loanDepot, Inc. Q3 FY2025 earnings call

Business Transformation - Initiated a business transformation including new leadership across origination channels (consumer direct, retail, partnership lending, servicing platform) and technology/innovation functions. - In consumer direct channel, realigned sales leadership team and formed revenue operations and strategy function. - In marketing, brand had national exposure during MLB post season. - In retail and partnership channels, announced new channel presidents. - In servicing, added Adam Saab to lead servicing business. - In innovation, introduced AI capabilities to call center functions and pivoting use of new technologies. - Announced Nikul Patel as Chief Growth Officer to drive growth opportunities, acquisition activities, and customer engagement.

In the third quarter, pull-through weighted rate lock volume was $7 billion, a 10% increase from the prior quarter's $6.3 billion. Origination volume was $6.5 billion, a 3% decrease from the prior quarter's $6.7 billion. Servicing fee income increased from $108 million in the second quarter of 2025 to $112 million in the third quarter. Adjusted net loss was $3 million in the third quarter compared to an adjusted net loss of $16 million in the second quarter of 2025. Adjusted total revenue was $325 million in the third quarter compared to $292 million in the second quarter of 2025. Pull-through weighted gain on sale margin for the third quarter was 339 basis points, within the guidance range of 325 to 350 basis points. Total expenses for the third quarter increased by $19 million or 6% from the prior quarter, but excluding nonrecurring items, total expenses would have increased by approximately 2%. Revenue contribution: Pull-through weighted rate lock volume contributed to the revenue growth, with origination volume and servicing fee income also playing roles in the overall revenue picture.

Fourth Quarter Expectations - Expect pull-through weighted lock volume between $6 billion and $8 billion and origination volume between $6.5 billion and $8.5 billion. - Expect third quarter pull-through weighted gain on sale margin between 300 and 325 basis points. - Total expenses expected to increase in the fourth quarter primarily driven by higher volume-related expenses from increased funded volume.

Risks - Market volatility. - Seasonality in purchase volume. - Affordability and availability of new and resale homes. - Level of mortgage interest rates.

Q: Hoping you could talk about your outlook for the ability to fund the growth with capital given the upcoming debt maturities and kind of the upfront capital that some growth might take and just how you're thinking about that in the current environment?

A: David Hayes said they feel good about funding growth opportunities, largely worked through warehouse line renewal season and see opportunities to upsize; Anthony Hsieh added they're enthusiastic and laser-focused to get back to standard of operations to grow market share profitably.

Q: How do you think about the size of the MSR servicing book in that context? Is that something that you would look to grow over time -- regrow over time?

A: Anthony Hsieh said MSR servicing book is a strategic advantage as in-house servicing gives industry-leading retention recapture, and they desire to continue to mount and increase it but need to drive down production cost while waiting for volume return.

Q: Have you guys sensitized the portfolio to what the minimum level of originations might be in order to return to profitability?

A: Anthony Hsieh said margins are highly dynamic, and when volumes and margins return, they'll get benefit of increased volume and margin, and they're well positioned for any return.

Q: When the stock got up to $4.50 back in September, did you guys consider any sort of capital raising to help maybe stabilize the capital structure a little bit more? And then if the stock got back up to that level in the future, I mean, are you prepared to put an ATM in place? Or how would you think about potentially raising capital in order to, again, stabilize the capital structure a little bit more?

A: David Hayes said when stock traded up, they were looking at all sorts of ways to shore up capital structure including potential debt refinances, ATM, or follow-on, but discussions were in flight; Anthony Hsieh added the best way to combat was with profitable market share growth and they're always looking at capital opportunities as they reposition for increased originations.