Walker & Dunlop, Inc. Q4 FY2025 earnings call

• Walker & Dunlop's Q4 and full year results showed continued success in real estate capital markets with growth in transaction volumes. - Impacted by loan buybacks and valuation marks on real estate-owned portfolio, but core business and market presence remain strong. - WND's capital markets transaction volumes grew from $7 billion in Q1 2025 to $18 billion in Q4. - Multifamily property sales volumes grew from $1.8 billion in Q1 2025 to $4.5 billion in Q4. - Investigated a portfolio of loans where borrower committed fraud, took action including hiring outside counsel, conducting review, and offering to indemnify Freddie Mac. - Shifted strategy for 2024 loan repurchases from long-term hold to near-term exit and marked down carrying value of assets. - Took impairment charge on affordable assets in Walker & Dunlop Affordable Equity Platform. - Capital markets business had strong quarter with momentum continuing into early 2026. - SAM segment had solid quarter absent repurchase and impairment charges with positive outlook for 2026.

Capital Markets Business: Delivered $18 billion of total transaction volumes in Q4 2025, up 36% year-over-year, generating $191 million of revenue, up 5% year-over-year. Full-year 2025 capital markets business had $90 million in net income, up 35% from 2024. Servicing and Asset Management (SAM) Segment: Servicing portfolio grew to $144 billion at end of 2025, up 6% from end of 2024. Revenues from SAM segment were $143 million, down 9% year-over-year. Repurchase and impairment charges impacted SAM segment, resulting in $9 million net loss compared to $37 million net income in Q4 2024.

Full-year 2026 guidance is for diluted earnings per share of $3.50 to $4.00, adjusted EBITDA of $300 million to $325 million, and adjusted core earnings per share of $4.50 to $5.00. 2026 outlook supported by strong balance sheet, improving transaction markets, and durability of recurring revenue streams. Q1 2026 pipeline at $15 billion, over two times Q1 2025 production total.

Loan buybacks and valuation marks on real estate-owned portfolio can impact financial results. Potential for future loan losses or fraudulent borrowers. Actions of a few had outsized impact on repurchases in the past. Impact of AI on business is uncertain and could present challenges or opportunities.

Q: On credit, comment on credit trends and overall portfolio.

A: Feel extremely good about credit portfolio, acted proactively with full transparency. While can't guarantee no further loan losses, feel better positioned now.

Q: Quantify non-recurring operating cost headwinds in 2026.

A: Continue to incur carry costs for repurchased and affordable assets, about $4 million to $5 million a quarter, gradual reduction expected.

Q: View on balance sheet being clean of write-downs and litigation.

A: Scrubbed portfolio of loans as deeply as possible, feel good about findings, but diligence continues with Freddie Mac.

Q: Market assumptions in 2026 guidance.

A: Expect market to grow similarly to 2025, GSEs caps expanded, pipeline strong.

Q: Impact of AI on business.

A: See potential for AI to enable and make relevant to customers, using Geofi's technology to streamline processes, but GSEs likely focus on single family business first