Q2 2025 UWM Holdings Corp Earnings Call

Marks there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. And if at any time, you would like to remove yourself from the queue, please, repress star, and 1. Thank You, Blake KOLO. You may begin your conference

Good morning, this is Blake Kolo, Chief Business Officer and Head of Investor Relations. Thank you for joining us and welcome to the second quarter 2025 UWM Holdings Corporation's earnings call. Before we start, I would like to remind everyone that this conference call includes forward-looking statements. 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 this morning.

Our commentary today will also include non-gaap Financial measures.

For information on our non-gaap metrics and the reconciliation between gaap and non-gaap metrics for the reported results, please refer to the earnings release issued earlier today as well as our filings with the SEC.

I will now turn the call over to Matt ishbia, chairman president and CEO of WM Holdings Corporation in United Wholesale Mortgage.

Thanks, Blake. And thank you everyone for joining today. You know, WM strong, consistent and differentiated values continue to be the foundation for everything we do here every day. Our team of more than 9,000 people delivers the best products, and services to the broker Community, which in turn benefits homeowners with significant cost savings, and a world-class mortgage experience. Our operating profile and Relentless drive to deliver results. Lend themselves to a consistent message for the investment Community. WM is uniquely positioned to win in any Market environment. While others have pulled back. UWM has doubled down proving that we can and will dominate the purchase Market regardless of Market cycles. And when the rates come down, we'll leverage our world-class operating system and Industry best technology that we either develop for Brokers to scale and dominate.

Over the last several years, we've built scale building in our business by investing in technology while your many other companies using AI as a buzzword, the difference is actually at UWM. We have products and services that are powered by AI that are actually impacting our business today and will impact our business. Even more when rates drop and just going forward in the future years ago, we invested heavily to build our AI based under a system B. Well under areas that most Learners can do 2 or 3 loans per day. Maybe even 4 we can do 2 3x or more per day than anyone else in the country. Our loan quality is better because of this technology and we'll continue to improve.

So here at UWM we can say AI is making a big impact on our business today. Another example of AI actually working is chat UWM which is similar to chat GPT, but for mortgages our Brokers and team members now use this as a primary resource for accessing job, AIDS, guidelines, and other information that arises that they need on a mortgage transaction. And within this is Leo loan estimate Optimizer, which we launched at WM live on May 16th, Leo Health Brokers compete and win by showing exactly how they can beat a competitor's loan estimate.

All they need to do is drag and drop the bars loan estimate into the Leo, and they get a detailed analysis of tips on how to win that specific loan and finally the big noise and big opportunities around Mia. Mia has been a huge, huge success. It's an AI loan officer assistant. Mia is designed to help loan officers do more loans and get more business, right? She is the ultimate loan officer since she works 24/7, 365; she doesn't get days off. We rolled this out at UWM. The broker feedback was incredible. We wrote it at WM Live back in May, and we've been using it every single day. It's having so much success where it's scheduling meetings and helping brokers get more business, and that's really the game. Now, you know, a stat that we're big on here at UWM is about 97% of all consumers that work with a mortgage broker give a 5-star review, which is phenomenal, unbelievable information. But only 10% of those people remember who the mortgage broker is when they go to refinance their mortgage because so much time has gone by. Until now, brokers haven't had great tools to stand in front of their business in front of their past borrowers. So Mia changes that.

Is all that she'll stay in front of, and we think that 10% number could go to 30%, 40%, maybe even 50% of them know who their mortgage brokers are, which just guarantees more business for brokers. This helps UWM and the broker channel continue to grow.

Real estate agents, it's best for loan officers. Which is why the channel continues to grow. I'm super excited about the opportunity, as we continue to build this together. And a lot of the AI things I talked about will help broker scale. Help WM scale and we're going to all win together. Okay, let's get into the quarter. We closed 39.7 billion of production our best quarter since 2021 and almost 20% higher than last year's second quarter. We did about 12.4 billion dollars of refi volume, which is double what we did last year, in second quarter, and represents about 11% of the volume in the industry, which is really interesting because most people think you need to have the client in your servicing book to refinance them first. We don't refinance any borrowers our Brokers do but second we only own about 2% of the industry servicing market. So for us to do 11 plus percent really just proves the age-old theory that you must have the service and do the refi. When you deliver world class experience you get 97% of borrowers, giving a 5-star rating. It really doesn't matter how big your servicing book, it gives the Brokers the ability to Excel on refinances and you're seeing that in real time here with you.

