What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-31 compared with 2025-04-30 · 236 added, 61 removed, 313 unchanged (49% of the section changed)

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and from sales to customers responding to advertisements for our financing programs, but who actually end up qualifying for traditional financing.

For the three months ended March 31, 2025, consolidated net income was $106.3 million, or $8.66 per diluted share, compared to consolidated net income of $64.3 million, or $5.08 per diluted share, for the same period in 2024.

The increase was primarily due to an increase in finance charges and a decrease in provision for credit losses, partially offset by an increase in interest expense.

Our results and achievements for the three months ended March 31, 2025 included the following:

• A modest decline in forecasted collection rates, which decreased forecasted net cash flows from our Loan portfolio by $20.9 million, or 0.2%, and slower forecasted net cash flow timing.

• An 11.0% increase in the average balance of our Loan portfolio from the first quarter of 2024 to $7.9 billion, which is our largest ever.

• A decline in Consumer Loan assignment unit and dollar volumes of 10.1% and 15.5%, respectively, as compared to the first quarter of 2024.

For the three months ended June 30, 2025, consolidated net income was $87.4 million, or $7.42 per diluted share, compared to consolidated net loss of $47.1 million, or $3.83 per diluted share, for the same period in 2024.

The increase was primarily due to a decrease in provision for credit losses and an increase in finance charges, partially offset by increases in provision for income taxes and operating expenses.

Our results and achievements for the three months ended June 30, 2025 included the following:

• A decline in forecasted collection rates, which decreased forecasted net cash flows from our Loan portfolio by $55.8 million, or 0.5%, and slower forecasted net cash flow timing.

• A 6.8% increase in the average balance of our Loan portfolio from the second quarter of 2024 to $8.0 billion, which is our largest ever.

• A decline in Consumer Loan assignment unit and dollar volumes of 14.6% and 18.8%, respectively, as compared to the second quarter of 2024.

• The repurchase of approximately 530,000 shares, or 4.5% of the shares outstanding at the beginning of the quarter.

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• $63.3 million in Dealer Holdback and accelerated Dealer Holdback payments to Dealers.

• Maintained a strong liquidity position, with over $2.2 billion in unrestricted cash and cash equivalents and unused and available revolving lines of credit as of March 31, 2025.

• Named a Top Workplaces USA award winner for the fifth year in a row, with a #2 ranking among companies of our size.

• $23.4 million contingent loss related to previously disclosed legal matters.

• Named one of the 100 Best Companies to Work For ® by Great Place to Work ® and Fortune magazine for the eleventh time, with a #34 ranking, and a Spring 2025 Top Workplaces Culture Excellence award winner in the following five categories:

Work-Life Flexibility, Leadership, Innovation, Purpose & Values, and Compensation & Benefits.

For the six months ended June 30, 2025, consolidated net income was $193.7 million, or $16.11 per diluted share, compared to consolidated net income of $17.2 million, or $1.37 per diluted share, for the same period in 2024.

The increase was primarily due to a decrease in provision for credit losses and an increase in finance charges, partially offset by increases in provision for income taxes and operating expenses .

Our results and achievements for the six months ended June 30, 2025 included the following:

• A decline in forecasted collection rates, which decreased forecasted net cash flows from our Loan portfolio by $76.7 million, or 0.7%, and slower forecasted net cash flow timing.

• An 8.9% increase in the average balance of our Loan portfolio from the first six months of 2024 to $7.9 billion.

• A decline in Consumer Loan assignment unit and dollar volumes of 12.2% and 17.1% respectively, as compared to the first six months of 2024.

• The repurchase of approximately 859,000 shares, or 7.1% of the shares outstanding at the beginning of the year.

• The enrollment of 3,205 new Dealers, with 13,008 active Dealers during the first six months of 2025.

• $131.3 million in Dealer Holdback and accelerated Dealer Holdback payments to Dealers.

• $23.4 million contingent loss related to previously disclosed legal matters.

• Received awards from Great Place to Work ® and Fortune magazine and from Top Workplaces USA.

Critical Success Factors

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By comparing our current expected collection rate for each Consumer Loan with the rate we projected at the time of assignment, we are able to assess the accuracy of our initial forecast.

The following table compares our aggregated forecast of Consumer Loan collection rates as of March 31, 2025, with the aggregated forecasts as of December 31, 2024, and at the time of assignment, segmented by year of assignment:

The following table compares our aggregated forecast of Consumer Loan collection rates as of June 30, 2025, with the aggregated forecasts as of March 31, 2025, December 31, 2024, and at the time of assignment, segmented by year of assignment:

Forecasted Collection Percentage as of (1) Current Forecast Variance from

Consumer Loan Assignment Year March 31, 2025 December 31, 2024 Initial Forecast December 31, 2024 Initial Forecast

Consumer Loan Assignment Year June 30, 2025 March 31, 2025 December 31, 2024 Initial Forecast March 31, 2025 December 31, 2024 Initial Forecast

2016 63.9 % 63.9 % 63.9 % 65.4 % 0.0 % 0.0 % -1.5 %

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Forecasted collection rates are negatively impacted by canceled Consumer Loans as the contractual amount owed is not removed from the denominator for purposes of computing forecasted collection rates.

