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loanDepot, Inc. (LDI)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue rose 12.6% year over year to $257.5M, while adjusted revenue increased 6.0% to $266.6M; however, net loss widened to $67.5M due to higher volume-related expenses tied to locks taken during Q3’s lower-rate window .
  • Pull-through weighted gain on sale margin was 334 bps, a significant upside vs prior-year (296 bps) and above Q4 guidance of 285–305 bps, reflecting wider margins and mix shift away from JVs toward retail/direct channels; loan origination volume grew 34% YoY to $7.19B .
  • Servicing fee income fell to $108.4M (from $132.5M YoY) and servicing rights fair value remained pressured, consistent with earlier MSR sales and hedging impacts; cash and equivalents ended at $421.6M, underscoring continued liquidity discipline .
  • 2025 catalysts include onboarding builder JVs (Smith Douglas “Ridgeland Mortgage,” Onx X+ Mortgage), expansion of home equity products (equityFREEDOM 10- and 30-year terms), and Project North Star technology investments to drive operating leverage .
  • Management guided Q1 2025 lock volumes of $4.8–$5.8B, originations of $4.5–$5.5B, pull-through margin of 320–340 bps, and lower expenses sequentially; consensus estimates from S&P Global were unavailable at the time of analysis .

What Went Well and What Went Wrong

What Went Well

  • Margin outperformance: Pull-through weighted gain on sale margin of 334 bps beat guidance and rose YoY, aided by wider product margins and mix shift to retail/direct channels .
  • Volume acceleration: Origination volume increased 34% YoY to $7.19B, driven by locks concentrated in September on lower rates; recapture rate improved to 76% in consumer-direct refinance .
  • Strategic execution: Completion of Vision 2025, leadership transition to Executive Chairman of Mortgage Originations, and progress on Project North Star to enhance tech platforms and operating efficiency (“positioned to accelerate revenue growth and sustainable profitability”) .

What Went Wrong

  • Expense pressure: Total expenses rose 13% YoY to $341.6M, with higher commission, direct origination, and marketing linked to Q3-driven closings; G&A normalized after Q3 insurance recovery, and servicing expenses ticked up with modest delinquency increases .
  • Servicing revenue headwinds: Servicing fee income declined to $108.4M and MSR fair value remained under pressure amid hedging and prior bulk sales; servicing rights net change was negative .
  • GAAP losses: Net loss widened to $67.5M vs $59.8M YoY; adjusted net loss was $47.0M vs $26.7M YoY, as volume-related expense timing outpaced revenue recognition (“accounting timing between locks and originations”) .

Financial Results

Income Statement vs Prior Year and Prior Quarter

MetricQ4 2023Q3 2024Q4 2024
Total Revenue ($USD Millions)$228.6 $314.6 $257.5
Adjusted Total Revenue ($USD Millions)$251.4 $329.5 $266.6
Total Expense ($USD Millions)$302.6 $311.0 $341.6
Net (Loss) Income ($USD Millions)$(59.8) $2.7 $(67.5)
Diluted EPS ($)$(0.16) $0.01 $(0.17)

Volumes and Margins

MetricQ4 2023Q3 2024Q4 2024
Rate Lock Volume ($USD Millions)$6,417.4 $9,792.4 $7,648.8
Pull-Through Weighted Lock Volume ($USD Millions)$4,407.4 $6,748.1 $5,592.5
Loan Origination Volume ($USD Millions)$5,370.7 $6,659.3 $7,188.2
Gain on Sale Margin (%)2.43% 3.33% 2.60%
Pull-Through Weighted Gain on Sale Margin (%)2.96% 3.29% 3.34%

Loan Origination Volume by Purpose

Purpose ($USD Millions)Q4 2023Q3 2024Q4 2024
Purchase$4,071.8 $4,378.6 $4,139.5
Refinance - Cash Out$1,221.5 $1,954.1 $2,424.7
Refinance - Rate/Term$77.4 $326.7 $623.9
Total$5,370.7 $6,659.3 $7,188.2
Purchase Mix (%)76% 66% 58%

KPIs and Balance Sheet Highlights

KPIQ4 2023Q3 2024Q4 2024
Servicing Fee Income ($USD Millions)$132.5 $124.1 $108.4
Change in Fair Value of Servicing Rights, Net ($USD Millions)$(57.4) $(56.6) $(52.5)
Cash and Cash Equivalents ($USD Millions)$660.7 $483.0 $421.6
Servicing Portfolio UPB ($USD Millions)$145,090.2 $114,915.2 $115,972.0
60+ Days Delinquent (%)1.0% 1.4% 1.6%
Servicing Rights, Net to UPB (%)1.4% 1.3% 1.4%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Pull-Through Weighted Gain on Sale Margin (%)Q4 2024285–305 bps Actual: 334 bps Beat guidance
Origination Volume ($USD Billions)Q1 2025N/A4.5–5.5 New
Pull-Through Weighted Rate Lock Volume ($USD Billions)Q1 2025N/A4.8–5.8 New
Pull-Through Weighted Gain on Sale Margin (%)Q1 2025N/A320–340 bps New
Total ExpensesQ1 2025N/AExpected to decline QoQ New/Lower