WM. Additionally, we originally had 27.3 billion dollars of purchases. This is our third best purchase record of all time and this big number in the market that we're in right now and it's tracking to do over 100 billion this year. Again on sale margin was 113 basis points, which is up a lot since the first quarter. And we also had a pretty good quarter of earnings 314 and a half million dollars in net income demonstrating, the earning power of our business and that also included a 111 million decline in fair value of our msrs. Our Playbook won't change in

Invest in our business when grow the broker Channel and repeat. I'll now turn the call over to our CFO rammy Hassani to go over some more numbers. Thank you, Matt Q2 is a strong quarter for us. Net income of 314.5 million.

And adjusted ibida of 195.7 million production, volume of 39.7 billion up 7.3 billion from q1 and gain margin of 113 basis points up by 19 basis points, from q1 and consistently maintaining a strong MSR portfolio of 211.2 billion in upb and whack of 5.51%. All this, while I'll never skipping a beat on service with best-in-class, net promoters score of 87, again, a strong and successful quarter by all measures,

To support our growth, we continue to invest in our people processes and developing Innovative technology to repair us and our broker partners for growth in 2025 and Beyond.

We remain on strategy, with our investments, to be prepared, for significant Market opportunities for us. And our broker Partners, as we've said before, we believe our business is positioned to handle twice, our current production volume with minimal, impact to fixed costs. We are prepared and excited for the future.

We also remain, well, capitalized with total Equity of 1.7, billion up from 1.6 billion in q1 and continue to be in a strong liquidity position cash of 490 million total available, liquidity of 2.2 billion and an MSR portfolio of 3.4 billion. We continue to assess and evaluate the opportunistic refinancing of our 800 million unsecured notes mature,

During a November of 2025 and given the current market conditions and strong, investor demand for our last offering we expect a favorable outcome in, refinancing these notes and as part of all this, we continue to maintain capital and liquidity leverage ratios within what we believe to be acceptable ranges in the current market environment.

In summary Q2 was a great quarter for us with strong production, gain margin, and that income performance. We continue to invest to be the most prepared mortgage company in America.

We are also prepared for a capital liquidity perspective and believe that we're well positioned operationally and financially for any Market cycle. I will turn things back over to our chairman president CEO. Matt hpf, for closing remarks.

Thanks rammy, appreciate it. You know, I'll close with a few points before the Q&A first, our work to bring, servicing in houses, progressing nicely. And I told you before, we'll have that done in the first quarter of next year. We'll have some positive Financial impact to our business in 2026, and Beyond more importantly than that, this gives you w. Complete control of our experience. We'll do both the same world classes. We're known for on the servicing side, which will drive increased loyalty to Brokers and UWM right now in the market. It's not done that way on the servicing side and UWM will be Best in Class. We recently partnered with a company called built which will help make the amazing front end experience for the consumers and there in a lot of places, which I'll explain very soon. It will make a huge impact. I'm really excited about bringing servicing in house and helping UWM dominate on this part of the business just like we do in origination.

In the 2026, we're really excited about our business. I'll turn it over to questions from all of you guys now.

and ladies and gentlemen, at this,

if you would like to ask a question, please press star then the number 1 on your telephone keypad. If at any time, you would like to remove yourself from the queue, please press star 1. Once more at this time, we'll pause momentarily to assemble our roster.

We will now begin the Q&A session.

Your first question today comes from Bose George at kvew.

Hey everyone. Good morning. Um, actually just first on the guidance uh and the higher gain on sale margins, does that reflect, you know, market trends or are you you know prioritizing higher margins a little more or just? Yeah can you can you please call around that?

