Logan Hennen

Logan Hennen inquired about the consumer behavior and specific drivers behind the strong collections performance in Q3, despite a perceived tougher macro environment. He also asked about the potential amount of cash that could be freed up for share buybacks if leverage continues to decrease towards 2.3x by mid-2026.

Answer

Ashish Masih, President and CEO, reported stable consumer behavior in the US market, with no adverse impact on payment plans or conversions. Regarding buybacks, he reiterated the company's capital allocation priorities, emphasizing confidence in Encore's future prospects, and noted the increased pace of repurchases without providing a specific future cash amount.

Logan Hennen sought additional color on consumer behavior and the specific drivers behind the strong 20% year-over-year collections growth in Q3 2025, despite a perceived tougher macro environment. He also asked about the potential amount of cash that could be freed up for buybacks if leverage continues to decrease towards 2.3x by mid-2026.

Answer

Ashish Masih, President and CEO, indicated that despite macro noise, Encore has observed no impact on consumer behavior in the U.S. market, with stable conversion rates, payment plan strength, and resilience. He attributed strong collections to operational improvements and stable consumer behavior. Regarding buybacks, Masih reiterated adherence to their capital allocation priorities, noting that future buybacks are subject to balance sheet and liquidity, and highlighted the recent increase in buyback pace as a reflection of confidence in Encore's future.

Logan Hennen of Northland Capital Markets inquired about current market dynamics, pricing strategy, and demand for A15 miners, and followed up on Canaan's strategy for penetrating the North American market with its new U.S. production facility.

Answer

CEO Nangeng Zhang noted that the average selling price (ASP) rose to $11.1 per terahash in Q2. He acknowledged U.S. customer hesitation due to tariffs but sees demand returning, aided by the new U.S. facility which mitigates some tariff impacts. Zhang emphasized North America's long-term strategic importance. CFO James Cheng added that the U.S. facility improves delivery and customer experience, citing recent orders from Cypher and CleanSpark as proof of concept.

Inquired about the trend in recreational loan delinquencies, the reasons for lower origination volumes, the unit economics of strategic partnership loans, and the forward-looking outlook for loan growth, margins, and credit quality.

Answer

The company stated that higher delinquencies are from older loan vintages predating a credit tightening in mid-2023, with newer loans performing better. Lower originations were attributed to stricter underwriting and capital management, but the recent capital raise should enable more growth. Strategic partnership loans generate a 20-50 basis point fee plus about five days of interest float at high yields (~20%). The company expects its net interest margin to remain around 8% and to maintain current credit standards.