Kyle Joseph

Kyle Joseph of Stephens Inc. asked for clarity on the U.S. inventory increase and its impact on margins, particularly the role of outright purchases. He also requested a market update on Latin America, including trends in redemption rates and the impact of factors like minimum wage increases.

Answer

CEO Lachlan Given explained that U.S. inventory is up for positive reasons like PLO growth, increased purchasing activity, and layaway growth, though he noted turns are down and will be addressed with marketing and incentives. CFO Tim Jugmans added that a majority of the purchase increase is in gold, driven by high prices. Regarding Latin America, management highlighted the segment's significant profit growth and improved operating practices, which allow them to quickly bring inventory levels back into balance.

Kyle Joseph of Stephens asked about the drivers behind the accelerated domestic loan growth during the quarter and its expected normalization, as well as current competitive dynamics and loan-to-value (LTV) trends in both the U.S. and Latin American markets.

Answer

Executive Lachlan Given attributed the strong U.S. loan growth to excellent in-store execution, higher average loan sizes, and sustained demand from financially challenged consumers, suggesting strong growth should continue. He also stated that competitive trends have been stable. CFO Timothy Jugmans added that while LTVs are constantly adjusted based on market sales data, they have remained very consistent on a consolidated, year-over-year basis.

Kyle Joseph of Stephens Inc. inquired about any other potential business implications from the recent election, such as impacts on immigration or foreign exchange movements.

Answer

CEO Lachlan Given responded that he does not foresee any significant tailwinds or headwinds for the business resulting from the new administration. He emphasized that EZCORP's customer base has a fundamental need for cash and value-priced goods, which tends to operate independently of political forces, and that the overall macro environment remains supportive for the company's services.

Kyle Joseph requested an update on the competitive environment by product and whether Affirm is seeing benefits from a more skittish capital market.

Answer

Max Levchin stated Affirm is focused on its own products and motions, noting their U.K. expansion with Shopify. Rob O'Hare added that capital markets remain constructive for Affirm's assets, with investors showing a 'flight to quality' and trust in Affirm's execution, leading to strong engagement and best-in-class execution with Blue Chip investors.

Kyle Joseph sought an update on the competitive environment by product and whether Affirm is seeing benefits from a more 'skittish' capital markets landscape.

Answer

Max Levchin, Founder and CEO, stated Affirm is focused on its own products, noting their U.K. expansion with Shopify. Rob O'Hare, CFO, highlighted that capital markets remain constructive for Affirm's assets, with increased engagement from investors and a 'flight to quality' due to Affirm's consistent results and best-in-class execution.

Kyle Joseph asked about the competitive environment, specifically whether SoFi's increased membership growth guidance was due to internal marketing and brand awareness efforts or a less competitive landscape, also referencing the 'flight to quality' among capital providers.

Answer

CEO Anthony Noto attributed the growth to several factors: increased unaided brand awareness (reaching 9.1% in Q3), new product launches (like crypto and SoFi Pay), and efficient customer acquisition costs across marketing channels. He emphasized SoFi's confidence in scaling marketing efforts while maintaining profitability and growth.

Kyle Joseph asked about the competitive environment, seeking insight into whether SoFi's increased membership growth guidance is driven by internal marketing, brand awareness, or a less competitive landscape, and the observed 'flight to quality' among capital providers.

Answer

CEO Anthony Noto attributed the growth to several factors, including an all-time high unaided brand awareness (9.1% in Q3), new product launches that reinforce the one-stop-shop strategy, and efficient customer acquisition costs across marketing channels. He confirmed SoFi's ability to scale marketing effectively while maintaining profitability and growth.

Kyle Joseph of Stephens Inc. inquired about the growth opportunities and future profit margins for the Lending segment, considering the success of the home equity product and shifts in the student lending market.

Answer

CEO Anthony Noto stated that Lending segment margins are expected to remain consistent. He highlighted that the home equity business, which is new, is performing well and is poised for significant acceleration when interest rates decline. He also noted a recent pickup in student loan refinancing activity, while emphasizing that the diversification into the now-larger LPB business demonstrates the success of SoFi's broader strategy.

