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Walker & Dunlop, Inc. (WD)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue rose 16% to $337.7M and diluted EPS was $0.98; adjusted core EPS was $1.22, with total transaction volume up 34% to $15.5B, reflecting broad-based recovery across GSE lending and investment sales .
  • Versus Street: revenue beat consensus ($337.7M vs $321.5M), while Primary EPS missed ($0.98 vs $1.20); adjusted core EPS of $1.22 was above the Primary EPS consensus but is a different measure (non-GAAP) . Q3 2025 consensus values retrieved from S&P Global.*
  • Capital Markets revenues +26% Y/Y and property sales fees +37% Y/Y; Servicing & Asset Management revenues +4% Y/Y; servicing portfolio reached $139.3B (+4% Y/Y) .
  • Credit remains solid (defaulted loans 0.21% of at-risk portfolio), but W&D disclosed two new GSE portfolios (~$100.2M UPB) tied to borrower fraud; management expects ~$20M collateral to indemnify Freddie Mac and losses in Q4 (non-recurring) .
  • Dividend maintained at $0.67 for Q4 2025; management expects to achieve annual guidance for EPS, adjusted core EPS, and adjusted EBITDA absent loan buyback losses, with a strong Q4 pipeline as a catalyst .

What Went Well and What Went Wrong

What Went Well

  • GSE lending surged: Freddie Mac volumes +137% Y/Y to $3.7B; Fannie Mae +7% Y/Y to $2.1B; GSE market share YTD 10.8% (+40 bps) .
  • Investment sales recovery: volume +30% Y/Y to $4.67B; property sales broker fees +37% Y/Y; W&D cited gateway markets strength (e.g., $550M Boston portfolio) and broad geographic coverage .
  • CEO tone confident on secular tailwinds and technology differentiation: “Our bankers and brokers are winning… W&D’s people, brand, and technology are well positioned… winning” .

What Went Wrong

  • Primary EPS missed consensus despite revenue beat; operating margin held 14% (down 100 bps vs Q2), reflecting elevated commissions and amortization/write-offs .
  • Non-cash MSR rate compression persisted (shorter loan duration and tighter servicing fees), tempering MSR income growth relative to volume; Agency MSR rate fell to 0.79% in Q3 (vs 1.14% in Q3’24) .
  • New borrower-fraud related repurchase/indemnification requests (~$100.2M UPB) with expected losses in Q4; management plans ~$20M of corporate capital to collateralize indemnification (event-driven headwind) .

Financial Results

Consolidated Metrics vs Prior Periods

MetricQ3 2024Q2 2025Q3 2025
Total Revenues ($USD Millions)$292.3 $319.2 $337.7
Diluted EPS ($USD)$0.85 $0.99 $0.98
Adjusted Core EPS ($USD)$1.19 $1.15 $1.22
Adjusted EBITDA ($USD Millions)$78.9 $76.8 $82.1
Operating Margin (%)13% 15% 14%

Results vs Wall Street Consensus (Q3 2025)

MetricConsensusActual
Revenue ($USD Millions)321.5337.7
Primary EPS ($USD)1.200.98

Values retrieved from S&P Global.*

Segment Results (Q3 2025 vs Q3 2024)

Segment MetricQ3 2024Q3 2025
Capital Markets - Total Revenues ($USD Millions)$143.7 $180.8
Capital Markets - W&D Net Income ($USD Millions)$21.8 $27.9
Servicing & Asset Mgmt - Total Revenues ($USD Millions)$144.9 $150.6
Servicing & Asset Mgmt - W&D Net Income ($USD Millions)$37.5 $37.0
Corporate - Total Revenues ($USD Millions)$3.7 $6.3
Corporate - W&D Net Income ($USD Millions)$(30.5) $(31.4)

