loanDepot, Inc. Q2 FY2026 earnings call

• Transformation Progress (One-Year Mark Since CEO Return) The team has delivered accelerated improvement through the transformation agenda, with the strongest 2026 results to date recorded in June 2026. Core operational efficiency metrics improved sharply year-over-year: return on marketing increased 70%, marketing lead-to-funded-loan conversion rose 50%, marketing cost per funded loan fell 34%, total cost per funded loan decreased 12%, and funded units per loan officer increased 18%. Net loan officer count grew 18% year-over-year, from both new graduates of the company's proprietary ACES training program and experienced retail hires.

1. Traditional First Mortgage (Purchase and Refinance): Total adjusted total company revenue was $308 million in Q2 2026, up from $299 million in Q1 2026. Purchase loan volume increased 44% quarter-over-quarter, driving a 33% increase in purchase market share. Servicing fee income came in at $112 million in Q2 2026, up from $109 million in Q1 2026, contributing ~36% of total adjusted revenue. The company holds a $10 billion mortgage servicing rights (MSR) portfolio planned for monetization post-quarter. 2. Home Equity (HELOC/5x5 Home Loan): Total company origination volume was $8 billion in Q2 2026, a 4% increase from Q1 2026; on a unit basis, total origination volume increased 25% quarter-over-quarter, entirely driven by HELOC growth. HELOC is a higher margin segment, contributing to a 60% quarter-over-quarter increase in origination income and pulling the overall pull-through gain on sale margin up to 345 basis points in Q2 from 271 basis points in Q1. 3. Wholesale Origination Channel: Reintroduced earlier in 2026, currently tracking ahead of internal launch expectations with positive reception from the broker community, and is not expected to become a major revenue contributor.

• Q3 2026 pull-through weighted rate lock volume is expected in the range of $5.25 billion to $7.25 billion, with total closed origination volume expected between $6.25 billion and $8.25 billion. The guidance range reflects ongoing product mix shift to HELOC, which is not counted in pull-through weighted lock volume but is included in closed origination volume. - Q3 2026 pull-through weighted gain on sale margin is expected between 360 and 390 basis points, an increase from Q2 2026's 345 basis points, driven by continued growth in higher-margin HELOC origination. - Total Q3 2026 expenses are expected to decrease slightly, driven by savings from discounted corporate debt repurchases, partially offset by higher volume-related costs for growing HELOC originations. - The company is implementing $12 million in annualized productivity cost savings that will roll out through the remainder of 2026. - Management maintains the long-term goal of achieving consistent profitability across all interest rate environments while expanding profitable market share.

No explicit material new risks or operational failures were discussed on the call. General forward-looking risk factors were referenced in the opening disclaimer, directing participants to the company's public earnings release for full risk detail. The primary external uncertainty cited was interest rate volatility, which impacts origination demand and product mix.

Q: How will the HELOC/first mortgage mix evolve in Q3 2026, and how will this affect gain on sale margins versus Q2? / A: If interest rates remain stable, HELOC volume will continue growing and will keep margins elevated relative to traditional first mortgages. The company has finished retooling marketing, technology, sales training for home equity and now has clear momentum, with new expansion like the recently opened Miami direct lending center. If rates fall, traditional first mortgage (especially refinance) volume will return, but HELOC will remain a core complementary product.

Q: What drove the sequential decline in customer recapture, and what recapture level should be expected for Q3? / A: The 500 basis point sequential decline was primarily driven by rising interest rates in Q2 that reduced consumer refinance demand, not the shift to HELOC. Management expects recapture rates to increase as the company expands its home equity offering, and does not forecast material further decline for Q3.

Q: Have large banks increased competitive pressure in the mortgage market recently? / A: Management has not observed increased competitive pressure; in fact, several competitors have exited the consumer direct mortgage market recently or shifted strategy. Loan Depot grew purchase share 33% quarter-over-quarter while growing purchase volume 44% and maintained margins across both purchase and refinance. The company also showed clear profitability improvement in its new home equity segment, cutting monthly losses from $15 million in April to $2 million in June.

Q: What are the company's plans for AI and technology, and how will this drive operating leverage? / A: The company is leveraging its existing proprietary platform, focusing AI investments first on top-of-funnel customer generation and origination tools to support new product addition like HELOC. A second key focus is using AI and automation to improve operational efficiency, already delivering improved verification process performance. Management believes AI will fundamentally change the mortgage industry, and LoanDepot's direct customer access at the top of the funnel positions the company to outperform competitors from AI adoption.