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JC

Jefferson Capital, Inc. / DE (JCAP)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered strong growth with revenue up 36% year over year to $150.8M and net income of $38.4M; adjusted EPS was $0.74, supported by collections of $236.8M and sector-leading cash efficiency ratio of 72.2% .
  • Versus Wall Street consensus, revenue modestly beat (~$150.3M actual vs $147.7M est) and Primary EPS beat ($0.79 actual vs ~$0.62 est); company-reported GAAP diluted EPS was $0.59 and adjusted EPS $0.74 (Primary EPS is S&P normalized) . Values with asterisks retrieved from S&P Global.
  • Strategic catalysts: Revolving Credit Facility upsized to $1.0B with pricing reduced 50 bps and maturity extended to 2030; Bluestem active credit card portfolio expected to close in Q4 2025; quarterly dividend declared at $0.24/share .
  • Sequentially, revenue dipped slightly vs Q2 ($150.8M vs $152.7M) and cash efficiency ratio moderated (72.2% vs 75.9%) due to mix and legal channel investments, while leverage improved to 1.59x, enhancing strategic optionality .

What Went Well and What Went Wrong

What Went Well

  • “Largest third quarter deployments in the company’s history” at $151.0M (+22% YoY) and ERC up 27% to $2.93B, underpinning future cash flows and returns .
  • Operating efficiency remained sector-leading (Cash Efficiency Ratio 72.2%); excluding Conn’s, CER would still be a strong 68.8%, reflecting structural improvements in cost-to-collect .
  • Capital strength and flexibility: Leverage improved to 1.59x and RCF upsized to $1.0B with better terms; management highlighted “speed and certainty of close” as a competitive advantage .

What Went Wrong

  • Operating expenses rose 60% YoY to $80.2M, driven by higher court costs ($14.9M, +66% YoY) and non-cash stock-based compensation ($8.8M), which compressed net operating margin vs prior year .
  • UK segment revenue and NOI declined YoY (Total revenue $13.4M vs $14.7M; NOI $2.7M vs $5.6M), reflecting lower deployments and higher servicing expenses .
  • Sequential moderation: Collections fell vs Q2 ($236.8M vs $255.7M) and CER decreased (72.2% vs 75.9%), consistent with mix (Conn’s runoff) and elevated legal channel investments timing .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$110.6 $152.7 $150.8
GAAP Diluted EPS ($)— 16.76 (pre-IPO share base) 0.59
Adjusted EPS ($)— 0.81 (Pro Forma Adjusted Diluted) 0.74
Net Operating Income ($USD Millions)$59.4 $86.6 $70.0
Net Operating Income Margin (%)53.7% 56.7% (86.6/152.7) 46.4%
Cash Efficiency Ratio (%)69.0% 75.9% 72.2%

Results vs Wall Street consensus (S&P Global):

MetricConsensusActualSurprise
Revenue ($USD Millions)$147.7*$150.3*+$2.6*
Primary EPS ($)$0.62*$0.7942*+$0.1742*
Values with asterisks retrieved from S&P Global.

Segment revenue breakdown:

Segment Revenue ($USD Millions)Q3 2024Q3 2025
United States$74.3 $111.3
United Kingdom$14.7 $13.4
Canada$12.9 $16.9
Latin America$8.7 $9.3
Total$110.6 $150.8

Key KPIs:

KPIQ3 2024Q2 2025Q3 2025
Collections ($USD Millions)$145.1 $255.7 $236.8
Deployments ($USD Millions)$123.4 $125.3 $151.0
ERC ($USD Billions)$2.3068 $2.8529 $2.9296
Cash Efficiency Ratio (%)69.0% 75.9% 72.2%
LTM Adjusted Cash EBITDA ($USD Billions)$0.3743 $0.6540 $0.7272
Leverage (Net Debt / LTM Adj Cash EBITDA, x)2.52x 1.76x 1.59x

Additional detail:

  • Conn’s portfolio contributed in Q3: portfolio revenue $22.4M, servicing revenue $1.9M, net operating income $16.5M .
  • Geographic collections Q3: US $182.9M, Canada $29.0M, UK $11.0–11.1M, LatAm $13.9M; YoY +63% total .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Court costs (legal channel)Q4 2025 & FY 2026Not specifiedSlightly higher than Q3 in Q4; 2026 run-rate based on current-quarter levels (~$15M) Set run-rate expectations
Effective tax rateH2 2025 onwardN/A (pre-IPO structure)~23% near-term effective tax rate, post-IPO normalization Established rate level
Leverage targetLong-termN/A2.0–2.5x long-term target Formal target
Revolving Credit FacilityPost-Q3$825M commitmentsUpsized to $1.0B; pricing reduced 50 bps; non-use fee -5 bps; maturity extended to Oct 27, 2030 Raised/improved
Forward flows (deployments)Next 12 months$218.8M (as of Q2) $272.8M (as of Q3) Raised
DividendQ4 2025$0.24/share (initiated Q2) $0.24/share declared; payable Dec 4, 2025 Maintained
Bluestem acquisitionQ4 2025N/AExpected closing in Q4; gross purchase price $302.8M; $20M escrow; HSR approval required New transaction pending

