Executive Summary

Q2 2025 adjusted EPS was $8.56, down 8% sequentially and 17% year over year, and below Wall Street consensus of $9.83; GAAP diluted EPS was $7.42 . EPS miss driven by a $23.4M contingent legal loss and higher operating expenses, partially offset by higher finance charges .
GAAP total revenue rose to $583.8M (+2% q/q, +8% y/y), while S&P Global’s revenue “actual” for the consensus series registered $293.1M versus a $581.1M estimate, implying a large miss on that revenue definition; GAAP revenue was $583.8M . Values retrieved from S&P Global.*
Forecasted net cash flows from the loan portfolio decreased by $55.8M (−0.5%); management applied an additional methodology adjustment to 2024 loans (pre-scorecard) that reduced forecasted net cash flows by $18.6M (0.2%) . 2025 vintage performance exceeded initial expectations; 2022–2024 vintages underperformed .
Long-term effective tax rate increased to 25% (from 23%), reducing adjusted return on capital to 8.5% (Q1: 9.2%) and economic profit to $24.4M .
Capital allocation remained aggressive: CACC repurchased ~530,000 shares (~4.5% of beginning shares) in Q2 at an average price around $490; ~391,000 shares remain under authorization .

What Went Well and What Went Wrong

What Went Well

Finance charges increased 8.6% (+$43.0M) on a higher average loan portfolio balance; GAAP total revenue reached $583.8M .
2025 vintage loans performed above initial expectations; spreads on 2025 dealer loans rose to 22.3% versus 20.4% for 2024 dealer loans, supported by better performance on 2025 assignments .
Technology modernization progressed: “The engineering team has made significant strides in modernizing our loan origination system… increased the velocity… from months to days,” positioning for faster feature releases and better dealer experiences .

What Went Wrong

Adjusted EPS declined to $8.56, missing consensus*; adjusted return on capital fell to 8.5% as operating expenses grew 25% (+$31.1M), including a $23.4M contingent legal loss .
Forecasted net cash flows fell $55.8M (−0.5%); an added forecast adjustment on 2024 pre-scorecard loans cut expected collections, reflecting continued underperformance of 2022–2024 vintages and slower cash-flow timing from below-average prepayments .
Origination volumes weakened: Consumer Loan units −14.6% y/y and dollar volume −18.8% y/y; average volume per active dealer −14.0% y/y; competition intensified, with management noting tough comps and a more competitive environment in H1 .

Financial Results

Metric	Q2 2024	Q4 2024	Q1 2025	Q2 2025
GAAP Total Revenue ($USD Millions)	$538.2	$565.9	$571.1	$583.8
GAAP Diluted EPS ($)	($3.83)	$12.26	$8.66	$7.42
Adjusted EPS ($)	$10.29	$10.17	$9.35	$8.56
Adjusted Return on Capital (%)	10.3%	9.8%	9.2%	8.5%

Estimates vs Actuals (S&P Global)

Metric	Q4 2024	Q1 2025	Q2 2025
Adjusted EPS: Consensus vs Actual ($)	7.93 vs 10.17*	9.67 vs 9.35*	9.83 vs 8.56*
Revenue: Consensus vs Actual ($USD Millions)	564.7 vs 331.2*	567.2 vs 294.5*	581.1 vs 293.1*

Note: Values retrieved from S&P Global.*

KPIs and Operating Metrics

KPI	Q2 2024	Q1 2025	Q2 2025
Forecasted Net Cash Flows Change ($USD Millions, % of beginning forecast)	($189.3), −1.7%	($20.9), −0.2%	($55.8), −0.5%
Consumer Loan Unit Volume (units)	100,057	100,278	85,486
Active Dealers (count)	10,736	10,789	10,655
Avg Volume per Active Dealer (units)	9.3	9.3	8.0
Purchased Loans (% of unit mix)	21.5%	23.0%	28.4%
Purchased Loans (% of dollar mix)	22.7%	24.9%	31.7%
Adjusted Finance Charges / Adjusted Avg Loans (%)	17.8%	16.7%	17.0%
Adjusted Avg Loans Receivable ($USD Billions)	$8.40	$8.93	$9.08
Dealer Holdback & Accelerated Payments ($USD Millions)	$63.3	$68.0	$63.3
Share Repurchases (shares, % of beg. shares)	—	~329,000; ~2.7%	~530,000; ~4.5%
Contingent Legal Loss ($USD Millions)	—	—	$23.4
Long-term Effective Tax Rate (estimate)	23%	23%	25%

Dealer vs Purchased Loans Spread

Assignment Year	Dealer Spread (Q2 2025)	Dealer Spread (Q4 2024)	Purchased Spread (Q2 2025)	Purchased Spread (Q4 2024)
2024	20.4%	21.3%	21.1%	21.8%
2025	22.3%	21.9%	21.2%	21.4%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Long-term Effective Tax Rate	Ongoing	~23%	~25%	Raised

