loanDepot Q1 2026 Earnings Call - Margin Recovery Driven by Figure Partnership and HELOC Shift

Operator: Good afternoon, and welcome to loanDepot’s first quarter 2026 earnings call. After today’s prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I would now like to hand the call over to Gerhard Erdelji, Senior Vice President, Investor Relations. Please go ahead.

Gerhard Erdelji, Senior Vice President, Investor Relations, loanDepot: Good afternoon, everyone, and thank you for joining our first quarter 2026 earnings call. Before we begin, I would like to remind everyone that this conference call may include forward-looking statements regarding the company’s operating and financial performance in future periods. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the earnings release that we issued earlier today, which is available on our website at investors.loandepot.com. Our presentation today contains certain non-GAAP financial measures that we believe provide additional insight into analyzing and benchmarking the performance and value of our business and facilitating company-to-company operating performance comparisons. For more details on these non-GAAP financial measures, including reconciliation of the most directly comparable GAAP measures, please refer to today’s earnings release. A webcast and transcript of this call will be posted on our website after the conclusion of this call.

On today’s call, we have loanDepot’s Founder and Chief Executive Officer, Anthony Hsieh, and Chief Financial Officer, David Hayes. They will provide an overview of our quarter, a review of our operating results, and our outlook. We’re also joined by Chief Investment Officer, Jeff DerGurahian, and Chief Digital Officer, Dominick Marchetti, to help answer your questions after our prepared remarks. With that, I’ll turn things over to Anthony to get us started. Anthony?

Anthony Hsieh, Founder and Chief Executive Officer, loanDepot: Thank you, Gerhard. I appreciate everyone joining us on the call today. We are now 3 quarters into the rebuild of our company, and I believe that all of our hard work will soon be reflected in our financial performance. We spent the most recent quarter focused on a series of long-term growth initiatives that we expect will accelerate our momentum in coming months, including the addition of over 100 new loan officers, the reimagining and relaunch of our wholesale business, and the completion of our game-changing partnership agreement with Figure. I’ll talk about each of these initiatives in more detail in a moment, but I am pleased to share they are delivering promising early results. Since my return as CEO, I have been laser-focused on our digital transformation as a key enabler of our return to a market-leading position.

We have focused on fully leveraging our unique assets and strategy, including one of the most differentiated customer acquisition and retention business models in the marketplace today. This included rebuilding our management team with members that have deep mortgage technology and marketing IQ. With this team now largely in place, we have spent the past several quarters hiring and training more loan officers with the goal of growing market share and positioning ourselves for accelerated growth when demand increases. This growth is broad-based and consists of newly trained loan officers graduating from our proprietary ACES program in our direct channel and experienced loan officers with established businesses in our retail channel. We also recently reopened our wholesale channel as part of our strategy to offer more products to our customers and leverage our existing infrastructure while limiting incremental expenses.

Response from the broker community has been very positive, with many directly reaching out seeking to partner with loanDepot. Despite a volatile market environment, these initiatives help us increase market share during the quarter, which I consider vital to our goal of achieving consistent profitability in the current market. Behind the scenes, we remain focused on reducing unit costs through operating leverage and automation. As demonstrated this quarter, we sharpened our marketing strategies to drive more lock volume to the top of the funnel while reducing marketing costs, increasing our return on marketing. Looking forward, I believe the digital migration of the customer will continue to accelerate, and we plan to be there to meet the customer.

Led by our digital team, we are hard at work introducing cutting-edge technology and AI capabilities to our repeatable and scalable functions across each aspect of the origination and servicing life cycles, including lead acquisition and conversion, loan officer and servicing CRM management, and automated underwriting process. Our recently announced partnership with Figure Technology Solutions is expected to meaningfully accelerate our work and is delivering promising early results. As part of this partnership, we integrated Figure’s proprietary credit and loan underwriting engine into our own proprietary mello technology platform, enabling us to seamlessly offer a variety of innovative home loan products to our customers.

Importantly, our partnership also positions us to introduce new and innovative products that expand the way we serve borrowers in the future and capitalize on market improvements. The 5x5 HomeLoan, which delivers approval in as little as 5 minutes and funding in as few as 5 days, brings real value to those seeking speed and convenience in their financial transaction. As we integrate this platform across our channels, we expect to lower our cost of production, improve the customer experience, close more loans quickly, and advance our long-term objective of profitable market share growth. We also believe that this product will be a consistent contributor to the earnings power of the company as customers with record levels of home equity, historically low interest rates on their first trust deeds, should remain a reliable source of demand even as interest rates fall.