Kyle Joseph asked for insights into the health of the underlying consumer, particularly how it impacts demand and credit quality, and the company's marketing strategies driving new customer origination growth and the competitive landscape.

Answer

Chad Prashad, President and CEO, noted tracking consumer performance on other loans, including auto loan weakness, but stated no major signs of weakness for their portfolio due to proactive, marginal tightening of the credit box. He highlighted successful test-and-learn marketing, reduced cost of acquisition for new and former customers, and increased application volume, while aiming for modest portfolio growth.

Kyle Joseph asked for an assessment of the underlying consumer's health, noting recent headlines in the auto sector, and how this impacts demand and credit quality for World Acceptance Corporation. He also questioned the company's marketing strategies driving new customer origination growth and the current competitive landscape.

Answer

Chad Prashad, President and CEO, acknowledged broader consumer weakness, particularly in auto loans, but stated World Acceptance had not seen major internal signs of weakness, proactively tightening credit marginally. He highlighted successful test-and-learn marketing, in-house modeling, and reduced customer acquisition costs for both new and former customers, aiming for modest portfolio growth with smaller marketing budgets amidst increased application volume.

Kyle Joseph of Stephens Inc. inquired about the drivers behind recent credit trends, the company's strategy regarding smaller loans and portfolio yield, and any observed changes in consumer behavior.

Answer

EVP, Treasurer, Chief Financial & Strategy Officer John Calmes explained that improved credit quality is due to a smaller proportion of new, higher-risk customers in the portfolio. President and CEO R. Chad Prashad added that the company is satisfied with the current loan mix, is not pursuing aggressive growth, and has not seen any significant increase in risk or changes in consumer behavior.

Kyle Joseph of Jefferies inquired about recent shifts in consumer behavior, the drivers behind the portfolio's mix shift towards smaller loans, and the factors contributing to strong growth in tax preparation revenue.

Answer

CEO Chad Prashad responded that the company has not observed any significant changes in consumer demand or payment behavior. He clarified the shift to smaller loans is a strategic return to the company's core business, driven by underwriting and marketing changes, not consumer demand. Prashad also attributed the 25% increase in tax prep revenue to successful price increases based on market research, which did not negatively impact demand.

Kyle Joseph asked about the balance between portfolio growth and credit quality, the drivers behind the 200 basis point improvement in portfolio yield, and the company's outlook on the upcoming tax refund season.

Answer

Executive Chad Prashad clarified that growth is driven by non-refinance customers, including former ones, and that a shift to smaller loans provides underwriting flexibility in the current macro environment. Chief Financial and Strategy Officer John Calmes attributed the significant yield improvement primarily to a mix shift from large loans to small loans, with credit quality also being a contributing factor. Regarding the tax season, Mr. Prashad stated it was too early for a definitive outlook but noted that early signs for customer demand were positive and he remains cautiously optimistic.

Kyle Joseph asked about the impact of delinquency trends among FICO bands, particularly a noted increase in lower bands among competitors, on LendingClub's originations and investor demand, and where the company sees the best value across FICO scores. He also inquired about the operating leverage on non-marketing expense items.

Answer

CEO Scott Sanborn stated that competitor delinquency trends do not directly affect LendingClub, but the company monitors shifts in application profiles to adapt and potentially identify opportunities or risks. CFO Drew LaBenne indicated that LendingClub expects significant operating leverage on non-marketing expenses, with marketing being the most variable cost, and promised more details at the upcoming Investor Day.

Kyle Joseph inquired about the operating leverage LendingClub possesses on its non-marketing expense items.

Answer

CFO Drew LaBenne indicated that LendingClub expects significant operating leverage, which is already evident in the year-over-year revenue growth compared to expenses. He noted that while other expenses may increase with company growth, marketing is anticipated to be the most variable cost as the company scales.

Kyle Joseph asked how the competitive environment and strong capital markets might influence LendingClub's mix of originations between holding loans versus selling them.

