q1 .
  • Versus consensus: revenue missed ($608M vs $669.6M*) and Primary EPS missed (3.13* vs 3.20*), but EBITDA beat (591M* vs 522M*) — reflecting robust servicing operating leverage despite softer topline; expectations for Q3 call for ~$667M* revenue and 3.20* EPS. Bold: Revenue miss; EPS miss; EBITDA beat. Values retrieved from S&P Global.
  • Servicing pretax income increased to $364M with pretax operating income of $332M; originations pretax income rose to $64M on $9.4B funded volume; MSR fair value was $11.431B (156 bps of UPB) .
  • Call highlighted strategic catalysts: maiden MSR fund launched with $200M commitment, continued DTC momentum (two home equity securitizations), and ongoing Rocket integration planning; buybacks remain paused pending the Rocket transaction .

What Went Well and What Went Wrong

What Went Well

  • Servicing operating leverage remained strong: pretax operating income of $332M, with revenues up and expenses down QoQ; management emphasized “consistent, recurring, and predictable performance” and ROTCE within the 16–20% guidance range .
  • Originations execution solid: pretax income rose to $64M; DTC momentum supported by two home equity securitizations; funded volume increased to $9.4B and pull-through volume to $9.7B .
  • Strategic initiatives: launched maiden MSR fund with $200M commitments; management highlighted cost leadership and technology (Agent IQ) driving efficiencies and better customer experiences .

What Went Wrong

  • Headline consensus comparisons were mixed: total revenue of $608M came in below Street ($669.6M*), and Primary EPS of ~3.13* was slightly below $3.20*; however EBITDA outperformed, indicating expense control offset topline softness. Bold: Revenue miss; EPS miss. Values retrieved from S&P Global .
  • Corporate/Other remained a drag at -$151M pretax; management guided corporate expenses to remain at ~$48M in Q3 due to continued IP investments, limiting consolidated margin expansion .
  • Subservicing churn: deboarding of ~$62B from a single client (deboarded $12B in Q2 and ~$50B early July) introduces near-term headwinds to subservicing UPB, though new client wins and MSR acquisitions are expected to offset .

Financial Results

Consolidated Performance (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Total Revenues ($USD Millions)$654 $560 $608
Net Income ($USD Millions)$204 $88 $198
Diluted EPS ($USD)$3.13 $1.35 $3.04
Pretax Operating Income ($USD Millions)$235 $255 $269
Operating ROTCE (%)15.8% 16.8% 17.2%
Service Related, net ($USD Millions)$537 $440 $472

Segment Breakdown (oldest → newest)

Segment MetricQ4 2024Q1 2025Q2 2025
Servicing Total Revenues ($M)$502 $403 $434
Servicing Pretax Income ($M)$393 $214 $364
Originations Total Revenues ($M)$135 $140 $158
Originations Pretax Income ($M)$46 $45 $64
Corporate/Other Pretax ($M)$(159) $(164) $(151)

Operating KPIs (oldest → newest)

KPIQ4 2024Q1 2025Q2 2025
Servicing Ending UPB ($B)$1,556 $1,514 $1,509
60+ Day Delinquency Rate1.6% 1.5% 1.4%
Annualized CPR7.5% 5.0% 7.0%
MSR Fair Value ($M)$11,736 $11,345 $11,431
MSR UPB (bps)159 155 156
Funded Volume ($B)$9.290 $8.319 $9.443
Pull-through Adjusted Volume ($B)$9.063 $8.842 $9.733
DTC Funded Volume ($B)$2.6 $1.9 $2.6
Correspondent Funded Volume ($B)$6.7 $6.4 $6.8
Recapture %21% 19% 17%
Refi Recapture %35% 51% 47%
Purchase Mix % of Funded65% 72% 70%

Consensus vs Actual – Q2 2025

MetricQ2 2025 ActualQ2 2025 Consensus# of Estimates
Total Revenues ($USD Millions)$608 $669.6*7*
Primary EPS ($USD)3.13*3.20*8*
EBITDA ($USD Millions)591*522.3*N/A

Values retrieved from S&P Global.

