Company Performance - Mr Cooper reported quarterly earnings of $3.13 per share, missing the Zacks Consensus Estimate of $3.28 per share, but showing an increase from $2.52 per share a year ago, representing an earnings surprise of -4.57% [1] - The company posted revenues of $608 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 10.45%, compared to year-ago revenues of $583 million [2] - Over the last four quarters, Mr Cooper has surpassed consensus EPS estimates three times and topped consensus revenue estimates just once [2] Stock Performance - Mr Cooper shares have increased by approximately 76.2% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.3% [3] - The current consensus EPS estimate for the coming quarter is $3.54 on revenues of $696.21 million, and for the current fiscal year, it is $13.27 on revenues of $2.63 billion [7] Industry Outlook - The Financial - Consumer Loans industry, to which Mr Cooper belongs, is currently ranked in the bottom 22% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of Mr Cooper's stock may be influenced by the overall outlook for the industry, as research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [8]

Financial Data and Key Metrics Changes - Operating ROTCE for the quarter was 17.2%, an increase from 16.8% in the previous quarter, within the guidance range of 16% to 20% [3] - Net income was reported at $198 million, including $269 million in pretax operating income, with adjustments totaling $15 million [18][19] - The capital ratio ended at 26.6%, up from 24.4% at year-end, attributed to strong earnings and the suspension of stock repurchases [23][24] Business Line Data and Key Metrics Changes - Servicing generated $332 million in pretax income, a 15% year-over-year increase, while originations produced $64 million despite high rates [7][12] - The servicing portfolio remained steady at approximately $1.5 trillion, with a slight decline in UPB due to a single client changing strategy [10] - The company expects to board about $20 billion in MSR acquisitions in the third quarter [11] Market Data and Key Metrics Changes - The company noted persistent high mortgage rates leading to affordability challenges and sluggish home sales, with home prices under pressure in some markets [5] - The DTC channel saw a 40% sequential increase in volumes, with home equity and cash-out refinances making up nearly 60% of the mix [14] Company Strategy and Development Direction - The company is focused on integrating with Rocket and enhancing its platform, with a strong emphasis on AI to improve customer experiences and operational efficiencies [5][9] - A maiden MSR fund was launched with $200 million in initial commitments, aiming to scale rapidly [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance despite a challenging environment, highlighting the strength of its scale platform and balanced business model [5][6] - The company anticipates continued consistent performance in the third quarter, supported by strong operating cash flow [24] Other Important Information - The company was recognized as one of the best places to work in Texas, reflecting its commitment to creating an inclusive environment [6] - Delinquencies in the portfolio declined to 1%, with a focus on maintaining high asset quality [20][21] Q&A Session Summary - Due to the pending merger with Rocket, no questions were taken during the call [2]

Financial Data and Key Metrics Changes - Operating ROTCE for the quarter was 17.2%, an increase from 16.8% in the previous quarter, within the guidance range of 16% to 20% [3] - Net income for the quarter was $198 million, including $269 million in pretax operating income [17] - The capital ratio ended at 26.6%, up from 24.4% at year-end, attributed to strong earnings and the suspension of stock repurchases [22] Business Line Data and Key Metrics Changes - Servicing generated $332 million in pretax income, a 15% year-over-year increase, while originations produced $64 million despite high rates [7][12] - The servicing portfolio remained steady at approximately $1.5 trillion following the acquisition of Flagstar [9] - The company completed two home equity securitizations during the quarter, indicating strong momentum in home equity loans [13] Market Data and Key Metrics Changes - The company noted persistent high mortgage rates leading to affordability challenges and sluggish home sales, with home prices under pressure in some markets [5] - Delinquencies in the portfolio declined to 1%, reflecting strong asset quality [6][20] Company Strategy and Development Direction - The company is focused on integrating with Rocket and enhancing its platform, which includes launching a maiden MSR fund with $200 million in initial commitments [7][8] - Continued investment in AI solutions is aimed at optimizing operations and improving customer experiences [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance despite a challenging environment, highlighting consistent double-digit returns over the past two and a half years [5] - The company anticipates continued strong operating cash flow and robust liquidity throughout the remainder of the year [22] Other Important Information - The company was recognized as one of the best places to work in Texas, emphasizing its commitment to a purposeful and inclusive environment [6] - The corporate segment incurred $48 million in expenses, expected to remain at this level due to ongoing IT investments [18] Q&A Session Summary - No questions were taken during the call due to the pending merger with Rocket [2]

PART I. Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements and detailed notes on business, accounting, and valuations [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and liabilities decreased from December 2024 to June 2025, while total stockholders' equity increased | Metric | Dec 31, 2024 (millions $) | Jun 30, 2025 (millions $) | Change (millions $) | | :----- | :------------------------ | :------------------------ | :------------------ | | Total Assets | 18,939 | 18,499 | (440) | | Total Liabilities | 14,126 | 13,400 | (726) | | Total Stockholders' Equity | 4,813 | 5,099 | 286 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net income for the six months ended June 30, 2025, decreased due to higher expenses despite a slight revenue increase | Metric | 6 Months Ended Jun 30, 2025 (millions $) | 6 Months Ended Jun 30, 2024 (millions $) | Change (millions $) | | :----- | :--------------------------------------- | :--------------------------------------- | :------------------ | | Total Revenues | 1,168 | 1,147 | 21 | | Total Expenses | 760 | 617 | 143 | | Net Income | 286 | 385 | (99) | | Basic EPS | 4.48 | 5.96 | (1.48) | | Diluted EPS | 4.40 | 5.83 | (1.43) | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity increased, driven by net income and partially offset by share-based compensation adjustments | Metric | Jan 1, 2025 (millions $) | Jun 30, 2025 (millions $) | Change (millions $) | | :----- | :----------------------- | :----------------------- | :------------------ | | Total Stockholders' Equity | 4,813 | 5,099 | 286 | | Retained Earnings | 4,971 | 5,257 | 286 | | Additional Paid-in Capital | 1,077 | 1,063 | (14) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow improved significantly, while financing activities used cash due to debt repayments | Activity | 6 Months Ended Jun 30, 2025 (millions $) | 6 Months Ended Jun 30, 2024 (millions $) | Change (millions $) | | :------- | :--------------------------------------- | :--------------------------------------- | :------------------ | | Operating Activities | 525 | (136) | 661 | | Investing Activities | (150) | (1,273) | 1,123 | | Financing Activities | (397) | 1,473 | (1,870) | | Net (decrease) increase in cash, cash equivalents, and restricted cash | (22) | 64 | (86) | [Notes to Condensed Consolidated Financial Statements (unaudited)](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) Provides detailed disclosures on the company's business, M&A activities, accounting policies, and financial compliance [1. Nature of Business and Basis of Presentation](index=9&type=section&id=Note%201.%20Nature%20of%20Business%20and%20Basis%20of%20Presentation) Mr Cooper Group Inc provides servicing and origination services for single-family residences in the U S - Mr. Cooper is the **largest home loan servicer** and a major mortgage originator in the country, operating under primary brands: Mr. Cooper®, Xome® and Rushmore Servicing®[22](index=22&type=chunk) - The interim condensed consolidated financial statements are **unaudited** and prepared in accordance with U.S. GAAP for interim financial information[24](index=24&type=chunk)[25](index=25&type=chunk) [2. Merger and Acquisition](index=10&type=section&id=Note%202.%20Merger%20and%20Acquisition) Details the pending acquisition by Rocket Companies and the completed acquisition of operations from Flagstar Bank - Rocket Companies, Inc. to acquire Mr. Cooper Group Inc. in an all-stock transaction for **$9.4 billion**, expected to close in the fourth quarter of 2025[29](index=29&type=chunk) - Acquired certain mortgage operations from Flagstar Bank, N.A. in Q4 2024 for approximately **$1.3 billion** in cash, primarily consisting of MSRs and client relationship intangibles[30](index=30&type=chunk) [3. Mortgage Servicing Rights and Related Liabilities](index=10&type=section&id=Note%203.%20Mortgage%20Servicing%20Rights%20and%20Related%20Liabilities) Mortgage Servicing Rights (MSRs) at fair value decreased, with a negative change in fair value due to valuation inputs | Metric | Jun 30, 2025 (millions $) | Dec 31, 2024 (millions $) | Change (millions $) | | :----- | :------------------------ | :------------------------ | :------------------ | | MSRs at fair value | 11,431 | 11,736 | (305) | | Excess spread financing at fair value | 357 | 386 | (29) | | Mortgage servicing rights financing at fair value | 24 | 32 | (8) | | MSR Activity (Fair Value) | 6 Months Ended Jun 30, 2025 (millions $) | 6 Months Ended Jun 30, 2024 (millions $) | | :------------------------ | :--------------------------------------- | :--------------------------------------- | | Balance - beginning of period | 11,736 | 9,090 | | Additions (Servicing retained & Purchases) | 654 | 1,540 | | Dispositions (Sales) | (250) | (237) | | Changes in fair value (MSR MTM) | (210) | 344 | | Changes in valuation due to amortization | (518) | (405) | | Balance - end of period | 11,431 | 10,352 | - Hypothetical sensitivities show MSR fair value decreases by **$456 million** with a 100 bps adverse change in Option Adjusted Spread and by **$321 million** with a 10% adverse change in Total Prepayment Speeds as of June 30, 2025[37](index=37&type=chunk) [4. Advances and Other Receivables](index=13&type=section&id=Note%204.%20Advances%20and%20Other%20Receivables) Net advances and other receivables decreased, while the provision for servicing reserves increased | Metric | Jun 30, 2025 (millions $) | Dec 31, 2024 (millions $) | Change (millions $) | | :----- | :------------------------ | :------------------------ | :------------------ | | Servicing advances, net | 1,202 | 1,410 | (208) | | Reserves | (116) | (112) | (4) | | Total advances and other receivables, net | 1,124 | 1,345 | (221) | | Reserves for Advances and Other Receivables | 6 Months Ended Jun 30, 2025 (millions $) | 6 Months Ended Jun 30, 2024 (millions $) | | :---------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Balance - beginning of period | 112 | 170 | | Provision | 36 | 11 | | Write-offs | (27) | (49) | | Balance - end of period | 116 | 149 | [5. Mortgage Loans Held for Sale](index=14&type=section&id=Note%205.%20Mortgage%20Loans%20Held%20for%20Sale) Mortgage loans held for sale at fair value increased, driven by higher mortgage loan originations and purchases | Metric | Jun 30, 2025 (millions $) | Dec 31, 2024 (millions $) | Change (millions $) | | :----- | :------------------------ | :------------------------ | :------------------ | | Mortgage loans held for sale – UPB | 2,419 | 2,187 | 232 | | Mark-to-market adjustment | 56 | 24 | 32 | | Total mortgage loans held for sale | 2,475 | 2,211 | 264 | | Mortgage Loans Held for Sale Activity | 6 Months Ended Jun 30, 2025 (millions $) | 6 Months Ended Jun 30, 2024 (millions $) | | :------------------------------------ | :--------------------------------------- | :--------------------------------------- | | Balance - beginning of period | 2,211 | 927 | | Loans sold and payments received | (18,565) | (6,923) | | Mortgage loans originated and purchased, net of fees | 17,844 | 6,786 | | Repurchase of loans out of Ginnie Mae securitizations | 947 | 744 | | Balance - end of period | 2,475 | 1,539 | [6. Loans Subject to Repurchase from Ginnie Mae](index=15&type=section&id=Note%206.%20Loans%20Subject%20to%20Repurchase%20from%20Ginnie%20Mae) Loans subject to repurchase from Ginnie Mae, representing delinquent loans, decreased from December 2024 - Loans subject to repurchase from Ginnie Mae **decreased by $66 million** from December 31, 2024, to June 30, 2025[51](index=51&type=chunk) - The Company recognizes these rights to the loan on its balance sheets and establishes a corresponding repurchase liability once it has the unilateral right to repurchase a delinquent loan[51](index=51&type=chunk) [7. Goodwill and Intangible Assets](index=15&type=section&id=Note%207.%20Goodwill%20and%20Intangible%20Assets) Goodwill remained constant, while intangible assets decreased from December 2024 to June 2025 | Metric | Jun 30, 2025 (millions $) | Dec 31, 2024 (millions $) | Change (millions $) | | :----- | :------------------------ | :------------------------ | :------------------ | | Goodwill | 141 | 141 | 0 | | Intangible Assets | 101 | 119 | (18) | [8. Derivative Financial Instruments](index=15&type=section&id=Note%208.