Executive Summary

PRA Group delivered Q2 2025 revenue of $287.7M, +1.2% y/y, and GAAP diluted EPS of $1.08, which includes a ~$0.75/share after-tax gain from the sale of its Brazil servicing stake; underlying EPS was ~$0.32 as disclosed on the call . Versus S&P Global consensus, revenue beat ($279.3M* est.), while GAAP EPS optics beat ($0.615* est.) but underlying EPS missed .
Record ERC reached $8.3B (+21.9% y/y) amid $346.5M Q2 portfolio purchases and a cash efficiency ratio of 62.4% (+355 bps y/y), with Europe continuing to outperform and U.S. transformation initiatives progressing .
Management reaffirmed FY2025 targets: ~$1.2B portfolio investments, high single-digit cash collections growth, and 60%+ cash efficiency; tax rate expected mid-to-high 20s for 2025 .
Key narrative: robust portfolio income (+19.9% y/y), strong legal channel momentum in the U.S. (legal cash +24% y/y), and disciplined purchasing (core purchase price multiples: Americas 2.14x YTD; Europe 1.82x YTD) supporting future collections; however, U.S. ERC adjustments tempered changes in expected recoveries .
Near-term stock catalysts: revenue beat and record ERC vs. underlying EPS shortfall; investor focus on sustainability of European overperformance, cadence of U.S. operational upgrades, legal channel ROI, and continued adherence to 60%+ cash efficiency .

What Went Well and What Went Wrong

What Went Well

Record ERC of $8.3B (+21.9% y/y) on continued robust portfolio investments at attractive return multiples; portfolio income rose 19.9% y/y to $250.9M .
Cash collections up 13.2% y/y to $536.3M with the cash efficiency ratio improving to 62.4% (+355 bps y/y); management emphasized Adjusted EBITDA growth outpacing collections growth (16% LTM) .
Europe outperformed expectations (14% cash overperformance vs. plan), underpinning consolidated overperformance (+7%) and reinforcing the thesis that European underwriting and operational execution remain strong .
CEO tone and execution focus: “we are accelerating the transformation of our U.S. business across our three strategic pillars: optimizing investments, operational execution, and managing expenses” .
Strategic capital actions: completed sale of Brazil servicing stake (RCB), generating ~$30M after-tax gain while retaining portfolios and operations; repurchased $10M of shares .

What Went Wrong

Underlying profitability softer: GAAP diluted EPS of $1.08 included ~$0.75 from the Brazil gain; excluding it, underlying EPS was ~$0.32, below consensus ($0.615*), reflecting U.S. ERC adjustments in “changes in expected future recoveries” (-$7M) primarily on 2023 vintages .
Operating expenses up 3.9% y/y to $202.6M and net interest expense up 12.6% y/y to $62.4M as debt balances rose to fund portfolio purchases; professional/outsourced services and legal costs stepped up to support U.S. transformation and legal channel .
Legal OpEx expected to grow 15–20% for the rest of 2025 as 2024 purchases move through the channel; while ROI is attractive, near-term expense pressure can weigh on cash efficiency optics if collections timing slips .

Financial Results

Headline P&L vs. Prior Periods and Estimates

Metric	Q4 2024	Q1 2025	Q2 2025	Q2 2025 S&P Consensus
Total Revenues ($USD Thousands)	$293,232	$269,619	$287,688	$279,344*
Diluted EPS (GAAP) ($)	$0.47	$0.09	$1.08	$0.615*
Underlying EPS ex. RCB Gain ($)	n/a	n/a	~$0.32 (CFO)	$0.615*
Income from Operations ($USD Thousands)	$94,136	$74,577	$85,111	n/a
Net Income Attributable to PRA Group ($USD Thousands)	$18,456	$3,659	$42,374	n/a
Cash Efficiency Ratio (%)	58.0%	60.8%	62.4%	n/a

Notes: S&P Global consensus figures denoted with an asterisk (*) and provided without document citations. Values retrieved from S&P Global.

Interpretation: Revenue beat consensus while underlying EPS missed; GAAP EPS beat optics reflect one-time Brazil gain .

