Executive Summary

Q3 revenue was $167.9M on continuing operations, with gross loans receivable up 2% sequentially to $1.25B; net charge-off rate improved 110 bps Q/Q to 17.7%, reflecting tighter underwriting, servicing optimization, and mix shift to larger, longer-duration loans .
EPS (continuing ops, diluted) was $(0.81), down from $0.52 in Q3 2022 and improved vs $(1.32) in Q2; provision for credit losses fell 23% Q/Q to $49.0M, and OpEx was $94.2M including $6.5M non-recurring charges .
Strategic pivot completed: Flexiti sale effective Aug 31, 2023; company now focused exclusively on Direct Lending in U.S. and Canada; U.S. operations converted to a single loan management system .
Management outlined 4Q23 targets (EOP receivables $1.26–$1.28B; revenue $165–$175M; NCO% 16.5–18.5%; OpEx $85–$95M) and FY2024 outlook (8–12% EOP receivables growth; NIM post charge-offs excl. recourse interest 26–28%; maintain 4Q23 OpEx run-rate) .

What Went Well and What Went Wrong

What Went Well

“The third quarter marked another significant milestone with the sale of the Flexiti business which allows us to focus on being an industry leader in Direct Lending in the U.S. and Canada,” said CEO Doug Clark; U.S. branch operations converted to a single system to accelerate path to profitability .
Credit quality improved: net charge-off rate declined 110 bps Q/Q to 17.7% and 70 bps YoY; late-stage roll rates improved, leading to a $10.6M allowance reduction despite portfolio growth .
Provision for credit losses decreased 23% Q/Q to $49.0M; net revenue post-provision rose to $118.9M; OpEx ratio adjusted for non-recurring items fell to ~28.3% (vs reported 30.4%) .

What Went Wrong

Continued net loss: $(33.6)M from continuing operations and $(104.4)M total including discontinued operations; interest expense rose 10.6% Q/Q to $55.8M on higher rates and greater average debt levels post May 2023 capital raise .
NIM post charge-offs (excl. recourse interest) decreased slightly Q/Q to 27.1%, pressured by increased non-recourse debt levels/rates and lower yields from mix shift, partly offset by lower net charge-offs .
Canadian delinquencies increased primarily in installment and single pay products (31+ days past due rose sequentially to 8.8% in Canada), though open-end product remained stable; total past-due rate rose to 8.5% .

Financial Results

Note: Q3 2023 is presented on continuing operations basis (excluding Canada POS Lending following Flexiti sale on Aug 31, 2023) . Prior quarters shown on comparable continuing operations basis using consolidated tables that include Direct Lending.

Metric	Q3 2022	Q1 2023	Q2 2023	Q3 2023
Revenue ($USD Millions)	$186.4	$169.4	$167.0	$167.9
Diluted EPS - Continuing Ops ($USD)	$0.52	$(1.35)	$(1.32)	$(0.81)
Provision for Credit Losses ($USD Millions)	$65.0	$48.4	$63.8	$49.0
Operating Expenses ($USD Millions)	$102.8	$103.2	$91.3	$94.2
Interest Expense ($USD Millions)	$38.2	$44.0	$50.5	$55.8
Net Charge-off Rate (%)	18.4%	15.6%	18.8%	17.7%
OpEx Ratio (%)	34.9%	33.5%	30.0%	30.4%

Segment/Geography (Direct Lending, Q3 2023):

Metric ($USD Millions)	U.S.	Canada	Total
Revenue	$88	$80	$168
Net Charge-offs	$28	$27	$55
Credit Changes	$(4)	$(2)	$(6)
Net Revenue	$64	$55	$119
Gross Loans Receivable	$752	$503	$1,254

Key KPIs:

KPI	Q1 2023	Q2 2023	Q3 2023
Net Charge-off %	11.5%	18.8%	17.7%
OpEx Ratio (%)	33.5%	30.0%	30.4% (28.3% excl. non-recurring)
Average Gross Receivables ($USD Billions)	$2.075	$2.101	$1.241