Answer

CFO Drew LaBenne stated that the goal is to grow originations at a pace that allows for both balance sheet growth and fulfilling high marketplace demand. He emphasized that balancing the resilient, recurring revenue from held loans with the strong in-period returns from loan sales is key to their strategy, and they intend to continue feeding both channels.

Kyle Joseph asked about the current consumer pulse, noting PROG Holdings' improving write-offs and underlying GMV trends despite broader macro headlines, and sought an update on the company's perspective on consumer health.

Answer

Steve Michaels, President and CEO, explained that PROG Holdings is pleased with its portfolio health, attributing consistent performance to the data science teams and deliberate actions taken earlier in the year. He acknowledged elevated delinquencies (DQs) but noted that the company has not yet seen the need for additional tightening, maintaining a defensively postured approach. Michaels also clarified that GMV comps remain challenging until Q1 2026, with Q3 GMV slightly below expectations due to consumer pressures, and discussed the seasonal profitability dynamics of Four Technologies in Q4.

Kyle Joseph asked for an update on the consumer's pulse, noting improved write-offs despite Big Lots headwinds and positive GMV trends excluding Big Lots and underwriting changes, while balancing this with macro data and consumer finance headlines. He also inquired about the GMV outlook for the rest of the year, specifically if Q3 was the bottom point for headwinds, and sought clarification on the 'other' segment's guidance regarding better revenue but marginally lower profitability.

Answer

Steve Michaels, President and CEO of PROG Holdings, stated that the portfolio is performing well due to deliberate actions, with write-offs improving sequentially and year-over-year. He acknowledged consumer stress and elevated delinquencies (DQs) but noted they are not impacting negative outcomes, and no additional broad tightening has been implemented since earlier this year. Michaels indicated that GMV comps would not ease until Q1 2026, with Q3 GMV slightly below expectations due to macro pressures. Brian Garner, CFO, explained that the 'other' segment's profitability dynamics are due to Four Technologies' seasonal upfront provisioning for credit losses in Q4, with revenue recognition primarily in Q1 2026, which is a normal model dynamic.

Kyle Joseph of Stephens Inc. asked about the underlying GMV growth rate after adjusting for the Big Lots bankruptcy and underwriting tightening, the timeline for lapping these headwinds, and the current retail partner pipeline.

Answer

CEO Steven Michaels stated that excluding the Big Lots impact and underwriting drag, underlying GMV growth would be in the high-single-digit to 10% range. He noted the Big Lots GMV impact is lapped in Q4 2025, while underwriting tightening laps in H1 2026. CFO Brian Garner provided context on a new appendix slide detailing the Big Lots impact. Regarding the pipeline, Michaels mentioned increased engagement and RFPs from large retailers but did not commit to timing.

Kyle Joseph asked if the negative macro shift was primarily a demand-side issue rather than a credit performance issue, and later followed up on the different business dynamics driving growth at Four Technologies versus Progressive Leasing.

Answer

CEO Steven Michaels confirmed the guidance change was a demand story, not a portfolio performance story, noting that Q1 write-offs were better than expected and the portfolio remains healthy. He explained that the GMV miss was driven by lower application volume and conversion post-approval. Regarding Four Technologies, Michaels highlighted its different customer base and product categories (e.g., apparel, cosmetics) with a lower average order value, which have been less impacted by the pullback in big-ticket durable goods spending.

Kyle Joseph inquired about the long-term evolution of the furniture retail industry, particularly the shift to online, and asked if any specific product verticals were showing signs of recovery. He also asked for an update on customer behavior during the current tax refund season, specifically regarding early buyouts versus credit performance.

Answer

CEO Steven Michaels stated that while all categories are shifting more online, physical stores will remain a crucial part of a multichannel customer journey. He noted that while the overall retail environment is challenging, with 'less bad is the new up,' there are some potential signs of life in consumer electronics and continued strength in mobile phones. Regarding tax season, he explained it was too early to have visibility, with the largest refund drops still pending, but the company anticipates a 'normal' season.

Kyle Joseph asked how new products like prescreening and affiliate optimization will impact Pagaya's growth profile, specifically if they will smooth out historical lumpiness, and what the timing and magnitude of the P&L impact will be.