Segment/KPI Breakdowns

Cash Collections by Source

Cash Collections ($USD Thousands)	Q2 2024	Q1 2025	Q2 2025
Americas & Australia Core	$263,828	$288,160	$301,698
Americas Insolvency	$26,971	$23,700	$24,329
Europe Core	$156,739	$164,371	$185,652
Europe Insolvency	$26,344	$21,205	$24,609
Total	$473,882	$497,436	$536,288

Portfolio Purchases and ERC

Metric	Q4 2024	Q1 2025	Q2 2025
Portfolio Purchases ($USD Thousands)	$432,670	$291,702	$346,505
ERC (Estimated Remaining Collections)	$7.5B	$7.8B	$8.3B
Forward Flow Commitments (12-mo)	$498.9M	$347.0M	$311.2M
Credit Facility Availability	$1.0B	$918.9M	$840.7M

Revenue Composition

Portfolio Revenue Components ($USD Thousands)	Q2 2024	Q1 2025	Q2 2025
Portfolio Income	$209,290	$240,958	$250,934
Recoveries > Forecast	$54,260	$16,500	$40,302
Changes in Expected Future Recoveries	$19,060	$11,422	$(7,010)
Total Portfolio Revenue	$282,610	$268,880	$284,226

Operating and Financing

Expense/Rate	Q2 2024	Q1 2025	Q2 2025
Operating Expenses ($USD Thousands)	$195,007	$195,042	$202,577
Net Interest Expense ($USD Thousands)	$55,353	$60,970	$62,361
Effective Tax Rate	n/a	32.2%	26.5% (1H25)

Additional KPIs (Call)

U.S. legal cash collections +24% y/y to $119M; consolidated cash overperformance +7% (Europe +14%; Americas +3%) .
YTD purchase price multiples: Americas Core 2.14x; Europe Core 1.82x (up vs. early 2023), reflecting disciplined high-return focus .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Portfolio Investments	FY2025	~$1.2B (updated Feb-2025)	Reaffirmed on track	Maintained
Cash Collections Growth	FY2025	High single-digit	On track	Maintained
Cash Efficiency Ratio	FY2025	60%+	60%+ reiterated	Maintained
ROATE	FY2025	~12% target	No update in Q2; call focused on operations	Maintained (implied)
Effective Tax Rate	FY2025	n/a (prior)	Mid-to-high 20s	New detail
Share Repurchase	n/a	n/a	Repurchased $10M in Q2; covenants constrained further buybacks near term	Informational

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24 and Q1’25)	Current Period (Q2’25)	Trend
U.S. Legal Channel	2024: increased legal investments; legal costs up to drive future cash (Q4’24) . Q1’25: continued investment; OpEx +3.1% y/y .	Legal cash +24% y/y; legal OpEx growth expected 15–20% rest of 2025; legal now low-40% of cash mix vs low-30s pre-COVID .	Scaling; improving ROI and mix despite near-term OpEx growth.
Europe Performance	Differentiated platform, consistent collections growth (Q4’24), record ERC (Q1’25) .	Europe overperformed plan by 14%; strong underwriting and consumer backdrop cited .	Sustained outperformance.
Portfolio Supply & Multiples	Record 2024 purchases; 2025 target $1.2B (Q4’24) . Q1’25 purchases +19% y/y .	YTD multiples: Americas 2.14x; Europe 1.82x; disciplined focus on high-return pools; elevated U.S. supply .	Favorable supply; disciplined pricing.
U.S. Transformation	Cash efficiency improved; strategic initiatives ongoing (Q1’25) .	Reorganizing U.S. ops into single P&L; return-to-office for corporate; Charlotte office to access talent; U.S. IT modernization prioritization .	Accelerating execution focus.
Capital Structure & Liquidity	YE’24 availability $1.0B; targets raised (Q4’24) . Q1’25 availability $918.9M .	Availability $840.7M; no maturities until 2027; ample flexibility; $10M buyback, covenants easing expected .	Ample funding; measured buybacks.
Brazil (RCB)	Right to sell stake noted in 2025 targets (exclusion) .	Sale completed; ~$30M after-tax gain; portfolios/ops retained in market .	One-time gain realized; ongoing Brazil presence.