%20Derivative%20Financial%20Instruments) The Company uses various derivative instruments to manage interest rate risks for its MSR portfolio and loans held for sale - Derivative instruments are used to manage exposure to interest rate risks related to mortgage loans held for sale and the MSR portfolio[53](index=53&type=chunk) | Derivative Type (Assets) | Outstanding Notional (millions $) Jun 30, 2025 | Fair Value (millions $) Jun 30, 2025 | Gain/(Loss) (millions $) 6 Months Ended Jun 30, 2025 | | :----------------------- | :------------------------------------------- | :----------------------------------- | :------------------------------------------------ | | Forward MBS trades | 8,369 | 118 | 232 | | Treasury futures | 4,272 | 79 | 79 | | IRLCs | 1,106 | 41 | 19 | | LPCs | 1,597 | 12 | 7 | | Total Assets | 15,344 | 250 | 337 | | Derivative Type (Liabilities) | Outstanding Notional (millions $) Jun 30, 2025 | Fair Value (millions $) Jun 30, 2025 | Gain/(Loss) (millions $) 6 Months Ended Jun 30, 2025 | | :---------------------------- | :------------------------------------------- | :----------------------------------- | :------------------------------------------------ | | Forward MBS trades | 4,226 | 34 | (186) | | LPCs | 187 | 1 | 6 | | IRLCs | 3 | 0 | 0 | | Total Liabilities | 4,416 | 35 | (180) | [9. Indebtedness](index=18&type=section&id=Note%209.%20Indebtedness) Total principal of advance, warehouse, and MSR facilities decreased, while unsecured senior notes remained constant | Debt Type | Jun 30, 2025 (millions $) | Dec 31, 2024 (millions $) | Change (millions $) | | :-------- | :------------------------ | :------------------------ | :------------------ | | Advance facilities | 627 | 849 | (222) | | Warehouse facilities | 2,287 | 2,016 | 271 | | MSR facilities | 3,260 | 3,650 | (390) | | Unsecured senior notes | 4,950 | 4,950 | 0 | - The weighted average interest rate for advance facilities **decreased from 7.7%** for the three months ended June 30, 2024, **to 6.8%** for the same period in 2025[59](index=59&type=chunk) - The weighted average interest rate for warehouse and MSR facilities **decreased from 7.8%** for the three months ended June 30, 2024, **to 6.5%** for the same period in 2025[59](index=59&type=chunk) [10. Securitizations and Financings](index=20&type=section&id=Note%2010.%20Securitizations%20and%20Financings) The Company consolidates certain Variable Interest Entities (VIEs) and has no significant exposure to unconsolidated trusts | Consolidated Transactions with VIEs | Jun 30, 2025 (millions $) | Dec 31, 2024 (millions $) | | :-------------------------------- | :------------------------ | :------------------------ | | Total Assets | 910 | 1,208 | | Total Liabilities | 1,710 | 1,296 | - The Company has not retained any variable interests in unconsolidated securitization trusts and therefore does not have a significant exposure to loss related to these entities[65](index=65&type=chunk) [11. Earnings Per Share](index=21&type=section&id=Note%2011.%20Earnings%20Per%20Share) Both basic and diluted Earnings Per Share (EPS) decreased for the six months ended June 30, 2025, compared to 2024 | Metric | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change | | :----- | :-------------------------- | :-------------------------- | :----- | | Basic EPS | $4.48 | $5.96 | $(1.48) | | Diluted EPS | $4.40 | $5.83 | $(1.43) | | Weighted average shares outstanding (Basic, in thousands) | 63,851 | 64,621 | (770) | | Weighted average shares outstanding (Diluted, in thousands) | 65,062 | 66,022 | (960) | [12. Income Taxes](index=21&type=section&id=Note%2012.%20Income%20Taxes) The effective tax rate for the six months ended June 30, 2025, decreased compared to the prior year | Period | Effective Tax Rate 2025 | Effective Tax Rate 2024 | Change | | :----- | :---------------------- | :---------------------- | :----- | | 3 Months Ended Jun 30 | 28.6% | 26.3% | 2.3% | | 6 Months Ended Jun 30 | 23.1% | 24.3% | (1.2)% | - The change in effective tax rate is primarily attributable to the impact of state legislative changes and quarterly discrete tax items for the respective period, including state income taxes[70](index=70&type=chunk) [13. Fair Value Measurements](index=21&type=section&id=Note%2013.%20Fair%20Value%20Measurements) Financial instruments are measured at fair value using a three-tiered hierarchy, with MSRs classified as Level 3 - Mortgage servicing rights (MSRs) are classified as **Level 3 assets**, with a total fair value of **$11,431 million** as of June 30, 2025[73](index=73&type=chunk) - Mortgage loans held for sale are primarily **Level 2 ($2,411 million)** and **Level 3 ($64 million)** as of June 30, 2025[73](index=73&type=chunk) - Key unobservable inputs for MSRs include **Option Adjusted Spread (weighted average 7.6%)** and **Prepayment Speed (weighted average 8.4%)** as of June 30, 2025[76](index=76&type=chunk) [14. Capital Requirements](index=24&type=section&id=Note%2014.%20Capital%20Requirements) The Company was in compliance with all minimum net worth, liquidity, and capital ratio requirements as of June 30, 2025 - The Company was in **compliance** with its required financial covenants as of June 30, 2025[78](index=78&type=chunk) - Nationstar Mortgage LLC and Cypress Loan Servicing LLC are subject to minimum net worth, liquidity, and capital ratio requirements established by FHFA and Ginnie Mae[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[165](index=165&type=chunk)[167](index=167&type=chunk) [15. Commitments and Contingencies](index=24&type=section&id=Note%2015.%20Commitments%20and%20Contingencies) The Company is involved in various legal proceedings, including a class action lawsuit related to a cybersecurity incident - A putative class action lawsuit, Cabezas v. Mr. Cooper Group, Inc., was filed against the Company regarding a **cybersecurity incident** that occurred on October 31, 2023[81](index=81&type=chunk) - Management currently believes the aggregate range of reasonably possible loss is **$7 million to $15 million** in excess of the accrued liability related to these matters as of June 30, 2025[82](index=82&type=chunk) - The repurchase reserve liability related to customary representations and warranties on mortgage loan sales was **$46 million** as of June 30, 2025, down from $62 million at December 31, 2024[84](index=84&type=chunk) [16. Segment Information](index=26&type=section&id=Note%2016.