NELNET INCNNI
NELNET INC Revenue Disclosure
Disaggregated Revenue and Deferred Revenue
The following provides additional revenue recognition information for the Company’s fee-based operating segments:
Loan Servicing and Systems Revenue
Loan servicing and systems revenue consists of the following items:
•Loan servicing revenue - Loan servicing revenue consideration is determined from individual contracts with customers and is calculated monthly based on the dollar value of loans, number of loans, number of borrowers serviced for each customer, or number of transactions. Loan servicing requires a significant level of integration and the individual components are not considered distinct. The Company performs various services, including, but not limited to, (i) application processing, (ii) monthly servicing, (iii) conversion processing, and (iv) fulfillment services, during each distinct service period. Even though the mix and quantity of activities that the Company performs each period may differ, the nature of the activities are substantially the same. Revenue is allocated to the distinct service period, typically a month, and recognized as control transfers as customers simultaneously receive and consume benefits. The Company may incur contract fulfillment or acquisition costs and records such costs within “loan servicing contract fulfillment and acquisition costs” in the consolidated statements of income.
•Software services revenue - Software services revenue consideration is determined from individual contracts with customers and includes license and maintenance fees associated with loan software products, generally in a remote hosted environment, and computer and software consulting. Usage-based revenue, based on each loan or unique borrower, from remote hosted licenses is allocated to the distinct service period, typically a month, and recognized as control transfers as customers simultaneously receive and consume benefits. Revenue from any non-refundable up-front fee is recognized ratably over the contract period, as the fee relates to set-up activities that provide no incremental benefit to the customers. Computer and software consulting is also capable of being distinct and accounted for as a separate performance obligation. Revenue allocated to computer and software consulting is recognized as services are provided.
•Outsourced services revenue - Outsourced services revenue consideration is determined from individual contracts with customers and is calculated monthly based on the volume of services. Revenue is allocated to the distinct service period, typically a month, and recognized as control transfers as customers simultaneously receive and consume benefits.
The following table presents disaggregated revenue by service offering:
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Government loan servicing (a) | $ | 363,970 | 380,921 | 412,478 | |||||||||||||
| Private education and consumer loan servicing | 94,472 | 63,453 | 48,984 | ||||||||||||||
| FFELP loan servicing | 8,878 | 12,212 | 13,704 | ||||||||||||||
| Software services | 38,416 | 21,032 | 29,208 | ||||||||||||||
| Outsourced services | 3,353 | 4,790 | 13,580 | ||||||||||||||
| Loan servicing and systems revenue | $ | 509,089 | 482,408 | 517,954 | |||||||||||||
(a) Upon reaching a final agreement with the Department, the Company recognized $32.9 million of non-recurring revenue in 2025 on a contract modification for services previously performed. In 2024, the Company recognized $10.9 million of non-recurring revenue to reflect a settlement related to certain provisions included in the legacy contract concerning inflation adjustments.
Loan servicing contract fulfillment and acquisition costs is primarily the amortization of previously capitalized contract fulfillment costs. The costs were pre-contract costs incurred to enhance the resources of the Company to satisfy future performance obligations and are expected to be recovered. The contract fulfillment costs were $23.8 million and $21.1 million as of December 31, 2025 and 2024, respectively, which are included in "other assets" on the consolidated balance sheets.
Education Technology Services and Payments Revenue
Education technology services and payments revenue consists of the following items:
•Tuition payment plan services - Tuition payment plan services consideration is determined from individual plan agreements, which are governed by plan service agreements, and includes access to a remote hosted environment and management of payment processing. The management of payment processing is considered a distinct performance obligation when sold with the remote hosted environment. Revenue for each performance obligation is allocated to the distinct service period, the academic school term, and recognized ratably over the service period as customers simultaneously receive and consume benefits.
