Nelnet Reports Fourth Quarter 2025 Results

Nelnet (NYSE: NNI) today reported GAAP net income of $57.8 million, or $1.60 per share, for the fourth quarter of 2025, compared with GAAP net income of $63.2 million, or $1.73 per share, for the same period a year ago.

Net income, excluding derivative market value adjustments1, was $56.3 million, or $1.56 per share, for the fourth quarter of 2025, compared with $52.7 million, or $1.44 per share, for the same period in 2024.

“Nelnet's teams knocked the ball out of the park in 2025, delivering record earnings and strengthening our foundation for long-term success,” said Jeff Noordhoek, chief executive officer of Nelnet. “Over time, we've meaningfully diversified our revenue, with each of our core businesses – consumer lending, loan servicing, payments, and technology – reporting solid performance and building real momentum. With our continued investments in technology and in both new and existing products and services, we see opportunities ahead in 2026.”

Nelnet operates through three divisions: Nelnet Financial Services (NFS), Loan Servicing and Systems [referred to as Nelnet Diversified Services (NDS)], and Education Technology Services and Payments [referred to as Nelnet Business Services (NBS)]. NFS includes the company's Asset Generation and Management (AGM) and Nelnet Bank reportable operating segments, which earn interest income on loans and investments. NDS and NBS generate primarily fee?based revenue through loan servicing, education technology, and payment services. Business activities not included in these divisions are combined and reported within Corporate Activities.

Nelnet Financial Services

AGM

The AGM operating segment reported loan and investment net interest income of $63.5 million during the fourth quarter of 2025, compared with $48.3 million for the same period a year ago. The increase in 2025 was due to an increase in loan spread2 and growth in the company's consumer financing receivables. In the third quarter of 2025, the company began to purchase Pay Later receivables. As of December 31, 2025, the balance of Pay Later receivables was $744.2 million. The increase in net interest income was offset by the anticipated runoff of the legacy Federal Family Education Loan Program (the “FFEL Program” or FFELP) loan portfolio. The average balance of FFELP loans outstanding decreased from $8.9 billion for the fourth quarter of 2024 to $7.9 billion for the same period in 2025.

AGM recognized a provision for loan losses in the fourth quarter of 2025 of $32.5 million ($24.7 million after tax), compared with $13.5 million ($10.3 million after tax) in the fourth quarter of 2024. Provision for loan losses was primarily impacted by establishing an initial allowance for consumer loans acquired during the fourth quarter of 2025.

AGM recognized net income after tax of $24.8 million during the fourth quarter of 2025, compared with $25.5 million for the same period in 2024.

(1) Net income, excluding derivative market value adjustments, is a non-GAAP measure. See “Non-GAAP Performance Measures” at the end of this press release and the “Non-GAAP Disclosures” section below for explanatory information and reconciliations of GAAP to non-GAAP financial information. (2) Loan spread represents the spread between the yield earned on loan assets and the costs of the liabilities and derivative instruments used to fund the assets.

Nelnet Bank

As of December 31, 2025, Nelnet Bank had a $957.6 million and $1.08 billion loan and investment portfolio, respectively, and total deposits, including intercompany deposits, of $1.76 billion. Nelnet Bank reported loan and investment net interest income of $17.6 million during the fourth quarter of 2025, compared with $12.9 million for the same period a year ago. The increase in 2025 was due to an increase in the loan and investment portfolio, partially offset by a decrease in net interest margin.

Nelnet Bank recognized provision for loan losses in the fourth quarter of 2025 of $5.7 million ($4.3 million after tax), compared with $8.6 million ($6.5 million after tax) in the fourth quarter of 2024. Provision for loan losses at Nelnet Bank is due primarily from the establishment of an initial allowance for loans originated and acquired during the period. In 2024, Nelnet Bank recognized income of $5.5 million ($4.2 million after tax) related to changes in the fair value of derivative instruments that do not qualify for hedge accounting.

Nelnet Bank recognized net income after tax for the quarter ended December 31, 2025 of $5.3 million, compared with $4.2 million for the same period in 2024.

Loan Servicing and Systems

Revenue from the Loan Servicing and Systems segment was $116.6 million for the fourth quarter of 2025, compared with $138.0 million for the same period in 2024. On April 1, 2024, the company began to earn revenue under its new Unified Servicing and Data Solution (USDS) contract which replaced its legacy student loan servicing contract with the Department of Education (Department). Revenue earned under the USDS contract on a per borrower blended basis is lower than the legacy contract. During the fourth quarter of 2024, the company recognized $10.9 million in non-recurring revenue under its Department servicing contract related to certain inflation provisions from the prior legacy contract and $4.0 million of non-recurring revenue from the conversion of a private education student loan portfolio.