%20Segment%20Information) The Company operates through Servicing and Originations segments, with Servicing contributing the majority of income - The Servicing segment performs operational activities on behalf of investors or owners of underlying mortgages and MSRs[86](index=86&type=chunk) - The Originations segment originates residential mortgage loans through its direct-to-consumer and correspondent channels[87](index=87&type=chunk) | Segment (6 Months Ended Jun 30, 2025) | Total Revenues (millions $) | Total Expenses (millions $) | Income (loss) before income tax expense (benefit) (millions $) | Total Assets (millions $) | | :------------------------------------ | :-------------------------- | :-------------------------- | :------------------------------------------------------------- | :------------------------ | | Servicing | 837 | 388 | 578 | 14,412 | | Originations | 298 | 195 | 109 | 2,481 | | Corporate/Other | 33 | 177 | (315) | 1,606 | | Consolidated | 1,168 | 760 | 372 | 18,499 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's perspective on financial condition, results of operations, business strategy, and liquidity [CAUTIONS REGARDING FORWARD-LOOKING STATEMENTS](index=30&type=section&id=CAUTIONS%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) Highlights that the report contains forward-looking statements susceptible to uncertainty and changes in circumstances - Forward-looking statements are inherently susceptible to uncertainty and changes in circumstances, and the company disclaims any obligation to update or alter them[95](index=95&type=chunk) - Factors that might cause future results to differ materially include macroeconomic conditions, interest rate changes, ability to maintain/grow servicing/originations, cyber risks, liquidity, and the merger with Rocket Companies, Inc[97](index=97&type=chunk) [Overview](index=31&type=section&id=Overview) Mr Cooper is the largest residential mortgage servicer, aiming for sustained growth and a high return on tangible equity - Mr. Cooper is the country's **largest residential mortgage servicer** and a major originator, with its servicing portfolio UPB expanded to **$1.5 trillion** as of June 30, 2025[100](index=100&type=chunk) - Key strategic initiatives include strengthening the balance sheet, improving efficiency, growing the servicing portfolio, sustaining refinance recapture rates, delighting customers, using mortgage-centric AI, and maintaining strong relationships with stakeholders[103](index=103&type=chunk) - The merger with Rocket Companies, Inc. is expected to close in the **fourth quarter of 2025**[101](index=101&type=chunk) [Results of Operations (Consolidated)](index=32&type=section&id=Results%20of%20Operations%20(Consolidated)) Total revenues increased slightly, but net income decreased due to higher expenses and negative mark-to-market adjustments | Metric | 3 Months Ended Jun 30, 2025 (millions $) | 3 Months Ended Jun 30, 2024 (millions $) | Change (millions $) | | :----- | :--------------------------------------- | :--------------------------------------- | :------------------ | | Total Revenues | 608 | 583 | 25 | | Revenues - operational | 577 | 514 | 63 | | Revenues - mark-to-market | 31 | 69 | (38) | | Total Expenses | 330 | 300 | 30 | | Net Income | 198 | 204 | (6) | - Total expenses increased primarily due to higher salaries, wages and benefits, general and administrative costs (including merger and Flagstar transaction costs), and amortization for intangible assets acquired in the Flagstar transaction[105](index=105&type=chunk) - Net income **decreased by $99 million** for the six months ended June 30, 2025, compared to 2024, primarily due to increased expenses and a negative shift in mark-to-market adjustments[104](index=104&type=chunk) [Segment Results](index=32&type=section&id=Segment%20Results) Performance varied across segments, with Servicing income decreasing for the six-month period while Originations grew [Servicing Segment](index=33&type=section&id=Servicing%20Segment) The Servicing segment's income before tax decreased for the six-month period due to negative MSR mark-to-market adjustments - Servicing segment income before income tax expense **increased by $10 million** for the three months ended June 30, 2025, compared to 2024, but **decreased by $89 million** for the six months ended June 30, 2025, compared to 2024[112](index=112&type=chunk)[119](index=119&type=chunk) - Total average UPB for the servicing and subservicing portfolio **increased to $1,509,813 million** for the three months ended June 30, 2025, from $1,170,818 million for the same period in 2024[126](index=126&type=chunk) - The decrease in MSR MTM was primarily due to lesser impact from the increase in mortgage rates in 2025 compared to 2024 (Q2) and a decrease in mortgage rates in 2025 compared to an increase in 2024 (H1)[115](index=115&type=chunk)[122](index=122&type=chunk) [Originations Segment](index=42&type=section&id=Originations%20Segment) The Originations segment's income before tax increased, driven by higher lock and funded volumes - Originations segment income before income tax expense **increased by $26 million** for the three months ended June 30, 2025, and by **$39 million** for the six months ended June 30, 2025, compared to the respective prior periods[140](index=140&type=chunk) | Metric | 3 Months Ended Jun 30, 2025 (millions $) | 3 Months Ended Jun 30, 2024 (millions $) | Change (millions $) | | :----- | :--------------------------------------- | :--------------------------------------- | :------------------ | | Total PTA lock volume | 9,733 | 4,473 | 5,260 | | Total funded volume | 9,443 | 3,794 | 5,649 | - The Originations Margin for the six months ended June 30, 2025, **decreased to 0.54% from 0.73%** in 2024, primarily due to lower margins from a shift in channel mix from higher margin direct-to-consumer to lower margin correspondent[147](index=147&type=chunk) [Corporate/Other](index=45&type=section&id=Corporate%2FOther) The Corporate/Other segment saw decreased revenues and increased expenses due to lower Xome volume and transaction costs - Total revenues decreased primarily due to a **decline in Xome revenues** as the average exchange volume decreased[150](index=150&type=chunk) - Total expenses increased primarily attributable to **transaction costs** related to the merger with Rocket and transition costs associated with the Flagstar Transaction[150](index=150&type=chunk) - Interest expense increased due to the issuance of the 2032 Notes in February 2024 and the 2029 Notes in August 2024[151](index=151&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) The Company maintains liquidity through cash and available borrowings and was in compliance with all financial covenants - Cash and cash equivalents on hand **increased to $783 million** as of June 30, 2025, compared to $753 million as of December 31, 2024[153](index=153&type=chunk) - Total available borrowing capacity for advance, warehouse, and MSR facilities was **$15,101 million**, of which **$3,058 million** was collateralized and immediately available to draw as of June 30, 2025[153](index=153&type=chunk) - The Company was in **compliance** with its required financial covenants and seller/servicer financial requirements as of June 30, 2025[160](index=160&type=chunk)[168](index=168&type=chunk) [Cash Flows](index=46&type=section&id=Cash%20Flows) Operating activities generated significant cash, while financing activities used cash due to net debt payments | Activity | 6 Months Ended Jun 30, 2025 (millions $) | 6 Months Ended Jun 30, 2024 (millions $) | Change (millions $) | | :------- | :--------------------------------------- | :--------------------------------------- | :------------------ | | Operating activities | 525 | (136) | 661 | | Investing activities | (150) | (1,273) | 1,123 | | Financing activities | (397) | 1,473 | (1,870) | - Operating activities generated **$525 