Executive Summary

Strong inaugural quarter as a public company: revenue $152.7M (+47% y/y), net income $47.7M (+48% y/y), cash efficiency ratio 75.9% (+638 bps y/y), leverage improved to 1.76x; board declared a $0.24 quarterly dividend .
Results materially beat Wall Street: consensus revenue $147.7M vs. actual $152.7M; consensus EPS $0.62 vs. S&P-actual $0.794, and company pro forma diluted EPS $0.81; strength driven by elevated collections ($255.7M, +85%) and ERC at a record $2.85B (+31% y/y) *.
Conn’s portfolio purchase contributed meaningfully ($24.7M portfolio revenue, $3.1M servicing revenue, $19.5M net operating income) while overall deployments were $125.3M (down 11% y/y); forward flows locked-in $257.3M, with $218.8M over the next 12 months .
Near-term catalysts: favorable delinquency/charge-off backdrop, ample liquidity (RCF $825M undrawn; cash $51.7M), pre-funded 2026 maturity, target leverage 2.0–2.5x, and declared dividend; management remains bullish on pipeline and operating efficiency .

What Went Well and What Went Wrong

What Went Well

Record operational metrics: collections $255.7M (+85% y/y) and ERC $2.85B (+31% y/y); cash efficiency ratio 75.9% vs. 69.5% a year ago .
CEO highlighted sector-leading efficiency and favorable market supply: “We are very proud of our best-in-class Cash Efficiency Ratio… operating efficiency is a powerful competitive advantage,” and “investment environment remains favorable with elevated…delinquencies and charge-offs” .
Balance sheet strength and liquidity: leverage improved to 1.76x; $825M RCF undrawn; $51.7M unrestricted cash; $500M 2030 notes issued to pre-fund 2026 maturity .

What Went Wrong

Operating expenses rose 37% y/y to $65.5M, driven by court costs, agency commissions, and IPO-related professional fees; interest expense also increased 42% y/y .
Deployments decreased 11% y/y to $125.3M in Q2 despite strong ytd deployments; UK net operating income contracted on lower deployments and higher servicing costs .
Effective tax rate came in ~23% with a significant catch-up tied to the IPO-related change in tax status, dampening bottom-line vs. pretax strength; management now guides ~23% going forward .

Financial Results

Revenue, EPS, Margins vs. Prior Periods and Estimates

Metric	Q2 2024	Q1 2025 (derived)	Q2 2025	Consensus (Q2 2025)	Actual vs Consensus
Revenue ($USD Millions)	$103.8	$154.9 (307.7 YTD − 152.7)	$152.7	$147.7*	Beat by $5.0M
Net Income ($USD Millions)	$32.2	$64.2 (111.9 YTD − 47.7)	$47.7	—	—
Diluted EPS (GAAP)	N/A (pre-IPO)	N/A (pre-IPO)	$16.76 (reported, limited share-DNI)	—	—
Pro Forma Adjusted Diluted EPS ($)	N/A	$1.11 (1.92 YTD − 0.81)	$0.81	$0.62*	Beat
Net Operating Income ($USD Millions)	$55.1	$89.3 (175.9 YTD − 86.6)	$86.6	—	—
Net Income Margin (%)	31.1%	41.5% (64.2/154.9)	31.2%	—	—
Net Operating Income Margin (%)	53.1%	57.6% (89.3/154.9)	56.7%	—	—

Note: Consensus values marked with * are retrieved from S&P Global; S&P lists the quarter as “Q3 2025” with actual revenue $150.348M and EPS $0.794, which are consistent with company pro forma EPS; company-reported revenue is $152.7M, implying a beat vs. consensus even on S&P’s “actual” basis *.

Segment Revenue Breakdown

Segment	Q2 2024 Revenue ($M)	Q2 2025 Revenue ($M)
United States	$68.5	$110.7
United Kingdom	$13.1	$13.7
Canada	$14.5	$19.2
Latin America	$7.8	$9.0
Total	$103.9	$152.7

KPIs

KPI	Q2 2024	Q2 2025	Notes
Collections ($USD Millions)	$137.9	$255.7	US included $65.1M from Conn’s
ERC ($USD Millions)	$2,170.2	$2,852.9	US ERC included $226.5M from Conn’s
Deployments/Purchases ($USD Millions)	$140.5	$125.3	Forward flows $257.3M; $218.8M next 12 months
Cash Efficiency Ratio (%)	69.5%	75.9%	Ex-Conn’s would be 71.8%
Leverage (Net Debt/Adj Cash EBITDA, x)	2.47x	1.76x	TTM adjusted cash EBITDA $654.0M