As of December 31, 2025, the company was servicing $486.2 billion in government-owned, FFEL Program, private education, and consumer loans for 13.2 million borrowers, compared with $532.4 billion in servicing volume for 15.8 million borrowers as of December 31, 2024.

The Loan Servicing and Systems segment reported net income after tax of $8.9 million for the quarter ended December 31, 2025, compared with $20.4 million for the same period in 2024.

Education Technology Services and Payments

For the fourth quarter of 2025, revenue from the Education Technology Services and Payments operating segment was $112.3 million, an increase from $108.3 million for the same period in 2024. Revenue less direct costs to provide services for the fourth quarter of 2025 was $73.7 million, compared with $69.7 million for the same period in 2024. Operating expenses increased in 2025 compared with 2024, reflecting continued investment to expand the customer base and advance new product and technology development.

Net income after tax for the Education Technology Services and Payments segment was $12.9 million for the quarter ended December 31, 2025, compared with $13.6 million for the same period in 2024.

Corporate Activities

Included in Corporate Activities are the operating results of the company's solar construction business. During the fourth quarter of 2025, the company reported a loss of $27.3 million ($20.7 million after tax or $0.57 per share) in its solar construction business. Since the acquisition of this business, the company has experienced low and, in certain cases, negative margins on projects. In addition, changes in legislation reducing clean energy tax incentives, tariff uncertainty, and rising construction costs adversely affected revenue and net income. As a result of these factors, the company sold the solar construction business in November 2025. Although the company retained a limited number of construction contracts to complete following the sale, the company does not expect the operating results from such contracts to be significant in future periods.

Share Repurchases

During the fourth quarter of 2025, the company repurchased 126,680 Class A common shares for $16.1 million (average price of $127.27 per share).

Year-End Results

GAAP net income for the year ended December 31, 2025 was $428.5 million, or $11.79 per share, compared with GAAP net income of $184.0 million, or $5.02 per share, for 2024. Net income in 2025, excluding derivative market value adjustments1, was $435.4 million, or $11.98 per share, compared with $176.4 million, or $4.81 per share, for 2024.

Forward-Looking and Cautionary Statements

This press release contains forward-looking statements within the meaning of federal securities laws. The words “anticipate,” “assume,” “believe,” “continue,” “could,” “ensure,” “estimate,” “expect,” “forecast,” “future,” “intend,” “may,” “plan,” “potential,” “predict,” “scheduled,” “see,” “should,” “will,” “would,” and similar expressions, as well as statements in future tense, are intended to identify forward-looking statements. These statements are based on management's current expectations as of the date of this release and are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results and performance to be materially different from any future results or performance expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to: risks related to the ability to successfully maintain and increase allocated volumes of student loans serviced by the company under existing and future servicing contracts with the Department, risks related to unfavorable contract modifications or interpretations, risks related to consistently meeting service requirements to avoid the assessment of performance penalties, and risks related to the company's ability to comply with agreements with third-party customers for the servicing of Federal Direct Loan Program, FFEL Program, private education, and consumer loans; loan portfolio risks such as credit risk, prepayment risk, interest rate basis and repricing risk, risks related to the use of derivatives to manage exposure to interest rate fluctuations, uncertainties regarding the expected benefits from purchased securitized and unsecuritized FFELP, private education, consumer, and other loans, or residual interests therein, and initiatives to purchase additional FFELP, private education, consumer, and other loans; financing and liquidity risks, including risks of changes in the interest rate environment; risks from changes in the terms of education loans and in the educational credit and services markets resulting from changes in applicable laws, regulations, and government programs and budgets; risks related to a breach of or failure in the company's operational or information systems or infrastructure, or those of third-party vendors, including disclosure of confidential or personal information and/or damage to reputation resulting from cyber breaches; risks related to use of artificial intelligence; uncertainties inherent in forecasting future cash flows from student loan assets, including residual interests therein, and related asset-backed securitizations; risks related to the ability of Nelnet Bank to achieve its business objectives and effectively deploy loan and deposit strategies and achieve expected market penetration; risks related to the company's solar tax equity partnerships, including risks of not being able to realize tax credits which remain subject to recapture by taxing authorities and risks from the impact of the enactment of the One Big Beautiful Bill that accelerates the expiration and phase out of solar energy credits; risks and uncertainties related to other initiatives (and anticipated income therefrom) including venture capital, real estate, reinsurance, acquisitions, and other activities, including activities that are intended to diversify the company both within and outside of its historical core education-related businesses; risks and uncertainties associated with climate change; risks from changes in economic conditions and consumer behavior; risks related to the company's ability to adapt to technological change; risks related to the exclusive forum provisions in the company's articles of incorporation; risks related to the company's executive chairman's ability to control matters related to the company through voting rights; risks related to related party transactions; risks related to natural disasters, terrorist activities, or international hostilities; and risks and uncertainties associated with litigation matters, maintaining compliance with the extensive regulatory requirements applicable to the company's businesses, and uncertainties inherent in the estimates and assumptions about future events that management is required to make in the preparation of the company's consolidated financial statements.