For the three months ended March 31, 2025, forecasted collection rates improved for Consumer Loans assigned in 2020, declined for Consumer Loans assigned in 2022, 2024, and 2025, and were generally consistent with expectations at the start of the period for all other assignment years presented.

The changes to our forecast of future net cash flows from our Loan portfolio (forecasted collections less forecasted Dealer Holdback payments) for each of the last five quarters are shown in the following table:

(2) The forecasted collection rate for 2025 Consumer Loans as of June 30, 2025 includes both Consumer Loans that were in our portfolio as of March 31, 2025 and Consumer Loans assigned during the most recent quarter.

The following table provides forecasted collection rates for each of these segments:

Forecasted Collection Percentage as of Current Forecast Variance from

2025 Consumer Loan Assignment Period June 30, 2025 March 31, 2025 Initial Forecast March 31, 2025 Initial Forecast

January 1, 2025 through March 31, 2025 66.2 % 66.0 % 66.2 % 0.2 % 0.0 %

April 1, 2025 through June 30, 2025 67.7 % — 67.7 % — 0.0 %

For the three months ended June 30, 2025, forecasted collection rates improved for Consumer Loans assigned in 2025, declined for Consumer Loans assigned in 2022 through 2024, and were generally consistent with expectations at the start of the period for all other assignment years presented.

For the six months ended June 30, 2025, forecasted collection rates improved for Consumer Loans assigned in 2020, declined for Consumer Loans assigned in 2022 through 2024, and were generally consistent with expectations at the start of the period for all other assignment years presented.

The changes to our forecast of future net cash flows from our Loan portfolio (forecasted collections less forecasted Dealer Holdback payments) for each of the last eight quarters are shown in the following table:

(Dollars in millions) Decrease in Forecasted Net Cash Flows

Three Months Ended Total Loans % Change from Forecast at Beginning of Period

September 30, 2023 $ (69.4) -0.7 %

December 31, 2023 (57.0) -0.6 %

March 31, 2024 (30.8) -0.3 %

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March 31, 2025 (20.9) -0.2 %

June 30, 2025 (55.8) -0.5 %

During the second quarter of 2025, we applied an adjustment to our methodology for forecasting the amount of future net cash flows from our Loan portfolio, which reduced the forecasted collection rates for Consumer Loans assigned in 2024.

Consumer Loans assigned in 2024 prior to the implementation of our scorecard adjustment during the third quarter of 2024 had underperformed relative to the forecast adjustment we implemented during the second quarter of 2024.

Accordingly, in the second quarter of 2025, we applied an adjustment to that segment of the Consumer Loans assigned in 2024 to reduce forecasted collection rates to what we believed the ultimate collection rates would be based on these trends.

Changes in the amount and timing of forecasted net cash flows are recognized in the period of change as a provision for credit losses.

The implementation of this forecast adjustment during the second quarter of 2025 reduced forecasted net cash flows by $18.6 million, or 0.2%, and increased provision for credit losses by $16.5 million.

During the second quarter of 2024, we applied an adjustment to our methodology for forecasting the amount of future net cash flows from our Loan portfolio, which reduced the forecasted collection rates for Consumer Loans assigned in 2022 through 2024.

Consumer Loans assigned in 2022 had continued to underperform our expectations for several quarters.

Consumer Loans assigned in 2023 had also begun exhibiting similar trends of underperformance, although not as severe as Consumer Loans assigned in 2022.

During the second quarter of 2024, we determined that we had sufficient Consumer Loan performance experience to estimate the magnitude by which we expected Consumer Loans assigned in 2022 through 2024 would likely underperform our historical collection rates on Consumer Loans with similar characteristics.

Accordingly, we applied an adjustment to Consumer Loans assigned in 2022 through 2024 to reduce forecasted collection rates to what we believed the ultimate collection rates would be based on these trends.

Changes in the amount and timing of forecasted net cash flows are recognized in the period of change as a provision for credit losses.

The implementation of this forecast adjustment during the second quarter of 2024 reduced forecasted net cash flows by $147.2 million, or 1.4%, and increased provision for credit losses by $127.5 million.

The following table presents information on Consumer Loan assignments for each of the last 10 years:

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Payments of Dealer Holdback and accelerated Dealer Holdback are not included.

(3) Represents activity for the three months ended March 31, 2025.

(3) Represents activity for the six months ended June 30, 2025.

Information in this table for each of the years prior to 2025 represents activity for all 12 months of that year.

(4) The averages for 2025 Consumer Loans include both Consumer Loans that were in our portfolio as of March 31, 2025 and Consumer Loans assigned

during the most recent quarter.

The following table provides averages for each of these segments:

2025 Consumer Loan Assignment Period Consumer Loan Advance Initial Loan Term (in months)

January 1, 2025 through March 31, 2025 $ 25,188 $ 11,096 60

April 1, 2025 through June 30, 2025 25,596 11,674 60

The profitability of our loans is primarily driven by the amount and timing of the net cash flows we receive from the spread between the forecasted collection rate and the advance rate, less operating expenses and the cost of capital.