Yeah, no. Just understand the market like we obviously have a, a view at the market and understanding what we're doing and what our clients need and what's going on in the markets that maybe others, don't have that same view as you see in our margins, sometimes look a lot different than everybody else's. So, uh, feel very confident in my guidance. Um, and then we'll hit know in that range, obviously, we had a good quarter um, from a volume and margin perspective and we expect uh to do the same in the second quarter. I mean, third quarter, excuse me.

So, okay, great. Thanks. And that makes you 1 1 on the bringing servicing in-house does the, you know, the costs related to that like the Opex number this quarter already, that already include costs related to that and you know, should we see, you know, any change or does that already kind of incorporate what's happening there?

No, you'll see some of those costs come out, uh, in some Savings in some opportunity for us in. 26. So we're, you know, I think a lot of the stuff that we're doing right now, there's actually some increase in cost in the servicing side. Tied to we moved it all to 1 suburb, we modified, we're we're in the process of building out technology tied to the servicing. We're partnering with a lot of different things to make it all happen in a in a very short time frame. But you'll see some of the costs come out in a positive way uh in 26th. Uh, you know, we're going to get the servicing up internally by early 26th first quarter and then, you know, you'll see the costs come out throughout the year and then obviously Beyond

Okay, great. Thanks.

Thank you.

Your next question comes from Eric Haugen at btig. Your line is open.

Good morning, guys. Good quarter. Um, do you feel like the speed to close loans has room to fall further while keeping your margin? The same like what are the processes or catalysts that would support even an even faster? Turn time from here,

Yeah, thanks Eric. Uh, you mean our speed to close loans? Yeah. With the AI Investments and the things we've done, it will continue to get faster. There's laws that you can't actually close it quicker than, like, 8 days. So, there's actually some laws in place that, but we, we talked about how clear quickly you get the clear to close purchase and refi. Um, obviously Reis are even faster and easier, but the truth is what's going to happen. Is when rates, do go down a little bit more and there are more refinancing in the market. Everyone else has turn times are going to uh get longer and they're going to slow down more and we won't um based on our AI Investments based on our team and our ability to scale it. So I've been talking about for probably 3 or 4 quarters now that we're ready. Um and so that will not impact us. Um, and what it will do is it creates a competitive Advantage which then gives us opportunity to get more business. Uh more margin or both.

Love it. Thank you. Um you know has the Playbook or the parameters around selling msrs changed at all for you guys. Like do you think the market has the capacity to buy more than you're currently selling at these interest rates? And how, you know, how like, how much capacity do you think would be available for msrs if rates fall?

Like, do you think the market can handle?

That.

Yeah, the market the Market's very uh robust in it. Honestly, we got

We had a new buyers coming in. We have people coming in and aggressively trying to buy our servicing. Once again, we're 1 of the few people that actually originate anything at scale. So if you want to get into servicing game, you got to come to UWM because we originated a volume that makes sense. Um, also a lot of people think that the way to refinance people is to buy servicing, and as I pointed out earlier, that's not how it really works anymore, but, you know, don't tell the servicing buyers. Um, so it's fine for them to continue to buy loans and, you know, but there's a lot of people that and they also look at things, there are some that aren't buying them, the refinance, they're buying them to head to other parts of the portfolio. So we've seen a good strong Market. Um, we're opportunistically selling, but at the same time, we can shut it down and not sell any. Um, and we'll look at all those options and we look at every single deal, um, before we make the trade, um, on all those. So we feel good about where we're doing on the MSR side.

Great stuff. Thank you guys very much.

Thank you.

Next question, today comes from Terry mall at Barkley's.

Um, I just wanted to follow up on expenses. Your non-interest expense growth, um, has been quite elevated the last 6 quarters, but it did moderate. Um the last 2. Um I'm just curious like, how should we think about the trajectory of that, non-interest expense growth as we look out to the back half of the year, um, particularly as you start to build out and how Servicing

Yeah, no, it's a good question, Terry. You know, I look at the we look at the fixed expenses, that's really what we manage and monitor, um, and understand, and a lot of them are investments, right? I look at them as investments in the scalability into the AI and the servicing. And so, do I think those will moderate as you already pointed out? Yes, and they will continue to moderate going forward. Now, the variable expenses, if we double our volume as an example, right? If that happens, I was the variable expenses will go up but we're in a really good position from a ability to handle the volume and then a lot more volume than we have today. Along with the Investments we've made from a perspective of broker business along with servicing along with um, technology tied to Ai. And so a lot of that stuff you see through there, but I do think that we're, I won't say we're it will never go up again, but I feel pretty good that we're in a in a place. That's not going to be going up a significantly.