For more information, see the “Risk Factors” sections and other cautionary discussions of risks and uncertainties included in documents filed or furnished by the company with the Securities and Exchange Commission. All forward-looking statements in this release are as of the date of this release. Although the company may voluntarily update or revise its forward-looking statements from time to time to reflect actual results or changes in the company's expectations, the company disclaims any commitment to do so except as required by law.

Non-GAAP Performance Measures

The company prepares its financial statements and presents its financial results in accordance with U.S. GAAP. However, it also provides additional non-GAAP financial information related to specific items management believes to be important in the evaluation of its operating results and performance. Reconciliations of GAAP to non-GAAP financial information, and a discussion of why the company believes providing this additional information is useful to investors, is provided in the “Non-GAAP Disclosures” section below.

Consolidated Statements of Income (Dollars in thousands, except share data) (unaudited) Three months ended Year ended December 31, September 30, December 31, December 31, December 31, 2025 2025 2024 2025 2024 Interest income: Loan interest $184,825 162,717 178,434 686,085 787,498 Investment interest 40,559 43,241 42,815 165,374 185,901 Total interest income 225,384 205,958 221,249 851,459 973,399 Interest expense on bonds and notes payable and bank deposits 118,273 120,708 141,170 496,950 680,537 Net interest income 107,111 85,250 80,079 354,509 292,862 Less provision (negative provision) for loan losses 38,147 (3,563) 22,057 67,851 54,607 Less provision for beneficial interests 2,679 2,145 4,628 11,311 39,491 Net interest income after provision 66,285 86,668 53,394 275,347 198,764 Other income (expense): Loan servicing and systems revenue 116,573 151,052 137,981 509,089 482,408 Education technology services and payments revenue 112,314 129,321 108,335 507,150 486,962 Reinsurance premiums earned 33,539 23,165 18,673 107,502 62,923 Solar construction revenue 3,379 5,738 13,828 14,371 56,569 Other, net 16,749 33,258 27,836 97,587 59,959 Gain on partial redemption of ALLO investment – 175,044 Derivative market value adjustments and derivative settlements, net 2,330 (27) 14,879 (6,398) 16,258 Total other income (expense), net 284,884 342,507 321,532 1,404,345 1,165,079 Cost of services and expenses: Loan servicing contract fulfillment and acquisition costs 2,056 2,021 1,497 7,555 1,889 Cost to provide education technology services and payments 38,654 50,363 38,658 176,907 172,763 Cost to provide solar construction services 12,326 7,607 28,558 41,810 77,673 Total cost of services 53,036 59,991 68,713 226,272 252,325 Salaries and benefits 141,086 144,778 147,229 558,786 576,931 Depreciation and amortization 9,365 7,327 12,544 33,571 58,116 Reinsurance losses and underwriting expenses 25,715 19,962 16,180 93,551 55,246 Impairment expense 17,220 7,000 1,136 29,612 3,138 Other expenses 58,369 53,669 50,681 211,568 189,503 Total operating expenses 251,755 232,736 227,770 927,088 882,934 Income before income taxes 46,378 136,448 78,443 526,332 228,584 Income tax expense (7,691) (35,773) (15,016) (127,986) (52,669) Net income 38,687 100,675 63,427 398,346 175,915 Net loss (income) attributable to noncontrolling interests 19,084 6,009 (268) 30,128 8,130 Net income attributable to Nelnet, Inc. $57,771 106,684 63,159 428,474 184,045 Earnings per common share: Net income attributable to Nelnet, Inc. shareholders – basic and diluted $1.60 2.94 1.73 11.79 5.02 Weighted-average common shares outstanding – basic and diluted 36,088,994 36,316,315 36,461,513 36,341,197 36,642,533 Condensed Consolidated Balance Sheets (Dollars in thousands) (unaudited) As of As of As of December 31, 2025 September 30, 2025 December 31, 2024 Assets: Loans and accrued interest receivable, net $10,006,695 10,227,261 9,992,744 Cash, cash equivalents, and investments 2,643,954 2,455,950 2,395,214 Restricted cash 677,563 550,371 736,502 Goodwill and intangible assets, net 187,312 189,783 194,357 Other assets 548,259 453,317 458,936 Total assets $14,063,783 13,876,682 13,777,753 Liabilities: Bonds and notes payable $7,780,927 7,822,531 8,309,797 Bank deposits 1,669,173 1,476,765 1,186,131 Other liabilities 1,036,454 990,691 982,708 Total liabilities 10,486,554 10,289,987 10,478,636 Equity: Total Nelnet, Inc. shareholders' equity 3,685,792 3,653,290 3,349,762 Noncontrolling interests (108,563) (66,595) (50,645) Total equity 3,577,229 3,586,695 3,299,117 Total liabilities and equity $14,063,783 13,876,682 13,777,753