million** in cash, an increase of **$661 million** compared to cash used in 2024, primarily due to an increase of $552 million in cash generated from originations net sales activities[156](index=156&type=chunk) - Cash used in investing activities **decreased by $1,123 million**, primarily due to a reduction of $1,147 million in cash used for the purchase of mortgage servicing rights in 2025[157](index=157&type=chunk) [Capital Resources](index=47&type=section&id=Capital%20Resources) The Company's capital structure includes various credit facilities and senior notes, with compliance to all covenants - The Company's credit facilities contain various financial covenants, including tangible net worth, liquidity reserves, leverage, and profitability requirements, with which it was in **compliance** as of June 30, 2025[160](index=160&type=chunk) - Ginnie Mae requires a Risk-based Capital Ratio (RBCR) of **at least 6%**[167](index=167&type=chunk) - FHFA requires an annual capital and liquidity plan that includes MSR stress tests[168](index=168&type=chunk) [Critical Accounting Policies and Estimates](index=49&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies involve significant judgment, particularly for fair value measurements of Level 3 assets - Critical accounting policies are inherently subject to estimation techniques, valuation assumptions, and subjective assessments, particularly for **Level 3 fair value measurements** (MSRs, excess spread financing) and valuation of deferred tax assets[178](index=178&type=chunk) - There have been **no material changes** to the Company's critical accounting policies and estimates since December 31, 2024[178](index=178&type=chunk) [Other Matters](index=49&type=section&id=Other%20Matters) The Company is currently evaluating recently issued accounting pronouncements for their impact on disclosures - The Company is evaluating Accounting Standards Update 2023-09, Income Taxes (Topic 740), which is expected to impact disclosures but not materially affect condensed consolidated financial statements[180](index=180&type=chunk) - The Company is evaluating Accounting Standards Update 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures, to determine its impact on disclosures[181](index=181&type=chunk) [GLOSSARY OF TERMS](index=50&type=section&id=GLOSSARY%20OF%20TERMS) Provides definitions for industry-specific and other terms used throughout the report to aid in understanding - Defines 'Mortgage Servicing Right (MSRs)' as the right and obligation to service a loan or pool of loans and to receive a servicing fee as well as certain ancillary income[206](index=206&type=chunk) - Explains 'Originations' as the process through which a lender provides a mortgage loan to a customer[210](index=210&type=chunk) - Describes 'Warehouse Facility' as a type of line of credit facility used to temporarily finance mortgage loan originations to be sold in the secondary market[226](index=226&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Assesses market risk using sensitivity analysis, focusing on interest rate changes and their impact on fair values - Market risk is assessed based on changes in interest rates utilizing a sensitivity analysis, measuring the potential impact on fair values[229](index=229&type=chunk) - A discounted cash flow analysis is utilized to determine the fair value of MSRs and the impact of parallel interest rate shifts, incorporating prepayment speeds, OAS, and costs to service[231](index=231&type=chunk) | Metric (June 30, 2025) | Down 25 bps (millions $) | Up 25 bps (millions $) | | :--------------------- | :----------------------- | :--------------------- | | Mortgage servicing rights at fair value | (257) | 230 | | Total change in assets | (60) | 26 | | Total change in liabilities | 20 | (27) | | Total, net change | (80) | 53 | [Item 4. Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025 - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are **effective** as of June 30, 2025[237](index=237&type=chunk) - **No changes** in internal control over financial reporting occurred during the three months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[238](index=238&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) The Company is routinely involved in legal proceedings not expected to have a material adverse effect on its financials - The Company and its subsidiaries are routinely involved in legal proceedings, but management does not believe any will have a **material adverse effect** on the financial position, results of operations, or cash flows[240](index=240&type=chunk) [Item 1A. Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K - **No material changes** or additions to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[241](index=241&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) As of June 30, 2025, $190 million remained available for repurchase under the stock repurchase program - As of June 30, 2025, **$190 million** of common stock remained available for repurchase under the authorized stock repurchase program[242](index=242&type=chunk) - **No shares** of common stock were repurchased during the three months ended June 30, 2025[242](index=242&type=chunk) [Item 3. Defaults Upon Senior Securities](index=58&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the period - No defaults upon senior securities[243](index=243&type=chunk) [Item 4. Mine Safety Disclosures](index=58&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the Company's operations - Mine Safety Disclosures are **not applicable**[244](index=244&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) Discloses a Rule 10b5-1 trading plan for the CEO and the retirement of the CEO of Xome - Jay Bray, Chairman and Chief Executive Officer, entered into a pre-arranged stock trading plan (10b5-1 Plan) to sell up to **240,000 shares** between October 2, 2025, and October 2, 2026[245](index=245&type=chunk) - Mike Rawls, EVP & Chief Executive Officer of Xome, retired on June 30, 2025, and was approved for a pro-rated Executive Management Incentive Program bonus of **$540,000** and 18 months of COBRA coverage[246](index=246&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) Lists the exhibits filed with the Form 10-Q, including loan agreement amendments and officer certifications - Exhibits include Amendment Number 10 to Mortgage Loan Participation Sale Agreement and Amendment Number Five to Second Amended and Restated Loan and Security Agreement[247](index=247&type=chunk) - Certifications by the Chief Executive Officer and Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) (Section 302) and 18 U.S.C. Section 1350 (Section 906) of the Sarbanes-Oxley Act of 2002 are included[247](index=247&type=chunk) [SIGNATURES](index=60&type=section&id=SIGNATURES) The report is duly signed by the Chief Executive Officer and Chief Financial Officer on July 23, 2025 - The report was signed by Jay Bray, Chief Executive Officer, and Kurt Johnson, Executive Vice President & Chief Financial Officer, on **July 23, 2025**[252](index=252&type=chunk)[253](index=253&type=chunk)