Answer

Co-Founder and President Sanjiv Das explained that these new growth initiatives, developed over the last 18 months, are designed to help partners expand their application funnels. He expects a full rollout by Q4, with a significant impact on PL business growth starting in 2026, which should smoothen out seasonality. CEO Gal Krubiner added that the investments are highly accretive as they are built once and can be deployed across Pagaya's 31+ partners.

Kyle Joseph asked how new products, such as prescreening and affiliate optimization, would impact Pagaya's growth profile, specifically if they would smooth out historical lumpiness, and inquired about the timing and magnitude of their P&L impact.

Answer

Co-Founder and President Sanjiv Das explained that these new products shift Pagaya from just decline monetization to actively helping partners grow their application funnels, which is expected to smooth out growth and show its full impact in 2026. Co-Founder and CEO Gal Krubiner added that these initiatives are highly accretive, as the technology is built once and can be deployed across Pagaya's 31+ partners.

Kyle Joseph of Stephens Inc. asked for details on the source of an additional $10 million in operating expense savings and questioned the outlook for marketing spend as the company aims for originations growth.

Answer

Interim CFO Paul Appleton outlined a quarterly expense run rate of about $96.5 million, driven by staffing and vendor efficiencies, with marketing spend expected to increase in Q4. CEO Raul Vazquez elaborated that savings came from tech, facilities, and disciplined personnel management, including leveraging GenAI, which provides flexibility to reinvest in marketing.

Kyle Joseph of Stephens Inc. asked for an assessment of the macroeconomic environment and consumer health, how larger loan originations might impact credit performance, the strategy behind marketing expenses versus origination growth, and the expected trend for portfolio yields.

Answer

Founder, CEO & Executive Chairman Todd Schwartz responded that OppFi remains cautious and is running a 'tight' credit box, relying on its dynamic Model 6 to react to economic changes rather than short-term volatility. He noted that marketing cost per funded loan (MCPF) increased to $220 as part of planned investments in new channels. Regarding yields, he expects them to be stable to slightly increasing, driven by the rollout of risk-based pricing.

Kyle Joseph inquired about the expected future product mix between personal loans and the newer home and auto products, and the potential implications for margins and customer acquisition costs.

Answer

CEO Dave Girouard stated that over time, it is inevitable that secured products (home and auto) will grow as a fraction of the business. CFO Sanjay Datta added that while the margin profile is still materializing, these new markets have a similar structure to personal loans, with opportunities for margin in underserved segments, potentially yielding similar dollar profit per loan.

Kyle Joseph of Stephens Inc. asked about the expected future product mix between personal, home, and auto loans and the potential implications for margins and customer acquisition costs.

Answer

CEO Dave Girouard projected that secured products (home and auto) will inevitably grow as a fraction of the business over time. CFO Sanjay Datta added that while the margin profile of new products is still developing, they have a similar market structure to personal loans and may yield a similar dollar profit per loan, despite different take rates.

Kyle Joseph of Stephens Inc. asked for insights into the competitive landscape, questioning why competition remains intense given the challenging macro environment, potential tariffs on used cars, and poor industry-wide performance of the 2022 vintage.

Answer

CEO Kenneth Booth acknowledged that the environment seems more competitive, as evidenced by lower volume per dealer. He stated that forecasting competitor behavior is difficult and that cost pressures on consumers, like tariffs, are typically negative. Booth also pointed out that the company is up against a tough year-over-year comparison to a record volume year and expects comparisons to ease after the anniversary of the Q3 2024 scorecard change.

Kyle Joseph of Stephens Inc. asked for insights into the competitive environment, questioning why competition remains intense given the challenging macro outlook, potential tariffs on used cars, and the industry's poor experience with the 2022 vintage.

Answer

CEO Kenneth Booth acknowledged that the environment seems more competitive, as evidenced by lower volume per dealer. He noted that cost pressures on consumers, like tariffs, are typically a negative for the business. He also contextualized the volume decline by highlighting the tough year-over-year comparison against a record 2024 and suggested comparisons will ease after Q3 2025, which marks the anniversary of a key scorecard change.