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Legal channel acceleration & court costsQ2: Elevated court costs; legal channel contributing to collections Court costs ~$14.9M; timing pulled forward; run-rate expectation set; legal channel inventory rising Increasing investment; sustained elevated costs
Cash efficiency ratio (CER)Q2: 75.9%; ex-Conn’s 71.8% 72.2%; ex-Conn’s 68.8%; still sector-leading High but moderating sequentially
Macro: delinquencies & insolvency supplyQ2: Elevated delinquencies; insolvency up in US/Canada Continued elevation; supports portfolio supply; low unemployment supports liquidation Sustained favorable supply backdrop
Capital structure & liquidityQ2: $500M 2030 notes; RCF undrawn; leverage 1.76x RCF upsized to $1.0B; leverage 1.59x; $42M cash; plan to use RCF for 2026 bonds Improved terms; optionality rising
Performing portfolio acquisitionsQ2: Conn’s performing/NP mix performing well; pipeline developing Bluestem portfolio expected; short duration; EPS/CER supportive; no employees acquired Expanding funnel; episodic opportunities
Asset class opportunities (auto)Q2: Not emphasizedQ3: Noted rising non-prime auto delinquencies; opportunity set increasing Emerging
Student loans policy riskQ2: Concern over forgiveness noise; cautious deployments Reiterated caution until regulatory clarity; capability to underwrite if government sells Cautious stance maintained

Note: Q-1 documents unavailable in this set; trends reference Q2 and Q3.

Management Commentary

  • “We delivered strong third quarter results with significant momentum in all key aspects of the business… largest third quarter deployments in the company’s history, up 22% year-over-year” — David Burton, CEO .
  • “We further improved our leading position in the market by upsizing our revolving credit facility to $1 billion in commitments while also improving pricing and enhancing terms” .
  • “When excluding the Conn’s portfolio collections and expenses, the cash efficiency ratio would have been 68.8%, which remains materially higher compared to other public companies in the sector” .
  • “We expect [Bluestem] to close later in the fourth quarter… net purchase price roughly ~$195M assuming a Dec 1 closing; half-life less than one year” .
  • “Our net debt to adjusted cash EBITDA improved to 1.59x… significantly better than our publicly traded peers… target leverage 2–2.5x” .

Q&A Highlights

  • Seasonality: Collections peak Feb–Apr due to US tax refunds; deployments seasonally largest in Q4 across geographies .
  • Court costs outlook: ~$15M in Q3; slightly higher in Q4; 2026 based on current run-rate, reflecting acceleration of legal channel activity .
  • Bluestem/Conn’s cadence: Similar short-duration earnings cadence; expected to support CER, offsetting Conn’s runoff .
  • Capital allocation: Dividend maintained; potential for share repurchases; primary focus on attractive portfolio deployments; RCF earmarked to repay 2026 bonds .
  • Pipeline: Increased visibility and eligibility for performing portfolio transactions post-Conn’s; opportunities remain episodic and timing uncertain .
  • Asset classes: Noted rising non-prime auto opportunities; cautious stance on private student loans pending policy clarity; potential interest if federal portfolio sale occurs .

Estimates Context

  • Q3 revenue beat S&P Global consensus (actual ~$150.3M vs est ~$147.7M), and Primary EPS beat (actual ~$0.794 vs est ~$0.62). Company-reported GAAP diluted EPS was $0.59 and adjusted EPS $0.74, indicating outsized operational performance relative to normalized consensus EPS bases . Values retrieved from S&P Global.
  • Forward estimates: Q4 2025 consensus revenue ~$153.7M and Primary EPS ~$0.665*. Given run-rate court costs and Conn’s runoff, estimates may calibrate to reflect legal-channel investments and timing of Bluestem closing; CER still strong, but mix-sensitive. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue/Primary EPS beat, with sector-leading efficiency and improved leverage (1.59x) strengthening capital flexibility; dividend maintained at $0.24/share .
  • Legal channel investments (court costs) are upfront and intended to drive future collections; management set expectations for sustained elevated costs into 2026 .
  • Strategic catalysts near term: Bluestem closing (short-duration cash inflows), expanded $1.0B RCF with lower pricing, and seasonal Q4 deployment opportunities .
  • Mix dynamics (Conn’s runoff vs Bluestem onboarding) likely to influence CER and margin trajectory; ex-Conn’s CER still robust at 68.8% .
  • Geographic diversification with strong US and Canada performance; UK softness highlights importance of deployment mix and cost control .
  • Medium term: Elevated delinquencies and insolvency supply underpin deployment runway; low unemployment supports liquidation assumptions .
  • Watch-list: Execution on Bluestem integration/servicing transfer, legal channel efficiency, forward flow deployment pace, and potential episodic performing portfolio opportunities .

Supporting data and sources:

  • Q3 2025 8-K press release and financial tables: revenue $150.8M, net income $38.4M, adjusted EPS $0.74, collections $236.8M, deployments $151.0M, ERC $2.9296B, CER 72.2%, leverage 1.59x; dividend $0.24/share; RCF upsized to $1.0B .
  • Q3 2025 earnings call transcript: operational themes (legal channel, CER ex-Conn’s, Bluestem details), leverage target 2–2.5x, capital allocation priorities .
  • Q2 2025 8-K and call: revenue $152.7M, collections $255.7M, ERC $2.8529B, CER 75.9%, forward flows $218.8M; tax rate commentary ~23% post-IPO .
  • Segment results and UK/Canada/LatAm details: 10-Q segment tables for Q3 2025 and Q3 2024 .
  • S&P Global consensus and actuals: Q3 revenue/Primary EPS and Q4 2025 forward estimates. Values retrieved from S&P Global.