[Second Quarter 2025 Results Overview](index=1&type=section&id=Second_Quarter_2025_Results_Overview) Mr. Cooper Group reported strong second quarter 2025 results, with significant increases in net income and pretax operating income, alongside substantial growth in its servicing portfolio and a high operating return on tangible common equity [Key Financial Highlights](index=1&type=section&id=Key_Financial_Highlights) Mr. Cooper Group reported strong second quarter 2025 results, with significant increases in net income and pretax operating income, alongside substantial growth in its servicing portfolio and a high operating return on tangible common equity Q2 2025 Consolidated Financial Highlights | Metric | Amount ($ millions) | | :-------------------------------- | :------------------ | | Income before income tax expense | $277 | | Net income | $198 | | Pretax operating income (excl. adjustments) | $269 | | Operating ROTCE | 17.2% | - Servicing portfolio grew **25% year-over-year to $1.509 trillion**[5](index=5&type=chunk) [Management Commentary](index=1&type=section&id=Management_Commentary) Chairman and CEO Jay Bray highlighted consistent, predictable performance and momentum towards the Rocket merger. President Mike Weinbach praised servicing excellence, strong originations execution, and strategic focus on cost leadership, fee-based revenue growth, and scaling the originations platform - Chairman and CEO Jay Bray commented on "another strong quarter, marked by **consistent, recurring, and predictable performance, along with higher returns**" and gaining momentum towards "**joining forces with Rocket**"[3](index=3&type=chunk) - President Mike Weinbach emphasized the team's "**continued excellence in servicing and strong execution in originations**" and the focus on "**cost leadership, fee-based revenue growth, and scaling our originations platform**" to deliver strong, sustainable returns[3](index=3&type=chunk) [Segment Performance Analysis](index=1&type=section&id=Segment_Performance_Analysis) The company's Servicing and Originations segments demonstrated robust performance, with significant growth in pretax income and funded volume, driven by strategic execution and portfolio expansion [Servicing Segment](index=1&type=section&id=Servicing_Segment) The Servicing segment delivered robust financial performance in Q2 2025, with a significant increase in pretax income and stable operating income, while expanding its portfolio and maintaining a low delinquency rate [Financial Performance](index=1&type=section&id=Servicing_Financial_Performance) The Servicing segment reported a substantial increase in pretax income and total revenues quarter-over-quarter, alongside a significant reduction in total expenses Servicing Segment Financials (QoQ) | Metric | Q2'25 ($ millions) | Q1'25 ($ millions) | Change (QoQ) | | :-------------------------------- | :----------------- | :----------------- | :------------- | | Pretax income | $364 | $214 | +$150 | | Pretax operating income (excl. MTM) | $332 | $332 | $0 | | Total revenues | $434 | $403 | +$31 | | Total expenses | $148 | $240 | -$92 | [Portfolio and Operational Metrics](index=2&type=section&id=Servicing_Portfolio_and_Operational_Metrics) Servicing portfolio UPB saw a slight decrease, while the delinquency rate improved and annualized CPR increased, indicating active portfolio management Servicing Segment Portfolio Metrics (QoQ) | Metric | Q2'25 | Q1'25 | Change (QoQ) | | :-------------------------------- | :------ | :------ | :----------- | | Ending UPB | $1,509B | $1,514B | -$5B | | 60+ day delinquency rate | 1.4% | 1.5% | -0.1% | | Annualized CPR | 7.0% | 5.0% | +2.0% | - Subsequent to quarter-end, Mr. Cooper Group launched an MSR Fund with an initial **$200 million commitment**[5](index=5&type=chunk) [Originations Segment](index=2&type=section&id=Originations_Segment) The Originations segment demonstrated strong growth in Q2 2025, with a significant increase in pretax income and funded volume, driven by both direct-to-consumer and correspondent channels [Financial Performance](index=2&type=section&id=Originations_Financial_Performance) The Originations segment achieved notable quarter-over-quarter growth in both income before taxes and pretax operating income Originations Segment Financials (QoQ) | Metric | Q2'25 ($ millions) | Q1'25 ($ millions) | Change (QoQ) | | :-------------------------------- | :----------------- | :----------------- | :------------- | | Income before taxes | $64 | $45 | +$19 | | Pretax operating income (excl. accounting items) | $64 | $53 | +$11 | [Volume and Recapture Metrics](index=2&type=section&id=Originations_Volume_and_Recapture_Metrics) Originations saw a significant increase in funded and pull-through adjusted volume, despite a slight decrease in refinance and overall recapture percentages Originations Segment Volume Metrics (QoQ) | Metric | Q2'25 | Q1'25 | Change (QoQ) | | :-------------------------------- | :------ | :------ | :----------- | | Funded volume | $9,443M | $8,319M | +$1,124M | | Total pull through adjusted volume | $9,733M | $8,842M | +$891M | | Refinance recapture percentage | 47% | 51% | -4% | | Recapture percentage | 17% | 19% | -2% | | Purchase volume as % of funded volume | 70% | 72% | -2% | - Funded volume increased **14% quarter-over-quarter**, totaling approximately **$9.4 billion UPB**, comprised of **$2.6 billion in direct-to-consumer** and **$6.8 billion in correspondent**[8](index=8&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated_Financial_Statements) The consolidated financial statements reflect strong Q2 2025 performance with increased net income, improved balance sheet health, and enhanced shareholder equity [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed_Consolidated_Statements_of_Operations) Mr. Cooper Group reported a significant increase in net income to $198 million in Q2 2025, up from $88 million in Q1 2025, driven by higher total revenues and lower total expenses. Diluted EPS rose to $3.04 Consolidated Statements of Operations (QoQ) | Metric | Q2'25 ($ millions) | Q1'25 ($ millions) | Change (QoQ) | | :-------------------------------- | :----------------- | :----------------- | :------------- | | Total revenues | $608 | $560 | +$48 | | Total expenses | $330 | $430 | -$100 | | Income before income tax expense | $277 | $95 | +$182 | | Net income | $198 | $88 | +$110 | | Diluted EPS | $3.04 | $1.35 | +$1.69 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed_Consolidated_Balance_Sheets) As of June 30, 2025, total assets slightly increased to $18,499 million, with mortgage servicing rights at fair value remaining the largest asset. Total liabilities decreased, leading to an increase in total stockholders' equity Consolidated Balance Sheets (QoQ) | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | Change (QoQ) | | :-------------------------------- | :------------------------- | :-------------------------- | :------------- | | Total assets | $18,499 | $18,446 | +$53 | | Mortgage servicing