Executive Summary

Q3 2025 adjusted EPS rose to $10.28 per diluted share (GAAP $9.43), with adjusted net income of $117.9M; GAAP net income was $108.2M as lower credit loss provision and higher portfolio yield offset higher OpEx and legal contingencies .
Versus Wall Street, S&P Global consensus EPS was $9.45*, so adjusted EPS delivered a clear beat while GAAP EPS was essentially in line; revenue of $582.4M came in modestly below the $592.8M* consensus, a small miss .*
Portfolio metrics: adjusted loans receivable remained near a record ($9.07B avg; $9.07B ending), while forecasted net cash flows declined by 0.5% ($58.6M) amid slower timing and mixed vintage performance (weak 2022–2024, stronger 2025) .
Strategic/catalyst items: $107.4M of buybacks (~230K shares, ~2% of shares) and a $500M ABS at ~5.1% cost (lowest cost since late 2021) enhance capital deployment and funding visibility; management emphasized competitive intensity and pricing discipline, with CEO Ken Booth announcing his retirement (remains on Board) .

What Went Well and What Went Wrong

What Went Well

Adjusted EPS up 11% YoY to $10.28, with adjusted net income up to $117.9M despite a difficult collection environment: “We are pleased to report growth in adjusted EPS…” — Ken Booth (CEO) .
Finance charges increased 6.3% YoY ($539.4M) driven by higher average loan balance and higher contractual yields on recent assignments; adjusted finance charge yield stabilized sequentially (16.8%) .
Capital deployment and funding: repurchased $107.4M in shares (~230K); completed a $500M ABS financing with expected average annualized cost ~5.1% and noted ~$1.6B unused revolver capacity at quarter-end, signaling ample liquidity and favorable ABS access .

What Went Wrong

Consumer Loan performance underperformed initial forecasts across 2022–2024 cohorts, contributing to a $58.6M (0.5%) decline in forecasted net cash flows and ongoing slower timing from lower-than-expected prepayments .
Originations remained pressured: unit volume down 16.5% YoY (79,916) and dollar volume down 19.4% YoY; active dealers fell 4.7% and average volume per dealer dropped 12.2%, reflecting competitive intensity and tighter scorecard/pricing .
Operating expenses rose 13.3% YoY (+$17.2M) with G&A up 25.2% (+$7.3M), including a $15.0M contingent legal loss tied to multi-state and NY AG matters; adjusted operating expenses still increased 7.7% YoY .

Financial Results

Core P&L and Adjusted Metrics

Metric	Q1 2025	Q2 2025	Q3 2025
Total revenue ($USD Millions)	$571.1	$583.8	$582.4
GAAP net income ($USD Millions)	$106.3	$87.4	$108.2
Adjusted net income ($USD Millions)	$114.8	$118.3	$117.9
Adjusted EPS ($USD)	$9.35	$10.05	$10.28
Adjusted revenue ($USD Millions)	$400.5	$408.0	$405.1
Adjusted operating expenses ($USD Millions)	$135.5	$132.1	$131.6
Adjusted return on capital (%)	9.2%	9.3%	9.4%

Portfolio and Cash Flow KPIs

Metric	Q1 2025	Q2 2025	Q3 2025
Adjusted loans receivable ($USD Millions)	$9,058.0	$9,098.3	$9,065.2
Adjusted average loans receivable ($USD Millions)	$8,931.3	$9,075.7	$9,071.4
Adjusted finance charges ($USD Millions)	$372.2	$384.7	$380.7
Decrease in forecasted net cash flows ($USD Millions)	$(20.9)	$(55.8)	$(58.6)

Mix: Dealer vs Purchased Loans

Metric	Q1 2025	Q2 2025	Q3 2025
Unit mix – Dealer loans (%)	77.0%	71.6%	73.1%
Unit mix – Purchased loans (%)	23.0%	28.4%	26.9%
Dollar mix – Dealer loans (%)	75.1%	68.3%	70.6%
Dollar mix – Purchased loans (%)	24.9%	31.7%	29.4%

Additional Q3 Details (YoY)

Metric	Q3 2025	Q3 2024	Change
GAAP average debt ($USD Millions)	$6,400.1	$6,071.1	+5.4%
GAAP average shareholders’ equity ($USD Millions)	$1,573.4	$1,594.2	-1.3%
Diluted weighted avg shares	11,472,729	12,415,143	-7.6%
Total operating expenses ($USD Millions)	$146.6	$129.4	+13.3%
Total provision for credit losses ($USD Millions)	$152.0	$184.7	-17.7%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Long-term effective tax rate used for adjustments	From Q2 2025 onward	23%	25%	Raised

Note: The company did not provide formal ranges for revenue, margins, OpEx, OI&E, or tax rate beyond the long-term effective rate assumption change; no dividend guidance was provided .