Non-GAAP Disclosures(Dollars in thousands, except share data)(unaudited)

Non-GAAP financial measures disclosed by management are meant to provide additional information and insight relative to business trends to investors and, in certain cases, to present financial information as measured by rating agencies and other users of financial information. These measures are not in accordance with, or a substitute for, GAAP and may be different from, or inconsistent with, non-GAAP financial measures used by other companies. The company reports this non-GAAP information because the company believes that it provides additional information regarding operational and performance indicators that are closely assessed by management. There is no comprehensive, authoritative guidance for the presentation of such non-GAAP information, which is only meant to supplement GAAP results by providing additional information that management utilizes to assess performance.

Net income, excluding derivative market value adjustments

Three months ended December Year ended December 31, 31, 2025 2024 2025 2024 GAAP net income attributable to Nelnet, Inc. $57,771 63,159 428,474 184,045 Realized and unrealized derivative market value adjustments (a) (1,879) (13,792) 9,098 (10,124) Tax effect (b) 451 3,310 (2,184) 2,430 Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments $56,343 52,677 435,388 176,351 Earnings per share: GAAP net income attributable to Nelnet, Inc. $1.60 1.73 11.79 5.02 Realized and unrealized derivative market value adjustments (a) (0.05) (0.38) 0.25 (0.28) Tax effect (b) 0.01 0.09 (0.06) 0.07 Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments $1.56 1.44 11.98 4.81 (a) “Derivative market value adjustments” includes both the realized portion of gains and losses (corresponding to variation margin received or paid on derivative instruments that are settled daily at a central clearinghouse) and the unrealized portion of gains and losses that are caused by changes in fair values of derivatives which do not qualify for “hedge treatment” under GAAP. “Derivative market value adjustments” does not include “derivative settlements” that represent the cash paid or received during the respective period to settle with derivative instrument counterparties the economic effect of the company's derivative instruments based on their contractual terms. The accounting for derivatives requires that changes in the fair value of derivative instruments be recognized currently in earnings, with no fair value adjustment of the hedged item, unless specific hedge accounting criteria are met. Management has structured all of the company's derivative transactions with the intent that each is economically effective; however, the majority of the company's derivative instruments do not qualify for hedge accounting in the consolidated financial statements. As a result, the change in fair value for the derivative instruments that do not qualify for hedge accounting is reported in current period earnings with no consideration for the corresponding change in fair value of the hedged item. Under GAAP, the cumulative net realized and unrealized gain or loss caused by changes in fair values of derivatives in which the company plans to hold to maturity will generally equal zero over the life of the contract. However, the net realized and unrealized gain or loss during any given reporting period fluctuates significantly from period to period. The company believes these point-in-time estimates of asset and liability values related to its derivative instruments that are subject to interest rate fluctuations are subject to volatility mostly due to timing and market factors beyond the control of management, and affect the period-to-period comparability of the results of operations. Accordingly, the company's management utilizes operating results excluding these items for comparability purposes when making decisions regarding the company's performance and in presentations with credit rating agencies, lenders, and investors. Consequently, the company reports this non-GAAP information because the company believes that it provides additional information regarding operational and performance indicators that are closely assessed by management and represents what earnings would have been had these derivatives qualified for hedge accounting. There is no comprehensive, authoritative guidance for the presentation of such non-GAAP information, which is only meant to supplement GAAP results by providing additional information that management utilizes to assess performance. (b) The tax effects are calculated by multiplying the realized and unrealized derivative market value adjustments by the applicable statutory income tax rate.

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SOURCE Nelnet, Inc.

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