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With this in mind, we establish advance rates that are intended to allow us to achieve acceptable levels of profitability across our portfolio, even if collection rates are less than we initially forecast.

The following table presents aggregate forecasted Consumer Loan collection rates, advance rates, and spreads (the forecasted collection rate less the advance rate), and the percentage of the forecasted collections that had been realized as of March 31, 2025, as well as forecasted collection rates and spreads at the time of assignment.

The following table presents aggregate forecasted Consumer Loan collection rates, advance rates, and spreads (the forecasted collection rate less the advance rate), and the percentage of the forecasted collections that had been realized as of June 30, 2025, as well as forecasted collection rates and spreads at the time of assignment.

All amounts, unless otherwise noted, are presented as a percentage of the initial balance of the Consumer Loan (principal + interest).

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Forecasted Collection % as of Spread % as of

Consumer Loan Assignment Year March 31, 2025 Initial Forecast Advance % (1) March 31, 2025 Initial Forecast % of Forecast Realized (2)

Consumer Loan Assignment Year June 30, 2025 Initial Forecast Advance % (1) June 30, 2025 Initial Forecast % of Forecast Realized (2)

2016 63.9 % 65.4 % 43.8 % 20.1 % 21.6 % 99.6 %

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(2) Presented as a percentage of total forecasted collections.

(3) The forecasted collection rate, advance rate and spread for 2025 Consumer Loans as of June 30, 2025 include both Consumer Loans that were in our portfolio as of March 31, 2025 and Consumer Loans assigned during the most recent quarter.

The following table provides forecasted collection rates, advance rates, and spreads for each of these segments:

Forecasted Collection % as of Spread % as of

2025 Consumer Loan Assignment Period June 30, 2025 Initial Forecast Advance % June 30, 2025 Initial Forecast

January 1, 2025 through March 31, 2025 66.2 % 66.2 % 44.2 % 22.0 % 22.0 %

April 1, 2025 through June 30, 2025 67.7 % 67.7 % 45.7 % 22.0 % 22.0 %

The risk of a material change in our forecasted collection rate declines as the Consumer Loans age.

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Conversely, the forecasted collection rates for more recent Consumer Loan assignments are less certain as a significant portion of our forecast has not been realized.

The spread between the forecasted collection rate as of March 31, 2025 and the advance rate ranges from 12.6% to 24.0%, on an annual basis, for Consumer Loans assigned over the last 10 years.

The spread between the forecasted collection rate as of June 30, 2025 and the advance rate ranges from 12.3% to 24.1%, on an annual basis, for Consumer Loans assigned over the last 10 years.

The spreads with respect to 2019 and 2020 Consumer Loans have been positively impacted by Consumer Loan performance, which has exceeded our initial estimates by a greater margin than the other years presented.

The spreads with respect to 2021 through 2024 Consumer Loans have been negatively impacted by Consumer Loan performance, which has been lower than our initial estimates by a greater margin than the other years presented.

The higher spread for 2025 Consumer Loans relative to 2024 Consumer Loans as of March 31, 2025 was primarily a result of Consumer Loan performance, as the performance of 2024 Consumer Loans has been lower than our initial estimates by a greater margin than 2025 Consumer Loans.

The following table compares our forecast of aggregate Consumer Loan collection rates as of March 31, 2025 with the forecasts at the time of assignment, for Dealer Loans and Purchased Loans separately:

The higher spread for 2025 Consumer Loans relative to 2024 Consumer Loans as of June 30, 2025 was primarily a result of Consumer Loan performance, as the performance of 2024 Consumer Loans has been lower than our initial estimates.

The following table compares our forecast of aggregate Consumer Loan collection rates as of June 30, 2025 with the forecasts at the time of assignment, for Dealer Loans and Purchased Loans separately:

Dealer Loans Purchased Loans

Forecasted Collection Percentage as of (1) Forecasted Collection Percentage as of (1)

Consumer Loan Assignment Year March 31, 2025 Initial

Forecast Variance March 31, 2025 Initial

Consumer Loan Assignment Year June 30, 2025 Initial

Forecast Variance June 30, 2025 Initial

Forecast Variance

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The following table presents aggregate forecasted Consumer Loan collection rates, advance rates, and spreads (the forecasted collection rate less the advance rate) as of March 31, 2025 for Dealer Loans and Purchased Loans separately.

The following table presents aggregate forecasted Consumer Loan collection rates, advance rates, and spreads (the forecasted collection rate less the advance rate) as of June 30, 2025 for Dealer Loans and Purchased Loans separately.

All amounts are presented as a percentage of the initial balance of the Consumer Loan (principal + interest).

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Although the advance rate on Purchased Loans is higher as compared to the advance rate on Dealer Loans, Purchased Loans do not require us to pay Dealer Holdback.

The spread as of March 31, 2025 on 2025 Dealer Loans was 21.9%, as compared to a spread of 21.1% on 2024 Dealer Loans.

The increase was primarily a result of Consumer Loan performance, as the performance of 2024 Dealer Loans has been lower than our initial estimates by a greater margin than 2025 Dealer Loans.

