Executive Summary

GAAP EPS was $1.73, returning to profitability from a prior-year loss (-$0.21); non-GAAP EPS excluding derivative market value adjustments was $1.44, reflecting strength in Nelnet Business Services (NBS), improved asset spreads (AGM), and non-recurring items in Loan Servicing and Systems (LSS) .
LSS revenue rose to $138.0M, aided by $10.9M non-recurring inflation adjustments on the prior legacy federal servicing contract and $4.0M conversion revenue tied to Discover private loan onboarding; segment net income after tax reached $20.4M (vs. $8.4M a year ago) .
Nelnet Bank posted $4.2M net income after tax (vs. a loss of $3.3M YoY), with loan & investment net interest income up to $12.9M, though provisions rose due to initial allowances on originations/acquisitions .
AGM net interest income increased to $48.3M and core loan spread improved to 1.18% (vs. 0.63% in Q4’23); AGM net income after tax reached $25.5M, aided by derivative fair value gains and despite higher provisions for loan losses and beneficial interests .
Consensus estimates (S&P Global) were unavailable at the time of review; beat/miss vs. Street cannot be determined. We note identifiable stock catalysts included the return to positive EPS, LSS non-recurring revenues from contract inflation adjustments and Discover conversions, and strong NBS execution .

What Went Well and What Went Wrong

What Went Well

Record year for NBS and solid Q4: ETSP revenue was $108.3M with revenue less direct costs at $69.7M; segment net income after tax hit $13.6M (vs. $10.1M YoY) .
LSS outperformed with $138.0M revenue in Q4, helped by $10.9M legacy contract inflation adjustments and $4.0M Discover conversion revenue; net income after tax rose to $20.4M .
AGM improved profitability and spreads: loan & investment net interest income of $48.3M; Q4 core loan spread expanded to 1.18%; net income after tax was $25.5M; management highlighted increased loan spread despite FFELP runoff .

Management quotes:

“We are pleased with the results in the fourth quarter of 2024 and optimistic about the opportunities ahead in 2025.” – CEO Jeff Noordhoek .
“This past year was a record-breaking one for Nelnet Business Services...” – CEO Jeff Noordhoek .
“Revenue earned under the USDS contract on a per borrower blended basis is lower than the legacy contract.” – LSS commentary .

What Went Wrong

Solar construction (NRE) losses persisted: Q4 loss was $17.0M (pre-tax), reflecting estimated losses on legacy projects; business continues focusing exclusively on commercial projects .
Higher credit provisioning: Q4 provisions included $13.5M for AGM loans (initial allowance on acquired consumer loans) and $4.6M non-cash beneficial interest provision; Nelnet Bank provision was $8.6M .
USDS federal servicing contract lowers per-borrower revenue vs. legacy, requiring technology investments and restructuring; although Q4 benefited from non-recurring inflation adjustments, per-borrower rates under USDS remain a headwind .

Financial Results

Consolidated comparison (oldest → newest)

Metric	Q2 2024	Q3 2024	Q4 2024
GAAP EPS ($)	$1.23	$0.07	$1.73
GAAP Net Income ($MM)	$45.1	$2.4	$63.2
Non-GAAP EPS excl. derivative MVAs ($)	$1.20	$0.34	$1.44
Net Interest Income ($MM)	$66.4	$72.2	$80.1
Total Other Income (Expense), net ($MM)	$258.5	$237.3	$321.5
LSS Revenue ($MM)	$109.1	$108.2	$138.0
ETSP Revenue ($MM)	$116.9	$118.2	$108.3
Core Loan Spread % (AGM)	0.98%	0.97%	1.18%
Total Operating Expenses ($MM)	$214.6	$221.5	$226.6

Year-over-year snapshot (Q4 only)

Metric	Q4 2023	Q4 2024
GAAP EPS ($)	-$0.21	$1.73
GAAP Net Income ($MM)	-$7.9	$63.2
LSS Revenue ($MM)	$128.8	$138.0
ETSP Revenue ($MM)	$106.1	$108.3
Core Loan Spread % (AGM)	0.63%	1.18%

Segment net income after tax trend

Segment ($MM)	Q2 2024	Q3 2024	Q4 2024
Loan Servicing & Systems (NDS)	$1.7	-$3.5	$20.4
Education Tech Services & Payments (NBS)	$19.5	$20.4	$13.6
Asset Generation & Management (AGM)	$18.5	-$12.4	$25.5
Nelnet Bank	-$2.8	-$3.6	$4.2

KPIs

KPI	Q2 2024	Q3 2024	Q4 2024
Total Servicing Volume ($BN)	$523.750	$526.553	$532.363
Total Servicing Borrowers (MM)	15.536	15.541	15.768
NBS Revenue less Direct Costs ($MM)	$76.7	$72.9	$69.7
Solar Construction Revenue ($MM)	$9.694	$19.321	$13.828

Notes:

Q4 LSS revenue included $10.9M non-recurring inflation adjustments and $4.0M conversion revenue (Discover portfolio), contributing to segment strength .
Q4 AGM core loan spread expansion supported net interest performance; Q4 also included derivative gains .
Q4 NRE loss of $17.0M reflects remaining legacy projects; residential EPC discontinued; commercial-only focus continues .

