Mr. Cooper Group(COOP) - 2025 Q2 - Quarterly Results

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 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 $1.509 trillion[5] Management Commentary Chairman and CEO Jay Bray highlighted consistent, predictable performance and momentum towards the Rocket merger. President Mike Weinbach praised servicing excellence, strong originations execution, and strategic focus on cost leadership, fee-based revenue growth, and scaling the originations platform - Chairman and CEO Jay Bray commented on "another strong quarter, marked by consistent, recurring, and predictable performance, along with higher returns" and gaining momentum towards "joining forces with Rocket"[3] - President Mike Weinbach emphasized the team's "continued excellence in servicing and strong execution in originations" and the focus on "cost leadership, fee-based revenue growth, and scaling our originations platform" to deliver strong, sustainable returns[3] Segment Performance Analysis The company's Servicing and Originations segments demonstrated robust performance, with significant growth in pretax income and funded volume, driven by strategic execution and portfolio expansion Servicing Segment The Servicing segment delivered robust financial performance in Q2 2025, with a significant increase in pretax income and stable operating income, while expanding its portfolio and maintaining a low delinquency rate Financial Performance The Servicing segment reported a substantial increase in pretax income and total revenues quarter-over-quarter, alongside a significant reduction in total expenses Servicing Segment Financials (QoQ) | Metric | Q2'25 ($ 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 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 $200 million commitment[5] Originations Segment The Originations segment demonstrated strong growth in Q2 2025, with a significant increase in pretax income and funded volume, driven by both direct-to-consumer and correspondent channels Financial Performance The Originations segment achieved notable quarter-over-quarter growth in both income before taxes and pretax operating income Originations Segment Financials (QoQ) | Metric | Q2'25 ($ 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 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] 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 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 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 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) 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) 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) 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 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 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] - 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 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] - 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] - 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] 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] - 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] - Mr. Cooper undertakes no obligation to publicly update or revise any forward-looking statement or any other financial information contained herein[13] 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] - Media Contact: Christen Reyenga, VP Corporate Communications, MediaRelations@mrcooper.com[14]