Executive Summary

Q2 2025 delivered a net loss from continuing operations of $8.9M and diluted EPS of $(1.73), with “Revenue” (interest income plus noninterest income) at ~$54.6M; sequentially, net interest income after losses softened vs Q1 on mark-to-market headwinds in securitization valuations and higher delinquent receivables .
Liquidity ended at $55.9M (cash $14.3M; UACC warehouse availability $16.6M; $25.0M line of credit on residual certificates). UACC total warehouse capacity was $600M at quarter-end, with $200M expiring July 21, 2025—reducing available capacity post-quarter and representing a key operational and funding watch-item .
Segment trends: UACC’s net interest income after losses fell YoY, partly offset by stronger warranties/GAP income; CarStory revenue declined YoY but turned positive adjusted net income; corporate expenses continued to compress (YoY) .
Management emphasized year-over-year improvement in net loss and adjusted net loss from focus on execution and loan portfolio performance at UACC; no formal update to full-year guidance ranges was provided in Q2 (prior ranges from May were the reference) .
Near-term stock narrative catalysts: warehouse capacity reduction post-June 30, securitization valuation marks, delinquency trends, and warranties/GAP momentum; medium-term focus remains on optimizing UACC credit/collections and scaling CarStory’s AI/data services .

What Went Well and What Went Wrong

What Went Well

Liquidity remained in place at $55.9M, including $25.0M residual-certificate line of credit; management reiterated continued operational execution and UACC portfolio progress .
Warranties and GAP income improved YoY at UACC (+124% YoY in Q2), supporting noninterest income resilience despite broader pressure in credit losses .
CarStory delivered positive adjusted net income in Q2 (vs a loss prior year), helped by materially lower depreciation/amortization and leaner cost structure .

What Went Wrong

Net interest income after losses decreased YoY (Q2: $13.1M vs $18.2M in Q2 2024) as realized/unrealized loss pressure persisted; sequential marks turned negative vs Q1 due to securitization valuations and delinquent receivables .
CarStory revenue fell ~37% YoY (to $1.85M), reflecting softer demand and client usage relative to prior year .
Post-quarter warehouse capacity declined (expired $200M on July 21), raising funding flexibility risk if originations or portfolio needs pick up before capacity is replaced/extended .

Financial Results

Consolidated fundamentals (GAAP; oldest to newest):

Metric	Q4 2024 (Predecessor)	Q1 2025 (Successor)	Q2 2025 (Successor)
Interest income ($USD)	$48,681	$37,157	$45,748
Net interest income after losses ($USD)	$2,015	$14,891	$13,106
Total noninterest income ($USD)	$8,471	$10,206	$8,817
Total expenses ($USD)	$41,175	$31,397	$30,796
Net loss from continuing ops ($USD)	$(36,716)	$(6,450)	$(8,932)
Diluted EPS – Continuing Ops ($USD)	$(20.15)	$(1.25)	$(1.73)

Revenue and EPS vs prior periods and estimates (S&P Global for revenue; oldest to newest):

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue Actual ($USD)	$60,881,000*	$55,590,000*	$54,565,000*
Revenue Consensus Mean ($USD)	—	—	—
EPS Actual – Continuing Ops ($USD)	$(10.61)	$(1.25)	$(1.73)
EPS Consensus Mean ($USD)	—	—	—

Values with asterisks retrieved from S&P Global.

Segment breakdown (Q2 2025 vs Q2 2024):

Segment Metric	Q2 2024	Q2 2025
UACC – Interest income ($USD)	$52,389	$45,748
UACC – Net interest income after losses ($USD)	$17,826	$11,684
UACC – Total noninterest income ($USD)	$5,325	$6,910
UACC – Total expenses ($USD)	$33,032	$25,042
UACC – Adjusted net loss ($USD)	$(8,289)	$(5,334)
CarStory – Revenue ($USD)	$2,913	$1,846
CarStory – Total expenses ($USD)	$4,219	$1,767
CarStory – Adjusted net income (loss) ($USD)	$(1,068)	$124
Corporate – Total expenses ($USD)	$9,191	$3,987

KPIs and balance metrics:

KPI	Q2 2024	Q1 2025	Q2 2025
Gross serviced portfolio ($USD)	$1,094M	$1,021M	$998M
Indirect origination volume ($USD)	$116M	$151M	$114M
Total available liquidity ($USD)	—	$66.9M	$55.9M

Guidance Changes

Metric	Period	Previous Guidance (May 14)	Current Guidance (Q2)	Change
Adjusted net income (loss) ($USD)	FY 2025	($30) – ($45) million	No quantitative update provided in Q2 materials	N/A
Year-end total available liquidity ($USD)	FY 2025	$35 – $50 million	No quantitative update provided in Q2 materials	N/A
Indirect origination volume ($USD)	FY 2025	$460 – $490 million	No quantitative update provided in Q2 materials	N/A

Note: Q2 commentary indicated quarterly cadence tracking prior expectations; formal ranges were not reiterated in the Q2 press release/presentation .