Management Commentary

CEO: “We had another period of robust portfolio investments at attractive purchase price multiples, record ERC, and improved portfolio income… leading to Adjusted EBITDA growth that outpaced cash collections growth.”
CEO on U.S. transformation: “We are accelerating the transformation of our U.S. business across our three strategic pillars: optimizing investments, operational execution, and managing expenses.”
CFO on underlying earnings: “Net income attributable to PRA was $42M or $1.08… including the approximately $30M after-tax gain… Excluding this one-time gain, … ~$0.32 in diluted EPS.”
CFO on forward targets: “On track to deliver… $1.2B purchases, high single-digit cash collections growth and 60%+ cash efficiency for the full year.”

Q&A Highlights

U.S. supply and new sellers/asset classes: Management sees continued elevated U.S. supply and strong long-term relationships; will test into new asset classes cautiously; near-term focus remains on core with disciplined capital allocation .
Legal channel mix and cash efficiency: Legal is used after voluntary engagement fails; management evaluates by NPV; mix has risen to low-40s of cash vs. low-30s pre-COVID; legal OpEx growth expected 15–20% through 2025 as 2024 purchases enter legal .
Collections overperformance drivers: Europe broad-based strength (operations, consumer health, underwriting conservatism); U.S. legal initiatives contributed to +3% overperformance in the Americas .
U.S. reorg details: U.S. operations consolidated under a single P&L led by a seasoned operator to drive speed, accountability, and cost control; tech modernization and return-to-office initiatives underway .
Purchasing cadence vs. multiples: Multiples vary by mix (primary vs. secondary/tertiary) and return thresholds; focus is value, not volume; management will forgo volume if returns don’t meet thresholds .

Estimates Context

Q2 2025 Results vs. S&P Global Consensus

Metric	Consensus	Actual	Delta
Revenue ($USD)	$279,343,500*	$287,688,000	+$8,344,500
Primary EPS (Consensus)	$0.615*	GAAP Diluted EPS: $1.08	+$0.465 (includes ~$0.75 one-time)
		Underlying EPS (ex-RCB gain): ~$0.32	-$0.295 vs. consensus

Notes: S&P Global consensus denoted with an asterisk (*) and provided without document citations. Values retrieved from S&P Global.

Forward Consensus Snapshot (S&P Global)

Metric	Q3 2025	Q4 2025	Q1 2026
Revenue Consensus Mean ($USD)	295,769,000*	301,712,250*	311,870,000*
Primary EPS Consensus Mean ($)	0.5033*	0.5033*	0.5433*

Notes: Values retrieved from S&P Global.

Implications: Revenue beat and underlying EPS miss suggest estimate revisions may tilt mixed: revenue models could inch higher near term, while EPS estimates may be trimmed to reflect expense timing and U.S. ERC adjustments .

Key Takeaways for Investors

Revenue beat with record ERC underpins forward collections; portfolio income growth (+19.9% y/y) and purchase multiples support medium-term earnings power .
Underlying EPS (~$0.32) missed consensus as U.S. adjustments in expected future recoveries offset strong cash overperformance; investors should focus on trajectory of U.S. vintages, especially 2023 .
Europe remains a profit center with consistent overperformance; sustaining that cadence is a key driver of group-level stability .
U.S. legal channel and operational reorg should drive structurally higher cash generation over time, but expect near-term OpEx growth (legal OpEx +15–20% expected through 2025) .
Balance sheet/liquidity are solid (no maturities until 2027; $841M availability), enabling disciplined buying; equity returns to shareholders remain selective given covenant constraints .
FY25 targets (investments, collections growth, 60%+ cash efficiency) reaffirmed; tracking execution on U.S. technology upgrades and cost reviews will inform credibility of out-year EPS bridge .
Trading setup: near term, the revenue beat/record ERC is supportive; underlying EPS miss and expense cadence could temper sentiment. Medium term, delivery on U.S. transformation and sustained European outperformance are the stock’s narrative drivers .

Citations:

Q2 2025 8-K and Press Release: ;
Earnings Call Transcript (Q2 2025):
Prior Quarters (Q1 2025 and Q4 2024) Press Releases: ;

Notes on S&P Global Estimates: Items marked with an asterisk (*) are consensus figures or forward estimates retrieved from S&P Global. Values retrieved from S&P Global.

PRA GROUP INC (PRAA)·Q2 2025 Earnings Summary