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
AI/Technology initiativesQ2: Next-gen MelloNow, platform investments ; Q3: Project North Star includes AI-powered relationship management Investing in tech platforms to reduce cycle times and improve CX under Project North Star Increasing
Macro/mortgage outlookQ2: MBA 2025 forecast $2.1T, moderate rates ; Q3: MBA $2.3T, improving volumes Q1 2025 seasonality in guidance; aim for share gains vs third-party estimates Cautiously improving
Product performance (Home Equity)Q2: Growing home equity products supporting margins ; Q3: Wider overall margins and product/channel mix Expanded equityFREEDOM with 10- and 30-year terms; refinance recapture rate 76% Strengthening
Regional/JV expansionQ3: Announced Ridgeland JV with Smith Douglas ; JV markets in Southeast/South Onboarding Smith Douglas and Onx X+ Mortgage JVs through 2025; ramping in 2026 Growing
Regulatory/legal (Cyber)Q2: Settlement in principle; $25M accrual ; Q3: $18.9M insurance benefit Q4: $1.9M cyber-related expense; ongoing resolution Resolving
Liquidity/MSR strategyQ2: Monetized ~$29B UPB MSRs; cash $533M ; Q3: servicing fee impact from MSR sales Maintain elevated liquidity (~5% of assets); intend to build servicing asset opportunistically Stable/high-liquidity posture

Management Commentary

  • “2024 was a year of significant progress for loanDepot with the completion of our Vision 2025 strategic program… positioned to accelerate revenue growth and continue our progress towards sustainable profitability under Project North Star.” — Frank Martell, CEO .
  • “Our pull-through weighted gain on sale margin… came in at 334 basis points, above our guidance… our higher gain on sale margin primarily benefited from wider overall margins… and a channel mix shift away from JV toward our retail and direct channels.” — David Hayes, CFO .
  • “We are actively onboarding now our partnership with Smith Douglas and with Onx Homes… fully onboarded in 2025 and fully ramped in 2026.” — Jeff Walsh, President of LDI Mortgage .
  • “We ended the quarter with $422 million in cash… Investments in products and operating leverage will provide the foundation for additional momentum in 2025 and beyond.” — David Hayes, CFO .

Q&A Highlights

  • Liquidity target and MSR strategy: Management aims to maintain ~5% of assets in liquidity through 2025; intent is to build servicing asset and pursue opportunistic MSR acquisitions, leveraging financing lines as needed .
  • Expense dynamics: Q4 G&A normalized after Q3 insurance recovery; investments in LOs/operations raised capacity; servicing expenses rose modestly with delinquency tick-up, but remain below historical norms .
  • Q1 volume backdrop: Guidance embeds normal seasonality; management expects less decline than some third-party forecasts and aims to gain share .
  • Operating leverage: Hiring targeted to revenue-generating roles with expected LO productivity gains as refinance markets materialize; modest reductions expected in back office/G&A .
  • JV pipeline: Actively onboarding Smith Douglas and Onx; expect full ramp through 2025–2026 with aggressive pursuit of additional opportunities .

Estimates Context

  • S&P Global consensus estimates for revenue, EPS, and EBITDA were unavailable at the time of analysis; therefore, formal comparisons to Wall Street consensus cannot be provided. We anchor comparisons to company guidance and actuals disclosed in the press release and call .
  • Where estimates would typically drive narrative (beats/misses), margin outperformance vs company guidance (334 bps vs 285–305 bps) served as the key positive surprise .

Key Takeaways for Investors

  • Margin surprise: Pull-through weighted gain on sale margin materially exceeded guidance; mix shift and pricing discipline are supportive if retail/direct continues to scale .
  • Volume trajectory: Strong Q4 originations reflect Q3 lock momentum; Q1 guidance embeds seasonality but management expects share gains vs third-party forecasts .
  • Servicing caution: Lower servicing revenue and persistent MSR fair value pressure are likely near-term headwinds; strategy is to grow MSRs over time while maintaining elevated liquidity .
  • Cost/operating leverage: Near-term expenses should decline from Q4; targeted investments in LOs/ops and tech under Project North Star position LDI for improved operating leverage as volumes recover .
  • Strategic catalysts: JV onboarding (Smith Douglas, Onx) and expanded home equity offerings should support purchase and refi equity flows; these are medium-term share/earnings drivers .
  • Leadership transition: Executive Chairman of Mortgage Originations role for founder Anthony Hsieh is a potential cultural/operational catalyst ahead of CEO search completion .
  • Trading implications: Near term, focus on margin sustainability and expense normalization; medium term, watch JV ramp, equity product uptake, and the pace of MSR rebuild for earnings durability .