As we look ahead with expectations of a larger market, our top of the funnel customer acquisition advantage uniquely positions us to outperform our competition in a rapidly evolving and consolidating marketplace. I am proud of the work that has been accomplished since my return to a full-time operating role. We plan to continue investing and growing our top of the funnel customer acquisition and origination capabilities, leveraging our brand and marketing muscle, along with introducing contemporary technology, including AI, which should lower our costs and increase our operating efficiency. Ultimately, our goal are to deliver profitable market share growth, improve the borrower experience, drive customer retention, and deliver long-term shareholder value. This is our mission and what we are working towards every day. Regardless of interest rate movements, we are focused on delivering consistent profitability. We believe we are well on our way towards that goal.

As rates fall, that timeline will be shortened. With that, I will now turn the call over to Dave, who will take us through our financial results in more detail. Dave?

David Hayes, Chief Financial Officer, loanDepot: Thanks, Anthony. Good afternoon, everyone. The quarter reflected continued progress towards sustainable profitability offset by geopolitically driven market volatility. We reported an adjusted net loss of $34 million in the first quarter compared to an adjusted net loss of $21 million in the fourth quarter of 2025, due primarily to lower pull-through weighted gain on sale margin, offset somewhat by lower expenses. During the first quarter, pull-through weighted rate lock volume was $8.3 billion, which represented a 14% increase from the prior quarter’s volume of $7.3 billion.

Pull-through weighted rate lock volume came in within the guidance we issued last quarter of $7.75 billion to $8.75 billion, and contributed to adjusted total revenue of $299 million, which compared to $316 million in the fourth quarter of 2025. As Anthony mentioned, the growth in rate lock volume was achieved while reducing marketing expenses by 12% during the quarter. This positive operating leverage reflected improved strategies for mid-funnel lead conversion and our sharpened marketing strategies. Our pull-through weighted gain on sale margin for the fourth quarter came in at 271 basis points at the low end of our guidance range of 270-300 basis points, and down compared to 324 basis points prior to the prior quarter.

Our lower gain on sale margin primarily reflected interest rate volatility and product mix shift. The geopolitical environment created a sharp increase in interest rates during the first quarter, and we originated fewer higher margin FHA, VA, and HELOC loans and originated more conventional loans, both effects compressing our margin. Higher interest rates during the quarter also generated wider negative fair value marks on our mortgage servicing and trading securities, contributing to lower revenue. Our loan origination volume was $7.7 billion for the quarter, a decrease of 5% from the prior quarter’s volume of $8 billion. This was at the high end of our guidance we issued last quarter of between $6.75 billion and $7.75 billion. Closed loan volume also represented a market share increase demonstrating success in investing in increasing our loan officers.

Servicing fee income decreased from $113 million in the fourth quarter of 2025 to $109 million in the first quarter. Primarily due to lower interest earnings from lower custodial balances along with fewer days in the quarter. Despite the lower servicing revenue, we’re able to increase our market leading recapture rate to 73% from the prior quarter’s 71%. We hedge our servicing portfolio. We do not report the full impact of the changes in fair value and results of our operations. We believe this strategy helps protect against volatility in our earnings and liquidity. Our strategy for hedging the servicing portfolio is dynamic. We adjust our hedge positions in reaction to the changing interest rate environments. Our total expenses for the first quarter decreased by $565,000 from the prior quarter.

We guided to higher expenses during the quarter, but ended up delivering a decrease. The primary drivers of the decrease were lower commissions due to the impact of implementing a more efficient commission strategies and lower marketing expenses as I previously discussed. Salary related expenses increased due to higher headcount as we build capacity and the impact from seasonal employment tax resets. We also experienced higher direct origination expenses as vendors increased the cost of credit reporting services. We believe that process and workflow improvements underway should mitigate some of the increased credit reporting costs going forward. Looking ahead to the second quarter, we expect pull-through weighted lock volume of between $5.75 billion and $7.75 billion, and origination volume of between $7.25 billion and $9.25 billion.

These ranges reflect a shift in mix as our 5x5 HomeLoan product ramps up, which has a very fast funding profile and which volume is not reflected in the lock volume, but is reflected in the closed loan volume. We expect our second quarter pull-through weighted gain on sale margin to be between 330 and 360 basis points. When evaluating our margin guidance, keep in mind that HELOC products are originated without an interest rate lock. Therefore, our guidance reflects the expected revenue contribution of those products in the numerator, but expected volume is not included in the denominator. They also generally carry a higher gain on sale margin but lower average loan balances, and combined with leveraging the Figure underwriting platform, have a lower cost structure.

Taken together, we believe the partnership will have a positive impact on our bottom line and a meaningful contributor to growth going forward. Our total expenses are expected to increase in the second quarter, primarily driven by higher volume related costs, reflecting higher expected originations quarter-over-quarter. We ended the quarter with $277 million in cash, decreasing by $60 million from the fourth quarter, reflecting our net loss, the investment in servicing rights, and timing differences related to our MSR secured loans. Anthony stated this earlier, but it bears repeating. Our goals are to continue investing in driving top line and market share growth, reducing our costs and increasing operating leverage, and applying automation and technology across the origination and servicing business to achieve consistent profitability in any environment.

