Walker & Dunlop (WD -0.54%), a major commercial real estate finance and services firm, reported strong second-quarter results on August 7, 2025. The company surpassed analyst estimates for both revenue (GAAP) and non-GAAP EPS, with revenue (GAAP) reaching $319.2 million against a forecast of $278.2 million, and Adjusted core EPS (non-GAAP) of $1.15 compared to an estimate of $0.72. While GAAP earnings showed robust year-over-year improvements, Core profitability metrics, such as adjusted EBITDA and adjusted core EPS, saw some declines due to changes in margin and the mix of revenue sources. Overall, the period reflected notable gains in transaction volume and market share, especially within agency lending, but also highlighted ongoing margin pressures and higher personnel costs.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP, Adjusted Core) | $1.15 | $0.72 | $1.23 | (6.5%) |
| EPS (GAAP) | $0.99 | $0.67 | 47.8% | |
| Revenue | $319.2 million | $278.2 million | $270.7 million | 17.9% |
| Adjusted EBITDA | $76.8 million | $80.9 million | (5.1%) | |
| Total Transaction Volume | $14.0 billion | $8.4 billion | 66.7% |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Recent Focus
Walker & Dunlop is one of the largest providers of capital and real estate services to the commercial real estate industry in the United States. Its core business involves arranging financing, brokering property sales, and servicing a large portfolio of commercial mortgages, with a significant focus on the multifamily apartment sector. The company is an active intermediary for government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac, making it a key player in the housing finance ecosystem. It earns fees for originating loans, managing assets, and servicing real estate loans across its vast portfolio.
Recently, Walker & Dunlop has targeted growth through expanding its transaction volume, enhancing its technology capabilities, and capturing market share in both traditional and new segments like hospitality and data centers. Success depends on efficient origination, competitive pricing, compliance with strict agency and regulatory requirements, and effective credit risk management. Ongoing investment in platforms like Apprise, a technology-driven appraisal service, and WD Suite, a client-focused software solution, are intended to improve its operating efficiency and broaden service offerings.
Quarterly Highlights: Volume-Driven Growth Amidst Margin Pressure
Total transaction volume was $14.0 billion, a 65% increase from Q2 2024. The bulk of this growth came from debt financing, which reached $11.6 billion, up 68%. Property sales volume advanced significantly, climbing 51.2% to $2.3 billion. These gains were largely attributed to renewed capital deployment in commercial real estate and a surge in large transactions as clients sought to refinance or acquire assets amid changing interest rates.
Agency lending through Fannie Mae and Freddie Mac saw especially strong growth. GSE lending volume grew 83% year over year, supported by a 106% jump in Fannie Mae debt financing volume compared to Q2 2024, described as one of the company's most profitable product lines. The firm's market share in GSE lending rose to 11.4%, from 10.3% a year earlier, based on year-to-date 2025 volumes. However, certain large deals, such as a $941 million portfolio refinancing with Fannie Mae, pressured overall origination margins. Origination fee rates declined to 0.82%, down from 0.95% in Q2 2024, and agency mortgage servicing rights (MSR) margins narrowed as well.
Walker & Dunlop also maintained its focus on expanding technology-led businesses. Management highlighted progress in data and analytics, including growth in appraisal revenues and further scaling of its Apprise platform, which centralizes real estate valuation and workflow. The company emphasized that these technology investments are aimed at improving both client insights and internal efficiency.
The servicing portfolio totaled $137.3 billion, a 3% gain from Q2 2024. Total managed assets, including assets under management, increased 4% to $156.0 billion. Despite volume growth, fee-based businesses such as investment management continued to lag, with investment management fees down 49% year over year due to fewer asset sales and weak conditions in the affordable housing capital markets. Credit quality remained solid on the whole, but defaulted loans more than doubled to $108.5 million, now representing 0.17% of the at-risk servicing portfolio as of June 30, 2025. The company maintained its allowance for potential credit losses at 0.05%, and stressed the underlying strength of its underwriting standards, with average loan-to-value ratios of 61% and a minimum debt service coverage ratio of 1.25x for its current at-risk portfolio.
Personnel expenses made up 51% of revenue (GAAP), compared to 49% in Q2 2024. The increase reflected higher commissions driven by rising transaction volumes as well as costs linked to separating underperforming staff. Operating margin improved to 15%, from 10% in Q2 2024, though adjusted EBITDA (non-GAAP) fell 5% due to decreases in placement fees, other interest income, investment management fees, and an increase in personnel expense. The company held its quarterly dividend steady at $0.67 per share. No share repurchases occurred during the period, despite an authorization in place.
Looking Forward: Guidance and Areas to Watch
The company expects origination fee and MSR income margins to remain at current levels as transaction volumes recover further in the second half of FY2025. No explicit revisions or new quantitative targets were provided. The focus remains on driving productivity, leveraging technology investments, and making expense ratios more efficient as transaction volumes expand.
Investors should watch for sustained margin recovery and performance in fee-based businesses like investment management, where current results trail targets. The rise in defaulted loans within the at-risk servicing portfolio is notable, but remains manageable at present levels. Continued progress on technology-driven platforms, expansion into new property sectors, and growing GSE lending market share are key themes for the upcoming quarters. The quarterly dividend was maintained at $0.67 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
