• Adjusted Net Loss: $47 million in Q4 2024, compared to $27 million in Q4 2023.
• Pull Through Weighted Rate Lock Volume: $5.6 billion, a 27% increase from $4.4 billion in the prior year.
• Adjusted Total Revenue: $267 million, up from $251 million in Q4 2023.
• Gain on Sale Margin: 334 basis points, above guidance of 285 to 305 basis points, compared to 296 basis points in the prior year.
• Loan Origination Volume: $7.2 billion, a 34% increase from $5.4 billion in the prior year.
• Servicing Fee Income: Decreased to $108 million from $132 million in Q4 2023.
• Total Expenses: Increased by $39 million or 13% from the prior year.
• Cash Position: Ended the quarter with $422 million in cash.

• Warning! GuruFocus has detected 4 Warning Signs with LDI.

Release Date: March 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Successful completion of Vision 2025, which helped the company navigate a significant downturn in the housing and mortgage markets.
• Return to profitability in the third quarter of 2024, marking a positive turnaround for the company.
• 27% increase in pull-through weighted rate lock volume from the prior year, reflecting successful investment in recruiting and developing loan officers.
• Higher gain on sale margin of 334 basis points, exceeding guidance and benefiting from a favorable channel mix shift.
• Introduction of Project Northstar, aimed at further growth and operational efficiency, with investments in technology and new joint ventures.

Negative Points

• Adjusted net loss of $47 million in the fourth quarter, an increase from the previous year's loss of $27 million.
• Decrease in servicing fee income from $132 million to $108 million, reflecting a reduction in the size of the portfolio.
• Total expenses increased by 13% due to higher volume-related commissions and marketing expenses.
• Challenges in the housing and mortgage markets persist, with volumes at generational lows.
• Sequential increase in GNA and servicing expenses, partly due to a return to normalization after an insurance recovery in the previous quarter.

Q & A Highlights

Q: Can you talk about how you're viewing your current cash liquidity situation and what you expect for servicing balances over the course of 2025? A: David Hayes, CFO, explained that loanDepot maintains heightened levels of liquidity due to the challenging mortgage market. They aim to keep liquidity at around 5% of assets throughout 2025. Regarding Mortgage Servicing Rights (MSR), the company plans to maintain and build this strategic asset, although sales may occur to meet liquidity needs.

Q: What were the drivers of the sequential increase in GNA and servicing expenses? A: David Hayes noted that the GNA increase was due to a previous insurance recovery related to a cyber event, which had understated expenses in the third quarter. The fourth quarter saw a return to normal expense levels. Additionally, investments in loan officers and operations contributed to the increase. Servicing expenses rose slightly due to a seasonal uptick in delinquency rates, but these remain below historical norms.

Q: What backdrop are you embedding in your volume guidance for Q1, and how does it compare to third-party estimates? A: David Hayes stated that the guidance is based on expectations of loan officer counts and investments made into the business. They anticipate a sequential decline in lock volumes due to seasonality, but expect to gain market share compared to third-party estimates, which predict a more significant decline.

Q: How should we think about operating leverage with expected rebound in mortgage originations in 2025? A: David Hayes mentioned that strategic investments in revenue-generating areas and operations should lead to increased operating leverage. As refinance markets improve, loan officer productivity is expected to rise, enhancing revenue to profitability. No significant increases in back-office or GNA expenses are anticipated, with modest reductions expected.

Q: Are there any updates on Project Northstar initiatives, such as expanding geography, JVs, or cost savings? A: Frank Martell highlighted that Project Northstar is in its formative stages, with investments in technology platforms to improve efficiency and customer experience. Two new joint ventures with Smith Douglas and Onyx Homes are being onboarded, expected to be fully operational by 2025 and ramped up by 2026. The company is also seeking additional opportunities in this space.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.