Nelnet — Third Quarter 2026 Earnings Summary

Financial Performance:

• GAAP net income was $76.2 million ($2.13 per share) for the third quarter of 2026, compared to $106.7 million ($2.94 per share) in the same period of 2025.
• Non-GAAP net income, excluding derivative market value adjustments, was $67.9 million ($1.89 per share) for the third quarter of 2026, compared to $107.3 million ($2.95 per share) in 2025.
• Loan and investment net interest income increased to $101.4 million for the quarter, up from $85.3 million in 2025.
• Total other income (expense), net was $335.2 million for the quarter, compared to $342.5 million in 2025.
• Total operating expenses were $263.7 million for the quarter, compared to $232.7 million in 2025.
• Income before income taxes was $81.0 million for the quarter, compared to $136.4 million in 2025.
• Income tax expense was $24.8 million for the quarter, compared to $35.8 million in 2025.
• Net interest income after provision was $61.1 million for the quarter, compared to $86.7 million in 2025.
• Provision for loan losses was $39.4 million for the quarter, compared to a negative provision of $3.6 million in 2025.
• Total assets were $14.14 billion as of September 30, 2026, compared to $13.88 billion as of September 30, 2025.
• Total liabilities were $10.52 billion as of September 30, 2026, compared to $10.29 billion as of September 30, 2025.
• Total Nelnet, Inc. shareholders' equity was $3.79 billion as of September 30, 2026, compared to $3.65 billion as of September 30, 2025.

Business Segments and Product Lines:

• Nelnet Financial Services (NFS):
  • Asset Generation and Management (AGM): Loan and investment net interest income was $65.2 million for the quarter, up from $44.7 million in 2025, driven by higher loan spreads and consumer loan portfolio growth. AGM acquired $3.23 billion of consumer loans in the quarter, including $3.06 billion of short-duration Pay Later receivables, compared to $1.52 billion in 2025. The consumer loan portfolio grew to $1.30 billion as of September 30, 2026, from $840.7 million in 2025. AGM reported net income after tax of $33.9 million for the quarter, up from $27.8 million in 2025. AGM recorded a provision for loan losses of $34.5 million for the quarter, compared to a negative provision of $7.4 million in 2025.
  • Nelnet Bank: Loan and investment net interest income increased to $20.4 million for the quarter, up from $15.4 million in 2025. The bank reported net income after tax of $12.0 million for the quarter, up from $4.6 million in 2025. As of September 30, 2026, the bank held a loan portfolio of $1.70 billion, an investment portfolio of $1.64 billion, and total deposits of $2.81 billion.
• Loan Servicing and Systems: Revenue was $139.8 million for the quarter, down from $151.1 million in 2025. Excluding $5.3 million of revenue from contract modifications in 2026 (compared to $32.9 million in 2025), segment revenue increased year-over-year, primarily due to the acquisition of NDS Canada, which contributed $16.5 million. The segment reported net income after tax of $12.5 million for the quarter, down from $35.2 million in 2025. The company was servicing $523.6 billion in loans for 15.4 million borrowers as of September 30, 2026.
• Education Technology Services and Payments: Revenue was $132.9 million for the quarter, up from $129.3 million in 2025. Revenue less direct costs was $83.4 million for the quarter, up from $79.0 million in 2025. Net income after tax was $19.4 million for the quarter, compared to $19.0 million in 2025.
• Corporate and Other Activities: Recognized an unrealized loss of $9.3 million from changes in the fair value of certain marketable equity securities.

Market and Competitive Landscape:

• The company continues to diversify its products and customer base, including the expansion of its education technology business internationally through the acquisition of Entab, a school management technology provider in India.
• Launched FACTS Compass to help scholarship granting organizations support students through the new Federal Scholarship Tax Credit, with BenefitEd offering employers a payroll deduction option for the program.
• AGM's average FFELP loan portfolio balance declined to $6.46 billion for the quarter, down from $8.25 billion in 2025, due to continued runoff of the legacy portfolio.

Risks and Challenges:

• Risks include the ability to maintain and increase allocated volumes of student loans serviced under existing and future contracts, unfavorable contract modifications, and meeting service requirements to avoid performance penalties.
• Loan portfolio risks include credit risk, prepayment risk, and interest rate basis and repricing risk.
• Risks related to the use of derivatives to manage interest rate exposure and uncertainties regarding expected benefits from purchased loans.
• Financing and liquidity risks, including changes in the interest rate environment.
• Risks from changes in education loan terms, educational credit markets, and applicable laws, regulations, and government budgets.
• Operational risks including cyber breaches, system failures, and risks related to the use of artificial intelligence.
• Risks related to solar tax equity partnerships, including the potential recapture of tax credits and the impact of the "One Big Beautiful Bill" on solar energy credits.
• Risks associated with climate change, economic conditions, and consumer behavior.
• Risks related to the executive chairman's ability to control matters through voting rights and related party transactions.

Management Commentary and Tone:

• CEO Jeff Noordhoek stated the company delivered strong operating performance with continued progress in diversifying products and the customer base.
• Management emphasized a focus on investing in businesses and creating long-term value while increasing the dividend and repurchasing shares.

Other Key Points:

• During the first nine months of 2026, the company repurchased 731,932 Class A common shares for $93.7 million (average price of $128.04 per share).
• In the third quarter of 2026, the company repurchased 415,332 Class A common shares for $53.1 million (average price of $127.81 per share).
• Subsequent to September 30, 2026 (through November 5, 2026), the company repurchased an additional 295,990 Class A common shares for $37.0 million (average price of $125.04 per share).
• The Board of Directors declared a fourth-quarter cash dividend of $0.36 per share on Class A and Class B common stock, payable on December 15, 2026, to shareholders of record on December 1, 2026.
• AGM contributed student loan trusts to Nelnet Bank during the first nine months of 2026, including $780.7 million of FFEL Program loans.
• The 2025 results included a $30.2 million gain related to a venture capital investment that completed an equity raise.