With that, we’re ready to turn it back over to the operator for Q&A. Operator?

Operator: We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Mihir Bhatia with Bank of America. Your line is open.

Mihir Bhatia, Analyst, Bank of America: Hi. Thank you for taking my question. I wanted to start maybe with just the gain on sale margin guide. You have a reasonable step up in the guide between from the first quarter’s 271 basis points level. Can you just talk about some of the factors that are driving that?

David Hayes, Chief Financial Officer, loanDepot: Sure. This is David Hayes. It’s really reflective of a couple of things, but first and foremost, it’s the introduction of our 5x5 product, which is a HELOC product. That carries a much stronger gain on sale margin with it. With the recent partnership with Figure, we’ve really started to ramp that production. We’re seeing a higher percentage mix of volume coming from that product, which is averaging up our gain on sale margin. Additionally, on the first trust deed side of the house, we saw, you know, product mix shift that diluted our margin in the first quarter, and we’re starting to see that shift back towards FHA, VA, and overall higher home equity volumes, which is also contributing to a higher gain on sale margin.

Mihir Bhatia, Analyst, Bank of America: Got it. Okay. Then just on the volume and pull-through dynamics, you know, weighted locks, I think in one Q are $8 billion. You’re obviously guiding to some good funded originations here in two Q. The locks for one Q is, like, $5.75 billion-$7.7 billion, like, a little bit smaller than first quarter. Are you making changes in your pull-through fallout or assumptions? Is something else happening there, or is this just every year seasonality from one to two Q?

David Hayes, Chief Financial Officer, loanDepot: No, this is kind of a pretty significant shift. I commented on the prepared remarks where with the ramping of this new five by five product, it’s a HELOC, and there’s no lock associated with it. Instead, when you look at our lock guidance there, that volume is not represented there. It is represented-

Mihir Bhatia, Analyst, Bank of America: Okay.

David Hayes, Chief Financial Officer, loanDepot: in our funded volume. You’ll see.

Mihir Bhatia, Analyst, Bank of America: Got it.

David Hayes, Chief Financial Officer, loanDepot: where our lock volume came down is because all that volume is showing up in funded volume. It’s a very quick turn time on that.

You know, app to fund is very quick. There is no lock associated with it.

Mihir Bhatia, Analyst, Bank of America: There’s no major change quarter-over-quarter in the base mortgage business. The changes are happening in the home equity business. Is that the right understanding?

David Hayes, Chief Financial Officer, loanDepot: Correct. We view the-

Mihir Bhatia, Analyst, Bank of America: The changes are happening because of the.

David Hayes, Chief Financial Officer, loanDepot: To be clear?

Mihir Bhatia, Analyst, Bank of America: Yeah.

David Hayes, Chief Financial Officer, loanDepot: It’s the product mix shift between a higher percentage.

Mihir Bhatia, Analyst, Bank of America: Got it.

David Hayes, Chief Financial Officer, loanDepot: of an expectation of higher percentage of HELOCs versus first trust deeds.

Anthony Hsieh, Founder and Chief Executive Officer, loanDepot: Yeah. This is Anthony Hsieh. I just want to chime in and add my two cents to what David described. It’s not only a difference in how we measure revenue because the HELOC loan is not locked. However.

The bigger difference is that a locked loan, the normal cycle is around 25 to 33 days until you recognize the funding of that loan. Our 5x5 HomeLoan product is funding in 5 to 7 calendar days. It’s a very fast process because it utilizes technology to fund loans and process loans. Ultimately, it’s gonna drive down our cost to produce. It does change the pull-through as you look at it from the traditional way because we’re not publishing the origination on these HELOC 5x5 HomeLoan loans.

Mihir Bhatia, Analyst, Bank of America: Got it. Sorry, can I squeeze one more in just on the recapture rate and refinance volume? Obviously, a pretty volatile quarter from interest rates. Wondering what you saw happen? Was there differences between what recapture rate and competitive intensity looked like in Jan/February versus maybe March/April? Any comments just quarter to date also on that, and then I’ll jump back in queue. Thank you.

Anthony Hsieh, Founder and Chief Executive Officer, loanDepot: I didn’t understand that question. I’m sorry.

David Hayes, Chief Financial Officer, loanDepot: Uh, I think-

Mihir Bhatia, Analyst, Bank of America: Oh, sorry.

David Hayes, Chief Financial Officer, loanDepot: dynamics.