Got it, that's helpful. Um, and then I guess maybe just on a 10b5, um, you've been, um, that's been active since about mid-June. Um, any updated thoughts on how you're kind of thinking about that and how much longer it will be kind of active? Like, what's the end point? Thank you.

Yeah, I mean the 10 B is uh a plant out there that obviously you can't change once you start it. Um the stock price is way too low to be doing it but I don't get to choose that anymore. Um, but we feel fine about it because I know it's a long-term play. It's it's the right thing for the long term, build the float. All of you guys that are on the call, tell me that we need more float. And so I'm selling it a massive discount to provide that for all of our investors and my my strategy and our our strategy based on you know, feedback from you guys. Is that the expectation, is that the other 85% or 83% of what I own will be worth more, because I'm getting more flat on the market.

Right. Thank you.

Our next question will come from the line of Doug harder at UBS. Please go ahead.

Uh, thanks. Uh, Matt. You do have a, a little update on, on MIA, but hoping you could talk a little bit more about, you know, kind of broker reaction to it consumer reaction to it. And, you know, any metrics on, you know, kind of, uh, you know, around the success of that roll out.

Yeah, thanks a lot. It's, it's been great. Uh, it's been, you know, we, we, we've not, it's not been a 100 thousand calls a day, because the market hasn't needed that yet, but it's ready.

Um, and she's been making a lot of calls. Uh, I actually played a couple in the sales huddle to all the our Brokers, you know, 10,00 people, almost 10,000. People watch that, and let them hear Mia talking with borrowers, calling inbound and answer. She's answering. And, and and setting up an appointment for the broker, um, or she's making outbound calls. Hey, looks like your rate should be dropped. Could could drop, do you want to talk to Johnny Smith, your Lo and and the person like, yeah, I'd love to schedule appointment, how about 5 oclock tomorrow? And they literally schedule an appointment and then the broker calls and the broker does a loan like it's, it's really cool. Um, and now just doing it at scale, um, which we already are doing it at scale like thousands and thousands a day, but I I think scale, you know, 50,000 100,000 and it's it doesn't go on scale until rates drop a little bit more um to where it's going to drive more business. But I think that's it's close to happening right now with where the 10 year is, and where the market and mortgage back Securities are trading right now, we're getting closer and closer and so MIA will be making a lot of calls today. Um, and you know, driving a lot of refinance activity along with

In general, just keeping the the broker's name and information in front of the borrower for referral based system and and Brokers are not good at that in general and we are helping and we are seeing Brokers get more business and have more upside because of what we're doing. So Mia has been a great success and it's only going to continue but it's not like in theory. He hopes you make some calls in 2027 it's like we're actually doing this today. I don't use AI as a buzzword like everybody else. We actually are doing stuff and it's actually working and we're getting more business and we're more efficient because of the art

Intelligence that we've invested in and built out here at UWM with our over 2,000 technology people.

Uh, great. And then just to, I appreciate that Matt, uh, to shift, you know, can you talk a little bit about the derivative gain in the quarter, you know, was that, um, kind of opportunistic or is that a kind of a change in and kind of how you're using, derivatives,

Manage some of that. And we took advantage of the opportunity and that trade, uh, we we look at that. We have a lot of very analytical people here, making those decisions and uh, we feel really good about that and uh, we'll look at that sometimes but it's all opportunistic.

Great. Appreciate it. Thank you.

Our next question, will come from the line of Jeff, Aiden at Morgan Stanley.

Your line is open.