Earnings Call Themes & Trends

(No Q2 earnings call transcript was available.)

Topic	Q4 2024 (Prev)	Q1 2025 (Prev)	Q2 2025 (Current)	Trend
Liquidity & warehouse capacity	YE cash + excess liquidity $57.5M; UACC capacity $825M, $465M remaining	Liquidity $66.9M; extended $400M warehouse; $800M capacity	Liquidity $55.9M; $600M capacity with $200M expiring July 21	Down sequential liquidity/capacity; watch funding flexibility
Securitizations/Capital markets	Announced 17th securitization to close in March	Closed 17th securitization ($324M)	Marks turned negative QoQ on securitization valuations; higher delinquents	From supportive in Q1 to a headwind in Q2 marks
Credit tightening & portfolio performance	Tightening returned delinquencies/performance to pre-pandemic; macro/recovery rates weaker	Positive mark-to-market; improving capital structure; continued efficiency	Continued performance initiatives; delinquency impact to marks QoQ	Mixed—structural improvements vs near-term delinquency/marks
CarStory AI/data platform	Stable revenue; capabilities highlighted	Capabilities reinforced; revenue modest	Revenue down YoY; cost base lean; positive adjusted net income	Cost discipline offsets softer top line
Accounting/regulatory	Recapitalization completed Jan 14; fresh-start noted	Fresh-start accounting; combined view for comparability	Fresh-start implications reiterated; non-comparability cautions	Ongoing disclosure framing

Management Commentary

“In the second quarter of 2025, our net loss and Adjusted net loss decreased year over year, driven by continued focus on operational execution, efficiency and progress in loan portfolio performance at UACC.” — CEO Tom Shortt .
“We succeeded in executing UACC's 17th securitization transaction, and we've extended $400 million of warehouse capacity since year end 2024… ended the quarter [Q1] with total available liquidity of approximately $67 million.” — UACC CFO Jon Sandison .
Fresh-start accounting cautions: post-emergence statements are not comparable to prior periods; combined views provided for context .

Q&A Highlights

No Q2 2025 earnings call transcript was available; themes inferred from the Q2 presentation included:
- Securitization valuation and delinquency-driven marks driving QoQ adjusted net loss bridge .
- Clarification that $200M of warehouse capacity expired on July 21, 2025, reducing capacity post-quarter .
- Continued focus on cost reductions across compensation, software/IT, and other operating expenses .

Estimates Context

S&P Global “Revenue” actuals indicate ~~$54.6M in Q2 2025, down QoQ (~~$55.6M in Q1) and YoY (~$60.9M in Q2 2024). Consensus revenue/EPS estimates were unavailable for comparison; EPS actuals from company filings were $(1.73) in Q2 2025 vs $(1.25) in Q1 2025 and $(10.61) in Q2 2024 .
With consensus unavailable, we expect sell-side models to reflect:
- Lower net interest income after losses vs Q1 tied to securitization valuation marks and delinquencies .
- Warranties/GAP strength in UACC noninterest income and CarStory’s improved profitability position despite revenue declines .

Values retrieved from S&P Global.

Key Takeaways for Investors

Funding risk watch: total warehouse capacity stepped down post-quarter due to a $200M expiry; monitor further extensions/renewals and securitization execution cadence .
Earnings quality driver: securitization valuation marks and delinquency trends were a material QoQ headwind; subsequent performance of loss vintages and collections will influence marks and net interest income after losses .
UACC noninterest income support: warranties/GAP income strength provides a buffer amid loss pressure; track sustainability of this uplift .
CarStory operating leverage: cost reductions drove positive adjusted net income despite revenue decline; upside depends on enterprise adoption of AI/data products .
Fresh-start comparability limits: use combined (non-GAAP) context from Q1 and recognize post-emergence statements differ materially from prior periods .
Liquidity trajectory: ended Q2 at $55.9M; sequential decline from Q1’s $66.9M underscores need for disciplined originations and efficient funding .
Near-term trading lens: sensitivity to warehouse capacity announcements, securitization pricing/marks, and delinquency/collection updates; medium-term thesis anchored on improving credit performance and scaling CarStory monetization .

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