The spread as of March 31, 2025 on 2025 Purchased Loans was 21.4%, as compared to a spread of 21.7% on 2024 Purchased Loans.

The decrease was primarily a result of a lower initial spread on 2025 Purchased Loans, due to a higher advance rate.

The spread as of June 30, 2025 on 2025 Dealer Loans was 22.3%, as compared to a spread of 20.4% on 2024 Dealer Loans.

The increase was primarily a result of Consumer Loan performance, as the performance of 2024 Dealer Loans has been lower than our initial estimates.

The spread as of June 30, 2025 on 2025 Purchased Loans was 21.2%, as compared to a spread of 21.1% on 2024 Purchased Loans, reflecting the net impact of two offsetting factors.

Consumer Loan performance increased the spread from 2024 to 2025, as the performance of 2024 Purchased Loans has been lower than our initial estimates.

This impact of Consumer Loan performance was partially offset by the impact of a lower initial spread on 2025 Purchased Loans, due to the advance rate increasing by a greater margin than the initial forecast in our Purchased Loan portfolio.

Access to Capital

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and (3) maintain multiple funding sources.

Our funded debt to equity ratio was 3.9 to 1 as of March 31, 2025.

Our funded debt to equity ratio was 4.2 to 1 as of June 30, 2025.

We currently utilize the following primary forms of debt financing:

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Consumer Loan Volume

The following table summarizes changes in Consumer Loan assignment volume in each of the last five quarters as compared to the same period in the previous year:

The following table summarizes changes in Consumer Loan assignment volume in each of the last eight quarters as compared to the same period in the previous year:

Year over Year Percent Change

Three Months Ended Unit Volume Dollar Volume (1)

September 30, 2023 13.0 % 10.5 %

December 31, 2023 26.7 % 21.3 %

March 31, 2024 24.1 % 20.2 %

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March 31, 2025 -10.1 % -15.5 %

June 30, 2025 -14.6 % -18.8 %

(1) Represents advances paid to Dealers on Consumer Loans assigned under the Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under the Purchase Program.

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Our pricing strategy is intended to maximize the amount of economic profit we generate, within the confines of capital constraints.

Unit and dollar volumes declined 10.1% and 15.5%, respectively, during the first quarter of 2025 as the number of active Dealers declined 0.1% and the average unit volume per active Dealer declined 9.7%.

Dollar volume declined by more than unit volume during the first quarter of 2025 due to a decrease in the average advance paid, resulting from decreases in the average size of Consumer Loans assigned and the average advance rate.

Unit volume for the 28-day period ended April 28, 2025 decreased 9.8% compared to the same period in 2024.

Unit and dollar volumes declined 14.6% and 18.8%, respectively, during the second quarter of 2025 as the number of active Dealers declined 0.8% and the average unit volume per active Dealer declined 14.0%.

Dollar volume declined by more than unit volume during the second quarter of 2025 due to a decrease in the average advance paid, primarily resulting from a decrease in the average size of Consumer Loans assigned.

Unit volume for the 28-day period ended July 28, 2025 decreased 19.4% compared to the same period in 2024.

The following table summarizes the changes in Consumer Loan unit volume and active Dealers:

For the Three Months Ended March 31,

2025 2024 % Change

For the Three Months Ended June 30, For the Six Months Ended

2025 2024 % Change 2025 2024 % Change

Consumer Loan unit volume 85,486 100,057 -14.6 % 185,764 211,545 -12.2 %

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The following table provides additional information on the changes in Consumer Loan unit volume and active Dealers:

For the Three Months Ended March 31,

2025 2024 % Change

For the Three Months Ended June 30, For the Six Months Ended

2025 2024 % Change 2025 2024 % Change

Consumer Loan unit volume from new active Dealers

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decrease in Consumer Loan unit volume from Dealers who have received funding for at least one Loan during the comparable period of the prior year but did not receive funding for any Loans during the current period divided by prior year comparable period Consumer Loan unit volume.

The following table shows the percentage of Consumer Loans assigned to us as Dealer Loans and Purchased Loans for each of the last five quarters:

The following table shows the percentage of Consumer Loans assigned to us as Dealer Loans and Purchased Loans for each of the last eight quarters:

Unit Volume Dollar Volume (1)

Three Months Ended Dealer Loans Purchased Loans Dealer Loans Purchased Loans

September 30, 2023 74.8 % 25.2 % 71.7 % 28.3 %

December 31, 2023 77.2 % 22.8 % 75.0 % 25.0 %

March 31, 2024 78.2 % 21.8 % 76.6 % 23.4 %

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March 31, 2025 77.0 % 23.0 % 75.1 % 24.9 %

June 30, 2025 71.6 % 28.4 % 68.3 % 31.7 %

(1) Represents advances paid to Dealers on Consumer Loans assigned under the Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under the Purchase Program.

Payments of Dealer Holdback and accelerated Dealer Holdback are not included.

As of March 31, 2025 and December 31, 2024, the net Dealer Loans receivable balance was 72.7% and 72.3% , respectively, of the total net Loans receivable balance.

