Executive Summary

EPS beat, revenue mixed: Non-GAAP EPS of $2.39 significantly beat the $1.92 consensus; GAAP EPS was $2.26. Total revenue was modestly below consensus, reflecting USDS contract headwinds offset by growth in private loan servicing and solid NBS performance . Values retrieved from S&P Global.*
Momentum across core businesses: AGM net interest income rose on higher loan spreads and acquisitions; NBS revenue increased; LSS delivered profitability despite lower per-borrower government rates under USDS .
Capital actions and near-term catalyst: Board declared a $0.28 dividend and authorized a new 5M-share repurchase program; ALLO redemption expected to provide ~$410M cash and ~$175M pre-tax gain in late May 2025, a potential Q2 earnings catalyst .
Stock reaction: Shares rose ~5.9% the day after the print, reflecting the EPS beat and improved operating momentum .

What Went Well and What Went Wrong

What Went Well
- Strong EPS and core operations: “We’re pleased with Nelnet’s strong operating results to kick off 2025” — CEO Jeff Noordhoek—supported by higher loan spreads and fee growth in NBS; non-GAAP EPS $2.39 vs $1.81 a year ago .
- AGM loan spread and acquisitions: AGM net interest income rose to $52.9M; acquired $832.6M of loans (including $702.8M FFELP), supporting earnings power despite FFELP runoff .
- Private servicing growth: LSS private and consumer loan servicing revenue climbed to $22.7M with conversions of Discover and SoFi portfolios, helping offset lower USDS per-borrower rates .
What Went Wrong
- Government servicing revenue pressure: LSS revenue fell to $120.7M from $127.2M YoY due to lower per-borrower rates under USDS, partially offset by private servicing growth .
- Higher credit provisioning: AGM provision for loan losses increased to $13.0M (from $6.5M YoY) driven by initial allowances on acquired loans; Nelnet Bank provision was $2.3M (vs $4.4M YoY) .
- Derivative mark-to-market: AGM recognized a $3.8M loss from non-hedge accounting derivatives (vs prior-year income $5.7M), adding P&L volatility despite economic effectiveness of hedges .

Financial Results

Metric	Q1 2024	Q4 2024	Q1 2025
Total Revenue ($USD Millions)	$371.169*	$373.506*	$380.056*
GAAP EPS ($)	$1.98	$1.73	$2.26
Non-GAAP EPS ($)	$1.81	$1.44	$2.39
Net Income ($USD Millions)	$73.4	$63.159	$82.560
Net Income Margin (%)	19.78*	16.91*	21.72*

Notes: Asterisks indicate values retrieved from S&P Global.*

Segment Breakdown (selected) | Segment | Q1 2024 | Q4 2024 | Q1 2025 | |---------|---------|---------|---------| | Loan Servicing & Systems revenue ($MM) | $127.201 | $137.981 | $120.741 | | Education Technology Services & Payments revenue ($MM) | $143.539 | $108.335 | $147.330 | | AGM net income after tax ($MM) | $25.6 | $25.452 | $22.7 | | Nelnet Bank net income after tax ($MM) | $0.9 | $4.2 | $1.5 | | LSS net income after tax ($MM) | $12.2 | $20.4 | $14.1 | | ETSP net income after tax ($MM) | $36.2 | $13.6 | $36.1 |
KPIs | KPI | Q1 2024 | Q4 2024 | Q1 2025 | |-----|---------|---------|---------| | Total servicing volume ($B) | $532.207 | $532.363 | $542.340 | | Total borrowers (MM) | 15.867 | 15.768 | 15.623 | | Private & consumer servicing revenue ($MM) | $12.620 | $24.819 | $22.696 |
Versus Estimates (Wall Street consensus, S&P Global) | Metric | Consensus | Actual | Surprise | |--------|-----------|--------|----------| | EPS (Q1 2025) | $1.92 | $2.39 | +24.5% (beat) | | Revenue (Q1 2025, $MM) | $393.0 | $380.1 | -3.3% (miss) |

Values retrieved from S&P Global.*

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per share	Q2 2025	—	$0.28	Maintained dividend cadence
Stock repurchase authorization	3 years ending May 8, 2028	Prior program expiring May 8, 2025	Up to 5M shares (includes remaining from prior)	New authorization
ALLO redemption proceeds	Late May 2025 (expected close)	—	~$410M cash, ~$175M pre-tax gain	New event; Q2 earnings catalyst

No formal revenue/margin/tax rate guidance ranges provided in the Q1 materials. Corporate actions (dividend, buyback) and ALLO transaction constitute forward-looking items.