rights at fair value | $11,431 | $11,345 | +$86 | | Total liabilities | $13,400 | $13,556 | -$156 | | Total stockholders' equity | $5,099 | $4,890 | +$209 | [Segment and Non-GAAP Reconciliations](index=7&type=section&id=Segment_and_Non_GAAP_Reconciliations) This section provides detailed reconciliations of segment operating income and non-GAAP financial measures, offering clarity on core business performance and shareholder value [Unaudited Segment Statement of Operations & Earnings Reconciliation (Q2'25)](index=7&type=section&id=Unaudited_Segment_Statement_of_Operations_%26_Earnings_Reconciliation_Q2%2725) For Q2 2025, the consolidated pretax operating income was $269 million, with Servicing contributing $332 million and Originations $64 million, after various non-GAAP adjustments Q2'25 Segment Operating Income Reconciliation | Metric | Servicing ($M) | Originations ($M) | Corporate/Other ($M) | Consolidated ($M) | | :-------------------------------- | :------------- | :---------------- | :------------------- | :---------------- | | Pretax income (loss) | $364 | $64 | $(151) | $277 | | Other mark-to-market | $(30) | — | — | $(30) | | Accounting items / other | $(8) | — | $23 | $15 | | Intangible amortization | $6 | — | $1 | $7 | | Pretax operating income (loss) | $332 | $64 | $(127) | $269 | | Operating ROTCE | | | | 17.2% | [Unaudited Segment Statement of Operations & Earnings Reconciliation (Q1'25)](index=8&type=section&id=Unaudited_Segment_Statement_of_Operations_%26_Earnings_Reconciliation_Q1%2725) In Q1 2025, the consolidated pretax operating income was $255 million, with Servicing contributing $332 million and Originations $53 million, after non-GAAP adjustments Q1'25 Segment Operating Income Reconciliation | Metric | Servicing ($M) | Originations ($M) | Corporate/Other ($M) | Consolidated ($M) | | :-------------------------------- | :------------- | :---------------- | :------------------- | :---------------- | | Pretax income (loss) | $214 | $45 | $(164) | $95 | | Other mark-to-market | $82 | — | — | $82 | | Accounting items / other | $26 | $8 | $34 | $68 | | Intangible amortization | $10 | — | — | $10 | | Pretax operating income (loss) | $332 | $53 | $(130) | $255 | | Operating ROTCE | | | | 16.8% | [Non-GAAP Reconciliation (Stockholders' Equity & ROCE)](index=9&type=section&id=Non_GAAP_Reconciliation_Stockholders%27_Equity_%26_ROCE) Tangible book value per share increased to $75.90 in Q2 2025, reflecting growth in stockholders' equity and a higher Return on Common Equity (ROCE) of 15.9% Non-GAAP Reconciliation: Equity & Returns (QoQ) | Metric | Q2'25 | Q1'25 | Change (QoQ) | | :-------------------------------- | :------ | :------ | :----------- | | Stockholders' equity (BV) | $5,099M | $4,890M | +$209M | | Tangible book value (TBV) | $4,857M | $4,641M | +$216M | | TBV/share | $75.90 | $72.53 | +$3.37 | | Net income | $198M | $88M | +$110M | | ROCE | 15.9% | 7.3% | +8.6% | [Additional Information](index=3&type=section&id=Additional_Information) This section provides details on the conference call, explanations of non-GAAP measures, forward-looking statements, and contact information for stakeholders [Conference Call Webcast and Investor Presentation](index=3&type=section&id=Conference_Call_Webcast_and_Investor_Presentation) Mr. Cooper Group released its Q2 2025 financial results on July 23, 2025, with related materials available on its investor relations website - The Company released its **second quarter 2025 financial results on July 23, 2025, at 7:00 A.M. Eastern Time**[11](index=11&type=chunk) - The press release, investor presentation, and a recording of prepared remarks are available under the investors section on **Mr. Cooper Group's website, www.mrcoopergroup.com**[11](index=11&type=chunk) [Non-GAAP Financial Measures Explanation](index=3&type=section&id=Non_GAAP_Financial_Measures_Explanation) The Company uses non-GAAP financial measures like pretax operating income, Return on Tangible Common Equity (ROTCE), and Tangible Book Value (TBV) to provide investors with additional insights into core operating performance by excluding volatile or non-recurring items - Non-GAAP financial measures provide additional information to assist investors in understanding and assessing the Company's **ongoing performance and financial results**[12](index=12&type=chunk) - Pretax operating income in the servicing segment eliminates the effects of **mark-to-market adjustments**, which are highly volatile and may not reflect ultimately realized gains or losses[12](index=12&type=chunk) - Return on tangible common equity (ROTCE) and tangible book value (TBV) are used to measure performance consistently and provide a more accurate measure of **realizable shareholder returns** by excluding goodwill and intangible assets[12](index=12&type=chunk) [Forward Looking Statements](index=4&type=section&id=Forward_Looking_Statements) The report contains forward-looking statements subject to known and unknown risks and uncertainties, and actual results may differ materially. The company does not undertake to update these statements - Statements that are not historical or current facts are forward-looking statements, involving **known and unknown risks, uncertainties, and other factors** that may cause actual results to differ materially[13](index=13&type=chunk) - Results for any specified quarter are not necessarily indicative of the results that may be expected for the **full year or any future period**[13](index=13&type=chunk) - Mr. Cooper undertakes **no obligation to publicly update or revise** any forward-looking statement or any other financial information contained herein[13](index=13&type=chunk) [Investor and Media Contacts](index=4&type=section&id=Investor_and_Media_Contacts) Contact information for investor relations and media inquiries is provided for stakeholders - Investor Contact: **Kenneth Posner, SVP Strategic Planning and Investor Relations, Shareholders@mrcooper.com**[14](index=14&type=chunk) - Media Contact: **Christen Reyenga, VP Corporate Communications, MediaRelations@mrcooper.com**[14](index=14&type=chunk)

Mr. CooperGroup® 2Q'25 EARNINGS REVIEW July 23, 2025 IMPORTANT INFORMATION This presentation contains summarized information concerning Mr. Cooper Group Inc. ("Mr. Cooper" or the "Company") and the Company's business, operations, financial performance and trends. No representation is made that the information in this presentation is complete. For additional financial, statistical and business related information, as well as information reqarding business and segment trends, see the Company's most recent Ann ...

Mr Cooper (COOP) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #2 (Buy). This rating change essentially reflects an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.The sole determinant of the Zacks rating is a company's changing earnings picture. The Zacks Consensus Estimate -- the consensus of EPS estimates from the sell-side analysts covering the stock -- for the current and following years is tracked by the system.The pow ...