Forward Consensus – Q3 2025

MetricQ3 2025 Consensus
Total Revenues ($USD Millions)$667.0*
Primary EPS ($USD)3.20*
# of Estimates (Revenue / EPS)1* / 1*

Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Operating ROTCE rangeOngoing16–20% (company framework) 16–20% (Q2 operating ROTCE 17.2%) Maintained
Corporate Expenses (Corporate/Other)Q3 2025N/A~$48M due to ongoing IP investments New
MSR Acquisitions BoardingQ3 2025N/A~$20B to board in Q3 New
Servicing Portfolio TrajectoryFY 2025N/A“Flat, plus or minus” for remainder of year New
Share Repurchases2025Active prior to mergerSuspended due to Rocket transaction Suspended
Tax Rate Assumption (non-GAAP)Q2 2025~24.2%24.2% used in operating reconciliation Maintained

Earnings Call Themes & Trends

TopicQ4 2024 (Two Quarters Ago)Q1 2025 (Prior Quarter)Q2 2025 (Current)Trend
AI/Technology InitiativesEmphasis on robust operations and technology enabling Flagstar close Integration team formed with Rocket; tech capability implied Agent IQ fully rolled; moving to agentic features to automate tasks under human supervision Increasing focus on AI-enabled efficiency
Macro/Rate BackdropNot emphasizedNot emphasizedHigh rates; affordability pressures; MBA shows originators lost money in 10/12 quarters Persistent headwinds acknowledged
Product Performance (DTC/Home Equity)Funded volumes up; improving mix Strong cash-out refi and second liens Two home equity securitizations; HE + cash-out ~60% of mix; faster turn times YoY Accelerating home equity focus
Regulatory/LegalNot discussedNot discussedFHA modification standards tightened (24 months) and student loan delinquencies elevated; conservative appetite (FHA 15% of MSR) Heightened regulatory caution
Rocket IntegrationCompleted Flagstar operations; industry recognition Announced combination and formed integration team Working closely on post-close planning; highlights Rocket/Redfin platform Advancing integration planning
Asset Quality60+ DLQ 1.6% 60+ DLQ 1.5% 60+ DLQ 1.4%; CFO notes MSR delinquencies down to ~1% Improving asset quality

Management Commentary

  • “This was another strong quarter, marked by consistent, recurring, and predictable performance… Operating ROTC was 17.2%… I’d say the company is firing on all cylinders.” — Jay Bray, CEO .
  • “We successfully launched our maiden MSR fund, with $200 million in initial commitments and plans to scale rapidly.” — Jay Bray .
  • “Our cost to serve is now nearly 50% below the industry average… and we’re rolling out AI (Agent IQ) to drive incremental efficiencies.” — Mike Weinbach .
  • “Liquidity ended the quarter at $3.8 billion… capital ratio (tangible net worth to assets) at 26.6%; we guide to continued consistent performance.” — Kurt Johnson .
  • “We’ve limited FHA loans to 15% of our MSR portfolio… student loan delinquencies peaked at 8.7% in April, settling at 7.9% in June; risk remains manageable given significant borrower equity.” — Kurt Johnson .

Q&A Highlights

  • The company did not take questions due to the pending combination with Rocket; the call consisted of prepared remarks only .
  • Management provided guidance color in remarks (corporate expenses, servicing portfolio trajectory, MSR acquisitions) and clarified liquidity and capital ratios without Q&A elaboration .

Estimates Context

  • Q2 2025 results vs consensus: revenue $608M vs $669.6M* (miss), Primary EPS ~3.13* vs 3.20* (miss), EBITDA 591M* vs 522M* (beat). Bold: Revenue miss, EPS miss, EBITDA beat . Values retrieved from S&P Global.
  • Next quarter (Q3 2025) Street implies ~$667M* revenue and 3.20* Primary EPS — modest sequential continuity; watch for any revisions after subservicing deboardings and corporate expense guidance. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Servicing remains the earnings engine: pretax operating income of $332M with strong operating leverage and improving delinquency metrics; supports resilience despite macro headwinds .
  • Originations momentum is shifting toward home equity: two securitizations completed; DTC volumes up with faster turn times — a multi-year opportunity given ~$900B customer equity cited by management .
  • Mix of headline results vs operating quality: topline and Primary EPS missed Street, but EBITDA beat and ROTCE improved; the narrative favors durable cash generation and cost discipline. Bold: EBITDA beat with stronger ROTCE . Values retrieved from S&P Global.
  • Strategic catalysts: maiden MSR fund ($200M commitments) and Rocket integration planning (including Redfin platform context) could drive platform scale and asset-light growth; buybacks paused near term .
  • Risk management remains conservative: FHA exposure capped ~15% of MSR; monitoring student loan delinquencies while emphasizing borrower equity and best-in-class loss mitigation .
  • Near-term trading lens: watch Street estimate revisions (topline/EPS misses vs EBITDA beat), MSR valuation sensitivity to rates (Q2 MTM +$59M with 75% hedge ratio), and any updates on subservicing client transitions and new wins .
  • Liquidity and capital provide optionality: $3.8B liquidity and 26.6% capital ratio support ongoing investments and integration with Rocket, albeit with repurchases suspended pending the transaction .

Additional references: Earnings press release and 8-K (financial tables and segment reconciliation) ; earnings call prepared remarks for context on AI, MSR fund, regulatory updates, and guidance color . The company scheduled Q2 2025 results for July 23, 2025 at 7:00am ET .