Earnings Call Themes & Trends

Note: A Q1 2025 earnings call transcript was not available from the company site or major transcript providers after comprehensive search .

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
USDS contract impact	Lower per-borrower revenue; LSS margin pressure	$10.9M non-recurring DOE settlement; conversion revenue $4.0M; LSS rev $138.0M	LSS rev $120.7M; private servicing rev up to $22.7M, offsetting USDS headwinds	Stabilizing with private servicing growth
Private loan servicing expansions	Discovery portfolio conversion planned	Major Discover conversion largely completed; non-recurring conversion revenue	Discover/SoFi conversions support private servicing revenue strength	Positive execution
Loan spread/AGM	Higher core spread; derivative volatility; beneficial interest provision	AGM NII up; provisions elevated; derivative income	AGM NII $52.9M; acquisitions $832.6M; provision $13.0M; derivative loss $3.8M	Spread favorable; provisioning elevated
Solar EPC legacy projects	Losses and repositioning to commercial; negative margins	$17.0M loss in Q4; fewer legacy contracts remaining	Smaller solar construction revenue $4.0M; ongoing execution	Improving mix, legacy wind-down
ALLO investment	No voting loss in Q3; preferred return income	Preferred income; continued exploration of capital options	Redemption agreement: ~$410M cash, ~$175M gain expected late May	Near-term cash/gain catalyst

Management Commentary

CEO Jeff Noordhoek: “In a challenging and uncertain economic environment, all our core businesses are performing well and contributing to this momentum. We enhanced our already strong capital and liquidity positions, allowing us to be ready to strategically invest in opportunities that we believe will drive long-term success and value creation.”
Segment highlights: AGM’s higher loan spread and loan acquisitions supported net interest income despite FFELP runoff; LSS private servicing revenue increased meaningfully; NBS continued to grow revenue and operating margin seasonally in Q1 .

Q&A Highlights

Transcript not available. We searched the company’s IR site and major transcript aggregators; no Q1 2025 earnings call transcript could be found .
Guidance clarifications were conveyed via press releases and the 8‑K exhibits (dividend, buyback, ALLO redemption timing and expected financial impact) .

Estimates Context

EPS beat: Non-GAAP EPS $2.39 vs $1.92 consensus (+24.5%). This beat was driven by improved AGM loan spread and higher fee businesses (NBS), even after higher provisions and derivative MTM headwinds . Values retrieved from S&P Global.*
Revenue miss: Total revenue ~$380.1M vs $393.0M consensus (−3.3%); USDS per-borrower revenue pressure weighed on LSS, partially offset by private servicing growth and NBS seasonality . Values retrieved from S&P Global.*
Prior two quarters context: Q4 2024 non-GAAP EPS $1.44 vs $1.23 consensus (beat); Q1 2024 non-GAAP EPS $1.81 vs $1.37 consensus (beat). Revenues in those periods also exceeded consensus modestly, reflecting stronger fee and interest components . Values retrieved from S&P Global.*

Key Takeaways for Investors

EPS quality improving: The sizable EPS beat amid revenue headwinds signals resilient spread income and fee growth; watch provisioning trends as loan acquisitions season .
USDS headwinds offset by private servicing: LSS continues shifting mix toward private and consumer portfolios (Discover/SoFi), reducing dependence on lower DOE per-borrower rates under USDS .
NBS seasonal strength: Q1 is typically peak for NBS; monitor sustainability across 2025 as education technology and payment processing scale .
ALLO transaction as Q2 catalyst: Expected ~$410M cash and ~$175M pre-tax gain provides capital flexibility and near-term earnings uplift; assess deployment toward buybacks or growth investments .
Capital returns: New 5M-share repurchase authorization plus $0.28 dividend underscore shareholder return commitment amid diversified cash flow streams .
Risk monitor: Derivative fair value volatility (non-hedge accounting), solar EPC legacy project margin drag (winding down), and DOE contract economics remain key variables .
Trading implications: Near-term positive skew as the market prices the ALLO gain and continued private servicing/NBS momentum; revenue normalization under USDS may cap upside without further private portfolio wins .

S&P Global disclaimer: Certain values (marked with *) were retrieved from S&P Global consensus/actuals via the GetEstimates/GetFinancials tools.

NELNET INC (NNI)·Q1 2025 Earnings Summary