Hey morning, Matt earning Ramey. Um,

Wanted to follow up on the guidance, for origination, you know, that 33 to 40 billion. Um if if I look at the midpoint it does seem to imply a bit of a decline, um, versus this quarter and a year ago. And you know, I think when we look at some of the industry forecasts it does look like there's a bit more of a positive outlook. And even with the the weekly app data, it looks a little bit more positive. I was just wondering, maybe what you can, what you're seeing that is causing you to maybe um, look for a little bit of a decline in the originations Outlook versus uh, prior periods.

Yeah, no. Just understanding the the market right now with where rates were um, and where rates are and, you know, in in June and July it, obviously impacts the purchase Market a little bit. And so I feel confident in our guidance, obviously, our margins are higher, um, and, you know, you know, margin and volume is a combination, um, to do things. Obviously, we feel good about the guidance, I provided we're obviously working to, to hit do as much volume and, and, and do margin and take care of Brokers, help them grow. So, some

Market does in dictate a little bit. So I wanted to give you a little bit of a range 33 to 40 and I feel good about that but uh, overall um, you know, we're we're the leader in the market and so you know, on the purchase side I feel really confident now. Can is there some Tailwinds or headwinds based on how much Reef I happens. Yes. And so that's what we're trying to understand in the market but we feel like it's going to be a great quarter um across the board in the third quarter. And I think you'll love our results, uh this quarter just like you guys did this quarter.

Okay, great. And and just to follow up on the edge, I mean, I know in the past you've talked about a a bit about, you know, you don't really hedge the MSR book and and it sounds, you know, now like you're being a little bit more opportunistic. Is this something, you know, you think you'll kind of continue to evaluate and do more of going forward or maybe just what's the strategy going to go for it here?

Yeah, I mean it's we're opportunistic with everything we do here at WM, from tra selling msrs to derivative trade, to doing more loans, to margin to volume to helping Brokers grow like we, we look at everything to win. And, um, we have a lot of smart people here that analyze things, but it's, it's not, I don't look at it as like, oh, we're going to head MSR some time. That's not how I even look at it. It's not, I haven't looked at it like that, it's not even type that Mrs. In my mind to my mind is understand the market, um, and understanding how we're going to do things. But obviously, when you sell msrs, you have a, a hedge is your position. But once again, I don't need to do that either. So we look at all those things. We're opportunistic with everything we do. Um, and, uh, you know, things go go in those in a positive direction sometimes.

As they have been over the last couple quarters tied to those things but we analyze it all and make the decisions on a day-by-day week-by-week basis here. Um with our strategy team.

Okay, perfect. Thanks Matt.

And again, to our audience on the phones today, if you would like to ask a question, simply press star and 1 on your telephone keypad. Our next question will come from male goberman, at citizens, JMP.

Hey, good morning, Madding. Congrats on a great quarter. Um, if I could just follow up real quick on, um, question about margins, the uh the margin, the new margin guidance. What would you say? Um, is the biggest driver or drivers of that decision to bump that range up, uh, 10 basis points?

Um, thanks.

Yeah, thanks for the question. Yeah. We feel, you know, I I I've been always in line with what we say. We're going to do on the margin side and volume side. As you guys have seen for, whatever 161819, whatever quarters, how many of our quarters we've been public? Um, and, you know, I, I give you guys a range that I, I know that we'll be in and I feel confident that we'll be in, based on the market, the market, um, understanding every aspect of the market. So it's not just, oh, what's going on with volume? It's tied to your Market. It's tied to inventory and the housing market is tied to interest rates. It's tied to the 10 year. It's tied to how bonds are trading. It's, there's a lot of pieces to it to come up with that range for you. And for the first time in a long time. Or first time ever, I guess we've decided to move it up 2 levels. Um, because I feel very confident that that's the the new range.

That will be from a margin perspective in the wholesale Channel and so we control that and that's what we feel, it will be. And we feel confident that that's what the margins will be. And at the same time, um,

Going forward. We feel good that 100 to 125, uh, is a nice number until I change the levels again.

Management for any additional or closing remarks.

No, thank you for the time today. I appreciate the questions and I look forward to talking to you guys again after another great quarter. After the third quarter, have a great day.

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