Guidance Changes

Nelnet did not provide explicit quantitative forward guidance ranges for revenue, margins, OpEx, OI&E, tax rate, or segment-specific metrics in Q4’24 materials. The table below summarizes disclosed items relevant to forward outlook.

Metric	Period	Previous Guidance	Current Guidance	Change
Cash Dividend per Share	Q1 2025	$0.28 (Q4’24 dividend)	$0.28 declared for Q1 2025	Maintained
Liquidity – Expected Future Cash Flows (AGM loan portfolio)	Multi-year	N/A	~$1.07B undiscounted future cash flows; ~$675M next five years	New disclosure
Liquidity – Beneficial Interest Investments	Multi-year	N/A	~$323.4M future cash flows (majority next five years)	New disclosure
Federal USDS Servicing Contract Economics	Ongoing	Legacy contract per-borrower rate higher	USDS per-borrower revenue lower; multiple components, tiered pricing	Lower per-borrower revenue vs. legacy
Solar EPC Focus	2024 onward	Mixed commercial/residential	Commercial-only; residential discontinued	Strategic shift

Earnings Call Themes & Trends

No Q4’24 earnings call transcript was available in the document catalog during the review period; themes are drawn from Q2–Q4 filings/press materials.

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q4 2024)	Trend
USDS federal servicing contract	Transition costs, restructuring; lower per-borrower revenue vs. legacy; headcount reductions in Q2 and Q3	Non-recurring $10.9M inflation adjustment revenue in Q4; per-borrower economics remain lower under USDS	Stabilizing operations; economics lower vs. legacy
Private loan servicing expansion	Tech/platform work; Discover portfolio conversion initiated in Q3	Majority of Discover conversions completed; $4.0M conversion revenue recognized	Scaling volumes; near-term onboarding benefit
AGM spreads and derivatives	Core loan spread ~0.84–0.98% in Q2/Q3; derivative gains/losses volatile	Core loan spread rose to 1.18%; derivative gains recognized	Improving spreads; benign rate backdrop
Solar EPC	Restructuring; impairment; losses in Q2/Q3; commercial-only focus	Q4 loss $17.0M; legacy projects nearing completion	Losses persist but winding down legacy
NBS execution	Strong seasonal Q1; Q2/Q3 revenue growth, margin leverage	Record year; Q4 revenue $108.3M; revenue less direct costs $69.7M; net income $13.6M	Structural strength; investment in AI/customer experience
Credit provisioning	Q2/Q3 initial allowance on originations/acquisitions; beneficial interests allowance	Q4: AGM $13.5M loan loss provision; $4.6M beneficial interest provision; Nelnet Bank $8.6M provision	Elevated near-term provisioning for new assets

Management Commentary

“This past year was a record-breaking one for Nelnet Business Services… Nelnet Diversified Services… transitioned to the new federal servicing contract… Nelnet Financial Services… diversify assets and offset earnings from our legacy student loan portfolio. Our results reflect a balanced mix of success across different segments.” – CEO Jeff Noordhoek .
“Revenue earned under the USDS contract on a per borrower blended basis is lower than the legacy contract.” – LSS commentary .
“We don’t have that competitive problem [AI startups], but we do have the opportunity to apply AI to our business processes… which we are doing aggressively.” – Executive Chairman Mike Dunlap .
“The Company has a handful of remaining legacy construction contracts to complete, down from over 30 at the beginning of 2024.” – Solar EPC update .

Q&A Highlights

No Q4’24 earnings call transcript was available; Q&A highlights and clarifications cannot be provided based on primary documents.

Estimates Context

Wall Street consensus (S&P Global) estimates for Q4’24 were unavailable due to access limits at the time of query; therefore, we cannot assess beat/miss versus Street on EPS or revenue for Q4’24. We recommend revisiting once access is restored to S&P Global to anchor estimate comparisons.

Key Takeaways for Investors

Q4 marked a return to profitability with GAAP EPS $1.73 and non-GAAP EPS $1.44, supported by improved AGM spreads, strong NBS performance, and LSS non-recurring items (inflation adjustment, Discover conversions) .
LSS economics under USDS are structurally lower per borrower than legacy; continued growth in private/consumer servicing and tech efficiencies (including AI) are key levers to offset headwinds .
AGM core loan spread improved to 1.18% and, along with derivative gains, supported Q4 interest income; watch credit provisioning tied to acquired consumer loans and beneficial interests in 2025 .
Nelnet Bank turned profitable in Q4; scaling originations and deposits continues, but provisions reflect initial allowances on new assets—monitor credit performance of consumer and private student loans .
Solar EPC remains a drag but legacy projects are diminishing; the commercial-only focus should reduce volatility over time—expect near-term results still impacted as legacy contracts complete .
Liquidity is robust: $717.1M unencumbered cash/investments, $495M undrawn revolver, and substantial expected cash flows from AGM loans (~~$1.07B undiscounted) and beneficial interests (~~$323.4M) to fund acquisitions and capital returns .
With consensus estimates unavailable, near-term trading may focus on identifiable non-recurring LSS revenues, spread trends at AGM, and NBS durability; medium-term thesis hinges on diversifying asset generation (consumer/private), scaling servicing volumes, and continued NBS margin resilience .

NELNET INC (NNI)·Q4 2024 Earnings Summary