Core Insights - Investors in the Financial - Consumer Loans sector should consider Mr Cooper (COOP) and Sallie Mae (SLM) for potential value opportunities [1] Valuation Metrics - Mr Cooper has a Zacks Rank of 2 (Buy), indicating a stronger earnings outlook compared to Sallie Mae, which has a Zacks Rank of 3 (Hold) [3] - COOP's forward P/E ratio is 9.61, while SLM's forward P/E is 10.78, suggesting COOP may be undervalued [5] - The PEG ratio for COOP is 0.37, compared to SLM's 0.92, indicating COOP's better valuation relative to its expected earnings growth [5] - COOP's P/B ratio is 1.69, significantly lower than SLM's P/B of 3.28, further supporting COOP's valuation advantage [6] - Based on these metrics, COOP has a Value grade of B, while SLM has a Value grade of C, highlighting COOP as the superior value option [6][7]

Summary of Key Points from the Conference Call Industry Overview - **Healthcare Sector**: Anticipation of an Executive Order on drug pricing expected next week, with a probability of over 70% for the implementation of Most Favored Nation (MFN) pricing to reduce the disparity between US and international drug prices [3][9] - **Transportation and Logistics**: Expected reduction in shipments due to tariffs, but supply chain disruptions may provide some offset. Favorable outlook for specific companies like XPO, NSC, and CP, while UPS and SAIA appear oversold [4] Company-Specific Insights - **Alphabet Inc. (GOOGL)**: Notable shift in search dynamics with the first-ever decline in Safari searches, raising concerns about AI search potentially replacing traditional search methods. However, long-term monetization of AI is expected to ramp up [2][27] - **Microsoft Corporation (MSFT)**: Azure reported a 35% year-over-year revenue growth, with a 34% increase in backlog, outperforming Amazon's AWS and Google's GCP. Combined cloud backlog growth of 33% indicates strong core demand despite AI capacity constraints [5][27] - **Tesla, Inc. (TSLA)**: Focus on Robotaxi and affordable model launches, but concerns over tariffs and execution risks contribute to share price volatility [6][27] - **Walmart Inc. (WMT)**: Anticipated Q1 sales are expected to be in line or slightly better, but caution is advised due to product mix and potential impacts on EBIT growth [5][27] - **Capital One Financial Corporation (COF)**: Continued performance exceeding expectations, with FY27 EPS estimates raised to approximately $25. Merger synergies of $2.7 billion expected to phase in from Q2 [7][27] - **MP Materials**: Potential factory closures in the US due to the absence of rare earth magnet flows from China, impacting industries such as aerospace and electric vehicles [7][27] - **GeneDx**: Management confidence in over 30% volume growth for NICU genetic diagnostics this year, with a compelling valuation at 4x projected 2026 revenues [8][27] Market Dynamics - **Quant Strategy**: Increasing EPS risk indicated by Q1 earnings beats and misses, with the Mag 7 model yielding a cumulative long-short return of 10.5% since its launch [2] - **Russell Rebalance**: Notable buy/sell pressure on specific stocks leading into the June 27 rebalance, with BAM, FLUT, and HWM among the top gainers, while SSB and HQY are under pressure [4] Additional Considerations - **Tariffs and Supply Chain**: The impact of tariffs on shipments and the potential for redirected flows to mitigate some negative effects [4] - **AI and Search Trends**: The evolving landscape of search engines and the implications of AI on traditional search methods [2] This summary encapsulates the critical insights and data points from the conference call, providing a comprehensive overview of the current state of the healthcare and technology sectors, along with specific company performances and market dynamics.

Financial Data and Key Metrics Changes - The company reported adjusted revenue of $1.3 billion, at the high end of guidance, with adjusted diluted EPS of $0.04, reflecting strong performance in Q1 [11][30] - Net rate lock volume reached $26 billion, a 17% year-over-year increase and an 11% quarter-over-quarter increase, driven by growth in refinance and home equity loans [31] - Gain on sale margin was 289 basis points, down from 311 basis points year-over-year, but consistent with the average over the last twelve months [31] Business Line Data and Key Metrics Changes - The company served 21% more origination clients in March compared to the same month in the previous year, while reducing turn times by 14% [11] - The home equity loan offering posted another record quarter, indicating strong demand in that segment [31][92] Market Data and Key Metrics Changes - Housing inventory increased by 25% year-over-year, providing relief to buyers [6] - Active home listings reached 960,000 in April, marking a 31% increase year-over-year, with homes staying on the market longer [34] Company Strategy and Development Direction - The company is focused on creating an integrated homeownership platform, emphasizing the importance of technology and innovation to enhance client experience [9][27] - Recent acquisitions of Redfin and Mr. Cooper are aimed at strengthening the business model and enhancing data capabilities [25][39] Management's Comments on Operating Environment and Future Outlook - Management noted a sharp reversal in market momentum in April due to global tariff announcements and declining consumer sentiment, leading to a slowdown in home buying activity [8][33] - For Q2, the company expects adjusted revenue to range from $1.175 billion to $1.325 billion, reflecting a challenging April but anticipating improvement in May and June [35][36] Other Important Information - The company has identified over 35 integration work streams for the acquisitions of Redfin and Mr. Cooper, with a focus on realizing synergy value post-closing [41][42] - The balance sheet remains strong, with $2.9 billion in available cash and $7.4 billion in mortgage servicing rights, totaling $10.3 billion in balance sheet value [43] Q&A Session Summary Question: Outlook for 2025 considering recent performance and expenses - Management acknowledged the strong Q1 performance but noted the challenges faced in April, indicating a cautious but optimistic outlook for the remainder of the year [49][50] Question: Subservicing strategy post-merger with Mr. Cooper - Management expressed excitement about the subservicing business and plans to honor all contractual provisions with subservicers, emphasizing the importance of this segment [64][66] Question: Near-term outlook for Rocket Pro and technology investments - Management highlighted optimism for growth in the broker space, focusing on empowering brokers with technology and innovative business models [70][74] Question: Potential for future acquisitions to grow market share - Management stated that current focus is on integrating Redfin and Mr. Cooper, with no immediate plans for additional acquisitions [78][80] Question: Capacity growth and potential expense savings - Management discussed the importance of AI in creating capacity and the potential to convert excess capacity into cost savings if mortgage volumes do not meet expectations [88][90]