Mihir Bhatia, Analyst, Bank of America: Yeah, just intra-quarter dynamics between competitive intensity and recaptures just given the movement in interest rates.

David Hayes, Chief Financial Officer, loanDepot: No, we didn’t see anything really different in recapture behavior and performance.

Mihir Bhatia, Analyst, Bank of America: Okay. Thank you.

Anthony Hsieh, Founder and Chief Executive Officer, loanDepot: Thank you.

Operator: Our next question comes from Mikhail Goberman with Citizens JMP. Your line is open.

Mikhail Goberman, Analyst, Citizens JMP: Hey, good afternoon, gentlemen. Thanks for taking the question. If I could get some color on how you guys see the mix between origination income and servicing fee income going forward. Also separately, to what extent do you guys think, or not, that a substantial decline in mortgage interest rates is needed to get a sort of a run rate of earnings that starts to trend in the right direction? Thank you.

Anthony Hsieh, Founder and Chief Executive Officer, loanDepot: I’ll take the second question and perhaps, David, you can take the first question, the blend between servicing income and origination income. You know, it’s been a solid 3 quarters since we have redirected and started to rebuild the organization. Of course, if yield was at 4.0 today on the 10-year, the environment here would be substantially different. However, understanding that we’re at 4.4-4.5, we’re still quite bullish based on all the hard work that we have done. We have shown tremendous progress in market share, top-line revenue growth, and more meaningfully is our efficiency in marketing. As we drive top of the funnel leads, our ability to convert mid-funnel and conversion to originations, that has changed in a meaningful way over the last 3 quarters.

As long as we continue, and we have every reason to believe that we will continue to drive that positive momentum. That really is the roots of this organization, and that is pro-producing lead flow at the top of the funnel and converting it in a best in class within the industry for us to scale and have profitable market share growth. That’s exactly what we did from 2010 to 2022. We are resuming a playbook that has worked for decades. It just is going to take some time in order for us to build all the mechanics, the tools, the measuring, the monitoring, as well as personnel management. We’re well on our way in doing that.

David Hayes, Chief Financial Officer, loanDepot: Yeah. I’ll just add from sort of the mix question around servicing revenue relative to mortgage revenue. I would say, you know, obviously, the servicing revenue will be a function of rates and runoff. Generally speaking, I would expect that to grow quarter-over-quarter by two percentage points. We really think that the opportunity lies on the mortgage revenue side. We’re heavily investing in loan officer additions across both the direct and retail side of the house. By virtue of that, we think that we should be able to grow mortgage revenue quarter-to-quarter from where we sit today, coupled with sort of the, you know, the seasonality of the business for 2nd and 3rd quarters.

Mikhail Goberman, Analyst, Citizens JMP: Great. Fantastic cover. Thank you, guys. If I could just squeeze in one more as well. Just curious about the liability side of your balance sheet. Your thoughts on addressing upcoming debt maturities. Thanks.

David Hayes, Chief Financial Officer, loanDepot: Sure. Yeah, popular question. That is something that the management team and the board is very actively engaged in, and with discussions with bankers. We are looking at strategies to address that in a pretty comprehensive way. You know, the markets are quite turbulent, as you well know right now. We are trying to be very thoughtful about how we approach that. We were hoping to have a resolution on that in the coming months.

Mikhail Goberman, Analyst, Citizens JMP: Thank you all. Best of luck going forward.

David Hayes, Chief Financial Officer, loanDepot: Thank you.

Anthony Hsieh, Founder and Chief Executive Officer, loanDepot: Thank you.

Operator: There are no further questions at this time. Anthony Hsieh, I turn the call back over to you.

Anthony Hsieh, Founder and Chief Executive Officer, loanDepot: Thank you. On behalf of Dave, Jeff, Dom, and the rest of our team, I want to thank you for joining us today. The pieces are in place. We are executing on our strategy to compete at the highest levels by returning to our core strength. Our strategy rests on four objectives. One, investing in the business through growth, operational efficiency and infrastructure. Two, becoming a best-in-class mortgage banker, or in other words, find another loan, close it faster, produce it cheaper, and maintain superior loan quality. Three, growing profitable market share by hiring and training sales professionals in each of our channels and by increasing our channel and distribution capabilities. We plan to grow our origination capacity to capture profitable market share growth across refinance, resale, and new home loans.

Finally, 4, returning to profitability by investing in our origination and new customer acquisition capabilities, growing our servicing portfolio, improving our recapture rates, growing our brand and marketing, and increasing our operating leverage. We believe we can return to consistent profitability. This is how we win. Executing these objectives positions us to create sustainable value for our shareholders while accelerating growth in a competitive landscape. Thanks again, everybody, and I appreciate your support. Operator.

Operator: This concludes today’s conference call. You may now disconnect.