Kyle Joseph of Stephens Inc. asked about the drivers behind the origination mix shifting towards large loans and the outlook for operating expenses given various strategic initiatives.

Answer

President & CEO Robert Beck stated that the growth in large loans is intentional, driven by digital originations, new state expansion, and the auto-secured product, which improves overall portfolio quality. He anticipates the higher-APR small loan portfolio will decline as a percentage over time. Regarding OpEx, he noted that while faster growth could increase spending, the company's long-term goal is to improve the OpEx ratio through scale and efficiency gains from new technology.

Kyle Joseph asked for the long-term outlook on net interest margin (NIM), including the key drivers for cost of funds and yield. He also inquired about any recent changes in consumer behavior regarding demand or credit performance since late February.

Answer

CFO Harpreet Rana stated that the cost of funds is expected to rise as older, fixed-rate debt matures. Yields will fluctuate seasonally but are benefiting from prior pricing actions and a strategic mix shift toward higher-margin loans, which is balanced by growth in lower-yield, high-quality auto-secured loans. CEO Robert Beck added that future yield adjustments are contingent on macroeconomic conditions and potential underwriting changes. Regarding consumer health, Beck noted that credit performance and roll rates are tracking as expected, and while the economic outlook has some uncertainty due to inflation and potential tariffs, the company is well-positioned with an already-tightened credit box.

Kyle Joseph of Stephens Inc. asked for a comparison of the competitive environments in the consumer and SMB lending markets, referencing management's comment about SMB growth being like 'sliding downhill.'

Answer

Chairman & CEO David Fisher explained that the dynamics ebb and flow, but the SMB market is generally more stable with fewer players where brand matters more. In contrast, the consumer market is more fragmented, where competitors can become aggressive temporarily. However, he noted this often leads to issues for those competitors, creating future tailwinds for Enova. He affirmed the company feels great about its competitive position in both segments.

Kyle Joseph asked about the expected credit performance of Enova's small business portfolio during a potential recession, seeking a comparison to the historically resilient non-prime consumer portfolio.

Answer

CEO David Fisher referenced Enova's experience from 2008, stating that small business credit performance was not significantly different from consumer performance. He explained that the primary impact was a slowdown in lending rather than major credit deterioration. Fisher emphasized that Enova's SMB customers are very small and behave more like sophisticated consumers, and the portfolio's diversification and short duration provide confidence in its resilience.

Kyle Joseph asked for early observations on the tax refund season and its potential impact on the Q1 guidance for both the consumer and small business segments.

Answer

CFO Steve Cunningham stated that while it is still early, expectations for a typical tax refund season are already factored into the company's Q1 guidance for both business lines. He confirmed that they do not anticipate any surprises related to tax refunds that would alter their outlook.

Kyle Joseph asked for clarification on the underlying GMV growth rate after adjusting for the Big Lots bankruptcy and underwriting tightening, and inquired about the timeline for lapping these headwinds.

Answer

CEO Steven Michaels confirmed that excluding the Big Lots impact and decisioning changes, underlying GMV growth would be in the high-single-digits. He stated the Big Lots GMV headwind is largely lapped in Q4 2025, while the bulk of the underwriting tightening will be lapped in H1 2026. CFO Brian Garner added that a new appendix slide details the direct portfolio impact from Big Lots on margins and write-offs.

Inquired about the expected P&L impact of the new risk-based pricing model, specifically on yields and margins. He also sought clarification on unit volume trends between Q3 and Q4, questioning if there was a pull-forward of sales into the third quarter.

Answer

The company explained that risk-based pricing allows for higher rates and down payments for lower-ranked customers without impacting conversion, while offering slight rate breaks to top-tier customers is driving volume growth. This strategy is also expected to positively impact gross margin by diversifying the vehicle mix. Regarding unit volumes, management clarified there was no pull-forward of sales; an early stocking strategy for tax season allowed them to avoid tariff-related price hikes, which resulted in lower average selling prices in Q4. The tight supply environment is the main constraint on volume.

