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Mar 31, 2020
Nelnet Q1 2020 Earnings Report
Nelnet reported a GAAP net loss due to adverse economic conditions caused by the COVID-19 pandemic, while core business operations performed well.
Key Takeaways
Nelnet reported a GAAP net loss of $40.5 million, or $1.01 per share, for Q1 2020, compared to a net income of $41.6 million, or $1.03 per share, for the same period last year. The decrease was primarily due to the COVID-19 pandemic, which led to an incremental provision for loan losses and impairment charges on certain investments.
Recognized an incremental provision for loan losses totaling $63.0 million due to an increase in expected loan defaults.
Recorded impairment charges totaling $34.1 million on certain investments negatively impacted by the pandemic.
Loan spread decreased due to a precipitous drop in interest rates.
Core business operations performed well despite the unique challenges brought on by the pandemic.
Nelnet
Nelnet
Nelnet Revenue by Segment
Revenue by Segment
Asset Generation & Management Revenue
CapyFin.comLoan Servicing & Systems Revenue
CapyFin.comEducation Technology Services & Payments Revenue
CapyFin.com Forward Guidance
Nelnet's diversification, financial strength, and liquidity will benefit it during the pandemic and resulting recession. The company will continue to evaluate the long-term impact of the pandemic and look for opportunities to invest in new initiatives.
Positive Outlook
- Strong liquidity position to invest in market opportunities.
- Opportunities in federally insured, private education, and consumer loan acquisitions.
- Potential for strategic acquisitions and investments.
- Expansion of ALLO's communications network.
- Capital management initiatives, including stock repurchases, debt repurchases, and dividend distributions.
Challenges Ahead
- Risks related to the severity, magnitude, and duration of the COVID-19 pandemic.
- Risks related to maintaining and increasing allocated volumes of student loans serviced under existing and future servicing contracts with the Department of Education.
- Risks related to the Department's initiatives to procure new contracts for federal student loan servicing.
- Risks related to the company's loan portfolio, such as interest rate basis and repricing risk and changes in levels of loan repayment or default rates.
- Risks and uncertainties related to the ability of ALLO to successfully expand its fiber network and market share.