Earnings Call Themes & Trends

Topic	Q1 2025 (Apr 30)	Q2 2025 (Jul 31)	Q3 2025 (Oct 30)	Trend
Loan performance by vintage	Modest underperformance in 2022, 2024, 2025; smallest forecast decline in 8 quarters (-0.2%)	Underperformance in 2022–2024; 2025 above expectations (-0.5% net cash flow)	2022–2024 underperform; 2025 above expectations; -0.5% (~$59M) forecast decline	Persistent back-book weakness; 2025 positive offset
Competitive intensity	Competitive environment pressuring volume; tighter scorecard impact	Competition intense; market share down; pricing discipline maintained	“Very competitive” market; prefer margin over volume	High and persistent competition
Prepayment timing	Slower timing; lower than historical prepayments	Slower timing persists; adjusted yields offset by new loans pricing	Prepay lag vs competition; may tick up if competition continues	Slower timing gradually normalizing?
ABS/capital markets	Conservative cash stance given macro; refi notes; securitization closed	ABS spreads tight; active buybacks; authorization remaining	Active ABS deal marketing; ~$1.6B unused revolvers	Funding access strong; costs favorable
Legal/regulatory	CFPB withdrew; limited scope to NY consumers (press release)	No detail on legal costs; reserves only when material	$15M contingent legal loss; proposed $45M settlement offer with multi-state & NY AG	Legal contingency ongoing; reserve increased
Technology & AI	Modernization of tech stack ongoing	Modernization accelerates release velocity	Modernized CAPS; delivery speed +~70% YoY; AI deployed for call center efficiency	Execution improving; AI usage expanding
Share repurchases/leverage	Buybacks aligned with leverage/growth; conservative stance	530K shares repurchased; 391K authorization remaining	$107.4M buybacks; “just over 2M” authorized; leverage high end of range (2–3x adj D/E)	Ongoing repurchases contingent on leverage/growth

Management Commentary

“We are pleased to report growth in adjusted EPS despite the challenging competitive landscape and difficult collection environment… our business model is designed to produce acceptable returns in the aggregate even if loan performance is significantly worse than forecasted.” — Ken Booth, CEO .
“We’ve increased the speed that we deliver enhancements to our dealers by almost 70% compared to a year ago… deployed AI to improve call center operational efficiencies and consumer engagement.” — Company highlights on CAPS modernization and AI .
“We still have [the 90% early amortization] covenant… We have no outstanding securitizations that are close to the 90% trigger.” — Ken Booth on ABS covenants .
“The environment’s very competitive right now… We’d rather do a little less volume at solid margins than chase volume.” — Jay Martin on competition and pricing discipline .
“We actually have an ABS deal in the market right now… seeing demand comparable to recent deals… ~$1.6B of unused availability on revolving credit facilities.” — Ken Booth on funding access .

Q&A Highlights

ABS covenants: Early amortization trigger (90%) remains in warehouse/ABS; no securitizations close to trigger, giving comfort on funding stability .
OpEx and legal: G&A elevated due to contingent legal losses ($23.4M in Q2, $15.0M in Q3); adjusted results used to strip one-time legal items .
Advance rates/mix: Slight increase in advance rates attributed to higher mix of purchased loans and products for somewhat better-credit consumers; volume still down due to competition and prior scorecard changes .
Competitive dynamics and attrition: Attrition up as some dealers pause activity; intense competition compressing per-dealer volume; company prioritizes margins over volume .
Tariffs/macro: Tariffs and affordability pressures are negatives for CACC’s consumer; prepay dynamics may lag and could tick up if competition persists .
Leverage/buybacks: Adjusted leverage at high end of historical 2–3x range; buyback cadence weighs leverage/growth and capital needs for originations .

Estimates Context

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue Consensus Mean ($USD Millions)	567.199*	581.124*	592.842*
Revenue Actual ($USD Millions)	$571.1	$583.8	$582.4
Primary EPS Consensus Mean ($USD)	9.6675*	9.83*	9.4525*
Adjusted EPS Actual ($USD)	$9.35	$10.05	$10.28

Q3: Adjusted EPS beat consensus ($10.28 vs $9.45*); GAAP diluted EPS was $9.43, roughly in line with consensus, while revenue missed modestly ($582.4M vs $592.8M*) .*
Q2: Revenue beat ($583.8M vs $581.1M*); adjusted EPS ahead of consensus ($10.05 vs $9.83*), though GAAP EPS differs due to non-GAAP adjustments .*
Q1: Revenue beat ($571.1M vs $567.2M*); adjusted EPS slightly below consensus ($9.35 vs $9.67*) amid slower cash flow timing .*

Values retrieved from S&P Global.*

Where estimates may adjust: Analysts may raise adjusted EPS assumptions for Q4/FY given stronger yields on recent originations and sustained buybacks, but could trim revenue forecasts to reflect slower unit/dollar volumes and ongoing forecast timing drags; legal contingencies and competitive intensity remain headwinds to margin assumptions .

Key Takeaways for Investors

Pricing discipline over volume: CACC continues to prioritize spread/returns over chasing originations in a fiercely competitive market, supporting adjusted returns while pressuring unit volumes .
Adjusted EPS strength vs consensus: The company delivered a notable adjusted EPS beat in Q3 despite a small revenue miss, aided by higher portfolio yields and buybacks; watch for EPS revisions higher near term .*
Back-book headwinds persist: 2022–2024 vintages remain below initial forecasts, contributing to $58.6M decline in expected net cash flows and slower timing; monitor prepayment trends as competition may eventually accelerate prepays .
Funding access is strong: $500M ABS at ~5.1% cost and ~$1.6B unused revolver capacity underscore robust liquidity and favorable ABS investor demand, a support for originations and buybacks .
Legal overhang: $15M contingent legal loss and a proposed $45M settlement offer indicate continued legal risk; adjusted reporting removes one-time impacts, but headline risk remains .
Tech and AI execution: CAPS modernization (delivery speed +~70% YoY) and AI deployment in servicing should support efficiency gains and potentially better consumer engagement over time .
Capital deployment: Buybacks (~2% reduction in shares in Q3) combined with leverage at the high end of the target range suggest continued repurchase activity will be calibrated to growth and funding needs .

Additional Relevant Press Releases (Q3 window)

$500.0M asset-backed non-recourse secured financing (three classes; expected average annualized cost ~5.1%; servicing strip 4%) — “lowest-cost ABS transaction since late 2021” .
Workplace recognition: Top Workplace for Remote Work (#1 in 1,000–2,499 employees) reinforces talent and culture narrative supporting modernization initiatives .

Management Commentary (Prepared Remarks)

“Our business model is designed to produce acceptable returns in the aggregate even if loan performance is significantly worse than forecasted.” — Ken Booth .
“Modernization… allowed us to build, launch, and iterate at a rapid pace… increased the speed… by almost 70% compared to one year ago.” — Company statement .
“Deployed AI to improve call center operational efficiencies and consumer engagement.” — Company statement .

Guidance Clarifications and Tone

No formal quantitative guidance; increased long-term effective tax rate assumption to 25% (from 23%) for non-GAAP adjustments due to higher state/local taxes and lower excess tax benefits .
Tone: Cautiously constructive on funding access and modernization; disciplined on pricing amid intense competition; candid acknowledgment of vintage underperformance and slower timing .

Appendix: Selected Operational KPIs (Q3 YoY)

Unit volume: 79,916 (-16.5% YoY); dollar volume -19.4% YoY; active dealers 10,180 (-4.7% YoY); average volume per active dealer 7.9 (-12.2% YoY) .
Dealer holdback/accelerated payments to dealers: $51.9M in Q3 .
Share repurchases: $107.4M (~230K shares; ~2.0% of shares outstanding at quarter-start) .

Bolded surprises:

Strong adjusted EPS beat vs consensus despite revenue miss — driven by yield and buybacks .*
Lowest-cost ABS since late 2021, adding a funding positive surprise amidst subprime auto headlines .

CREDIT ACCEPTANCE CORP (CACC)·Q3 2025 Earnings Summary