As of both June 30, 2025 and December 31, 2024, the net Dealer Loans receivable balance was 72.3% of the total net Loans receivable balance.

In 2025, we expanded Dealer access to the Purchase Program for Consumer Loans to consumers with higher credit ratings.

The increase in the percentage of Purchased Loans in 2025 Consumer Loan assignment volume was primarily related to Consumer Loans assigned under this expanded Dealer access.

Results of Operations

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For additional information, see Note 3 and Note 6 to the consolidated financial statements contained in Part I - Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

The following is a discussion of our results of operations and income statement data on a consolidated basis.

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Provision for claims 19.8 20.3 (0.5) -2.5 %

Loss on sale of building — 23.7 (23.7) — %

Total costs and expenses 466.0 593.5 (127.5) -21.5 %

Income (loss) before provision (benefit) for income taxes 117.8 (55.3) 173.1 313.0 %

Provision (benefit) for income taxes 30.4 (8.2) 38.6 470.7 %

Net income (loss) $ 87.4 $ (47.1) $ 134.5 285.6 %

Net income (loss) per share:

Basic $ 7.55 $ (3.83) $ 11.38 297.1 %

Diluted $ 7.42 $ (3.83) $ 11.25 293.7 %

Weighted average shares outstanding:

Basic 11,574,018 12,282,174 (708,156) -5.8 %

Diluted 11,771,525 12,282,174 (510,649) -4.2 %

Finance Charges.

The increase of $43.0 million, or 8.6%, was primarily due to an increase in the average net Loans receivable balance, as follows:

(Dollars in millions) For the Three Months Ended June 30,

2025 2024 Change

Average net Loans receivable balance $ 8,011.6 $ 7,499.2 $ 512.4

Average yield on our Loan portfolio 27.0 % 26.5 % 0.5 %

The following table summarizes the impact each component had on the overall increase in finance charges for the three months ended June 30, 2025:

(In millions) Year over Year Change

Impact on finance charges:

For the Three Months Ended June 30, 2025

Due to an increase in the average net Loans receivable balance $ 34.0

Due to an increase in the average yield 9.0

Total increase in finance charges $ 43.0

The increase in the average net Loans receivable balance was primarily due to the dollar volume of new Consumer Loan assignments exceeding the principal collected on Loans receivable.

The increase in the average yield of our Loan portfolio was primarily due to higher contractual yields on more recent Consumer Loan assignments.

Operating Expenses.

The increase of $31.1 million, or 25.0%, was primarily due to:

• An increase in general and administrative expense of $22.0 million, or 94.8%, primarily due to an increase in legal expenses, which included the recognition of a $23.4 million contingent loss during the second quarter of 2025 related to previously disclosed legal matters.

• An increase in salaries and wages expense of $7.9 million, or 10.4%, primarily due to increases in (i) the number of team members as we are investing in our business with the goal of increasing the speed at which we enhance our product for Dealers and consumers and (ii) stock-based compensation expense, primarily due to equity awards granted to our executive officers and senior leaders.

Provision for Credit Losses .

The decrease of $148.0 million, or 46.2%, was due to decreases in provision for credit losses on forecast changes and provision for credit losses on new Consumer Loan assignments.

We recognize provision for credit losses on new Consumer Loan assignments for contractual net cash flows that are not expected to be realized at the time of assignment.

We also recognize provision for credit losses on forecast changes in the amount and timing of expected future net cash flows subsequent to assignment.

The following table summarizes the provision for credit losses for each of these components:

(In millions) For the Three Months Ended June 30,

Provision for Credit Losses 2025 2024 Change

Forecast changes $ 101.3 $ 237.8 $ (136.5)

New Consumer Loan assignments 71.3 82.8 (11.5)

Total $ 172.6 $ 320.6 $ (148.0)

The decrease in provision for credit losses related to forecast changes was due to a smaller decline in Consumer Loan performance during the second quarter of 2025 compared to the second quarter of 2024.

During the second quarter of 2025, we decreased our estimate of future net cash flows by $55.8 million, or 0.5%, to reflect a decline in forecasted collection rates during the period and slowed our forecasted net cash flow timing to reflect lower-than-expected Consumer Loan prepayments, which remained below historical averages.

Historically, Consumer Loan prepayments have been lower in periods with less availability of consumer credit.

The $55.8 million decrease in forecasted net cash flows for the second quarter of 2025 was composed of an ordinary decrease in forecasted net cash flows of $37.2 million, or 0.3%, and an adjustment applied to our forecasting methodology, which upon implementation, reduced forecasted net cash flows by $18.6 million, or 0.2%, and increased our provision for credit losses by $16.5 million.

During the second quarter of 2024, we decreased our estimate of future net cash flows by $189.3 million, or 1.7%, to reflect a decline in forecasted collection rates during the period and slowed our forecasted net cash flow timing to reflect a decrease in Consumer Loan prepayments, which remained below historical averages.

The $189.3 million decrease in forecasted net cash flows for the second quarter of 2024 was composed of an ordinary decrease in forecasted net cash flows of $42.1 million, or 0.3%, and an adjustment applied to our forecasting methodology, which upon implementation, reduced forecasted net cash flows by $147.2 million, or 1.4%, and increased our provision for credit losses by $127.5 million.

