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    Mr. Cooper Group (COOP)

    COOP Q2 2025: 17.2% ROTCE and $200M MSR Fund Launch

    Reported on Jul 23, 2025 (Before Market Open)
    Pre-Earnings Price$169.12Last close (Jul 22, 2025)
    Post-Earnings Price$178.70Open (Jul 23, 2025)
    Price Change
    $9.58(+5.66%)
    • Consistent and predictable operating performance: The company delivered a solid quarter with an operating ROTCE of 17.2%, which is within its guidance range, underscoring the stability of its business model even in a challenging environment.
    • Robust liquidity and balance sheet strength: With liquidity at $3.8B and a normalized capital ratio positioned in the upper end of guidance, the company shows readiness to deploy capital for growth and withstand market headwinds.
    • Strategic growth initiatives: The launch of its maiden MSR fund with $200M of initial commitments and significant progress in home equity securitizations highlight an innovative approach to expanding its revenue streams and competitive positioning.
    MetricYoY ChangeReason

    Total Revenue

    +4.3% (from $583m in Q2 2024 to $608m in Q2 2025)

    The increase in Total Revenue is driven primarily by the robust growth in Originations Revenue, which outweighed declines in other segments. This mirrors earlier patterns where operational improvements in originations contributed positively to overall revenue performance.

    Servicing Revenue

    -4.8% (decline from $456m in Q2 2024 to $434m in Q2 2025)

    The decline in Servicing Revenue is likely due to unfavorable mark-to-market adjustments and a reduction in servicing fee components, a trend similar to declines observed in previous periods when external rate changes affected revenue streams.

    Originations Revenue

    +47.7% (from $107m in Q2 2024 to $158m in Q2 2025)

    A substantial increase in Originations Revenue is attributed to improved activity in both direct-to-consumer and correspondent channels, with higher pull-through volumes and funded volumes building on strategic shifts seen in prior periods.

    Corporate/Other Revenue

    -20% (decline from $20m in Q2 2024 to $16m in Q2 2025)

    The decline in Corporate/Other Revenue stems from lower fees earned from Xome Exchange, driven by a reduced average exchange inventory under management—a pattern consistent with previous period challenges in that segment.

    MetricPeriodPrevious GuidanceCurrent GuidanceChange

    Corporate Expenses

    Q3 2025

    no prior guidance

    $48 million

    no prior guidance

    Capital Ratio

    Q3 2025

    no prior guidance

    26.6%

    no prior guidance

    Overall Performance

    Q3 2025

    no prior guidance

    continued consistent performance

    no prior guidance

    TopicPrevious MentionsCurrent PeriodTrend

    Robust Financial Strength & Liquidity

    Emphasized in Q1 2025 with liquidity at $3.9B and strong capital ratios ; Q4 2024 focused on liquidity at $3.4B and balanced capital ratios ; Q3 2024 highlighted record liquidity of $4.1B and a solid balance sheet

    Described in Q2 2025 with liquidity at $3.8B, improved tangible net worth to assets (26.6% vs 24.4% previously), and strong asset quality with delinquencies at 1%

    Consistent robust financial strength with minor adjustments due to acquisition timing and evolving capital metrics.

    Operational Efficiency & Technological Innovation

    Q1 2025 discussed AgentiQ rollout with efficiency improvements and cost reductions ; Q4 2024 detailed AI tool AgentiQ deployment and operational advances ; Q3 2024 emphasized digital-first strategies and Agent IQ-driven improvements

    Q2 2025 continued focus on operational efficiency with servicing income growth, further rollout and beta testing of AgentIQ (with autonomous capabilities in progress)

    Sustained commitment to technology with incremental advancements (e.g., enhanced AI features) and steady operational improvements.

    Strategic Growth Initiatives & M&A Integration

    Q1 2025 and Q3 2024 focused on the Flagstar acquisition integration and outlined the pending Rocket merger with detailed integration progress ; Q4 2024 concentrated on Flagstar acquisition only

    Q2 2025 highlighted both Flagstar acquisition progress (steady servicing portfolio and deboarding large loan volumes) and active integration planning for the Rocket merger (including suspension of stock repurchases)

    A reinforcing of strategic initiatives with clearer emphasis on Rocket merger integration alongside Flagstar, strengthening long‑term growth prospects.

    Mortgage Servicing Rights Valuation, Fund Launch, and Margin Pressures

    Q1 2025 and Q3 2024 mentioned markdowns in MSR valuation with hedge gains and discussed margin impacts without a fund launch ; Q4 2024 touched on consistent margins amid valuation approaches but did not mention a fund launch

    Q2 2025 reported a positive shift with a $59M mark‑up in MSR valuation, launched a new MSR fund with $200M in commitments, and noted balanced margin performance despite industry pressures

    A notable shift from cautious markdowns to an improved valuation outlook and the introduction of a dedicated fund, reflecting a more favorable view of MSR economics.

    Interest Rate Volatility and Its Impact on Originations

    Q1 2025 detailed challenges for rate‑term refinances while seizing opportunities in cash‑outs and second liens ; Q3 2024 discussed rate fluctuations impacting product mix and guided originations income ; Q4 2024 emphasized potential rate drops to boost originations

    Q2 2025 described a relatively muted rate volatility during the quarter, while noting strong Direct‑to‑Consumer momentum (with 22% of customers having note rates above 6%) to capitalize on opportunities

    A subtle change in emphasis – from navigating high volatility to leveraging a calmer rate environment for targeted product opportunities.

    Emergence of Fee‑Based Revenue Growth

    Q3 2024 highlighted subservicing as a fee‑based catalyst and Q4 2024 emphasized fee‑based revenue contributing over 20% of total revenue ($500M) with stable, steady growth ; Q1 2025 did not mention this topic

    Not mentioned in Q2 2025 discussions

    A noticeable omission in Q2 relative to earlier quarters, suggesting either a temporary shift in focus or deprioritization of fee‑based revenue commentary for the current period. [N/A]

    Home Equity Securitizations Progress

    No specific details were provided in Q1 2025 or Q3 2024; Q4 2024 discussed growth in home equity business and available customer equity but not securitizations per se

    Q2 2025 detailed progress with two completed securitizations and underscored significant available customer equity ($900B) for home equity loans

    A new and emerging focus in Q2, marking a shift toward capitalizing on home equity as a securitization vehicle with potential long‑term impact.

    Debt Refinancing and Senior Notes Maturation Risks

    Q1 2025 mentioned $500M in senior notes maturing in Feb 2026 with active evaluation for early retirement ; Q3 2024 discussed corporate debt interest expense and extending maturity via new notes ; Q4 2024 did not include discussion on this topic [N/A]

    Q2 2025 did not address debt refinancing or senior notes maturation risks

    A reduced emphasis in Q2 compared to prior periods, perhaps reflecting a lower prioritization due to improved liquidity, reduced perceived risk, or a shift in management focus. [N/A]

    1. No Q&A
      Q: No questions were asked.
      A: Management did not take any questions during the call due to the pending Rocket merger, so no additional Q&A details are available.

    Research analysts covering Mr. Cooper Group.