loanDepot, Inc. 2026 Q2 Earnings Call

Good afternoon, everyone, thank you for joining our second 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 to the most directly comparable GAAP measures, please refer to today's earnings release.

A webcast and a 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? Thank you, Gerhard. I appreciate everyone joining us on the call today.

When I returned as full-time CEO one year ago, I set a clear transformation agenda to position loanDepot for profitable market share growth in any macro environment. We have moved decisively to reshape the business and are starting to see signs of our progress. We are making more loans faster and at a lower cost. In the second quarter, revenue increased, operating leverage improved, and our net loss narrowed substantially even as interest rates rose meaningfully beginning in March. While we are in the early innings of our transformation, the pace of improvement accelerated as the quarter progressed, with June demonstrating the strongest results so far this year. A central driver of this momentum is the progress we made during the second quarter in executing our strategic expansion into home equity lending.

This represents a significant expansion opportunity within a market supported by approximately $35 trillion of U.S. homeowner equity, which represents a potential market size more than double total mortgage debt outstanding. Importantly, these are the same homeowners we have long served through traditional refinance products. In a higher rate environment, however, home equity products can allow qualified borrowers to access liquidity while preserving an attractive first mortgage rate and may offer a more compelling value proposition than higher cost alternatives such as unsecured personal loans, credit cards, and certain small business financing products. Home equity lending is more stable, less rate sensitive, and less seasonal than refinance and purchase mortgage lending. It is also stickier in that it meets an ongoing customer need. Loan balances are smaller, but gain on sale and revenue are both typically higher. Our cost to produce is significantly lower.

We are now seeing the result of this pivot. During the quarter, we increased unit volume by 25% from the first quarter, reflecting the success of our launch into this product segment. We believe that when rates fall and traditional refinance activity returns, home equity will remain an attractive product for a large segment of the market, particularly those customers with ultra-low pandemic-era interest rates that are unlikely to be in the money for a traditional refinance. Home equity lending broadens our addressable market and complements our traditional purchase and refinance business. It addresses our customers' liquidity needs and benefits from attractive unit economics. The second quarter results demonstrate that this strategic shift is beginning to translate into measurable growth, stronger margins, and improved operating leverage.

During the year, we continued to expand our core mortgage franchise by adding builder partners in our joint venture channel and branch locations in our retail channel. That growth drove a 33% increase in purchase market share in the second quarter and reinforces the durability of our diversified origination platform. It's important to understand that we believe that we are the number one independent mortgage company financing new home construction for builders. This is a critical competitive advantage. Our ability to pivot towards home equity will continue to grow purchase market share, reflects the agility of our team, and the adaptability of loanDepot's origination model. Few originators have the multi-channel distribution, customer relationship, or operating expertise to make that transition at scale.

We believe we are uniquely positioned with our nationally recognized brand, valuable servicing portfolio, diversified channels, including our growing wholesale channel, proven ability to develop loan officers organically, industry-leading recapture capabilities, and technology-enabled customer acquisition platform, allowing us to redirect capacity towards a product that offer the greatest customer and shareholder value at a given rate environment. Together, these assets help generate customer leads at the top of the funnel and support a broad distribution network that includes retail and partner channels, as well as what we believe to be one of only two scaled direct lending platforms. Our ability to efficiently convert marketing investments at the top of the funnel into customer leads and new customer acquisition is an important market differentiator. The market is extremely fragmented, giving us a huge opportunity to apply our differentiated assets to profitably grow market share.

Producing, managing, and directing leads to our loan officers has been a core competency since founding the company. With new technology powering lead conversion, we expect to create more customers while also driving down marketing costs. Powering our growth is our ability to organically develop loan officers. Over the past year, we increased our net loan officer count by 18%. 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 relationships in our retail channel. This quarter's results are evidence of the progress we have made over the past year as we strengthen our platform, rebuild our management team with leaders that have deep expertise across mortgage, technology, and marketing, expand our loan officer base, improve marketing performance, and invest in technology and AI-enabled capabilities designed to enhance productivity and the customer experience.

To punctuate this progress, over the past year, we have increased return on marketing by 70%. We increased marketing lead to funded loan conversion by 50%. We reduced marketing cost per funding by 34%, reduced total cost per funded loan by 12%, and increased funded loan units per loan officer by 18%. As we continue to scale the platform, we believe there are opportunities to realize additional operating leverage across our business in a range of market environments. Our technology-enabled multi-channel platform creates a unique opportunity to partner with additional financial service providers that can benefit from our scale, distribution, and sales culture. Few originators have the resources or expertise to make this transition at scale. When refinance and purchase opportunities return, we will be ready to move just as quickly to capture them. This is what it means to be built to compete across market cycles.

While important work remain, we believe we have the discipline and focus to increase operating leverage and cost containment necessary to continue progressing towards sustainable profitability over time. With that, I will now turn the call over to Dave, who will take us through our financial results in more detail.

David? Thanks, Anthony, and good afternoon, everyone.

The second quarter marked another meaningful step forward in our financial performance, demonstrating that we can grow volume while maintaining a focus on efficiency and profitability. We reported an adjusted net loss of $29 million in the second quarter compared to an adjusted net loss of $34 million in the first quarter, due primarily to higher adjusted revenue, while limiting expense growth to primarily volume-related costs. During the second quarter, our loan origination volume was $8 billion for the quarter, an increase of 4% from the prior quarter's volume of $7.7 billion. This was within the guidance we issued last quarter of between $7.25 billion and $9.25 billion. The increase in closed loan volume was more notable given the mix shift towards smaller five by five Home Loan products, which carry a smaller loan balance compared to traditional firsts.