Management provided no formal revenue/margin guidance ranges; operating commentary focused on forecast assumptions, portfolio yields, and competitive dynamics .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Technology/modernization	Limited disclosure in 8-Ks; focus on portfolio metrics and forecasting	“Modernizing our loan origination system... increased velocity from months to days” to enhance dealer experiences	Increasing emphasis
Competitive environment	Tough comps noted into Q4; pricing changes in Q3 2024 impacted volumes	“Environment more competitive in the first half”; tough y/y comps; potential tariff headwind	More competitive
Forecasting & vintages	Q4/Q1: methodology adjustments; 2022 underperformance; slower prepayments	Additional Q2 adjustment to 2024 (pre-scorecard) loans; 2025 vintage performing as expected	Mixed; older vintages still headwind
Prepayments/cash-flow timing	Below historical averages; slows timing	Continued below-average prepayments slowing cash-flow timing	Persistent headwind
Capital allocation	Y/Y increase in repurchases since late 2023	Bought ~530k shares; 391k authorization remaining; opportunistic when originations down	Active buybacks
Regulatory/legal	Q4: lower legal expense; general admin down	$23.4M contingent legal loss recognized	Legal costs up in Q2

Management Commentary

“Loan performance declined this quarter with our 2022, 2023, and 2024 vintages underperforming our expectations and our 2025 vintage exceeding our expectations… Overall, forecasted net cash flows declined by 0.5%” .
“The yields of the new loans that we've originated more than offset the decline in the yield due to loan performance,” explaining adjusted yield resilience despite collection headwinds .
“It does seem like the environment is more competitive in the first half of this year… Tariffs… tend to be a negative for us… too early to tell what the impact will be” .
“We bought back 530,000 shares at roughly an average price of $490… 391,000 shares left [under authorization]” .
“We applied an adjustment… to 2024 [pre-scorecard] loans to reduce forecasted collection rates,” reducing forecasted net cash flows by $18.6M and increasing provision by $16.5M .

Q&A Highlights

Adjusted yield vs declining collections: CFO noted higher yields on recent originations offset performance declines, keeping adjusted yields higher despite collection shortfalls .
2024 vintage underperformance concentration: Underperformance primarily in loans originated in 2024 before the Q3 scorecard change; post-change loans performing as expected .
Competitive intensity and tariffs: Management observed more competition and flagged tariffs as potential cost headwind for customers; tough comps also weighed on volume .
Share repurchases: ~530k shares repurchased at ~$490 avg; remaining authorization ~391k shares; management tends to be active when originations are down .
Economic profit and returns: Adjusted ROC 8.5% vs cost of capital 7.4% leaves ~110 bps spread; CFO emphasized model aims for acceptable returns even with underperformance .

Estimates Context

Q2 2025 adjusted EPS of $8.56 vs $9.83 consensus: a miss tied to higher operating expenses (+25.0%) including a $23.4M contingent legal loss; partially offset by stronger finance charges on a larger portfolio . Values retrieved from S&P Global.*
S&P Global revenue series showed $293.1M actual vs $581.1M consensus*, indicating a large miss on that revenue definition; GAAP total revenue was $583.8M and adjusted revenue $408.0M, highlighting definitional differences between GAAP/adjusted disclosures and S&P’s tracked “Revenue” metric . Values retrieved from S&P Global.*
Prior quarters: Q1 2025 EPS 9.35 vs 9.67 consensus* (slight miss); Q4 2024 EPS 10.17 vs 7.93 consensus* (beat) . Values retrieved from S&P Global.*

Key Takeaways for Investors

EPS miss and rising opex/legal costs: Adjusted EPS fell to $8.56 and missed consensus*, with a $23.4M contingent legal loss and higher salaries/stock comp lifting opex; watch for further legal developments and opex normalization . Values retrieved from S&P Global.*
Forecasting adjustments largely concentrated in 2024 pre-scorecard loans; 2025 vintage performing well, suggesting forward cohort quality and pricing may be improving .
Portfolio yield dynamics resilient: Adjusted finance charge yield rose to 17.0%, aided by higher-yield recent originations despite back-book performance pressure .
Mix shift toward purchased loans (units 28.4%, dollars 31.7%) continues; purchased loans carry higher advance rates but no dealer holdback—monitor spread and risk characteristics as mix evolves .
Tax rate reset to ~25% will be a recurring headwind to adjusted ROC and EPS; investors should recalibrate forward models accordingly .
Active buybacks (~530k shares) provide per-share support amid softer originations; ~391k shares remain authorized—capital return may continue if originations remain subdued .
Macro/competition/tariffs are near-term swing factors: management flagged a more competitive environment and potential tariff effects on customers; below-average prepayments continue to slow cash-flow timing .

CREDIT ACCEPTANCE CORP (CACC)·Q2 2025 Earnings Summary