Kyle Joseph asked for details on how the nationwide rollout of risk-based pricing is expected to impact the P&L, specifically on yields and margins. He also sought to clarify unit volume trends, questioning if any Q4 volume was pulled into Q3 due to the timing of tax season incentives.

Answer

CEO & President Douglas Campbell detailed the new pricing model, noting they successfully increased rates and down payments for the highest-risk customers without impacting conversion, while seeing volume growth from offering modest rate breaks to top-tier customers. He stated this strategy could also improve gross margins by shifting inventory to higher-quality vehicles. Regarding unit volume, Campbell clarified there was no pull-forward; instead, a strategic Q3 inventory build-up allowed them to avoid procurement price hikes, resulting in lower Q4 average selling prices.

Kyle Joseph asked about the drivers of the unit sales recovery, specifically inquiring about year-over-year underwriting trends, the quantifiable impact of weather on delinquencies, and the ramp-up timeline for recent acquisitions.

Answer

CEO Douglas Campbell explained that underwriting was intentionally relaxed from the overly tight standards set during the initial LOS rollout, but the focus remains on risk-based pricing rather than a broad loosening. CFO Vickie Judy noted that while difficult to isolate, delinquencies quickly returned to expected levels after the weather impact. She also detailed the timing of the two acquisitions, with the larger Texas deal expected to add over 5,000 accounts in the next 18-24 months.

Kyle Joseph asked for an update on the company's underwriting posture across its segments, noting previous tightening actions and the current macroeconomic environment.

Answer

CFO Fahmi Karam explained that Upbound has maintained a conservative underwriting posture for a couple of years, which provides confidence in the current portfolio. He noted that Acima has more flexibility to tighten on high-risk segments while remaining competitive elsewhere, thanks to strong application flow from the trade-down effect. CEO Mitchell E. Fadel added that this disciplined approach has allowed Acima to achieve a 29% two-year stacked GMV growth while simultaneously lowering its loss rates.

Kyle Joseph of Stephens Inc. asked if recent bankruptcies among furniture retailers present a significant opportunity for Rent-A-Center and questioned why Acima's credit losses were improving while Rent-A-Center's were not.

Answer

CEO Mitchell E. Fadel confirmed that competitor bankruptcies are seen as a potential tailwind and opportunity for 2025, after being a headwind from liquidation sales in late 2024. He attributed the differing loss trends to the 'trade-down' effect, which directly benefits Acima's customer mix and credit profile more than Rent-A-Center's. He noted, however, that Rent-A-Center's losses have stabilized sequentially.

Kyle Joseph asked if management was observing any shifts in consumer behavior across their product lines, such as changes in demand for personal loans, spending on credit cards, or activity in the auto segment.

Answer

CEO Douglas Shulman stated that despite a volatile macro environment, they are not seeing any negative shifts in consumer behavior within their portfolio. He reported that demand remains good, credit trends are steady and predictable, and internal surveys of their branch network indicate no change in consumer sentiment from previous quarters.

Kyle Joseph requested a competitive update across OneMain's different product channels, including personal loans, credit cards, and auto lending. He also asked for commentary on expectations for the upcoming tax refund season and any early trends observed.

Answer

CEO Douglas Shulman described the personal loan environment as constructive, allowing for strong origination growth to high-quality borrowers. He noted that while capital is more available for competitors now than a few years ago, OneMain's differentiated balance sheet remains an advantage. For cards and franchise auto, he characterized OneMain as a small challenger picking specific pockets of opportunity. Regarding tax season, Shulman stated it was still early but that they had not observed anything wildly different from recent years.

Kyle Joseph inquired about Medley Management's operational strategy for MCC leading up to the merger, asking if it would be run independently or with the combined portfolio in mind, and also asked about the expected run-rate dividend of the combined entity.

Answer

Executive Brook Taube explained that while the businesses are managed holistically, MCC must be run independently until the merger receives shareholder and regulatory approval. He noted that the investment strategies of MCC and Sierra Income Corporation (SIC) have already been converging. Regarding the future dividend, Taube stated that the policy for the combined entity would be reviewed by the new board with the goal to be covered by Net Investment Income (NII), and that current dividend policies will remain in place until the transaction closes.