Consumer Loans assigned in 2022 had continued to underperform our expectations for several quarters.

Consumer Loans assigned in 2023 had also begun exhibiting similar trends of underperformance, although not as severe as Consumer Loans assigned in 2022.

The 13.9% decrease in provision for credit losses related to new Consumer Loan assignments was primarily due to a 14.6% decrease in Consumer Loan assignment unit volume.

For additional information, see Note 6 to the consolidated financial statements contained in Part I - Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

The increase in interest expense of $13.6 million, or 13.0%, was primarily due to an increase in our average outstanding debt balance, primarily due to borrowings used to fund the growth of our Loan portfolio and stock repurchases.

The following table presents the change in interest expense, average outstanding debt balance, and average cost of debt for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024:

(Dollars in millions) For the Three Months Ended June 30,

2025 2024 Change

Interest expense $ 118.1 $ 104.5 $ 13.6

Average outstanding debt balance 6,583.8 5,818.2 765.6

Average cost of debt 7.2 % 7.2 % — %

Loss on Sale of Building.

For the three months ended June 30, 2024, we recognized a loss on sale of a building of $23.7 million.

Provision for Income Taxes .

For the three months ended June 30, 2025, the effective income tax rate increased to 25.8% from 14.8% for the same period in 2024.

The increase was primarily due to changes in state tax laws enacted during the second quarter of 2024 that were effective retroactively to the beginning of 2024, which increased our state income taxes and reduced, rather than increased, our effective income tax rate, as we had a pre-tax loss that quarter compared to pre-tax income for the second quarter of 2025.

For additional information, see Note 10 to the consolidated financial statements contained in Part I - Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

The following is a discussion of our results of operations and income statement data on a consolidated basis.

(Dollars in millions, except per share data) For the Six Months Ended

2025 2024 $ Change % Change

Finance charges $ 1,067.4 $ 966.9 $ 100.5 10.4 %

Premiums earned 47.6 46.2 1.4 3.0 %

Other income 39.9 33.1 6.8 20.5 %

Total revenue 1,154.9 1,046.2 108.7 10.4 %

Costs and expenses:

Salaries and wages 172.3 154.3 18.0 11.7 %

General and administrative 67.3 46.9 20.4 43.5 %

Sales and marketing 51.4 49.3 2.1 4.3 %

Total operating expenses 291.0 250.5 40.5 16.2 %

Provision for credit losses on forecast changes 177.6 325.0 (147.4) -45.4 %

Provision for credit losses on new Consumer Loan assignments 156.9 181.6 (24.7) -13.6 %

Total provision for credit losses 334.5 506.6 (172.1) -34.0 %

Interest 232.8 197.0 35.8 18.2 %

Provision for claims 35.9 37.3 (1.4) -3.8 %

Loss on extinguishment of debt 1.2 — 1.2 — %

Loss on sale of building — 23.7 (23.7) — %

Total costs and expenses 895.4 1,015.1 (119.7) -11.8 %

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Finance Charges.

The increase of $57.5 million, or 12.3%, was primarily due to an increase in the average net Loans receivable balance, as follows:

(Dollars in millions) For the Three Months Ended March 31,

The increase of $100.5 million, or 10.4%, was primarily a result of an increase in the average net Loans receivable balance, as follows:

(Dollars in millions) For the Six Months Ended June 30,

2025 2024 Change

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Average yield on our Loan portfolio 26.9 % 26.5 % 0.4 %

The following table summarizes the impact each component had on the overall increase in finance charges for the three months ended March 31, 2025:

The following table summarizes the impact each component had on the overall increase in finance charges for the six months ended June 30, 2025:

(In millions) Year over Year Change

Impact on finance charges:

For the Three Months Ended March 31, 2025

For the Six Months Ended June 30, 2025

Due to an increase in the average net Loans receivable balance $ 85.7

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The increase in the average net Loans receivable balance was primarily due to the dollar volume of new Consumer Loan assignments exceeding the principal collected on Loans receivable.

The increase in the average yield of our Loan portfolio was primarily due to higher contractual yields on more recent Consumer Loan assignments.

Other Income.

The increase of $6.8 million, or 20.5%, was primarily due to:

• A $4.0 million increase in interest income primarily due to income earned on the investment of excess cash balances.

• A $2.5 million increase in ancillary product profit sharing income primarily due to growth in our Loan portfolio and an increase in the average cost of premiums written on vehicle service contracts.

Operating Expenses.

The increase of $9.4 million, or 7.5%, was primarily due to an increase in salaries and wages expense of $10.1 million, or 12.9%.

The increase was primarily due to increases in (i) the number of team members as we are investing in our business with the goal of increasing the speed at which we enhance our product for Dealers and consumers, (ii) stock-based compensation expense, primarily due to equity awards granted to our executive officers and senior leaders, and (iii) fringe benefits, primarily due to higher medical claims.

The increase of $40.5 million, or 16.2%, was primarily due to:

• An increase in general and administrative expense of $20.4 million, or 43.5%, primarily due to an increase in legal expenses, which included the recognition of a $23.4 million contingent loss during the first six months of 2025 related to previously disclosed legal matters.

