LINCOLN, Neb. - Nelnet (NYSE: NYSE:NNI) reported a significant increase in its first quarter earnings, surpassing analyst expectations.
The financial services company posted adjusted earnings per share (EPS) of $1.81, which was $0.44 higher than the analyst estimate of $1.37. Revenue also exceeded forecasts, coming in at $385.38 million against the consensus estimate of $364 million.
The company's robust performance in the first quarter marks a substantial improvement from the same period last year, with GAAP net income rising to $73.2 million, or $1.97 per share, from $26.5 million, or $0.71 per share.
This growth reflects the company's successful navigation through an uncertain environment, as noted by CEO Jeff Noordhoek. He attributed the strong quarter to the solid performance of Nelnet's core businesses and the strategic utilization of the company's liquidity position for investments and share repurchases.
Nelnet's Asset Generation and Management (AGM) segment experienced a decrease in loan and investment net interest income, primarily due to the expected runoff of the loan portfolio. Despite this, the segment recognized a significant reduction in the provision for loan losses and a favorable change in the fair value of derivative instruments, leading to a net income after tax of $25.6 million for the quarter.
The company's Loan Servicing and Systems segment reported a decline in revenue to $127.2 million from $139.2 million in the previous year. However, the Education Technology Services and Payments segment saw an increase in revenue to $143.5 million, up from $133.6 million in the first quarter of 2023, with net income after tax rising to $36.2 million.
Following the earnings release, Nelnet shares experienced a 1.5% uptick, indicating a positive market response to the company's financial results. This movement, while not exceeding the 2% threshold for significant market reaction, still reflects investor confidence in the company's performance.
Looking ahead, Nelnet's management remains focused on capitalizing on market opportunities and investing in its businesses. The company's share repurchase program has also been active, with nearly 818,000 shares bought back year to date at prices deemed attractive by management.
The company's forward momentum is also reflected in the declaration of a second-quarter cash dividend of $0.28 per share, payable on June 14, 2024, to shareholders of record as of May 31, 2024. Nelnet's financial results and strategic initiatives underscore its commitment to delivering value to its shareholders and strengthening its market position.
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