KPIs and Operating Drivers

KPI (units)Q3 2024Q2 2025Q3 2025
Debt Financing Volume ($USD Thousands)$8,013,432 $11,638,225 $10,842,620
Property Sales Volume ($USD Thousands)$3,602,675 $2,313,585 $4,672,875
Total Transaction Volume ($USD Thousands)$11,616,107 $13,951,810 $15,515,495
Origination Fee Rate (%)0.93% 0.82% 0.90%
Agency MSR Rate1.14 1.03 0.79
Total Servicing Portfolio ($USD Thousands)$134,080,546 $137,349,124 $139,331,678
Custodial Escrow Deposits ($USD Billions)$3.1 $2.7 $2.8–3.2 (period end/avg)
Defaulted Loans ($USD Thousands)$59,645 $108,530 $139,020
Defaulted Loans (% of At-Risk Portfolio)0.10% 0.17% 0.21%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
EPS, Adjusted Core EPS, Adjusted EBITDAFY 2025Management guidance in place (not quantified)“On path toward achieving annual guidance… absent any losses related to loan buybacks” Maintained (qualifier added)
Dividend per shareQ3 2025 → Q4 2025$0.67 declared for Q3 2025 $0.67 declared for Q4 2025 Maintained
Share Repurchase Program12-month (from Feb 21, 2025)$75M Authorized; no repurchases to date through Q2 $75M Authorized; no repurchases to date through Q3 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Loan duration shift; MSR pressureBorrowers opting for 5-year terms; Agency MSR rate 1.13 in Q1; 1.03 in Q2 60% of YTD loans are 5-year; Agency MSR rate fell to 0.79; MSR valuations lower despite volume Continued shift to shorter duration; MSR pressure persists
GSE market share/capsGSE market share 11.4% YTD in Q2 YTD market share 10.8%; management expects both agencies to hit 2025 caps; potential cap increase in 2026 Strong agency presence; possible volume tailwinds
Investment sales recoveryQ1 volume +58%; Q2 +51% Q3 +30% with gateway market strength; Boston $550M portfolio highlighted Ongoing recovery; broadening geographically
Credit quality; fraud repurchasesQ1: repurchase requests (five loans in 2024); eight defaults; provisions elevated Ten defaults (0.21% of at-risk UPB); new ~$100.2M portfolios tied to borrower fraud; expected Q4 losses Portfolio performance solid; isolated fraud-related repurchases
Technology/AI/data enablementLaunch of client-facing tools and appraisals growth (tech-enabled) Client Navigator and W&D Suite adoption; Galaxy drives new clients/loans; 2,700 clients active Increasing tech adoption; differentiator
HUD process/macroTop HUD lender in FY2024; deregulatory changes noted Bullish on HUD efficiency; government shutdown impact noted but improving processing Operational improvement expected

Management Commentary

  • Willy Walker (CEO): “Our bankers and brokers are winning, driving strong transaction volume and revenue growth… W&D’s people, brand, and technology are well positioned… and winning.”
  • On agency maturities and opportunity: “$31B scheduled agency maturities in 2025… step up to ~$50B in 2026 and 2027, $97B in 2028, and $144B in 2029… assets will get sold and refinanced… pulling forward a large portion of the refinancing wall.”
  • Greg Florkowski (CFO): “We expect to use approximately $20 million of Walker & Dunlop capital to collateralize our indemnification… and we expect to take the credit losses associated with this portfolio in the fourth quarter.”
  • On pipeline and guidance: “Our core business [is] on the path toward achieving our annual guidance for EPS, Adjusted Core EPS, and Adjusted EBITDA, absent any losses related to loan buybacks.”

Q&A Highlights

  • Borrower fraud/repurchase scope: Management characterized new repurchase requests as isolated, with no other investigations underway; credit fundamentals remain strong vs broader CMBS multifamily defaults .
  • Loan terms and coupons: Preference for five-year terms driven by optionality and minimal coupon spread vs ten-year; recent five-year coupons cited in high 4s (e.g., ~4.83%) with more flexible prepayment .
  • Transaction activity outlook: Drivers include capital recycling and narrowing bid-ask; management expects a gradual build rather than a step-function surge; resurgent activity seen Q1→Q2→Q3 and into Q4 .

Estimates Context

  • Revenue beat: $337.7M actual vs $321.5M consensus; reflects strong GSE origination, property sales fees, and steady servicing fees . Consensus values retrieved from S&P Global.*
  • Primary EPS miss: $0.98 actual vs $1.20 consensus; mix shift to shorter-duration GSE loans (lower MSR income) and higher commission/personnel expenses weighed on GAAP EPS .
  • Forward look: Q4 2025 consensus revenue $342.6M and EPS $1.55; Q1 2026 revenue $257.6M and EPS $0.92 (consensus). Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Broad-based top-line momentum: Revenue +16% Y/Y and transactions +34%; Capital Markets levered to improving debt supply and narrowing bid-ask spreads .
  • Quality credit and durable servicing cash flows: Defaulted loans remain low at 0.21% of at-risk; servicing fees +4% Y/Y on a $139.3B book .
  • Near-term headline risk: Fraud-related repurchases/indemnifications likely to drive Q4 losses; management has planned ~$20M collateral and expects isolation of issues .
  • Structural MSR headwind offsets volume tailwinds: Shorter loan terms and tighter servicing fees depress non-cash MSR income even as GSE volumes rise; positions W&D for refinancing wave over 2–5 years .
  • Dividend stability: $0.67 per share maintained; buyback authorization ($75M) remains unused, preserving flexibility .
  • Setup into Q4/2026: Strong pipeline and macro tailwinds (rate normalization, equity recycling) support trajectory; management reaffirmed annual targets excluding buyback losses .
  • Trading implication: Consider revenue-beat/EPS-miss dynamic; event-driven Q4 charge could create near-term volatility but does not impair core franchise or forward cycle optionality .

Footnote: *Consensus values retrieved from S&P Global (Primary EPS Consensus Mean and Revenue Consensus Mean).