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
EOP Receivables ($USD Billions)	Q3 2023	$2.15–$2.25	Actual: $1.25	Below prior guidance; reflects Flexiti divestiture and continuing ops basis
Revenue ($USD Millions)	Q3 2023	$210–$220	Actual: $167.9	Lower than guided; portfolio/composition shift and sale of Flexiti
Net Charge-off %	Q3 2023	12.5–15.5%	Actual: 17.7%	Above guidance; credit normalization post policy changes
Operating Expenses ($USD Millions)	Q3 2023	$108–$118	Actual: $94.2 (incl. $6.5M non-recurring)	Better than guided on reported basis
EOP Receivables ($USD Billions)	Q4 2023	N/A	$1.26–$1.28	Introduced
Revenue ($USD Millions)	Q4 2023	N/A	$165–$175	Introduced
Net Charge-off %	Q4 2023	N/A	16.5–18.5%	Introduced
Operating Expenses ($USD Millions)	Q4 2023	N/A	$85–$95	Introduced
EOP Receivables Growth	FY 2024	N/A	8–12%	Introduced
NIM post charge-offs (excl. recourse)	FY 2024	N/A	26–28%	Introduced
OpEx Run-rate	FY 2024	N/A	Maintain 4Q23 run-rate	Introduced

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2023)	Previous Mentions (Q2 2023)	Current Period (Q3 2023)	Trend
Technology/platform execution	Centralized U.S. collections; enhanced Canadian servicing; change in charge-off policy	Integrated First Heritage into Heights platform; improving expense ratios	Completed conversion to single loan management system across U.S.; continued tech investments	Improving execution
Macro/credit quality	NCO% improved; policy changes aided recoveries; delinquency trends encouraging	Stabilized credit and delinquencies; NCOs reflect policy change normalization	NCO% improved Q/Q and YTD; allowance reduced on late-stage roll rates, macro outlook	Improving credit
Liquidity/capital	Raised $150M term loan and C$110M warehouse; enhanced liquidity	Liquidity +$111M Q/Q; unrestricted cash $113M	Available capital ~$285.3M; unrestricted cash $82.6M; fixed/variable debt mix 57%/43%	Adequate but rate-sensitive
Strategic portfolio	Direct Lending focus emphasized; growth framework	Gradual receivables growth (Direct Lending + Canada POS)	Flexiti sale completed; exclusive focus on Direct Lending	Portfolio simplified
Regulatory/legal	Generic forward-looking risk disclosures	Generic forward-looking risk disclosures	Generic forward-looking risk disclosures	No notable change

Management Commentary

“We completed our conversion to a single loan management system across our U.S. footprint and continue to invest in our technology infrastructure which we believe will accelerate our path to profitability.” — Doug Clark, CEO .
“Our disciplined underwriting, prudent originations and enhanced servicing have resulted in improved credit quality metrics while at the same time allowing us to grow our loan portfolio.” — Doug Clark, CEO .
Prior quarter context: “We delivered solid results in the second quarter… fundamentals continued to gradually improve… position us well for long term growth and shareholder value creation.” — Doug Clark, CEO .
Q1 context: “Our first quarter results highlight the emerging benefits of our business transformation… successfully raised over $230 million in gross capital… favorable relative to guidance expectations.” — Doug Clark, CEO .

Q&A Highlights

The Q3 2023 earnings call transcript was listed but could not be retrieved due to a document database inconsistency; as a result, Q&A highlights and any clarifications provided during Q&A are unavailable for inclusion .

Estimates Context

S&P Global consensus estimates for Q3 2023 EPS and revenue were unavailable due to a missing Capital IQ mapping for CURO (GetEstimates error: missing CIQ mapping); therefore, we cannot assess beats/misses vs Wall Street consensus for this quarter [GetEstimates error].

Key Takeaways for Investors

Credit metrics are improving: net charge-off rate declined Q/Q and YoY; allowance reduced on better late-stage roll rates and macro assumptions—supports margin stabilization into Q4/FY24 .
Strategic simplification (Flexiti sale) and U.S. platform consolidation should enhance operating leverage; adjusted OpEx ratio fell to ~28.3% in Q3 .
Interest expense headwinds persist with higher rates and elevated non-recourse funding; NIM pressure Q/Q highlights sensitivity to funding costs and product mix .
Near-term guidance implies disciplined growth with 4Q revenue $165–$175M and NCO% 16.5–18.5%; FY24 targets call for 8–12% EOP receivables growth and NIM post charge-offs (excl. recourse) of 26–28% .
Liquidity remains adequate ($285.3M total capital resources; $82.6M cash), but leverage is high and interest coverage low, warranting continued focus on funding mix and expense control .
Watch catalysts: execution on OpEx run-rate reduction, sustained credit improvements, and delivery against Q4/FY24 guidance; platform conversion benefits may drive medium-term margin expansion .

CURO Group Holdings Corp. (CURO)·Q3 2023 Earnings Summary