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Effective tax rate	Q3 2025 and forward	Upper single digits was historical pre-IPO framework	~23% normalized; Q2 included ~$12.2M catch-up	Raised/normalized
Target leverage	Long-term	2.0–2.5x (framework)	2.0–2.5x; Q2 actual at 1.76x	Maintained
ERC collections outlook	Next 12 months	N/A	Expect $889M collections from ERC	New disclosure
Deployments to maintain ERC	Next 12 months	N/A	~$465M needed globally; $219M already contracted via forward flows	New disclosure
Dividend	Q3 2025	N/A	$0.24 per share declared, payable Sep 4, 2025	Initiated/Declared
Liquidity	Current	N/A	RCF $825M undrawn; $51.7M cash	New disclosure

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q2 2025)	Trend
Market supply & delinquencies	Supply cadence consistent with Q1 across asset classes	Elevated non-mortgage delinquencies and charge-offs driving portfolio supply; low unemployment supports liquidation rates	Improving supply backdrop
Operating efficiency	Ongoing continuous improvement pre-IPO (implied)	Cash efficiency 75.9%; ex-Conn’s ~71.8%; initiatives to further reduce cost-to-collect	Sustained improvement
Insolvency mix	Trough in 2021; rising since then (Canada, US)	45% y/y growth in insolvency deployments combined (US+Canada); mix impact on efficiency modest currently	Increasing contribution
Tax rate & structure	Pre-IPO partnership status; low effective rate	~23% effective tax rate post-IPO; Q2 catch-up item explained	Normalize higher
Capital & leverage	Framework 2.0–2.5x	Actual 1.76x; third unsecured bond $500M; RCF undrawn; ample liquidity	Balance sheet stronger

Management Commentary

CEO: “We delivered robust inaugural quarterly results… Collections growth was strong and our ERC set a new record.”
CEO: “Our leading operating efficiency is a powerful competitive advantage, and… continues to deliver consistent attractive ROE.”
CFO: “Adjusted pretax income… $62M up 55% y/y… adjusted pretax ROAE 58.4%.”
CFO: “Net debt to adjusted cash EBITDA improved to 1.76x… balance sheet is solid with ample liquidity… dividend of $0.24 per share.”

Q&A Highlights

Deployments mix and supply: Mix consistent; increased supply across credit card, personal loans, telco; pipeline expansion underway; potential Discover selling noted as market speculation post Capital One/Discover merger .
Insolvency and efficiency: Insolvency growth in US/Canada; if mix rises materially, cash efficiency could increase; net returns similar across distressed/insolvency as pricing multiples adjust .
Tax rate: Effective rate ~23% going forward; Q2 included ~$12.2M catch-up due to change in tax status post-IPO; dampened reported bottom line vs. pretax strength .
Conn’s portfolio: Performing book exceeding underwritten expectations; Q2 contribution detailed; expected taper through 2025 .
Efficiency outlook: Continuous improvement remains a hallmark; gains get harder at high levels but should not flatline .
Leverage & capital: Target leverage 2.0–2.5x; Q4 typically largest deployment quarter; strong liquidity and optionality (prefunded 2026) .
Macro sensitivity: Recession historically reduces liquidation ~10% for ~18 months but increases supply/pricing; net medium-term positive for returns (2009–2011 vintages example) .

Estimates Context

Q2 2025 S&P Global consensus: revenue $147.7M*, EPS $0.62*, with 5 and 4 estimates respectively; company reported revenue $152.7M and pro forma diluted EPS $0.81; S&P “actual” shows revenue $150.3M* and EPS $0.794*, confirming a beat on both metrics * *.
Implication: Street models likely need to raise revenue run-rate and EPS trajectory given operating leverage and cash efficiency, while incorporating normalized ~23% tax rate *.

Key Takeaways for Investors

Strong beat on revenue and EPS with record ERC and collections, supported by favorable credit supply and sector-leading efficiency—a constructive setup into seasonally strong Q4 deployment quarter .
Efficiency is durable and improving; ex-Conn’s metrics still ~1,000 bps above peers, suggesting sustainable margin advantage and upside to earnings vs. consensus .
Liquidity and capital flexibility (RCF undrawn, prefunded 2026 notes) position JCAP to opportunistically scale deployments and consider capital returns (dividend established; buybacks evaluated over time) .
Normalized tax rate (~23%) is now embedded; adjust models to reflect the post-IPO corporate structure and one-time catch-up already taken in Q2 .
Watch mix shifts (insolvency vs. distressed) and forward flows ($219M next 12 months) as leading indicators for efficiency and ERC maintenance .
Conn’s portfolio impact will taper through 2025; underlying core performance remains strong and should carry the growth mantle thereafter .
Macro downside appears mitigated by historical return dynamics in recessions (higher supply, better pricing); net medium-term positive for the strategy .

Values marked with * are retrieved from S&P Global via GetEstimates.

Jefferson Capital, Inc. / DE (JCAP)·Q2 2025 Earnings Summary