• An increase in salaries and wages expense of $18.0 million, or 11.7%, primarily due to increases in (i) the number of team members as we are investing in our business with the goal of increasing the speed at which we enhance our product for Dealers and consumers, (ii) stock-based compensation expense, primarily due to equity awards granted to our executive officers and senior leaders, and (iii) fringe benefits, primarily due to higher medical claims.

Provision for Credit Losses .

The decrease of $24.1 million, or 13.0%, was due to decreases in provision for credit losses on forecast changes and provision for credit losses on new Consumer Loan assignments.

The decrease of $172.1 million, or 34.0%, was due to a decreases in provision for credit losses on forecast changes and provision for credit losses on new Consumer Loan assignments.

We recognize provision for credit losses on new Consumer Loan assignments for contractual net cash flows that are not expected to be realized at the time of assignment.

We also recognize provision for credit losses on forecast changes in the amount and timing of expected future net cash flows subsequent to assignment.

The decrease in provision for credit losses related to forecast changes was due to a smaller decline in Consumer Loan performance during the first quarter of 2025 compared to the first quarter of 2024.

During the first quarter of 2025, we decreased our estimate of future net cash flows by $20.9 million, or 0.2%, to reflect a decline in forecasted collection rates during the period and slowed our forecasted net cash flow timing to reflect lower-than-expected Consumer Loan prepayments, which remained below historical averages.

The following table summarizes the provision for credit losses for each of these components:

(In millions) For the Six Months Ended June 30,

Provision for Credit Losses 2025 2024 Change

Forecast changes $ 177.6 $ 325.0 $ (147.4)

New Consumer Loan assignments 156.9 181.6 (24.7)

Total $ 334.5 $ 506.6 $ (172.1)

The decrease in provision for credit losses related to forecast changes was primarily due to a smaller decline in Consumer Loan performance during the first six months of 2025 compared to the first six months of 2024.

During the first six months of 2025, we decreased our estimate of future net cash flows by $76.7 million, or 0.7%, to reflect a decline in forecasted collection rates during the period and slowed our forecasted net cash flow timing to reflect lower-than-expected Consumer Loan prepayments, which remained below historical averages.

Historically, Consumer Loan prepayments have been lower in periods with less availability of consumer credit.

During the first quarter of 2024, we decreased our estimate of future net cash flows by $30.8 million, or 0.3%, to reflect a decline in forecasted collection rates during the period and slowed our forecasted net cash flow timing to reflect lower-than-expected Consumer Loan prepayments.

The decrease in provision for credit losses related to new Consumer Loan assignments was due to a 10.1% decrease in Consumer Loan assignment unit volume and a 3.7% decrease in the average provision per Consumer Loan assignment.

The decrease in the average provision per Consumer Loan assignment was primarily due to a decrease in the average advance rate for 2025 Consumer Loans.

The $76.7 million decrease in forecasted net cash flows for the first six months of 2025 was composed of an ordinary decrease in forecasted net cash flows of $58.1 million, or 0.5%, and an adjustment applied to our forecasting methodology, which upon implementation, reduced forecasted net cash flows by $18.6 million, or 0.2%, and increased our provision for credit losses by $16.5 million.

Accordingly, during the second quarter of 2025, we applied an adjustment to that segment of the Consumer Loans assigned in 2024 to reduce forecasted collection rates to what we believed the ultimate collection rates would be based on these trends.

During the first six months o f 2024, we decreased our estimate of future net cash flows by $220.1 million, or 2.2%, to reflect a decline in forecasted collection rates during the period and slowed our forecasted net cash flow timing to reflect a decrease in Consumer Loan prepayments, which remained below historical averages.

The $220.1 million decrease in forecasted net cash flows for the first six months of 2024 was composed of an ordinary decrease in forecasted net cash flows of $72.9 million, or 0.8%, and an adjustment applied to our forecasting methodology, which upon implementation, reduced forecasted net cash flows by $147.2 million, or 1.4%, and increased our provision for credit losses by $127.5 million.

Consumer Loans assigned in 2022 had continued to underperform our expectations for several quarters.

Consumer Loans assigned in 2023 had also begun exhibiting similar trends of underperformance, although not as severe as Consumer Loans assigned in 2022.

During the first six months o f 2024, we determined that we had sufficient Consumer Loan performance experience to estimate the magnitude by which we expected Consumer Loans assigned in 2022 through 2024 would likely underperform our historical collection rates on Consumer Loans with similar characteristics.

For additional information, see Note 6 to the consolidated financial statements contained in Part I - Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

The 13.6% decrease in provision for credit losses related to new Consumer Loan assignments was due to a 12.2% decrease in Consumer Loan assignment unit volume and a 1.6% decrease in the average provision per Consumer Loan assignment.

The decrease in the average provision per Consumer Loan assignment was due to a decrease in the average advance rate for 2025 Consumer Loans.

The increase in interest expense of $35.8 million, or 18.2%, was primarily due to an increase in our average outstanding debt balance, primarily due to borrowings used to fund the growth of our Loan portfolio and stock repurchases.