•Payment processing - Payment processing consideration is determined from individual contracts with customers and includes electronic transfer and credit card processing, reporting, virtual terminal solutions, and specialized integrations to business software for education and non-education markets. Volume-based revenue from payment processing is allocated and recognized to the distinct service period, based on when each transaction is completed, and recognized as control transfers as customers simultaneously receive and consume benefits. The electronic transfer and credit card processing consideration is recognized as revenue on a gross basis as the Company is the principal in the delivery of the payment processing. The Company has concluded it is the principal as it controls the services before delivery to the educational institution or business, it is primarily responsible for the delivery of the services, and it has discretion in setting prices charged to its customers. In addition, the Company has the unilateral ability to accept or reject a transaction based on criteria established by the Company. The Company is liable for the costs of processing the transactions and records such costs within "cost to provide education technology services and payments" in the consolidated statements of income.
•Education technology services - Education technology services consideration is determined from individual contracts with customers and is based on the services selected by the customer. Services in K-12 private and faith-based markets primarily includes (i) assistance with financial needs assessment, (ii) school information system software that automates administrative processes such as admissions, enrollment, scheduling, cafeteria management, attendance, and grade book management, and (iii) professional development and educational instruction services. Revenue for these services is recognized for the consideration the Company has a right to invoice, the amount of which corresponds directly with the value provided to the customer based on the performance completed. Services provided to the higher education market include payment technology and processing that allow for electronic billing and payment of campus charges. These services are considered distinct performance obligations. Revenue for each performance obligation is allocated to the distinct service period, typically a month or based on when each transaction is completed, and recognized as control transfers as customers simultaneously receive and consume benefits. The Company incurs direct costs to provide professional development and educational instructional services and records such costs within "cost to provide education technology services and payments" in the consolidated statements of income.
The following table presents disaggregated revenue by service offering:
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Tuition payment plan services | $ | 141,246 | 135,851 | 125,326 | |||||||||||||
| Payment processing | 193,317 | 179,043 | 163,859 | ||||||||||||||
| Education technology services | 171,481 | 169,065 | 170,754 | ||||||||||||||
| Other | 1,106 | 3,003 | 3,372 | ||||||||||||||
| Education technology services and payments revenue | $ | 507,150 | 486,962 | 463,311 | |||||||||||||
Cost to provide education technology services and payments is primarily associated with providing professional development and educational instruction and payment processing services. Items included in the cost to provide professional development and educational instruction services include salaries and benefits and third-party professional services directly related to providing these services to teachers, school leaders, and students. For payment processing services, interchange and payment network fees are charged by the card associations or payment networks. Depending upon the transaction type, the fees are a percentage of the transaction’s dollar value, a fixed amount, or a combination of the two methods.
Solar Construction Revenue
Solar construction revenue is derived principally from individual contracts with customers for engineering, procurement, and construction (EPC) of solar facilities for commercial customers. Solar construction is a single performance obligation which requires a significant level of integration. The individual materials and installation (the inputs) are not considered distinct and are integrated into the solar facilities (the combined output). Revenue for this service is recognized based on the project progress to date. Progress towards completion of the contract is measured by the percentage of total costs incurred to date compared with the estimated total costs to complete the contract. The Company recognizes changes in estimated total costs on a cumulative catch-up basis in the period in which the changes are identified. Such changes in estimates can result in the recognition of revenue in a current period for performance obligations which were satisfied or partially satisfied in prior periods. Changes in estimates may also result in the reversal of previously recognized revenue if the current estimate adversely differs from the previous estimate. The Company will recognize a contract asset or liability depending on the progression of the project to date compared with the amount billed to date.
The following table presents disaggregated revenue by customer type:
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Commercial revenue (a) | $ | 14,341 | 53,269 | 20,969 | |||||||||||||
| Residential revenue (b) | 30 | 3,300 | 10,700 | ||||||||||||||
| Solar construction revenue | $ | 14,371 | 56,569 | 31,669 | |||||||||||||
(a) The Company sold its ownership interests in Nelnet Renewable Energy during the fourth quarter of 2025. The Company has a handful of remaining construction contracts which it retained to complete.
(b) In April 2024, the Company announced a change in its solar EPC operations to focus exclusively on the commercial solar market and discontinued its residential solar operations.
Cost to provide solar construction services include direct costs associated with completing a solar facility, including labor, third-party contractor fees, permitting, engineering fees, and construction material. If the Company estimates that a project will have costs in excess of revenue, the Company will recognize the total loss in the period it is identified.
Other Income (Expense)
The following table presents the components of "other, net" in “other income (expense)” on the consolidated statements of income:
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Investment activity, net | $ | 61,072 | 12,438 | (8,586) | |||||||||||||
| ALLO preferred return | 14,548 | 17,486 | 9,120 | ||||||||||||||
| Solar consulting fee income | 13,127 | 6,134 | — | ||||||||||||||
| Borrower late fee income | 11,664 | 8,828 | 8,997 | ||||||||||||||
| Administration/sponsor fee income | 6,400 | 5,823 | 6,793 | ||||||||||||||
| Investment advisory services (WRCM) | 6,366 | 5,934 | 6,760 | ||||||||||||||
| Loss from ALLO voting membership interest | — | (10,693) | (65,277) | ||||||||||||||
| Loss from solar investments, net | (29,029) | (6,477) | (59,645) | ||||||||||||||
| (Loss) gain on debt repurchases | (4,849) | 54 | 815 | ||||||||||||||
| Loss on sale of loans, net | (1,720) | (1,643) | (17,662) | ||||||||||||||
| Other | 20,008 | 22,075 | 26,696 | ||||||||||||||
| Other, net | $ | 97,587 | 59,959 | (91,989) | |||||||||||||
•Solar consulting fee income - Solar consulting fee income is earned by the renewable energy solar developments operating segment for due diligence services provided to developers of solar projects to support project qualification. Revenue is allocated to the distinct service period, based on when the transaction is completed.
•Borrower late fee income - Late fee income is earned primarily by the education lending subsidiaries in the AGM operating segment. Revenue is allocated to the distinct service period, based on when each transaction is completed.
•Administration/sponsor fee income - Administration and sponsor fee income is earned by the AGM operating segment as administrator and sponsor for certain securitizations. Revenue is allocated to the distinct service period, typically a month, and recognized as control transfers as customers simultaneously receive and consume benefits.
•Investment advisory services - Investment advisory services are provided by WRCM, the Company's SEC-registered investment advisor subsidiary, under various arrangements. The Company earns monthly fees based on the monthly outstanding balance of investments and certain performance measures, which are recognized monthly as the uncertainty of the transaction price is resolved.
Deferred Revenue
Activity in the deferred revenue balance, which is included in "other liabilities" on the consolidated balance sheets, is shown below:
| Loan Servicing and Systems | Education Technology Services and Payments | Corporate and Other Activities | Total | ||||||||||||||||||||
| Balance as of December 31, 2022 | $ | 2,310 | 49,314 | 5,030 | 56,654 | ||||||||||||||||||
| Deferral of revenue | 3,954 | 149,815 | 53,019 | 206,788 | |||||||||||||||||||
| Recognition of revenue | (2,808) | (147,405) | (40,676) | (190,889) | |||||||||||||||||||
| Balance as of December 31, 2023 | 3,456 | 51,724 | 17,373 | 72,553 | |||||||||||||||||||
| Deferral of revenue | 34,827 | 155,688 | 41,548 | 232,063 | |||||||||||||||||||
| Recognition of revenue | (6,719) | (156,251) | (53,361) | (216,331) | |||||||||||||||||||
| Balance as of December 31, 2024 | 31,564 | 51,161 | 5,560 | 88,285 | |||||||||||||||||||
| Deferral of revenue | 7,356 | 165,162 | 27,384 | 199,902 | |||||||||||||||||||
| Recognition of revenue | (12,453) | (161,265) | (21,953) | (195,671) | |||||||||||||||||||
| Balance as of December 31, 2025 | $ | 26,467 | 55,058 | 10,991 | 92,516 | ||||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 27, 2020 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.