The following table presents the change in interest expense, average outstanding debt balance, and average cost of debt for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024:

(Dollars in millions) For the Three Months Ended March 31,

The following table presents the change in interest expense, average outstanding debt balance, and average cost of debt for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024:

(Dollars in millions) For the Six Months Ended June 30,

2025 2024 Change

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Average cost of debt 7.2 % 7.1 % 0.1 %

Loss on Sale of Building.

For the six months ended June 30, 2024, we recognized a loss on sale of a building of $23.7 million.

Provision for Income Taxes.

For the three months ended March 31, 2025, the effective income tax rate decreased to 25.0% from 25.6% for the same period in 2024.

The decrease was primarily due to a decrease in the impact of state and local income taxes on our effective income tax rate, primarily related to uncertain tax position estimates, and was partially offset by the recognition of a tax deficiency in the current quarter compared to an excess tax benefit recognized during the first quarter of 2024.

For additional information, see Note 1 0 to the consolidated financial statements contained in Part I - Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

For the six months ended June 30, 2025, our effective income tax rate decreased to 25.4% from 44.7% for the six months ended June 30, 2024.

The decrease was primarily due to an increase in pre-tax income in the first six months of 2025 compared to the same period in 2024.

The lower pre-tax income in the first six months of 2024 increased the impact of an adjustment to an uncertain tax position for state income taxes recorded in the second quarter of 2024 and non-deductible executive compensation expense on our 2024 effective income tax rate.

For additional information, see Note 10 to the consolidated financial statements contained in Part I - Item 1 of this Quarterly Report on Form 10-Q, which i s incorporated herein by reference.

Liquidity and Capital Resources

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and (4) senior notes.

There are various restrictive covenants to which we are subject under each financing arrangement, and we were in compliance with those covenants as of March 31, 2025.

There are various restrictive covenants to which we are subject under each financing arrangement, and we were in compliance with those covenants as of June 30, 2025.

For information regarding these financings and the covenants included in the related documents, see Note 9 to the consolidated financial statements contained in Part I - Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

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The financing has an expected average annualized cost of 5.6% (including upfront fees and other costs), and it will revolve for 24 months, after which it will amortize based upon the cash flows on the underlying Loans.

Cash and cash equivalents were $528.8 million as of March 31, 2025 and $343.7 million as of December 31, 2024.

As of March 31, 2025 and December 31, 2024, we had $1,733.6 million and $1,734.9 million, respectively, in unused and available revolving lines of credit.

Our total balance sheet indebtedness increased to $6,705.2 million as of March 31, 2025 from $6,352.9 million as of December 31, 2024, primarily due to borrowings used to fund the growth of our Loan portfolio and stock repurchases.

A summary of our scheduled principal debt maturities as of March 31, 2025 is as follows:

On June 24, 2025, we extended the maturity of our revolving secured line of credit facility from June 22, 2027 to June 22, 2028.

On July 11, 2025, we extended the date on which our $75.0 million Warehouse Facility VI will cease to revolve from September 30, 2026 to September 30, 2028.

The interest rate on borrowings under the facility has been decreased from the Secured Overnight Financing Rate (“SOFR”) plus 210 basis points to SOFR plus 185 basis points.

The servicing fee has also been decreased from 6.0% to 4.0% of collections on the underlying consumer loans.

On July 30, 2025, we extended the date on which our $300.0 million Warehouse Facility IV will cease to revolve from December 29, 2026 to July 30, 2028.

The interest rate on borrowings under the facility has been decreased from the Secured Overnight Financing Rate plus 221.4 basis points to SOFR plus 205 basis points.

Cash and cash equivalents were $70.0 million as of June 30, 2025 and $343.7 million as of December 31, 2024.

As of June 30, 2025 and December 31, 2024, we had $1,733.5 million and $1,734.9 million, respectively, in unused and available revolving lines of credit.

Our total balance sheet indebtedness increased to $6,471.2 million as of June 30, 2025 from $6,352.9 million as of December 31, 2024, primarily due to borrowings used to fund the growth of our Loan portfolio and stock repurchases.

A summary of our scheduled principal debt maturities as of June 30, 2025 is as follows:

(In millions)

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Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 discusses several critical accounting estimates, which we believe involve a high degree of judgment and complexity.

There have been no material changes to the estimates and assumptions associated with these critical accounting estimates from those discussed in our Annual Report on Form 10-K for the year ended December 31, 2024.

Changes in the amount and timing of forecasted net cash flows are recognized in the period of change as a provision for credit losses.

Forward-Looking Statements

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While we believe that our forward-looking statements are reasonable, actual results could differ materially since the statements are based on our current expectations, which are subject to risks and uncertainties.

Factors that might cause such a difference include, but are not limited to, the factors set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024, other risk factors discussed herein or listed from time to time in our reports filed with the SEC, and the following:

Factors that might cause such a difference include, but are not limited to, the factors set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024, and in Part II - Item 1A of this report, other risk factors discussed herein or listed from time to time in our reports filed with the SEC, and the following:

Industry, Operational, and Macroeconomic Risks

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis