Encore Capital Group Inc 10-Q for FY2025 Q3
Encore Capital Group Inc (ECPG)
10-Q
2025-11-05
For: 2025-09-30
View Original
Added on
April 08, 2026
About this 10-Q
Encore Capital Group Inc filed this 10-Q on November 5, 2025, covering the quarter ended September 30, 2025 (FY2025 Q3).
Headline figures
Quarter ended September 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $460.35M
- up 25.4% from $367.07M a year earlier
- Net income
- $74.66M
- up 143.6% from net income of $30.64M a year earlier
- Diluted EPS
- $3.17
- up 151.6% from $1.26 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________________________________________________________
FORM 10-Q
(Mark One)
For the quarterly period ended September 30, 2025 or
For the transition period from __________to__________.
COMMISSION FILE NUMBER: 000-26489
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | ||||
(Address of principal executive offices, including zip code)
(877 ) 345-3002
(Registrant’s telephone number, including area code)
(Not Applicable)
(Former name, former address and former fiscal year, if changed since last report)
_______________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | |||||||||||||||||||||||||||
| Emerging growth company | ||||||||||||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding at October 29, 2025 | |||||||
| Common Stock, $0.01 par value | ||||||||
ENCORE CAPITAL GROUP, INC.
INDEX TO FORM 10-Q
| Page | |||||
PART I – FINANCIAL INFORMATION
Item 1—Condensed Consolidated Financial Statements (Unaudited)
ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Financial Condition
(In Thousands, Except Par Value Amounts)
(Unaudited)
| September 30, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Receivable portfolios, net | |||||||||||
| Property and equipment, net | |||||||||||
| Other assets | |||||||||||
| Goodwill | |||||||||||
Total assets | $ | $ | |||||||||
| Liabilities and Equity | |||||||||||
| Liabilities: | |||||||||||
| Accounts payable and accrued liabilities | $ | $ | |||||||||
| Borrowings | |||||||||||
| Other liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 11) | |||||||||||
| Equity: | |||||||||||
Convertible preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
The following table presents certain assets and liabilities of consolidated variable interest entities (“VIEs”) included in the condensed consolidated statements of financial condition above. Most assets in the table below include those assets that can only be used to settle obligations of consolidated VIEs. The liabilities exclude amounts where creditors or beneficial interest holders have recourse to the general credit of the Company. See “Note 8: Variable Interest Entities” for additional information on the Company’s VIEs.
| September 30, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Receivable portfolios, net | |||||||||||
| Other assets | |||||||||||
| Liabilities | |||||||||||
| Accounts payable and accrued liabilities | |||||||||||
| Borrowings | |||||||||||
| Other liabilities | |||||||||||
See accompanying notes to condensed consolidated financial statements
3
ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Income
(In Thousands, Except Per Share Amounts)
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
Portfolio revenue | $ | $ | $ | $ | |||||||||||||||||||
| Changes in recoveries | |||||||||||||||||||||||
| Total debt purchasing revenue | |||||||||||||||||||||||
| Servicing revenue | |||||||||||||||||||||||
| Other revenues | |||||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Salaries and employee benefits | |||||||||||||||||||||||
| Cost of legal collections | |||||||||||||||||||||||
| General and administrative expenses | |||||||||||||||||||||||
| Other operating expenses | |||||||||||||||||||||||
| Collection agency commissions | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Income from operations | |||||||||||||||||||||||
| Other expense | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Other income | |||||||||||||||||||||||
| Total other expense | ( | ( | ( | ( | |||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Provision for income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements
4
ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited, In Thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive (loss) income, net of tax: | |||||||||||||||||||||||
| Change in unrealized gain (loss) on derivative instruments: | |||||||||||||||||||||||
| Unrealized gain (loss) on derivative instruments | ( | ( | ( | ||||||||||||||||||||
| Income tax effect | ( | ||||||||||||||||||||||
| Unrealized gain (loss) on derivative instruments, net of tax | ( | ( | ( | ||||||||||||||||||||
| Change in foreign currency translation: | |||||||||||||||||||||||
| Unrealized (loss) gain on foreign currency translation | ( | ||||||||||||||||||||||
| Income tax effect | ( | ( | |||||||||||||||||||||
| Unrealized (loss) gain on foreign currency translation, net of tax | ( | ||||||||||||||||||||||
| Other comprehensive (loss) income, net of tax: | ( | ||||||||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | |||||||||||||||||||
See accompanying notes to condensed consolidated financial statements
5
ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Equity
(Unaudited, In Thousands)
| Three Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Accumulated Earnings | Accumulated Other Comprehensive Loss | Total Equity | |||||||||||||||||||||||||||||||||||||
| Shares | Par | ||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||
Issuance of share-based awards, net of shares withheld for employee taxes | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||
Repurchase and retirement of common stock | ( | ( | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2024 | |||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Accumulated Earnings | Accumulated Other Comprehensive (Loss) Income | Total Equity | |||||||||||||||||||||||||||||||||||||
| Shares | Par | ||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Issuance of share-based awards, net of shares withheld for employee taxes | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Accumulated Earnings | Accumulated Other Comprehensive (Loss) Income | Total Equity | |||||||||||||||||||||||||||||||||||||
| Shares | Par | ||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Issuance of share-based awards, net of shares withheld for employee taxes | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
Repurchase and retirement of common stock | ( | ( | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
6
| Nine Months Ended September 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Accumulated Earnings | Accumulated Other Comprehensive (Loss) Income | Total Equity | |||||||||||||||||||||||||||||||||||||||||||
| Shares | Par | ||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2023 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Issuance of share-based awards, net of shares withheld for employee taxes | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements
7
ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited, In Thousands)
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Operating activities: | |||||||||||
Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Other non-cash interest expense, net | |||||||||||
| Stock-based compensation expense | |||||||||||
| Changes in recoveries | ( | ( | |||||||||
| Other, net | |||||||||||
| Changes in operating assets and liabilities | |||||||||||
| Other assets | ( | ||||||||||
| Accounts payable, accrued liabilities and other liabilities | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Investing activities: | |||||||||||
Purchases of receivable portfolios, net of put-backs | ( | ( | |||||||||
Collections applied to receivable portfolios | |||||||||||
| Purchases of property and equipment | ( | ( | |||||||||
| Other, net | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Financing activities: | |||||||||||
| Payment of loan and debt refinancing costs | ( | ( | |||||||||
| Proceeds from credit facilities | |||||||||||
| Repayment of credit facilities | ( | ( | |||||||||
| Proceeds from senior secured notes | |||||||||||
| Repayment of senior secured notes | ( | ||||||||||
| Repurchase and retirement of common stock | ( | ||||||||||
| Other, net | ( | ||||||||||
| Net cash provided by financing activities | |||||||||||
| Net (decrease) increase in cash and cash equivalents | ( | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | |||||||||||
| Cash and cash equivalents, beginning of period | |||||||||||
| Cash and cash equivalents, end of period | $ | $ | |||||||||
Supplemental disclosures of cash flow information: | |||||||||||
| Cash paid for interest | $ | $ | |||||||||
Cash paid for income taxes, net of refunds | |||||||||||
| Supplemental schedule of non-cash investing activities: | |||||||||||
Receivable portfolios transferred to real estate owned | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements
8
ENCORE CAPITAL GROUP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1: Ownership, Description of Business, and Summary of Significant Accounting Policies
Encore Capital Group, Inc. (“Encore”), through its subsidiaries (collectively with Encore, the “Company”), is an international specialty finance company providing debt recovery solutions and other related services for consumers across a broad range of financial assets. The Company purchases portfolios of defaulted consumer receivables at deep discounts to face value and manages them by working with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial obligations to credit originators, including banks, credit unions, consumer finance companies and commercial retailers. Defaulted receivables may also include receivables subject to bankruptcy proceedings. The Company also provides debt servicing and other portfolio management services to credit originators for non-performing loans in Europe.
Through Midland Credit Management, Inc. and its domestic affiliates (collectively, “MCM”), the Company is a market leader in portfolio purchasing and recovery in the United States. Through Cabot Credit Management Limited (“CCM”) and its subsidiaries and European affiliates (collectively, “Cabot”), the Company is one of the largest credit management services providers in Europe and the United Kingdom. These are the Company’s primary operations.
The Company also has investments and operations in Latin America and Asia-Pacific, which the Company refers to as “LAAP.”
Financial Statement Preparation and Presentation
The accompanying interim condensed consolidated financial statements have been prepared by the Company, without audit, in accordance with the instructions to the Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the “SEC”) and, therefore, do not include all information and footnotes necessary for a fair presentation of its condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”).
In the opinion of management, the unaudited financial information for the interim periods presented reflects all adjustments, consisting of only normal and recurring adjustments, necessary for a fair statement of the Company’s condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.
The preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in the Company’s condensed financial statements and the accompanying notes. Actual results could materially differ from those estimates.
Basis of Consolidation
The condensed consolidated financial statements have been prepared in conformity with GAAP and reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. The Company also consolidates variable interest entities (“VIEs”) for which it is the primary beneficiary. The primary beneficiary has both (a) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance, and (b) either the obligation to absorb losses or the right to receive benefits. Refer to “Note 8: Variable Interest Entities” for further details. All intercompany transactions and balances have been eliminated in consolidation.
Translation of Foreign Currencies
9
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes. The new standard is effective for annual periods beginning after December 15, 2024. This ASU, once adopted, will likely result in additional required disclosures in the Company’s consolidated financial statements for the year ending December 31, 2025.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”) and in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses: Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual periods beginning after December 15, 2026 and interim periods with fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-04, Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The new standard is effective for annual periods beginning after December 15, 2025. The Company is currently evaluating the potential impact, but it does not expect the adoption of this standard to have a material impact on its consolidated financial statements and related disclosures.
Note 2: Earnings Per Share
Basic earnings per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period.
The number of shares used to calculate the diluted earnings per share is computed by using the basic weighted-average number of common shares outstanding plus any potentially dilutive common shares outstanding during the period, except when their effect is anti-dilutive. Dilutive potential common shares include outstanding stock based awards, and the dilutive effect of the convertible senior notes, if applicable.
A reconciliation of shares used in calculating earnings per basic and diluted shares follows (in thousands, except per share amounts):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
Shares: | |||||||||||||||||||||||
| Total weighted-average basic shares outstanding | |||||||||||||||||||||||
| Dilutive effect of stock-based awards | |||||||||||||||||||||||
Dilutive effect of convertible senior notes | |||||||||||||||||||||||
| Total weighted-average dilutive shares outstanding | |||||||||||||||||||||||
| Basic earnings per share | $ | $ | $ | $ | |||||||||||||||||||
| Diluted earnings per share | $ | $ | $ | $ | |||||||||||||||||||
10
Note 3: Fair Value Measurements
Fair value is defined as the price that would be received upon sale of an asset or the price paid to transfer a liability, in an orderly transaction between market participants at the measurement date (i.e., the “exit price”). The Company uses a fair value hierarchy that prioritizes the inputs used in valuation techniques to measure fair value into three broad levels. The following is a brief description of each level:
•Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
•Level 3: Unobservable inputs, including inputs that reflect the reporting entity’s own assumptions.
Financial Instruments Required To Be Carried At Fair Value
Financial assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):
| Fair Value Measurements as of September 30, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Interest rate cap contracts | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
Interest rate swap agreements | ( | ( | |||||||||||||||||||||
| Fair Value Measurements as of December 31, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Interest rate cap contracts | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Interest rate swap agreements | ( | ( | |||||||||||||||||||||
Derivative Contracts:
The Company uses derivative instruments to manage its exposure to fluctuations in interest rates and foreign currency exchange rates. Fair values of these derivative instruments are estimated using models that project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves, foreign currency exchange rates, and forward and spot prices for currencies.
Non-Recurring Fair Value Measurement:
Financial Instruments Not Required To Be Carried At Fair Value
The table below summarizes fair value estimates for the Company's financial instruments that are not required to be carried at fair value. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company.
11
The carrying amounts in the following table are included in the condensed consolidated statements of financial condition as of September 30, 2025 and December 31, 2024 (in thousands):
| September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||
Fair Value Level | Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | |||||||||||||||||||||||||
| Financial Assets | |||||||||||||||||||||||||||||
Cash and cash equivalents | Level 1 | $ | $ | $ | $ | ||||||||||||||||||||||||
Receivable portfolios, net | Level 3 | ||||||||||||||||||||||||||||
Other assets(2) | Level 2 | ||||||||||||||||||||||||||||
| Financial Liabilities | |||||||||||||||||||||||||||||
Accounts payable and accrued liabilities | Level 2 | ||||||||||||||||||||||||||||
| Global senior secured revolving credit facility | Level 2 | ||||||||||||||||||||||||||||
Senior secured notes(1) | Level 2 | ||||||||||||||||||||||||||||
| Convertible senior notes due October 2025 | Level 2 | ||||||||||||||||||||||||||||
| Convertible senior notes due March 2029 | Level 2 | ||||||||||||||||||||||||||||
| Cabot securitisation senior facility | Level 2 | ||||||||||||||||||||||||||||
U.S. facility | Level 2 | ||||||||||||||||||||||||||||
| Other borrowings | Level 2 | ||||||||||||||||||||||||||||
Other liabilities(2) | Level 2 | ||||||||||||||||||||||||||||
(1)Carrying amount represents historical cost, adjusted for any related debt discount.
(2)Only includes financial instruments not required to be carried at fair value. Derivative instruments, which are required to be carried at fair value are excluded.
Receivable Portfolios:
The fair value of receivable portfolios is measured by discounting the estimated future cash flows generated by the Company’s proprietary forecasting models. The key inputs include the estimated future gross cash flow, average cost to collect, and discount rate. The determination of such inputs requires significant judgment, including assessing the assumed market participant’s cost structure, its determination of whether to include fixed costs in its valuation, its collection strategies, and determining the appropriate weighted average cost of capital. The Company evaluates the use of these key inputs on an ongoing basis and refines the data as it continues to obtain better information from market participants in the debt recovery and purchasing business.
Borrowings:
The Company’s convertible notes and senior secured notes are carried at historical cost, adjusted for the applicable debt discount. The fair value estimate for the convertible notes incorporates quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. The fair value of the senior secured notes is estimated using borrowing rates with similar terms, maturities, and credit ratings.
The carrying value of the Company’s senior secured revolving credit facility, securitisation senior facility, U.S. facility, and other borrowings approximates fair value due to the use of current market rates that are repriced frequently.
Others:
The Company’s cash and cash equivalents, certain other assets, accounts payable and accrued liabilities, and other liabilities approximate their fair values due to their short-term nature.
Note 4: Derivatives and Hedging Instruments
The Company may periodically enter into derivative financial instruments to manage risks related to interest rates and foreign currency. Certain of the Company’s derivative financial instruments qualify for hedge accounting treatment.
12
The following table summarizes the fair value of derivative instruments as recorded in the Company’s condensed consolidated statements of financial condition (in thousands):
| September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||||||||||||||
| Interest rate cap contracts | Other assets | $ | Other assets | $ | |||||||||||||||||||
| Interest rate swap agreements | Other liabilities | ( | Other liabilities | ( | |||||||||||||||||||
Derivatives Designated as Hedging Instruments
The Company may periodically enter into interest rate swap agreements and interest rate cap contracts to reduce its exposure to fluctuations in interest rates on variable interest rate debt and their impact on earnings and cash flows. Under the swap agreements, the Company receives floating interest rate payments and makes interest payments based on fixed interest rates. Under the cap contracts, the Company receives floating interest rate payments and makes interest payments based on capped interest rates. The Company designates its interest rate swap and interest rate cap instruments as cash flow hedges at inception.
From time to time, the Company uses cross-currency swap agreements to manage foreign currency exchange risk by converting fixed-rate Euro-denominated borrowings and fixed-rate GBP-denominated borrowings including periodic interest payments and the payment of principal at maturity to fixed-rate USD debt. The Company designates its cross-currency swap agreements as fair value hedges at inception.
The following tables summarize the terms of the derivative instruments designated as hedging instruments as recorded in the Company’s condensed consolidated statements of financial condition:
| September 30, 2025 | |||||||||||||||||||||||||||||
| Effective date | Maturity Date | Hedge Designation | Notional Amount | Receive Floating Rate Index | |||||||||||||||||||||||||
| Interest rate cap contracts | |||||||||||||||||||||||||||||
| 2024 Cap | September 2024 | September 2026 | Cash flow hedge | $ | SONIA | ||||||||||||||||||||||||
2025 Cap | September 2026 | January 2028 | Cash flow hedge | $ | SONIA | ||||||||||||||||||||||||
| Interest rate swap agreements | |||||||||||||||||||||||||||||
| 2023 Euro IR Swap | October 2023 | January 2028 | Cash flow hedge | $ | 3-month EURIBOR | ||||||||||||||||||||||||
| 2024 Euro IR Swaps | June 2024 | January 2028 | Cash flow hedge | $ | 3-month EURIBOR | ||||||||||||||||||||||||
2023 SOFR IR Swaps - U.S.Facility | November 2023 | October 2026 | Cash flow hedge | $ | 1-month SOFR CME Term | ||||||||||||||||||||||||
2025 SOFR IR Swaps - U.S.Facility | January 2025 | October 2027 | Cash flow hedge | $ | 1-month SOFR CME Term | ||||||||||||||||||||||||
2025 SOFR IR Swaps - Global Senior Facility | April 2025 | April 2027 | Cash flow hedge | $ | 1-month SOFR CME Term | ||||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||
| Effective date | Maturity Date | Hedge Designation | Notional Amount | Receive Floating Rate Index | |||||||||||||||||||||||||
| Interest rate cap contracts | |||||||||||||||||||||||||||||
| 2024 Cap | September 2024 | September 2026 | Cash flow hedge | $ | SONIA | ||||||||||||||||||||||||
| Interest rate swap agreements | |||||||||||||||||||||||||||||
| 2023 Euro IR Swap | October 2023 | January 2028 | Cash flow hedge | $ | 3-month EURIBOR | ||||||||||||||||||||||||
2024 Euro IR Swaps | June 2024 | January 2028 | Cash flow hedge | $ | 3-month EURIBOR | ||||||||||||||||||||||||
2023 SOFR IR Swaps - U.S.Facility | November 2023 | October 2026 | Cash flow hedge | $ | 1-month SOFR CME Term | ||||||||||||||||||||||||
The Company expects to reclassify approximately $10.5 million of net derivative loss from OCI into earnings relating to its cash flow designated derivatives within the next 12 months. This amount will vary due to fluctuations in benchmark interest rates.
13
The following tables summarize the effects of derivatives designated as hedging instruments in the Company’s condensed consolidated financial statements (in thousands):
| Derivatives Designated as Hedging Instruments | Gain (Loss) Recognized in OCI | Location of Gain (Loss) Reclassified from OCI into Income (Loss) | (Loss) Gain Reclassified from OCI into Income | |||||||||||||||||||||||||||||
| Three Months Ended September 30, | Three Months Ended September 30, | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||
| Interest rate swap agreements | $ | $ | ( | Interest expense | $ | ( | $ | |||||||||||||||||||||||||
| Interest rate cap contracts | ( | ( | Interest expense | ( | ( | |||||||||||||||||||||||||||
| Cross-currency swap agreements | Interest expense | ( | ||||||||||||||||||||||||||||||
| Other income | ||||||||||||||||||||||||||||||||
| Derivatives Designated as Hedging Instruments | (Loss) Gain Recognized in OCI | Location of Gain (Loss) Reclassified from OCI into Income (Loss) | (Loss) Gain Reclassified from OCI into Income | |||||||||||||||||||||||||||||
| Nine Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||
| Interest rate swap agreements | $ | ( | $ | Interest expense | $ | ( | $ | |||||||||||||||||||||||||
| Interest rate cap contracts | ( | ( | Interest expense | ( | ( | |||||||||||||||||||||||||||
| Cross-currency swap agreements | Interest expense | ( | ||||||||||||||||||||||||||||||
| Other income | ||||||||||||||||||||||||||||||||
Derivatives Not Designated as Hedging Instruments
From time to time, the Company enters into currency exchange forward contracts to reduce the effects of currency exchange rate fluctuations. These derivative contracts generally mature within to six months and are not designated as hedge instruments for accounting purposes. The gains or losses on these unhedged derivative contracts are recognized in other income or expense based on the changes in fair value. The Company did not have any derivatives that were not designated as hedging instruments as of September 30, 2025 and December 31, 2024.
The following table summarizes the effects of derivatives not designated as hedging instruments on the Company’s condensed consolidated statements of income during the periods presented (in thousands):
| Derivatives Not Designated as Hedging Instruments | Location of (Loss) Gain Recognized in Income on Derivative | Amount of (Loss) Gain Recognized in Income | ||||||||||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||
Interest rate cap contract | Other (expense) income | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||
Foreign currency exchange contract | Other expense | ( | ( | |||||||||||||||||||||||||||||
Note 5: Receivable Portfolios, Net
The Company’s purchased portfolios of loans are grossed-up to their face value with an offsetting allowance and noncredit discount allocated to the individual receivables as the unit of account is at the individual loan level. Since each loan is deeply delinquent and deemed uncollectible at the individual loan level, the Company applies its charge-off policy and fully writes-off the amortized costs (i.e., face value net of noncredit discount) of the individual receivables immediately after purchasing the portfolio. The Company then records a negative allowance that represents the present value of all expected future recoveries for pools of receivables that share similar risk characteristics using a discounted cash flow approach, which ultimately equals the amount paid for a portfolio purchase and presented as “Receivable portfolios, net” in the Company’s condensed consolidated statements of financial condition. The discount rate is an effective interest rate (or “purchase EIR”) based on the purchase price of the portfolio and the expected future cash flows at the time of purchase. The amount of the negative allowance (i.e., receivable portfolios) will not exceed the total amortized cost basis of the loans written-off.
14
Receivable portfolio purchases are aggregated into pools based on similar risk characteristics. Examples of risk characteristics include financial asset type, collateral type, size, interest rate, date of origination, term, and geographic location. The Company’s static pools are typically grouped into credit card, purchased consumer bankruptcy, and mortgage portfolios. The Company further groups these static pools by geographic location. Once a pool is established, the portfolios will remain in the designated pool unless the underlying risk characteristics change. The purchase EIR of a pool will not change over the life of the pool even if expected future cash flows change.
Revenue is recognized for each static pool over the economic life of the pool. Debt purchasing revenue includes two components:
(1) Portfolio revenue, which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the EIR) and also includes all revenue from zero basis portfolio (“ZBA”) collections, and
(2) Changes in recoveries, which includes
(a) Recoveries above or below forecast, which is the difference between (i) actual cash collected/recovered during the current period and (ii) expected cash recoveries for the current period, which generally represents over or under performance for the period; and
(b) Changes in expected future recoveries, which is the present value change of expected future recoveries, where such change generally results from (i) collections “pulled forward from” or “pushed out to” future periods (i.e. amounts either collected early or expected to be collected later) and (ii) magnitude and timing changes to estimates of expected future collections (which can be increases or decreases).
Receivable portfolios, net consists of the following as of the dates presented (in thousands):
| September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||
| Amortized cost | $ | $ | |||||||||||||||||||||||||||
Negative allowance for expected recoveries | |||||||||||||||||||||||||||||
| Balance, end of period | $ | $ | |||||||||||||||||||||||||||
The following table summarizes the changes in the balance of receivable portfolios, net during the periods presented (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | |||||||||||||||||||
Negative allowance for expected recoveries - portfolio purchases (1) | |||||||||||||||||||||||
Collections applied to receivable portfolios, net (2) | ( | ( | ( | ( | |||||||||||||||||||
Changes in recoveries (3) | |||||||||||||||||||||||
Put-backs and recalls | ( | ( | ( | ( | |||||||||||||||||||
| Disposals and transfers to real estate owned | ( | ( | ( | ( | |||||||||||||||||||
| Foreign currency translation adjustments | ( | ||||||||||||||||||||||
| Balance, end of period | $ | $ | $ | $ | |||||||||||||||||||
(1)The table below provides the detail on the establishment of negative allowance for expected recoveries of portfolios purchased during the periods presented:
15
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Purchase price | $ | $ | $ | $ | |||||||||||||||||||
| Allowance for credit losses | |||||||||||||||||||||||
| Amortized cost | |||||||||||||||||||||||
| Noncredit discount | |||||||||||||||||||||||
| Face value | |||||||||||||||||||||||
| Write-off of amortized cost | ( | ( | ( | ( | |||||||||||||||||||
| Write-off of noncredit discount | ( | ( | ( | ( | |||||||||||||||||||
| Negative allowance | |||||||||||||||||||||||
Negative allowance for expected recoveries - portfolio purchases | $ | $ | $ | $ | |||||||||||||||||||
(2)Collections applied to receivable portfolios, net, is calculated as follows during the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Cash Collections | $ | $ | $ | $ | |||||||||||||||||||
Less - amounts classified to portfolio revenue | ( | ( | ( | ( | |||||||||||||||||||
Collections applied to receivable portfolios, net | $ | $ | $ | $ | |||||||||||||||||||
(3)Changes in recoveries is calculated as follows during the periods presented, where recoveries include cash collections, put-backs and recalls, and other cash-based adjustments:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
Recoveries above forecast | $ | $ | $ | $ | |||||||||||||||||||
| Changes in expected future recoveries | ( | ( | |||||||||||||||||||||
| Changes in recoveries | $ | $ | $ | $ | |||||||||||||||||||
Recoveries above or below forecast represent over and under-performance in the reporting period, respectively. Collections during the three and nine months ended September 30, 2025, over-performed the forecasted collections by approximately $61.5 million and $140.7 million, respectively, primarily driven by collections over-performance in the U.S. resulting from enhanced collections strategies. Collections during the three and nine months ended September 30, 2024, over-performed the forecasted collections by approximately $23.0 million and $51.3 million, respectively.
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Note 6: Other Assets
Other assets consist of the following (in thousands):
| September 30, 2025 | December 31, 2024 | ||||||||||
| $ | $ | ||||||||||
| Prepaid expenses | |||||||||||
| Real estate owned | |||||||||||
| Other financial receivables | |||||||||||
| Service fee receivables | |||||||||||
| Income tax deposits | |||||||||||
| Deferred tax assets | |||||||||||
| Other | |||||||||||
| Total | $ | $ | |||||||||
Note 7: Borrowings
The Company is in compliance in all material respects with all covenants under its financing arrangements as of September 30, 2025. The components of the Company’s consolidated borrowings were as follows (in thousands):
| September 30, 2025 | December 31, 2024 | ||||||||||
| Global senior secured revolving credit facility | $ | $ | |||||||||
| Senior secured notes | |||||||||||
Convertible senior notes | |||||||||||
| Cabot securitisation senior facility | |||||||||||
U.S. facility | |||||||||||
| Other | |||||||||||
| Less: debt discount and issuance costs, net of amortization | ( | ( | |||||||||
| Total | $ | $ | |||||||||
Encore is the parent of the restricted group for the Global Senior Facility and the Senior Secured Notes, both of which are guaranteed by the same group of material Encore subsidiaries and secured by the same collateral, which represents substantially all of the assets of those subsidiaries.
Global Senior Secured Revolving Credit Facility
In September 2020, the Company entered into a multi-currency senior secured revolving credit facility agreement (as amended and restated, the “Global Senior Facility”). As of September 30, 2025, the Global Senior Facility provided for a total committed facility of $1,485.0 million that matures in September 2029, except for a $69.5 million tranche that terminates in September 2028, and included the following key provisions:
•Interest at Term SOFR (or EURIBOR for any loan drawn in Euro or a rate based on SONIA for any loan drawn in British Pound), with a Term SOFR (or EURIBOR or SONIA) floor of 0.00 2.25 0.10 %;
•An unused commitment fee of 0.40 % per annum, payable quarterly in arrears;
•A restrictive covenant that limits the LTV Ratio (defined in the Global Senior Facility) to 0.75 in the event that the Global Senior Facility is more than 20 % utilized;
•A restrictive covenant that limits the SSRCF LTV Ratio (defined in the Global Senior Facility) to 0.275 ;
•A restrictive covenant that requires the Company to maintain a Fixed Charge Coverage Ratio (as defined in the Global Senior Facility) of at least 2.0 ;
17
•Additional restrictions and covenants which limit, among other things, the payment of dividends and the incurrence of additional indebtedness and liens; and
•Standard events of default which, upon occurrence, may permit the lenders to terminate the Global Senior Facility and declare all amounts outstanding to be immediately due and payable.
The Global Senior Facility is secured by substantially all of the assets of the Company and the guarantors. Pursuant to the terms of an intercreditor agreement entered into with respect to the relative positions of (1) the Global Senior Facility and any super priority hedging liabilities (collectively, “Super Senior Liabilities”) and (2) the Senior Secured Notes, Super Senior Liabilities that are secured by assets that also secure the Senior Secured Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets.
As of September 30, 2025, the outstanding borrowings under the Global Senior Facility were $927.3 million. The weighted average interest rate of the Global Senior Facility was 6.44 % and 6.13 % for the three months ended September 30, 2025 and 2024, respectively, and 6.49 % and 7.87 % for the nine months ended September 30, 2025 and 2024, respectively. Available capacity under the Global Senior Facility, after taking into account applicable debt covenants, was approximately $491.1 million as of September 30, 2025.
Senior Secured Notes
The following table provides a summary of the Company’s senior secured notes (the “Senior Secured Notes”) ($ in thousands):
| September 30, 2025 | December 31, 2024 | Issue Currency | Maturity Date | Interest Payment Dates | Interest Rate | ||||||||||||||||||||||||||||||
Encore 2028 Notes | $ | $ | GBP | Jun 1, 2028 | Jun 1, Dec 1 | % | |||||||||||||||||||||||||||||
Encore 2028 Floating Rate Notes | EUR | Jan 15, 2028 | Jan 15, Apr 15, Jul 15, Oct 15 | EURIBOR + | |||||||||||||||||||||||||||||||
Encore 2029 Notes | USD | Apr 1, 2029 | Apr 1, Oct 1 | % | |||||||||||||||||||||||||||||||
Encore 2030 Notes | USD | May 15, 2030 | May 15, Nov 15 | % | |||||||||||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||||||||||||||
(1)Interest rate is based on three-month EURIBOR (subject to a 0 % floor) plus 4.250 % per annum, resets quarterly.
The Senior Secured Notes are secured by the same collateral as the Global Senior Facility. The guarantees provided in respect of the Senior Secured Notes are pari passu with the guarantee given in respect of the Global Senior Facility. Subject to the intercreditor agreement described above under the section “Global Senior Secured Revolving Credit Facility,” Super Senior Liabilities that are secured by assets that also secure the Senior Secured Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets.
The 2028 Floating Rate Notes had a weighted average interest rate of 6.32 % and 7.97 % for the three months ended September 30, 2025 and 2024, respectively, and 6.68 % and 8.11 % for the nine months ended September 30, 2025 and 2024, respectively.
On October 1, 2025, the Company issued $500.0 million in aggregate principal amount of 6.625 % Senior Secured Notes due April 2031 at an issue price of 100.000 % (the “2031 Notes”). Interest on the 2031 Notes is payable semi-annually, in arrears, on April 15 and October 15 of each year, commencing on April 15, 2026. The Company used the proceeds from this offering to pay down drawings under its Global Senior Facility and to pay certain transaction fees and expenses incurred in connection with the offering of the 2031 Notes.
Convertible Notes
The following table provides a summary of the principal balance, maturity date and interest rate for the Company’s convertible senior notes (the “Convertible Notes”) ($ in thousands):
| September 30, 2025 | December 31, 2024 | Maturity Date | Interest Payment Dates | Interest Rate | |||||||||||||||||||||||||
| 2025 Convertible Notes | $ | $ | Oct 1, 2025 | Apr 1, Oct 1 | % | ||||||||||||||||||||||||
| 2029 Convertible Notes | Mar 15, 2029 | Mar 15, Sep 15 | % | ||||||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||||||||
18
In order to reduce the risk related to the potential dilution and/or the potential cash payments the Company may be required to make in the event that the market price of the Company’s common stock becomes greater than the conversion prices of the Convertible Notes, the Company may enter into hedge programs that increase the effective conversion price for the Convertible Notes. In connection with the issuance of the 2029 Convertible Notes, the Company entered into privately negotiated capped call transactions that effectively raised the conversion price of the 2029 Convertible Notes from $65.89 to $82.69 . These hedging instruments have been determined to be indexed to the Company’s own stock and meet the criteria for equity classification. The Company recorded the cost of the hedge instruments as a reduction in additional paid-in capital, and does not recognize subsequent changes in fair value of these financial instruments in its condensed consolidated financial statements. The Company did not hedge the 2025 Convertible Notes.
Certain key terms related to the convertible features as of September 30, 2025 are listed below ($ in thousands, except conversion price):
_______________________
| 2025 Convertible Notes | 2029 Convertible Notes | ||||||||||
Initial conversion price | $ | $ | |||||||||
| Closing stock price at date of issuance | $ | $ | |||||||||
| Closing stock price date | Sep 4, 2019 | Feb 28, 2023 | |||||||||
Initial conversion rate (shares per $1,000 principal amount) | |||||||||||
Adjusted conversion rate (shares per $1,000 principal amount)(1) | |||||||||||
Adjusted conversion price(1) | $ | $ | |||||||||
Adjusted effective conversion price(2) | $ | $ | |||||||||
Excess of if-converted value compared to principal(3) | $ | $ | |||||||||
Conversion date | Jul 1, 2025 | Dec 15, 2028 | |||||||||
(1)Pursuant to the indenture for the Company’s 2025 Convertible Notes, the conversion rate for the 2025 Convertible Notes was adjusted upon the completion of the Company’s tender offer in December 2021.
(2)As discussed above, the Company maintains a hedge program that increases the effective conversion price for the 2029 Convertible Notes to $82.69 .
Prior to the close of business on the business day immediately preceding their respective free conversion dates (listed above), holders may convert their Convertible Notes only under certain circumstances set forth in the applicable indentures. On or after their respective free conversion dates until the close of business on the second scheduled trading day immediately preceding their respective maturity dates, holders may convert their notes at any time.
In the event of conversion, the Convertible Notes are convertible into cash up to the aggregate principal amount of the notes and the excess conversion premium, if any, may be settled in cash or shares of the Company’s common stock at the Company’s election and subject to certain restrictions contained in each of the indentures governing the Convertible Notes.
The Company’s convertible notes are carried as a single liability, which reflects the principal amount of the convertible notes. Interest expense related to the Convertible Notes was $3.1 9.4
On October 1, 2025, the Company settled its $100.0 million 2025 Convertible Notes upon conversion in cash for $106.2 million, of which $6.2 million (the excess above the principal amount) represented the conversion spread and was recognized in the Company’s stockholder’s equity subsequent to the quarter ended September 30, 2025. No gain or loss was recognized as a result of the conversion of the 2025 Convertible Notes. The settlement was funded by borrowings from the Company’s Global Senior Facility.
Cabot Securitisation Senior Facility
Cabot Securitisation UK Ltd (“Cabot Securitisation”), an indirect subsidiary of Encore, has a senior facility for a committed amount of £255.0 million (the “Cabot Securitisation Senior Facility”). Funds drawn under the Cabot Securitisation Senior Facility bear interest at a rate per annum equal to SONIA plus a margin of 3.20 % plus, for periods after January 18, 2028, a step up margin ranging from zero to 1.00 %. The Cabot Securitisation Senior Facility matures in January 2030.
19
As of September 30, 2025, the outstanding borrowings under the Cabot Securitisation Senior Facility were £255.0 million (approximately $342.9 million based on an exchange rate of $1.00 to £0.74 , the exchange rate as of September 30, 2025). The obligations of Cabot Securitisation under the Cabot Securitisation Senior Facility are secured by first ranking security interests over all of Cabot Securitisation’s property, assets and rights (including receivables purchased from Cabot Financial UK from time to time), the book value of which was approximately £284.9 million (approximately $383.1 million based on an exchange rate of $1.00 to £0.74 , the exchange rate as of September 30, 2025) as of September 30, 2025. The weighted average interest rate of the Cabot Securitisation Senior Facility was 7.29 % and 8.22 % for the three months ended September 30, 2025 and 2024, respectively, and 7.54 % and 8.34 % for the nine months ended September 30, 2025 and 2024, respectively.
Cabot Securitisation is a securitized financing vehicle and is a VIE for consolidation purposes. Refer to “Note 8: Variable Interest Entities” for further details.
U.S. Facility
An indirect subsidiary of Encore (“U.S. Financing Subsidiary”) has a facility for a committed amount of $450.0 million (as amended, the “U.S. Facility”) that matures in October 2028. Funds drawn under the U.S. Facility bear interest at a rate per annum equal to Term SOFR plus a margin of 3.50 %.
As of September 30, 2025, the outstanding borrowings under the U.S. Facility were $352.5 million. The obligations under the U.S. Facility are secured by first ranking security interests over all of U.S. Financing Subsidiary’s assets and rights. As of September 30, 2025, this included receivables acquired from MCM, the book value of which was approximately $621.2 million. The weighted average interest rate of the U.S. Facility was 7.81 % and 8.80 % for the three months ended September 30, 2025 and 2024, respectively, and 7.82 % and 8.82 % for the nine months ended September 30, 2025 and 2024, respectively.
The U.S. Facility is a securitized financing vehicle and is a VIE for consolidation purposes. Refer to “Note 8: Variable Interest Entities” for further details.
Note 8: Variable Interest Entities
A VIE is defined as a legal entity whose equity owners do not have sufficient equity at risk, or, as a group, the holders of the equity investment at risk lack any of the following three characteristics: decision-making rights, the obligation to absorb expected losses, or the right to receive expected residual returns of the entity. The primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and the obligation to absorb expected losses or the right to receive residual returns from the entity that could potentially be significant to the VIE. The Company consolidates VIEs when it is the primary beneficiary.
As of September 30, 2025, the Company’s VIEs include certain securitized financing vehicles and other immaterial special purpose entities that were created to purchase receivable portfolios in certain geographies. The Company is the primary beneficiary of these VIEs. The Company has the power to direct the activities of the VIEs including the ability to exercise discretion in the servicing of the financial assets and has the right to receive residual returns that could potentially be significant to the VIEs. The Company evaluates its relationships with its VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary.
Most assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets. Conversely, liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets; rather, they represent claims against the specific assets of the VIE.
Note 9: Accumulated Other Comprehensive Loss
A summary of the Company’s changes in accumulated other comprehensive loss by component is presented below (in thousands):
| Three Months Ended September 30, 2025 | |||||||||||||||||
| Derivatives | Currency Translation Adjustments | Accumulated Other Comprehensive (Loss) Income | |||||||||||||||
| Balance at beginning of period | $ | ( | $ | ( | $ | ( | |||||||||||
Other comprehensive income (loss) before reclassification | ( | ( | |||||||||||||||
| Reclassification | |||||||||||||||||
| Tax effect | ( | ( | ( | ||||||||||||||
| Balance at end of period | $ | ( | $ | ( | $ | ( | |||||||||||
20
| Three Months Ended September 30, 2024 | |||||||||||||||||
| Derivatives | Currency Translation Adjustments | Accumulated Other Comprehensive (Loss) Income | |||||||||||||||
| Balance at beginning of period | $ | ( | $ | ( | $ | ( | |||||||||||
| Other comprehensive income before reclassification | |||||||||||||||||
| Reclassification | ( | ( | |||||||||||||||
| Tax effect | |||||||||||||||||
| Balance at end of period | $ | ( | $ | ( | $ | ( | |||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||
| Derivatives | Currency Translation Adjustments | Accumulated Other Comprehensive (Loss) Income | |||||||||||||||
| Balance at beginning of period | $ | ( | $ | ( | $ | ( | |||||||||||
| Other comprehensive (loss) income before reclassification | ( | ||||||||||||||||
| Reclassification | |||||||||||||||||
| Tax effect | ( | ||||||||||||||||
| Balance at end of period | $ | ( | $ | ( | $ | ( | |||||||||||
| Nine Months Ended September 30, 2024 | |||||||||||||||||
| Derivatives | Currency Translation Adjustments | Accumulated Other Comprehensive (Loss) Income | |||||||||||||||
| Balance at beginning of period | $ | ( | $ | ( | $ | ( | |||||||||||
| Other comprehensive income before reclassification | |||||||||||||||||
| Reclassification | ( | ( | |||||||||||||||
| Tax effect | |||||||||||||||||
| Balance at end of period | $ | ( | $ | ( | $ | ( | |||||||||||
Note 10: Income Taxes
The Company’s effective tax rate for the three and nine months ended September 30, 2025 was 25.2 % and 24.4 %, respectively. For the three and nine months ended September 30, 2024, the Company’s effective tax rate was 24.8 % and 24.3 %, respectively. For the three and nine months ended September 30, 2025, the differences between the effective tax rate and the federal statutory rate were primarily due to state income taxes offset by other foreign adjustments. For the three and nine months ended September 30, 2024, the differences between our effective tax rate and the federal statutory rate were primarily due to state income taxes.
Each interim period is considered an integral part of the annual period and tax expense or benefit is measured using an estimated annual effective income tax rate. The estimated annual effective tax rate for the full year is applied to the respective interim period, taking into account year-to-date amounts and projected amounts for the year. Since the Company operates in foreign countries with varying tax rates, the Company’s quarterly effective tax rate is dependent on the level of income or loss from international operations in the reporting period.
The Company’s subsidiary in Costa Rica is operating under a 100 % tax holiday through August 13, 2026. The exemption under this tax holiday will decrease to 50 % through August 13, 2030, and then 0 % thereafter. The impact of the tax holiday in Costa Rica for the three and nine months ended September 30, 2025 and 2024, was immaterial.
The Company is subject to income taxes in the U.S. and foreign jurisdictions. Significant judgment is required in evaluating uncertain tax positions and determining the provision for income taxes.
In December 2021, the Organization for Economic Cooperation and Development (“OECD”) enacted model rules for a new global minimum tax framework (“Pillar Two”). Under the Pillar Two rules, a company is required to determine a combined effective tax rate for each jurisdiction. If the jurisdictional effective tax rate determined under the Pillar Two rules is less than 15%, a top-up tax will be due to bring the jurisdictional effective tax rate up to 15%. In December 2022, European Union Member States adopted a directive implementing the Pillar Two rules requiring Member States to enact the directive into
21
their national laws and these began to go into effect from January 1, 2024. The Company has estimated the applicable top-up tax and recorded this in tax expense for the three and nine months ended September 30, 2025. The estimated impact of top-up tax for the periods was immaterial.
On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (“OBBBA”), which includes a broad range of tax reform provisions affecting businesses. The legislation features permanent extension, with modifications, of key 2017 Tax Cuts and Jobs Act provisions that were set to change at the end of 2025. The effects of the OBBBA were included in the Company’s consolidated financial statements for the three and nine months ended September 30, 2025. The OBBBA is not expected to materially impact the Company’s 2025 annual effective tax rate.
Note 11: Commitments and Contingencies
Litigation and Regulatory
The Company is involved in disputes, legal actions, regulatory investigations, inquiries, and other actions from time to time in the ordinary course of business. The Company, along with others in its industry, is routinely subject to legal actions asserting various claims, including those based on the Fair Debt Collection Practices Act (“FDCPA”), the Fair Credit Reporting Act (“FCRA”), the Telephone Consumer Protection Act (“TCPA”), comparable state statutes, state and federal unfair competition statutes, and common law causes of action. The violations of law investigated or alleged in these actions often include claims that the Company lacks specified licenses to conduct its business, attempts to collect debts on which the statute of limitations has run, has made inaccurate or unsupported assertions of fact in support of its collection actions and/or has acted improperly in connection with its efforts to contact consumers. Such litigation and regulatory actions could involve potential compensatory or punitive damage claims, fines, sanctions, injunctive relief, or changes in business practices. Many continue on for some length of time and involve substantial investigation, litigation, negotiation, and other expense and effort before a result is achieved, and during the process the Company often cannot determine the substance or timing of any eventual outcome.
As of September 30, 2025, there were no material developments in any of the legal proceedings disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 or any new material legal proceedings during the three and nine months ended September 30, 2025.
In certain legal proceedings, the Company may have recourse to insurance or third-party contractual indemnities to cover all or portions of its litigation expenses, judgments, or settlements. The Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. Where a range of loss can be reasonably estimated with no best estimate in the range, the Company records the minimum estimated liability. The Company continuously assesses the potential liability related to its pending litigation and regulatory matters and revises its estimates when additional information becomes available. The Company’s legal costs are recorded to expense as incurred. As of September 30, 2025, the Company has no material reserves for legal matters.
Purchase Commitments
In the normal course of business, the Company enters into forward flow purchase agreements. A forward flow purchase agreement is a commitment to purchase receivables over a duration that is typically three to twelve months, but can be longer, generally with a specifically defined volume range, frequency, and pricing. Typically, these forward flow contracts have provisions that allow for early termination or price re-negotiation should the underlying quality of the portfolio deteriorate over time or if any particular month’s delivery is materially different than the original portfolio used to price the forward flow contract. Certain of these forward flow purchase agreements may also have termination clauses, whereby the agreements can be canceled by either party upon providing a certain specified amount of notice.
As of September 30, 2025, the Company had entered into forward flow purchase agreements for the purchase of nonperforming loans with an estimated minimum aggregate purchase price of approximately $498.3 million. The Company expects actual purchases under these forward flow purchase agreements to be significantly greater than the estimated minimum aggregate purchase price.
22
Note 12: Segment and Geographic Information
The Company conducts business through several operating segments. The accounting policies applied to the segments are the same as those described in the summary of significant accounting policies. The Company determined its operating segments meet the aggregation criteria, and therefore, it has one reportable segment, debt purchasing and recovery segment, based on similarities among the operating units including economic characteristics, the nature of the services, the nature of the production process, customer types for their services, the methods used to provide their services and the nature of the regulatory environment. The Company’s Chief Operating Decision Maker, which is the Company’s chief executive officer, relies on internal management reporting processes that provide segment revenues, segment total operating expenses, segment operating income, and segment asset information in order to make financial decisions. The measure of segment performance is segment operating income. The Company’s Chief Operating Decision Maker assesses the segment’s performance and makes decisions about the allocation of capital resources to each segment accordingly. Corporate and other unallocated represents corporate overhead and other items not allocated to any of the Company’s operating segments. Segment assets are presented in the Company’s Consolidated Statements of Financial Position as total assets.
The following tables present the results of operations of the Company’s reportable segment for the periods presented (in thousands):
| Three Months Ended September 30, 2025 | |||||||||||||||||
Debt purchasing and recovery segment | Corporate and other unallocated | Consolidated | |||||||||||||||
Total revenues | $ | $ | $ | ||||||||||||||
Total operating expenses(1) | ( | ( | ( | ||||||||||||||
Operating income | |||||||||||||||||
Other segment items(2) | |||||||||||||||||
Interest expense(3) | ( | ( | |||||||||||||||
Provision for income taxes | ( | ( | |||||||||||||||
Net income | $ | ||||||||||||||||
(1)Certain corporate activities that are not allocated to the debt purchasing and recovery segment are recorded under corporate and other unallocated. During the three months ended September 30, 2025, such non-allocated operating expenses primarily consisted of salaries and employee benefits of approximately $11.3 million for corporate employees and general and administrative expenses of approximately $5.3 million.
(2)The other segment items category includes other income.
(3)The Company manages its available capital resources at the corporate level. Interest expense is not allocated to operating segments.
| Three Months Ended September 30, 2024 | |||||||||||||||||
Debt purchasing and recovery segment | Corporate and other unallocated | Consolidated | |||||||||||||||
Total revenues | $ | $ | $ | ||||||||||||||
Total operating expenses(1) | ( | ( | ( | ||||||||||||||
Operating income | |||||||||||||||||
Other segment items(2) | |||||||||||||||||
Interest expense(3) | ( | ( | |||||||||||||||
Provision for income taxes | ( | ( | |||||||||||||||
Net income | $ | ||||||||||||||||
(1)Certain corporate activities that are not allocated to the debt purchasing and recovery segment are recorded under corporate and other unallocated. During the three months ended September 30, 2024, such non-allocated operating expenses primarily consisted of salaries and employee benefits of approximately $9.8 million for corporate employees and general and administrative expenses of approximately $4.2 million.
(2)The other segment items category includes other income.
(3)The Company manages its available capital resources at the corporate level. Interest expense is not allocated to operating segments.
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| Nine Months Ended September 30, 2025 | |||||||||||||||||
Debt purchasing and recovery segment | Corporate and other unallocated | Consolidated | |||||||||||||||
Total revenues | $ | $ | $ | ||||||||||||||
Total operating expenses(1) | ( | ( | ( | ||||||||||||||
Operating income | |||||||||||||||||
Other segment items(2) | |||||||||||||||||
Interest expense(3) | ( | ( | |||||||||||||||
Provision for income taxes | ( | ( | |||||||||||||||
Net income | $ | ||||||||||||||||
_______________________
(1)Certain corporate activities that are not allocated to the debt purchasing and recovery segment are recorded under corporate and other unallocated. During the nine months ended September 30, 2025, such non-allocated operating expenses primarily consisted of salaries and employee benefits of approximately $31.6 million for corporate employees and general and administrative expenses of approximately $15.1 million.
(2)The other segment items category includes other income.
(3)The Company manages its available capital resources at the corporate level. Interest expense is not allocated to operating segments.
| Nine Months Ended September 30, 2024 | |||||||||||||||||
Debt purchasing and recovery segment | Corporate and other unallocated | Consolidated | |||||||||||||||
Total revenues | $ | $ | $ | ||||||||||||||
Total operating expenses(1) | ( | ( | ( | ||||||||||||||
Operating income | |||||||||||||||||
Other segment items(2) | |||||||||||||||||
Interest expense(3) | ( | ( | |||||||||||||||
Provision for income taxes | ( | ( | |||||||||||||||
Net income | $ | ||||||||||||||||
_______________________
(1)Certain corporate activities that are not allocated to the debt purchasing and recovery segment are recorded under corporate and other unallocated. During the nine months ended September 30, 2024, such non-allocated operating expenses primarily consisted of salaries and employee benefits of approximately $28.7 million for corporate employees and general and administrative expenses of approximately $13.8 million.
(2)The other segment items category includes other income.
The following table presents information about geographic areas in which the Company operates (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Total revenues: | |||||||||||||||||||||||
| United States | $ | $ | $ | $ | |||||||||||||||||||
| Europe | |||||||||||||||||||||||
| United Kingdom | |||||||||||||||||||||||
Other European countries(1) | |||||||||||||||||||||||
| Total Europe | |||||||||||||||||||||||
Other geographies(1) | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
(1)None of these countries comprise greater than 10% of the Company's consolidated revenues.
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Note 13: Goodwill
The Company’s goodwill is tested for impairment at the reporting unit level annually and in interim periods if certain events occur that indicate that the fair value of a reporting unit may be below its carrying value. Determining the number of reporting units and the fair value of a reporting unit requires the Company to make judgments and involves the use of significant estimates and assumptions.
There have been no events or circumstances during the three and nine months ended September 30, 2025 that have required the Company to perform an interim assessment of goodwill carried at these reporting units. Management continues to evaluate and monitor all key factors impacting the carrying value of the Company’s recorded goodwill. Adverse changes in the Company’s actual or expected operating results, market capitalization, business climate, economic factors or other negative events that may be outside the control of management could result in a material non-cash impairment charge in the future.
The Company’s goodwill is attributable to reporting units included in its portfolio purchasing and recovery segment. The following table summarizes the activity in the Company’s goodwill balance (in thousands):
Total Company | |||||
Balance as of December 31, 2024 | $ | ||||
| Effect of foreign currency translation | |||||
Balance as of March 31, 2025 | |||||
| Effect of foreign currency translation | |||||
| Balance as of June 30, 2025 | |||||
| Effect of foreign currency translation | ( | ||||
| Balance as of September 30, 2025 | $ | ||||
As of September 30, 2025 and December 31, 2024, the Company’s accumulated goodwill impairment loss was $338.8
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Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q contains “forward-looking statements” relating to Encore Capital Group, Inc. (“Encore”) and its subsidiaries (which we may collectively refer to as the “Company,” “we,” “our” or “us”) within the meaning of the securities laws. The words “believe,” “expect,” “anticipate,” “estimate,” “project,” “intend,” “plan,” “will,” “may,” and similar expressions often characterize forward-looking statements. These statements may include, but are not limited to, projections of collections, revenues, income or loss, estimates of capital expenditures, plans for future operations, products or services, and financing needs or plans, as well as assumptions relating to these matters. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we caution that these expectations or predictions may not prove to be correct or we may not achieve the financial results, savings, or other benefits anticipated in the forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties, some of which may be beyond our control or cannot be predicted or quantified, that could cause actual results to differ materially from those suggested by the forward-looking statements. Many factors including, but not limited to, those set forth in our Annual Report on Form 10-K under “Part I, Item 1A—Risk Factors” could cause our actual results, performance, achievements, or industry results to be very different from the results, performance, achievements or industry results expressed or implied by these forward-looking statements. Our business, financial condition, or results of operations could also be materially and adversely affected by other factors besides those listed. Forward-looking statements speak only as of the date the statements were made. We do not undertake any obligation to update or revise any forward-looking statements to reflect new information or future events, or for any other reason, even if experience or future events make it clear that any expected results expressed or implied by these forward-looking statements will not be realized. In addition, it is generally our policy not to make any specific projections as to future earnings, and we do not endorse projections regarding future performance that may be made by third parties.
Our Business
We are an international specialty finance company providing debt recovery solutions and other related services for consumers across a broad range of financial assets. We primarily purchase portfolios of defaulted consumer receivables at deep discounts to face value and manage them by working with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial obligations to credit originators, including banks, credit unions, consumer finance companies and commercial retailers. Defaulted receivables may also include receivables subject to bankruptcy proceedings. We also provide debt servicing and other portfolio management services to credit originators for non-performing loans in Europe.
Encore Capital Group, Inc. (“Encore”) has three business units: MCM, which consists of Midland Credit Management, Inc. and its domestic affiliates; Cabot, which consists of Cabot Credit Management Limited (“CCM”) and its subsidiaries and European affiliates, and LAAP, which is comprised of our investments and operations in Latin America and Asia-Pacific.
MCM (United States)
Through MCM, we are a market leader in portfolio purchasing and recovery in the United States.
Cabot (Europe)
Through Cabot, we are one of the largest credit management services providers in Europe and the United Kingdom. Cabot, in addition to its primary business of portfolio purchasing and recovery, also provides a range of debt servicing offerings such as early stage collections, business process outsourcing (“BPO”), and contingent collections, including through Wescot Credit Services Limited (“Wescot”).
LAAP (Latin America and Asia-Pacific)
We have purchased non-performing loans in Mexico. Additionally, we have a subsidiary Encore Asset Reconstruction Company (“EARC”) in India.
To date, operating results from LAAP have not been significant to our total consolidated operating results. Our long-term growth strategy is focused on continuing to invest in our core portfolio purchasing and recovery business in the United States and United Kingdom and strengthening and developing our business in France and Spain.
Government Regulation
MCM (United States)
As discussed in more detail under “Part I - Item 1 - Business - Government Regulation” contained in our Annual Report on Form 10-K, our operations in the United States are subject to federal, state and municipal statutes, rules, regulations and
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ordinances that establish specific guidelines and procedures that debt purchasers and collectors must follow when collecting consumer accounts, including among others, specific guidelines and procedures for communicating with consumers and prohibitions on unfair, deceptive or abusive debt collection practices.
Cabot (Europe)
As discussed in more detail under “Part I - Item 1 - Business - Government Regulation” contained in our Annual Report on Form 10-K, our operations in Europe are affected by foreign statutes, rules and regulations regarding debt collection and debt purchase activities. These statutes, rules, regulations, ordinances, guidelines and procedures are modified from time to time by the relevant authorities charged with their administration, which could affect the way we conduct our business.
Portfolio Purchasing and Recovery
MCM (United States)
In the United States, the defaulted consumer receivable portfolios we purchase are primarily charged-off credit card debt portfolios. A small percentage of our capital deployment in the United States is comprised of receivable portfolios subject to Chapter 13 and Chapter 7 bankruptcy proceedings.
We purchase receivables based on robust, account-level valuation methods and employ proprietary statistical and behavioral models across our U.S. operations. These methods and models generally allow us to value portfolios accurately (limiting the risk of overpaying), avoid buying portfolios that are incompatible with our methods or strategies and align the accounts we purchase with our business channels to maximize future collections. As a result, we have generally been able to realize significant returns from the receivables we acquire. We maintain strong relationships with many of the largest financial service providers in the United States.
Cabot (Europe)
In Europe, our purchased defaulted debt portfolios primarily consist of credit card and consumer loan accounts. We purchase receivable portfolios using a proprietary pricing model that utilizes account-level statistical and behavioral data. This model generally allows us to accurately value portfolios and to develop collection strategies that maximize future returns. As a result, we have generally been able to realize significant returns from the assets we have acquired. We maintain strong relationships with many of the largest financial services providers in the United Kingdom and Europe.
Purchases and Collections
Portfolio Pricing, Supply and Demand
MCM (United States)
With lending and charge-off rates remaining near recent peak levels, U.S. portfolio supply continues to be robust. Issuers have continued to sell predominantly fresh portfolios that are generally sold within six months of the consumer’s account being charged-off by the financial institution. Pricing in the third quarter remained at favorable levels as a result of elevated market supply. Issuers continue to sell their volume in mostly forward flow arrangements that are often committed early in the calendar year. We believe steadying lending and delinquency rates at elevated levels will result in stable and strong market supply.
We believe that smaller competitors continue to face difficulties in the portfolio purchasing market because of the high cost to operate due to regulatory pressure and increasing cost of capital. We believe this favors larger participants, like MCM, because the larger market participants are better able to adapt to these pressures and commit to larger forward flow agreements and fluctuating volumes.
Cabot (Europe)
The UK market for charged-off portfolios generally provides a relatively consistent pipeline of opportunities, despite a historically low level of charge-off rates, as creditors have embedded debt sales as an integral part of their business models. The percentage of volume that is sold in multi-year forward flow arrangements is increasing.
France and Spain continue to be two of the largest non-performing loan markets in Europe with significant portfolio sales. Financial institutions continue to look to dispose of non-performing loans in these markets.
While sales activity across all of our European markets remains stable, underlying default rates are generally low by historic levels, and consumer lending volumes have stagnated. Sales levels are expected to fluctuate from quarter to quarter. In general, portfolio pricing remains competitive across our European footprint, constraining the amount of capital we elect to deploy in Europe.
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Purchases by Geographic Location
The following table summarizes purchases of receivable portfolios by geographic location during the periods presented (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| MCM (United States) | $ | 261,140 | $ | 230,182 | $ | 894,770 | $ | 703,517 | |||||||||||||||
| Cabot (Europe) | 84,929 | 52,303 | 186,249 | 153,374 | |||||||||||||||||||
| Total purchases of receivable portfolios | $ | 346,069 | $ | 282,485 | $ | 1,081,019 | $ | 856,891 | |||||||||||||||
In the United States, capital deployments increased during the three and nine months ended September 30, 2025, as compared to the corresponding periods in the prior year. The majority of our deployments in the U.S. come from forward flow agreements, and the timing, contract duration, and volumes for each contract can fluctuate leading to variation when comparing to prior periods. Portfolio purchases in the U.S. were robust as supply increased and pricing remained at favorable levels.
In Europe, capital deployments increased during the three and nine months ended September 30, 2025, as compared to the corresponding periods in the prior year. Pricing continues to remain competitive in our European footprint; constraining the amount of capital we choose to deploy. Capital deployment in Europe increased during the three and nine months ended September 30, 2025. Capital deployment can fluctuate based on the timing of the forward flow contracts and spot purchases. The increases in capital deployment were also partially driven by favorable foreign currency translation effect resulting from the weakening of the U.S. dollar against the British Pound during the comparable periods.
Collections from Purchased Receivables by Channel and Geographic Location
We utilize three channels for the collection of our purchased receivables: call center and digital collections; legal collections; and collection agencies. The call center and digital collections channel consists of collections that result from our call centers, direct mail program and online collections. The legal collections channel consists of collections that result from our internal legal channel or from our network of retained law firms. The collection agencies channel consists of collections from third-party collections agencies to whom we pay a fee or commission. We utilize this channel to supplement capacity in our internal call centers, to service accounts in regions where we do not have collections operations or for accounts purchased where we maintain the collection agency servicing relationship.
The following table summarizes the total collections by collection channel and geographic area during the periods presented (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| MCM (United States): | |||||||||||||||||||||||
| Call center and digital collections | $ | 327,639 | $ | 251,763 | $ | 946,013 | $ | 733,928 | |||||||||||||||
| Legal collections | 170,545 | 145,622 | 489,031 | 418,774 | |||||||||||||||||||
| Collection agencies | 3,584 | 4,317 | 11,101 | 15,107 | |||||||||||||||||||
| Subtotal | 501,768 | 401,702 | 1,446,145 | 1,167,809 | |||||||||||||||||||
| Cabot (Europe): | |||||||||||||||||||||||
| Call center and digital collections | 67,646 | 61,902 | 196,411 | 178,847 | |||||||||||||||||||
| Legal collections | 55,969 | 50,002 | 168,775 | 151,192 | |||||||||||||||||||
| Collection agencies | 36,714 | 35,894 | 109,086 | 107,680 | |||||||||||||||||||
| Subtotal | 160,329 | 147,798 | 474,272 | 437,719 | |||||||||||||||||||
| Other geographies: | 921 | 768 | 2,393 | 2,355 | |||||||||||||||||||
| Total collections from purchased receivables | $ | 663,018 | $ | 550,268 | $ | 1,922,810 | $ | 1,607,883 | |||||||||||||||
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Gross collections from purchased receivables increased by $112.8 million, or 20.5%, to $663.0 million during the three months ended September 30, 2025, as compared to $550.3 million during the three months ended September 30, 2024. Gross collections from purchased receivables increased by $314.9 million, or 19.6%, to $1,922.8 million during the nine months ended September 30, 2025, as compared to $1,607.9 million during the nine months ended September 30, 2024. The increases in collections in the United States were primarily a result of consistent increases in capital deployments in the United States in recent periods. The increases in collections from purchased receivables in Europe were primarily driven by a combination of increases in capital deployments and acquisitions of portfolios with higher returns in recent periods. Additionally, collections in Europe were favorably impacted by foreign currency translation by approximately $6.8 million and $13.5 million during the three and nine months ended September 30, 2025, respectively, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 3.5% and 2.8% for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024, respectively.
Results of Operations
Results of operations, in dollars and as a percentage of total revenues, were as follows for the periods presented (in thousands, except percentages):
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
Portfolio revenue | $ | 370,126 | 80.4 | % | $ | 328,119 | 89.4 | % | |||||||||||||||
| Changes in recoveries | 63,636 | 13.8 | % | 12,675 | 3.4 | % | |||||||||||||||||
| Total debt purchasing revenue | 433,762 | 94.2 | % | 340,794 | 92.8 | % | |||||||||||||||||
| Servicing revenue | 22,175 | 4.8 | % | 22,772 | 6.2 | % | |||||||||||||||||
| Other revenues | 4,416 | 1.0 | % | 3,505 | 1.0 | % | |||||||||||||||||
| Total revenues | 460,353 | 100.0 | % | 367,071 | 100.0 | % | |||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Salaries and employee benefits | 117,118 | 25.4 | % | 107,502 | 29.3 | % | |||||||||||||||||
| Cost of legal collections | 80,010 | 17.4 | % | 67,339 | 18.3 | % | |||||||||||||||||
| General and administrative expenses | 39,220 | 8.5 | % | 38,808 | 10.6 | % | |||||||||||||||||
| Other operating expenses | 37,056 | 8.1 | % | 31,804 | 8.7 | % | |||||||||||||||||
| Collection agency commissions | 6,601 | 1.4 | % | 7,370 | 2.0 | % | |||||||||||||||||
| Depreciation and amortization | 7,170 | 1.6 | % | 8,158 | 2.2 | % | |||||||||||||||||
| Total operating expenses | 287,175 | 62.4 | % | 260,981 | 71.1 | % | |||||||||||||||||
| Income from operations | 173,178 | 37.6 | % | 106,090 | 28.9 | % | |||||||||||||||||
| Other expense | |||||||||||||||||||||||
| Interest expense | (74,242) | (16.1) | % | (66,906) | (18.2) | % | |||||||||||||||||
Other income | 929 | 0.2 | % | 1,578 | 0.4 | % | |||||||||||||||||
| Total other expense | (73,313) | (15.9) | % | (65,328) | (17.8) | % | |||||||||||||||||
| Income before income taxes | 99,865 | 21.7 | % | 40,762 | 11.1 | % | |||||||||||||||||
| Provision for income taxes | (25,205) | (5.5) | % | (10,119) | (2.8) | % | |||||||||||||||||
| Net income | $ | 74,660 | 16.2 | % | $ | 30,643 | 8.3 | % | |||||||||||||||
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| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Portfolio revenue | $ | 1,076,518 | 83.1 | % | $ | 965,901 | 91.9 | % | |||||||||||||||
| Changes in recoveries | 140,699 | 10.9 | % | 6,020 | 0.6 | % | |||||||||||||||||
| Total debt purchasing revenue | 1,217,217 | 94.0 | % | 971,921 | 92.5 | % | |||||||||||||||||
| Servicing revenue | 67,022 | 5.1 | % | 64,258 | 6.1 | % | |||||||||||||||||
| Other revenues | 11,011 | 0.9 | % | 14,563 | 1.4 | % | |||||||||||||||||
| Total revenues | 1,295,250 | 100.0 | % | 1,050,742 | 100.0 | % | |||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Salaries and employee benefits | 340,788 | 26.3 | % | 318,294 | 30.3 | % | |||||||||||||||||
| Cost of legal collections | 227,672 | 17.6 | % | 190,309 | 18.1 | % | |||||||||||||||||
| General and administrative expenses | 121,565 | 9.4 | % | 111,828 | 10.7 | % | |||||||||||||||||
| Other operating expenses | 108,298 | 8.4 | % | 93,016 | 8.9 | % | |||||||||||||||||
| Collection agency commissions | 21,848 | 1.7 | % | 22,308 | 2.1 | % | |||||||||||||||||
| Depreciation and amortization | 21,825 | 1.7 | % | 23,467 | 2.2 | % | |||||||||||||||||
| Total operating expenses | 841,996 | 65.1 | % | 759,222 | 72.3 | % | |||||||||||||||||
| Income from operations | 453,254 | 34.9 | % | 291,520 | 27.7 | % | |||||||||||||||||
| Other expense | |||||||||||||||||||||||
| Interest expense | (218,715) | (16.9) | % | (184,047) | (17.5) | % | |||||||||||||||||
Other income | 3,802 | 0.3 | % | 6,291 | 0.6 | % | |||||||||||||||||
| Total other expense | (214,913) | (16.6) | % | (177,756) | (16.9) | % | |||||||||||||||||
| Income before income taxes | 238,341 | 18.3 | % | 113,764 | 10.8 | % | |||||||||||||||||
| Provision for income taxes | (58,164) | (4.5) | % | (27,701) | (2.6) | % | |||||||||||||||||
| Net income | $ | 180,177 | 13.8 | % | $ | 86,063 | 8.2 | % | |||||||||||||||
30
Comparison of Results of Operations
Revenues
Our revenues primarily include debt purchasing revenue, which is revenue recognized from engaging in debt purchasing and recovery activities. We apply our charge-off policy and fully write-off the amortized costs (i.e., face value net of noncredit discount) of the individual receivables we acquire immediately after purchasing the portfolio. We then record a negative allowance that represents the present value of all expected future recoveries for pools of receivables that share similar risk characteristics using a discounted cash flow approach, which is presented as “Receivable portfolios, net” in our condensed consolidated statements of financial condition. The discount rate is an effective interest rate (or “purchase EIR”) established based on the purchase price of the portfolio and the expected future cash flows at the time of purchase.
Debt purchasing revenue includes two components:
(1) Portfolio revenue, which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the EIR), and
(2) Changes in recoveries, which includes
(a) Recoveries above (below) forecast, which is the difference between (i) actual cash collected/recovered during the current period and (ii) expected cash recoveries for the current period, which generally represents over or under performance for the period; and
(b) Changes in expected future recoveries, which is the present value change of expected future recoveries, where such change generally results from (i) collections “pulled forward from” or “pushed out to” future periods (i.e. amounts either collected early or expected to be collected later) and (ii) magnitude and timing changes to estimates of expected future collections (which can be increases or decreases).
Certain pools already fully recovered their cost basis and became zero basis portfolios (“ZBA”) prior to our adoption of the accounting standard for Financial Instruments - Credit Losses (“CECL”) in January 2020. We did not establish a negative allowance for these pools as we elected the Transition Resource Group for Credit Losses’ practical expedient to retain the integrity of these legacy pools. Similar to how we treated ZBA collections prior to the adoption of CECL, all subsequent collections to the ZBA pools are recognized as ZBA revenue, which is included in portfolio revenue in our condensed consolidated statements of income. We expect our ZBA revenue to continue to decline as we collect on these legacy pools. We do not expect to have new ZBA pools in the future.
Servicing revenue consists primarily of fee-based income earned on accounts collected on behalf of others, primarily credit originators. We earn fee-based income by providing debt servicing (such as early stage collections, BPO, contingent collections, trace services and litigation activities) to credit originators for non-performing loans in Europe.
Other revenues primarily include revenues recognized from the sale of real estate assets that are acquired as a result of our investments in non-performing secured residential mortgage portfolios and real estate assets in Europe and LAAP.
31
The following tables summarize revenues for the periods presented (in thousands, except percentages):
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Revenue recognized from portfolio basis | $ | 364,239 | $ | 322,491 | $ | 41,748 | 12.9 | % | |||||||||||||||
| ZBA revenue | 5,887 | 5,628 | 259 | 4.6 | % | ||||||||||||||||||
Portfolio revenue | 370,126 | 328,119 | 42,007 | 12.8 | % | ||||||||||||||||||
Recoveries above forecast | 61,459 | 22,962 | 38,497 | ||||||||||||||||||||
| Changes in expected future recoveries | 2,177 | (10,287) | 12,464 | ||||||||||||||||||||
| Changes in recoveries | 63,636 | 12,675 | 50,961 | 402.1 | % | ||||||||||||||||||
| Debt purchasing revenue | 433,762 | 340,794 | 92,968 | 27.3 | % | ||||||||||||||||||
| Servicing revenue | 22,175 | 22,772 | (597) | (2.6) | % | ||||||||||||||||||
| Other revenues | 4,416 | 3,505 | 911 | 26.0 | % | ||||||||||||||||||
| Total revenues | $ | 460,353 | $ | 367,071 | $ | 93,282 | 25.4 | % | |||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Revenue recognized from portfolio basis | $ | 1,058,742 | $ | 947,907 | $ | 110,835 | 11.7 | % | |||||||||||||||
| ZBA revenue | 17,776 | 17,994 | (218) | (1.2) | % | ||||||||||||||||||
Portfolio revenue | 1,076,518 | 965,901 | 110,617 | 11.5 | % | ||||||||||||||||||
Recoveries above forecast | 140,674 | 51,258 | 89,416 | ||||||||||||||||||||
| Changes in expected future recoveries | 25 | (45,238) | 45,263 | ||||||||||||||||||||
| Changes in recoveries | 140,699 | 6,020 | 134,679 | 2237.2 | % | ||||||||||||||||||
| Debt purchasing revenue | 1,217,217 | 971,921 | 245,296 | 25.2 | % | ||||||||||||||||||
| Servicing revenue | 67,022 | 64,258 | 2,764 | 4.3 | % | ||||||||||||||||||
| Other revenues | 11,011 | 14,563 | (3,552) | (24.4) | % | ||||||||||||||||||
| Total revenues | $ | 1,295,250 | $ | 1,050,742 | $ | 244,508 | 23.3 | % | |||||||||||||||
Our operating results are impacted by foreign currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency. The strengthening of the U.S. dollar relative to other foreign currencies has an unfavorable impact on our international revenues, and the weakening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international revenues. Our revenues were favorably impacted by foreign currency translation by approximately $5.2 million and $10.2 million during the three and nine months ended September 30, 2025, respectively, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 3.5% and 2.8% for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024, respectively.
The increases in revenue recognized from portfolio basis during the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024, were primarily due to a higher portfolio basis (i.e. a higher receivable portfolios balance) in the U.S. driven by a consistent higher volume of purchases in recent periods.
Recoveries above or below forecast represent over and under-performance in the reporting period, respectively, and are expected to vary from period to period. Collections during the three and nine months ended September 30, 2025, over-performed the forecasted collections by approximately $61.5 million and $140.7 million, respectively, primarily as a result of collections over-performance in the U.S. The collections over-performance in the U.S. was driven by the deployment of new technologies, enhanced digital capabilities and continued operational innovation, which enabled us to reach more consumers, leading to more payments as well as a larger payer book. These initiatives had a greater impact on the early stages of a portfolio’s lifecycle, leading to over-performance for our recent vintages. We expect that our collections forecasts will
32
gradually adjust to reflect the positive impact of these initiatives. Collections during the three and nine months ended September 30, 2024, over-performed the forecasted collections by approximately $23.0 million and $51.3 million, respectively.
When reassessing the forecasts of expected lifetime recoveries during the three months ended September 30, 2025, management considered, among other factors, historical and current collection performance, changes in consumer behavior, and the macroeconomic environment. The significant recoveries above forecast in recent periods were carefully evaluated. Management concluded that the recoveries above forecast were primarily current period collections over-performance and did not represent any material shift in timing of the collections. Therefore, the updated forecast did not result in a material change in expected future recoveries. We recorded a net positive change in expected future recoveries of approximately $2.2 million during the three months ended September 30, 2025. This $2.2 million net positive change recorded during the three months ended September 30, 2025 was offset by approximately $2.2 million net negative change recorded in the first half of fiscal year 2025 and as a result, the net change in expected future recoveries recorded during the nine months ended September 30, 2025 was negligible. During the three and nine months ended September 30, 2024, we recorded approximately $10.3 million and $45.2 million in net negative change in expected future recoveries, respectively.
The following tables summarize collections from purchased receivables, portfolio revenue, end of period receivable portfolios balance and other related supplemental data, by year of purchase (in thousands, except percentages):
| Three Months Ended September 30, 2025 | As of September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||
| Collections | Portfolio Revenue | Changes in Recoveries | Receivable Portfolios | Monthly EIR | |||||||||||||||||||||||||||||||||||||
| United States: | |||||||||||||||||||||||||||||||||||||||||
| ZBA | $ | 5,884 | $ | 5,884 | $ | — | $ | — | — | % | |||||||||||||||||||||||||||||||
| <2016 | 16,515 | 10,761 | 4,620 | 27,312 | 14.4 | % | |||||||||||||||||||||||||||||||||||
| 2016 | 4,958 | 2,435 | 1,059 | 18,839 | 4.2 | % | |||||||||||||||||||||||||||||||||||
| 2017 | 6,891 | 4,020 | 889 | 23,032 | 5.6 | % | |||||||||||||||||||||||||||||||||||
| 2018 | 10,170 | 5,540 | 584 | 43,309 | 4.0 | % | |||||||||||||||||||||||||||||||||||
| 2019 | 18,269 | 9,724 | 243 | 79,549 | 3.8 | % | |||||||||||||||||||||||||||||||||||
| 2020 | 20,110 | 11,097 | (1,449) | 92,627 | 3.7 | % | |||||||||||||||||||||||||||||||||||
| 2021 | 20,272 | 11,051 | 672 | 87,875 | 3.9 | % | |||||||||||||||||||||||||||||||||||
| 2022 | 41,818 | 18,797 | 3,255 | 190,954 | 3.1 | % | |||||||||||||||||||||||||||||||||||
| 2023 | 101,492 | 46,309 | 6,313 | 442,470 | 3.3 | % | |||||||||||||||||||||||||||||||||||
2024 | 157,406 | 83,892 | 30,916 | 812,677 | 3.3 | % | |||||||||||||||||||||||||||||||||||
2025 | 97,983 | 66,827 | 11,662 | 867,113 | 3.2 | % | |||||||||||||||||||||||||||||||||||
| Subtotal | 501,768 | 276,337 | 58,764 | 2,685,757 | 3.4 | % | |||||||||||||||||||||||||||||||||||
| Europe: | |||||||||||||||||||||||||||||||||||||||||
| ZBA | 3 | 3 | — | — | — | % | |||||||||||||||||||||||||||||||||||
<2016 | 33,199 | 22,729 | 3,340 | 251,118 | 3.0 | % | |||||||||||||||||||||||||||||||||||
2016 | 7,176 | 4,744 | 799 | 56,986 | 2.7 | % | |||||||||||||||||||||||||||||||||||
| 2017 | 8,982 | 5,217 | 463 | 91,306 | 1.9 | % | |||||||||||||||||||||||||||||||||||
| 2018 | 8,729 | 5,104 | (80) | 106,143 | 1.6 | % | |||||||||||||||||||||||||||||||||||
| 2019 | 9,397 | 5,597 | (2,498) | 94,001 | 1.9 | % | |||||||||||||||||||||||||||||||||||
| 2020 | 6,053 | 3,431 | (1,083) | 48,302 | 2.2 | % | |||||||||||||||||||||||||||||||||||
| 2021 | 10,431 | 6,626 | (316) | 116,427 | 1.9 | % | |||||||||||||||||||||||||||||||||||
| 2022 | 12,746 | 6,493 | (1,722) | 134,641 | 1.5 | % | |||||||||||||||||||||||||||||||||||
| 2023 | 18,862 | 8,008 | 3,482 | 177,980 | 1.5 | % | |||||||||||||||||||||||||||||||||||
2024 | 32,370 | 18,115 | 1,079 | 309,505 | 1.9 | % | |||||||||||||||||||||||||||||||||||
2025 | 12,381 | 7,722 | 1,080 | 182,995 | 2.1 | % | |||||||||||||||||||||||||||||||||||
| Subtotal | 160,329 | 93,789 | 4,544 | 1,569,404 | 2.0 | % | |||||||||||||||||||||||||||||||||||
Other geographies:(1) | |||||||||||||||||||||||||||||||||||||||||
| All vintages | 921 | — | 328 | 14,855 | — | % | |||||||||||||||||||||||||||||||||||
| Subtotal | 921 | — | 328 | 14,855 | — | % | |||||||||||||||||||||||||||||||||||
| Total | $ | 663,018 | $ | 370,126 | $ | 63,636 | $ | 4,270,016 | 2.9 | % | |||||||||||||||||||||||||||||||
(1)All portfolios are on non-accrual basis. Annual pool groups for other geographies have been aggregated for disclosure purposes.
33
| Three Months Ended September 30, 2024 | As of September 30, 2024 | ||||||||||||||||||||||||||||
| Collections | Portfolio Revenue | Changes in Recoveries | Receivable Portfolios | Monthly EIR | |||||||||||||||||||||||||
| United States: | |||||||||||||||||||||||||||||
| ZBA | $ | 5,628 | $ | 5,628 | $ | — | $ | — | — | % | |||||||||||||||||||
<2016 | 19,741 | 14,736 | 2,636 | 35,510 | 13.0 | % | |||||||||||||||||||||||
| 2016 | 6,976 | 3,384 | 2,669 | 27,226 | 4.2 | % | |||||||||||||||||||||||
| 2017 | 9,748 | 5,662 | 2,234 | 33,308 | 5.5 | % | |||||||||||||||||||||||
| 2018 | 15,488 | 8,060 | 1,627 | 63,173 | 4.0 | % | |||||||||||||||||||||||
| 2019 | 27,024 | 14,526 | (1,113) | 117,894 | 3.8 | % | |||||||||||||||||||||||
| 2020 | 30,170 | 16,384 | (1,069) | 137,464 | 3.7 | % | |||||||||||||||||||||||
| 2021 | 30,867 | 16,397 | 963 | 130,575 | 3.9 | % | |||||||||||||||||||||||
| 2022 | 61,009 | 28,531 | 2,177 | 289,780 | 3.1 | % | |||||||||||||||||||||||
2023 | 117,460 | 66,842 | 7,805 | 656,348 | 3.3 | % | |||||||||||||||||||||||
2024 | 77,591 | 54,500 | 5,721 | 674,257 | 3.4 | % | |||||||||||||||||||||||
| Subtotal | 401,702 | 234,650 | 23,650 | 2,165,535 | 3.6 | % | |||||||||||||||||||||||
| Europe: | |||||||||||||||||||||||||||||
| ZBA | — | — | — | — | — | % | |||||||||||||||||||||||
<2016 | 35,076 | 27,891 | (1,233) | 319,035 | 2.9 | % | |||||||||||||||||||||||
2016(1) | 7,157 | 5,552 | (5,960) | 64,238 | 2.7 | % | |||||||||||||||||||||||
| 2017 | 9,937 | 6,284 | 185 | 111,792 | 1.9 | % | |||||||||||||||||||||||
| 2018 | 9,916 | 6,653 | (4,698) | 139,021 | 1.6 | % | |||||||||||||||||||||||
| 2019 | 11,765 | 6,901 | (555) | 121,893 | 1.9 | % | |||||||||||||||||||||||
| 2020 | 7,927 | 4,982 | (2,669) | 72,052 | 2.2 | % | |||||||||||||||||||||||
| 2021 | 12,796 | 8,804 | (710) | 155,417 | 1.9 | % | |||||||||||||||||||||||
| 2022 | 16,046 | 8,471 | 1,912 | 181,895 | 1.6 | % | |||||||||||||||||||||||
2023 | 22,478 | 9,849 | (216) | 220,592 | 1.5 | % | |||||||||||||||||||||||
2024 | 14,700 | 8,082 | 2,473 | 148,590 | 2.2 | % | |||||||||||||||||||||||
| Subtotal | 147,798 | 93,469 | (11,471) | 1,534,525 | 2.1 | % | |||||||||||||||||||||||
Other geographies:(2) | |||||||||||||||||||||||||||||
| All vintages | 768 | — | 496 | 19,200 | — | % | |||||||||||||||||||||||
| Subtotal | 768 | — | 496 | 19,200 | — | % | |||||||||||||||||||||||
| Total | $ | 550,268 | $ | 328,119 | $ | 12,675 | $ | 3,719,260 | 3.0 | % | |||||||||||||||||||
_______________________
(1)Portfolio balance includes non-accrual pool groups. The EIR presented is only for pool groups that accrete portfolio revenue.
(2)All portfolios are on non-accrual basis. Annual pool groups for other geographies have been aggregated for disclosure purposes.
34
| Nine Months Ended September 30, 2025 | As of September 30, 2025 | ||||||||||||||||||||||||||||
| Collections | Portfolio Revenue | Changes in Recoveries | Receivable Portfolios | Monthly EIR | |||||||||||||||||||||||||
| United States: | |||||||||||||||||||||||||||||
| ZBA | $ | 17,771 | $ | 17,771 | $ | — | $ | — | — | % | |||||||||||||||||||
<2016 | 51,318 | 35,624 | 8,610 | 27,312 | 14.4 | % | |||||||||||||||||||||||
| 2016 | 16,070 | 8,122 | 1,731 | 18,839 | 4.2 | % | |||||||||||||||||||||||
| 2017 | 22,894 | 13,353 | 2,033 | 23,032 | 5.6 | % | |||||||||||||||||||||||
| 2018 | 33,606 | 18,375 | 913 | 43,309 | 4.0 | % | |||||||||||||||||||||||
| 2019 | 61,665 | 32,449 | 682 | 79,549 | 3.8 | % | |||||||||||||||||||||||
| 2020 | 68,925 | 36,889 | (1,186) | 92,627 | 3.7 | % | |||||||||||||||||||||||
| 2021 | 68,455 | 36,945 | 263 | 87,875 | 3.9 | % | |||||||||||||||||||||||
| 2022 | 143,384 | 63,020 | 9,308 | 190,954 | 3.1 | % | |||||||||||||||||||||||
2023 | 328,675 | 155,450 | 6,272 | 442,470 | 3.3 | % | |||||||||||||||||||||||
2024 | 472,422 | 266,490 | 68,239 | 812,677 | 3.3 | % | |||||||||||||||||||||||
| 2025 | 160,960 | 117,333 | 18,591 | 867,113 | 3.2 | % | |||||||||||||||||||||||
| Subtotal | 1,446,145 | 801,821 | 115,456 | 2,685,757 | 3.4 | % | |||||||||||||||||||||||
| Europe: | |||||||||||||||||||||||||||||
| ZBA | 5 | 5 | — | — | — | % | |||||||||||||||||||||||
<2016 | 99,682 | 68,275 | 10,440 | 251,118 | 3.0 | % | |||||||||||||||||||||||
| 2016 | 20,278 | 14,184 | 704 | 56,986 | 2.7 | % | |||||||||||||||||||||||
| 2017 | 27,252 | 15,705 | 1,682 | 91,306 | 1.9 | % | |||||||||||||||||||||||
| 2018 | 26,233 | 15,308 | 168 | 106,143 | 1.6 | % | |||||||||||||||||||||||
| 2019 | 29,241 | 16,984 | (2,629) | 94,001 | 1.9 | % | |||||||||||||||||||||||
| 2020 | 18,964 | 10,570 | (1,062) | 48,302 | 2.2 | % | |||||||||||||||||||||||
| 2021 | 32,264 | 19,869 | 447 | 116,427 | 1.9 | % | |||||||||||||||||||||||
| 2022 | 40,443 | 19,746 | (180) | 134,641 | 1.5 | % | |||||||||||||||||||||||
2023 | 60,254 | 24,370 | 10,654 | 177,980 | 1.5 | % | |||||||||||||||||||||||
2024 | 96,290 | 55,281 | 1,470 | 309,505 | 1.9 | % | |||||||||||||||||||||||
| 2025 | 23,366 | 14,400 | 2,353 | 182,995 | 2.1 | % | |||||||||||||||||||||||
| Subtotal | 474,272 | 274,697 | 24,047 | 1,569,404 | 2.0 | % | |||||||||||||||||||||||
Other geographies:(1) | |||||||||||||||||||||||||||||
| All vintages | 2,393 | — | 1,196 | 14,855 | — | % | |||||||||||||||||||||||
| Subtotal | 2,393 | — | 1,196 | 14,855 | — | % | |||||||||||||||||||||||
| Total | $ | 1,922,810 | $ | 1,076,518 | $ | 140,699 | $ | 4,270,016 | 2.9 | % | |||||||||||||||||||
_______________________
(1)All portfolios are on non-accrual basis. Annual pool groups for other geographies have been aggregated for disclosure purposes.
35
| Nine Months Ended September 30, 2024 | As of September 30, 2024 | ||||||||||||||||||||||||||||
| Collections | Portfolio Revenue | Changes in Recoveries | Receivable Portfolios | Monthly EIR | |||||||||||||||||||||||||
| United States: | |||||||||||||||||||||||||||||
| ZBA | $ | 17,992 | $ | 17,992 | $ | — | $ | — | — | % | |||||||||||||||||||
<2016 | 61,698 | 48,314 | 4,502 | 35,510 | 13.0 | % | |||||||||||||||||||||||
| 2016 | 21,643 | 11,200 | 4,168 | 27,226 | 4.2 | % | |||||||||||||||||||||||
| 2017 | 30,891 | 18,861 | 2,554 | 33,308 | 5.5 | % | |||||||||||||||||||||||
| 2018 | 50,210 | 26,744 | 2,904 | 63,173 | 4.0 | % | |||||||||||||||||||||||
| 2019 | 87,945 | 48,474 | (3,375) | 117,894 | 3.8 | % | |||||||||||||||||||||||
| 2020 | 100,826 | 54,709 | (3,478) | 137,464 | 3.7 | % | |||||||||||||||||||||||
| 2021 | 104,611 | 54,361 | 5,270 | 130,575 | 3.9 | % | |||||||||||||||||||||||
| 2022 | 199,446 | 96,269 | (5,021) | 289,780 | 3.1 | % | |||||||||||||||||||||||
2023 | 362,724 | 215,070 | 14,708 | 656,348 | 3.3 | % | |||||||||||||||||||||||
2024 | 129,823 | 96,633 | 6,327 | 674,257 | 3.4 | % | |||||||||||||||||||||||
| Subtotal | 1,167,809 | 688,627 | 28,559 | 2,165,535 | 3.6 | % | |||||||||||||||||||||||
| Europe: | |||||||||||||||||||||||||||||
| ZBA | 2 | 2 | — | — | — | % | |||||||||||||||||||||||
<2016 | 104,903 | 85,055 | (9,137) | 319,035 | 2.9 | % | |||||||||||||||||||||||
2016(1) | 22,994 | 17,146 | (6,000) | 64,238 | 2.7 | % | |||||||||||||||||||||||
| 2017 | 30,747 | 19,327 | (1,321) | 111,792 | 1.9 | % | |||||||||||||||||||||||
| 2018 | 32,407 | 20,670 | (11,196) | 139,021 | 1.6 | % | |||||||||||||||||||||||
| 2019 | 36,012 | 21,225 | (1,186) | 121,893 | 1.9 | % | |||||||||||||||||||||||
| 2020 | 24,257 | 15,624 | (2,769) | 72,052 | 2.2 | % | |||||||||||||||||||||||
| 2021 | 40,075 | 26,843 | (1,355) | 155,417 | 1.9 | % | |||||||||||||||||||||||
| 2022 | 49,632 | 26,240 | 1,209 | 181,895 | 1.6 | % | |||||||||||||||||||||||
2023 | 68,229 | 30,695 | 3,203 | 220,592 | 1.5 | % | |||||||||||||||||||||||
2024 | 28,461 | 14,447 | 4,166 | 148,590 | 2.2 | % | |||||||||||||||||||||||
| Subtotal | 437,719 | 277,274 | (24,386) | 1,534,525 | 2.1 | % | |||||||||||||||||||||||
Other geographies:(2) | |||||||||||||||||||||||||||||
| All vintages | 2,355 | — | 1,847 | 19,200 | — | % | |||||||||||||||||||||||
| Subtotal | 2,355 | — | 1,847 | 19,200 | — | % | |||||||||||||||||||||||
| Total | $ | 1,607,883 | $ | 965,901 | $ | 6,020 | $ | 3,719,260 | 3.0 | % | |||||||||||||||||||
______________________
(1)Portfolio balance includes non-accrual pool groups. The EIR presented is only for pool groups that accrete portfolio revenue.
(2)All portfolios are on non-accrual basis. Annual pool groups for other geographies have been aggregated for disclosure purposes.
Servicing revenue and other revenues remained relatively consistent during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.
Servicing revenue increased during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily driven by increased demand from BPO clients. Other revenues decreased during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, primarily driven by a decrease in gains recognized on the sale of real estate assets.
36
Operating Expenses
The following tables summarize operating expenses during the periods presented (in thousands, except percentages):
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Salaries and employee benefits | $ | 117,118 | $ | 107,502 | $ | 9,616 | 8.9 | % | |||||||||||||||
| Cost of legal collections | 80,010 | 67,339 | 12,671 | 18.8 | % | ||||||||||||||||||
| General and administrative expenses | 39,220 | 38,808 | 412 | 1.1 | % | ||||||||||||||||||
| Other operating expenses | 37,056 | 31,804 | 5,252 | 16.5 | % | ||||||||||||||||||
| Collection agency commissions | 6,601 | 7,370 | (769) | (10.4) | % | ||||||||||||||||||
| Depreciation and amortization | 7,170 | 8,158 | (988) | (12.1) | % | ||||||||||||||||||
| Total operating expenses | $ | 287,175 | $ | 260,981 | $ | 26,194 | 10.0 | % | |||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Salaries and employee benefits | $ | 340,788 | $ | 318,294 | $ | 22,494 | 7.1 | % | |||||||||||||||
| Cost of legal collections | 227,672 | 190,309 | 37,363 | 19.6 | % | ||||||||||||||||||
| General and administrative expenses | 121,565 | 111,828 | 9,737 | 8.7 | % | ||||||||||||||||||
| Other operating expenses | 108,298 | 93,016 | 15,282 | 16.4 | % | ||||||||||||||||||
| Collection agency commissions | 21,848 | 22,308 | (460) | (2.1) | % | ||||||||||||||||||
| Depreciation and amortization | 21,825 | 23,467 | (1,642) | (7.0) | % | ||||||||||||||||||
| Total operating expenses | $ | 841,996 | $ | 759,222 | $ | 82,774 | 10.9 | % | |||||||||||||||
Our operating results are impacted by foreign currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency. The strengthening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international operating expenses, and the weakening of the U.S. dollar relative to other foreign currencies has an unfavorable impact on our international operating expenses. Our operating expenses were unfavorably impacted by foreign currency translation by approximately $3.5 million and $7.1 million, during the three and nine months ended September 30, 2025, respectively, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 3.5% and 2.8% for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024, respectively.
Operating expenses are explained in more detail as follows:
Salaries and Employee Benefits
The increases in salaries and employee benefits during the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024, respectively, were primarily due to increase in overall headcount.
Cost of Legal Collections
Cost of legal collections primarily includes contingent fees paid to our external network of attorneys and the cost of litigation. We pursue legal collections using a network of attorneys that specialize in collection matters and through our internal legal channel. Under the agreements with our contracted attorneys, we advance certain out-of-pocket court costs. Cost of legal collections does not include internal legal channel employee costs, which are included in salaries and employee benefits in our condensed consolidated statements of income.
37
The following tables summarize our cost of legal collections during the periods presented (in thousands, except percentages):
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Court costs | $ | 54,157 | $ | 44,282 | $ | 9,875 | 22.3 | % | |||||||||||||||
| Legal collection fees | 25,853 | 23,057 | 2,796 | 12.1 | % | ||||||||||||||||||
| Total cost of legal collections | $ | 80,010 | $ | 67,339 | $ | 12,671 | 18.8 | % | |||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Court costs | $ | 153,021 | $ | 124,250 | $ | 28,771 | 23.2 | % | |||||||||||||||
| Legal collection fees | 74,651 | 66,059 | 8,592 | 13.0 | % | ||||||||||||||||||
| Total cost of legal collections | $ | 227,672 | $ | 190,309 | $ | 37,363 | 19.6 | % | |||||||||||||||
The increases of cost of legal collections during the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024, were primarily due to increased legal placements in this channel in the United States.
General and Administrative Expenses
General and administrative expense remained relatively consistent during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.
The increase in general and administrative expense during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, was primarily due to the following reasons:
•An increase in information technology expenses of approximately $3.6 million;
•An increase in consulting fees of approximately $2.9 million; and
•An increase in rent and facilities expenses of approximately $1.2 million.
Other Operating Expenses
The increase in other operating expenses during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, was primarily due to the following reason:
•An increase in postage and printing expenses of approximately $4.2 million.
The increase in other operating expenses during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, was primarily due to the following reasons:
•An increase in postage and printing expenses of approximately $9.6 million; and
•An increase in collections bank charges and trace agencies fees of approximately $3.4 million.
Collection Agency Commissions
Collection agency commissions are commissions paid to third-party collection agencies. Collections through the collections agencies channel are predominately in Europe and vary from period to period depending on, among other things, the number of accounts placed with an agency versus accounts collected internally. Commission rates vary depending on, among other things, the amount of time that has passed since the charge-off of the accounts placed with an agency, the asset class, and the geographic location of the receivables. Generally, freshly charged-off accounts have a lower commission rate than accounts that have been charged off for a longer period of time, and commission rates for purchased bankruptcy portfolios are lower than the commission rates for charged-off credit card accounts. Collection agency commissions remained relatively consistent during the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024.
Depreciation and Amortization
Depreciation and amortization expenses decreased by approximately $1.0 million and $1.6 million during the three and nine months ended September 30, 2025, respectively, as compared to the three and nine months ended September 30, 2024. The decreases were primarily due to smaller depreciable and amortizable asset balances during the three and nine months ended September 30, 2025, as compared to corresponding periods in the prior year.
38
Interest Expense
The following tables summarize our interest expense for the periods presented (in thousands, except percentages):
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Stated interest on debt obligations | $ | 70,302 | $ | 62,467 | $ | 7,835 | 12.5 | % | |||||||||||||||
| Amortization of debt issuance costs | 3,693 | 3,991 | (298) | (7.5) | % | ||||||||||||||||||
Amortization of debt discount | 247 | 448 | (201) | (44.9) | % | ||||||||||||||||||
| Total interest expense | $ | 74,242 | $ | 66,906 | $ | 7,336 | 11.0 | % | |||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Stated interest on debt obligations | $ | 207,564 | $ | 171,668 | $ | 35,896 | 20.9 | % | |||||||||||||||
| Amortization of debt issuance costs | 10,450 | 11,071 | (621) | (5.6) | % | ||||||||||||||||||
Amortization of debt discount | 701 | 1,308 | (607) | (46.4) | % | ||||||||||||||||||
| Total interest expense | $ | 218,715 | $ | 184,047 | $ | 34,668 | 18.8 | % | |||||||||||||||
The increase in interest expense during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, was primarily due to the following reasons:
•The effect resulting from increased average debt balance of approximately $8.0 million; and
•The effect resulting from an unfavorable impact of foreign currency translation of approximately $1.1 million driven by the weakening of the U.S. dollar against the British Pound.
•The increase was partially offset by the effect resulting from a decrease in interest rates of approximately $1.8 million.
The increase in interest expense during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, was primarily due to the following reasons:
•The effect resulting from increased average debt balance of approximately $25.1 million;
•The effect resulting from rising interest rates of approximately $7.7 million; and
•The effect resulting from an unfavorable impact of foreign currency translation of approximately $1.9 million driven by the weakening of the U.S. dollar against the British Pound.
Other Income, net of Other Expense
Other income or expense consists primarily of foreign currency exchange gains or losses, interest income, and gains or losses recognized on certain transactions outside of our normal course of business. Other income, net, was $0.9 million and $3.8 million during the three and nine months ended September 30, 2025, respectively. Other income, net, was $1.6 million and $6.3 million during the three and nine months ended September 30, 2024, respectively. Interest income included in other income, net of other expense, was approximately $1.0 million and $3.9 million during the three and nine months ended September 30, 2025, respectively, and $1.9 million and $5.0 million for the three and nine months ended September 30, 2024, respectively.
Provision for Income Taxes
Provision for income taxes and effective tax rate are as follows for the periods presented ($ in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Provision for income taxes | $ | 25,205 | $ | 10,119 | $ | 58,164 | $ | 27,701 | |||||||||||||||
| Effective tax rate | 25.2% | 24.8% | 24.4% | 24.3% | |||||||||||||||||||
For the three and nine months ended September 30, 2025, the differences between our effective tax rate and the federal statutory rate were primarily due to state income taxes offset by other foreign adjustments. For the three and nine months ended September 30, 2024, the differences between our effective tax rate and the federal statutory rate were primarily due to state income taxes.
39
Non-GAAP Disclosure
In addition to the financial information prepared in conformity with Generally Accepted Accounting Principles (“GAAP”), we provide historical non-GAAP financial information. Management believes that the presentation of such non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of our operations. Management believes that these non-GAAP financial measures reflect an additional way of viewing aspects of our business that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business.
Management believes that the presentation of these measures provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments, and amortization methods, which provide a more complete understanding of our financial performance, competitive position, and prospects for the future. Readers should consider the information in addition to, but not instead of, our financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of these measures for comparative purposes.
Adjusted EBITDA. Management utilizes adjusted EBITDA (defined as net income before interest income and expense, taxes, depreciation and amortization, stock-based compensation expenses, acquisition, integration and restructuring related expenses, and other charges or gains that are not indicative of ongoing operations), in the evaluation of our operating performance. Adjusted EBITDA for the periods presented is as follows (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| GAAP net income, as reported | $ | 74,660 | $ | 30,643 | $ | 180,177 | $ | 86,063 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Interest expense | 74,242 | 66,906 | 218,715 | 184,047 | |||||||||||||||||||
| Interest income | (1,027) | (1,909) | (3,935) | (5,037) | |||||||||||||||||||
| Provision for income taxes | 25,205 | 10,119 | 58,164 | 27,701 | |||||||||||||||||||
| Depreciation and amortization | 7,170 | 8,158 | 21,825 | 23,467 | |||||||||||||||||||
| Stock-based compensation expense | 4,341 | 3,737 | 13,048 | 11,731 | |||||||||||||||||||
Net loss (gain) on derivative instruments(1) | — | 7 | — | (267) | |||||||||||||||||||
Acquisition, integration and restructuring related expenses(2) | 165 | 162 | 1,455 | 4,364 | |||||||||||||||||||
| Adjusted EBITDA | $ | 184,756 | $ | 117,823 | $ | 489,449 | $ | 332,069 | |||||||||||||||
Collections applied to principal balance(3) | $ | 236,293 | $ | 223,292 | $ | 725,270 | $ | 666,766 | |||||||||||||||
(1)Amount represents gain or loss recognized on derivative instruments that are not designated as hedging instruments or gain or loss recognized on derivative instruments upon dedesignation of hedge relationships. We adjust for this amount because we believe the gain or loss on derivative contracts is not indicative of ongoing operations.
(2)Amount represents acquisition, integration and restructuring related expenses. We adjust for this amount because we believe these expenses are not indicative of ongoing operations; therefore, adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results.
(3)Collections applied to principal balance is calculated in the table below:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
Collections applied to receivable portfolios, net | $ | 292,892 | $ | 222,149 | $ | 846,292 | $ | 641,982 | |||||||||||||||
| Changes in recoveries | (63,636) | (12,675) | (140,699) | (6,020) | |||||||||||||||||||
Other proceeds applied to basis | 7,037 | 13,818 | 19,677 | 30,804 | |||||||||||||||||||
| Collections applied to principal balance | $ | 236,293 | $ | 223,292 | $ | 725,270 | $ | 666,766 | |||||||||||||||
40
Supplemental Performance Data
The tables included in this supplemental performance data section include detail for purchases, collections and ERC by year of purchase.
Our collection expectations are based on account characteristics and economic variables. Additional adjustments are made to account for qualitative factors that may affect the payment behavior of our consumers and servicing related adjustments to ensure our collection expectations are aligned with our operations. We continue to refine our process of forecasting collections both domestically and internationally with a focus on operational enhancements. Our collection expectations vary between types of portfolio and geographic location. As a result, past performance of pools in certain geographic locations or of certain types of portfolio are not necessarily a suitable indicator of future results in other locations or for other types of portfolio.
The supplemental performance data presented in this section is impacted by foreign currency translation, which represents the effect of translating financial results where the functional currency of our foreign subsidiary is different than our U.S. dollar reporting currency. Generally, international purchases reflect the exchange rates at the time of purchase and international cumulative collections are aggregated each month based on respective month-end exchange rates. For example, the strengthening of the U.S. dollar relative to other foreign currencies has an unfavorable reporting impact on our international purchases, collections, and ERC, and the weakening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international purchases, collections, and ERC.
We utilize proprietary forecasting models to continuously evaluate the economic life of each pool.
41
Cumulative Collections Money Multiple - Cumulative Collections from Purchased Receivables to Purchase Price Multiple
The following table summarizes our receivable purchases, related gross collections, and cumulative collections money multiples (in thousands, except multiples):
| Year of Purchase | Purchase Price(1) | Cumulative Collections through September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| <2016 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | Total(2) | CCMM(3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| United States: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| <2016 | $ | 4,261,057 | $ | 8,440,701 | $ | 970,845 | $ | 706,004 | $ | 498,378 | $ | 375,393 | $ | 281,095 | $ | 229,701 | $ | 166,469 | $ | 131,698 | $ | 102,710 | $ | 69,089 | $ | 11,972,083 | 2.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2016 | 552,968 | — | 110,875 | 283,035 | 234,690 | 159,279 | 116,452 | 87,717 | 51,650 | 35,130 | 27,972 | 16,070 | 1,122,870 | 2.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2017 | 527,437 | — | — | 111,902 | 315,853 | 255,048 | 193,328 | 144,243 | 85,348 | 57,985 | 40,123 | 22,894 | 1,226,724 | 2.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 | 629,087 | — | — | — | 175,042 | 351,696 | 308,302 | 228,919 | 144,566 | 89,548 | 64,231 | 33,606 | 1,395,910 | 2.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 | 674,917 | — | — | — | — | 174,693 | 416,315 | 400,250 | 256,444 | 164,106 | 112,391 | 61,665 | 1,585,864 | 2.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 537,482 | — | — | — | — | — | 213,450 | 430,514 | 311,573 | 194,522 | 127,555 | 68,925 | 1,346,539 | 2.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 403,067 | — | — | — | — | — | — | 120,354 | 240,605 | 188,895 | 131,870 | 68,455 | 750,179 | 1.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 548,874 | — | — | — | — | — | — | — | 98,277 | 268,516 | 254,329 | 143,384 | 764,506 | 1.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 805,938 | — | — | — | — | — | — | — | — | 184,182 | 471,838 | 328,675 | 984,695 | 1.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | 991,254 | — | — | — | — | — | — | — | — | — | 238,635 | 472,422 | 711,057 | 0.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 892,157 | — | — | — | — | — | — | — | — | — | — | 160,960 | 160,960 | 0.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | 10,824,238 | 8,440,701 | 1,081,720 | 1,100,941 | 1,223,963 | 1,316,109 | 1,528,942 | 1,641,698 | 1,354,932 | 1,314,582 | 1,571,654 | 1,446,145 | 22,021,387 | 2.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Europe: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| <2016 | 1,662,149 | 995,241 | 449,359 | 388,622 | 349,761 | 290,842 | 232,719 | 235,893 | 176,754 | 148,533 | 138,569 | 99,687 | 3,505,980 | 2.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2016 | 249,584 | — | 44,641 | 97,587 | 83,107 | 63,198 | 51,609 | 51,017 | 40,214 | 35,278 | 30,143 | 20,278 | 517,072 | 2.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2017 | 461,571 | — | — | 68,111 | 152,926 | 118,794 | 87,549 | 86,107 | 61,762 | 48,763 | 41,211 | 27,252 | 692,475 | 1.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 | 427,030 | — | — | — | 49,383 | 118,266 | 78,846 | 80,629 | 61,691 | 49,675 | 42,379 | 26,233 | 507,102 | 1.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 | 272,905 | — | — | — | — | 44,118 | 80,502 | 88,448 | 63,607 | 54,544 | 47,174 | 29,241 | 407,634 | 1.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 104,940 | — | — | — | — | — | 22,721 | 59,803 | 45,757 | 37,363 | 31,454 | 18,964 | 216,062 | 2.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 242,825 | — | — | — | — | — | — | 43,082 | 66,529 | 58,515 | 52,278 | 32,264 | 252,668 | 1.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 231,869 | — | — | — | — | — | — | — | 36,957 | 70,385 | 64,555 | 40,443 | 212,340 | 0.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 259,255 | — | — | — | — | — | — | — | — | 40,975 | 89,799 | 60,254 | 191,028 | 0.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | 353,182 | — | — | — | — | — | — | — | — | — | 50,469 | 96,290 | 146,759 | 0.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 186,249 | — | — | — | — | — | — | — | — | — | — | 23,366 | 23,366 | 0.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | 4,451,559 | 995,241 | 494,000 | 554,320 | 635,177 | 635,218 | 553,946 | 644,979 | 553,271 | 544,031 | 588,031 | 474,272 | 6,672,486 | 1.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other geographies(4): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All vintages | 340,283 | 82,958 | 109,884 | 112,383 | 108,480 | 75,601 | 28,960 | 20,682 | 3,334 | 3,954 | 2,793 | 2,393 | 551,422 | 1.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | 340,283 | 82,958 | 109,884 | 112,383 | 108,480 | 75,601 | 28,960 | 20,682 | 3,334 | 3,954 | 2,793 | 2,393 | 551,422 | 1.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 15,616,080 | $ | 9,518,900 | $ | 1,685,604 | $ | 1,767,644 | $ | 1,967,620 | $ | 2,026,928 | $ | 2,111,848 | $ | 2,307,359 | $ | 1,911,537 | $ | 1,862,567 | $ | 2,162,478 | $ | 1,922,810 | $ | 29,245,295 | 1.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
________________________
(1)Adjusted for Put-Backs and Recalls. Put-Backs (“Put-Backs”) and recalls (“Recalls”) represent ineligible accounts that are returned by us or recalled by the seller pursuant to specific guidelines as set forth in the respective purchase agreement.
(2)Cumulative collections from inception through September 30, 2025, excluding collections on behalf of others.
(3)Cumulative Collections Money Multiple (“CCMM”) through September 30, 2025 refers to cumulative collections as a multiple of purchase price.
(4)Annual pool groups for other geographies have been aggregated for disclosure purposes.
42
Purchase Price Multiple - Total Estimated Collections from Purchased Receivables to Purchase Price Multiple
The following table summarizes our purchases, resulting historical gross collections, estimated remaining gross collections from purchased receivables, and purchase price multiple (in thousands, except multiples):
Purchase Price(1) | Historical Collections(2) | Estimated Remaining Collections | Total Estimated Gross Collections | Purchase Price Multiple(3) | |||||||||||||||||||||||||
| United States: | |||||||||||||||||||||||||||||
<2016 | $ | 4,261,057 | $ | 11,972,083 | $ | 159,408 | $ | 12,131,491 | 2.8 | ||||||||||||||||||||
| 2016 | 552,968 | 1,122,870 | 41,030 | 1,163,900 | 2.1 | ||||||||||||||||||||||||
| 2017 | 527,437 | 1,226,724 | 62,266 | 1,288,990 | 2.4 | ||||||||||||||||||||||||
| 2018 | 629,087 | 1,395,910 | 99,208 | 1,495,118 | 2.4 | ||||||||||||||||||||||||
| 2019 | 674,917 | 1,585,864 | 175,921 | 1,761,785 | 2.6 | ||||||||||||||||||||||||
| 2020 | 537,482 | 1,346,539 | 204,016 | 1,550,555 | 2.9 | ||||||||||||||||||||||||
| 2021 | 403,067 | 750,179 | 201,036 | 951,215 | 2.4 | ||||||||||||||||||||||||
| 2022 | 548,874 | 764,506 | 382,602 | 1,147,108 | 2.1 | ||||||||||||||||||||||||
| 2023 | 805,938 | 984,695 | 910,585 | 1,895,280 | 2.4 | ||||||||||||||||||||||||
| 2024 | 991,254 | 711,057 | 1,684,194 | 2,395,251 | 2.4 | ||||||||||||||||||||||||
| 2025 | 892,157 | 160,960 | 1,899,264 | 2,060,224 | 2.3 | ||||||||||||||||||||||||
| Subtotal | 10,824,238 | 22,021,387 | 5,819,530 | 27,840,917 | 2.6 | ||||||||||||||||||||||||
| Europe: | |||||||||||||||||||||||||||||
<2016 | 1,662,149 | 3,505,980 | 838,713 | 4,344,693 | 2.6 | ||||||||||||||||||||||||
| 2016 | 249,584 | 517,072 | 161,109 | 678,181 | 2.7 | ||||||||||||||||||||||||
| 2017 | 461,571 | 692,475 | 199,036 | 891,511 | 1.9 | ||||||||||||||||||||||||
| 2018 | 427,030 | 507,102 | 218,702 | 725,804 | 1.7 | ||||||||||||||||||||||||
| 2019 | 272,905 | 407,634 | 203,944 | 611,578 | 2.2 | ||||||||||||||||||||||||
| 2020 | 104,940 | 216,062 | 109,983 | 326,045 | 3.1 | ||||||||||||||||||||||||
| 2021 | 242,825 | 252,668 | 249,847 | 502,515 | 2.1 | ||||||||||||||||||||||||
| 2022 | 231,869 | 212,340 | 246,459 | 458,799 | 2.0 | ||||||||||||||||||||||||
| 2023 | 259,255 | 191,028 | 318,292 | 509,320 | 2.0 | ||||||||||||||||||||||||
| 2024 | 353,182 | 146,759 | 661,789 | 808,548 | 2.3 | ||||||||||||||||||||||||
| 2025 | 186,249 | 23,366 | 404,954 | 428,320 | 2.3 | ||||||||||||||||||||||||
| Subtotal | 4,451,559 | 6,672,486 | 3,612,828 | 10,285,314 | 2.3 | ||||||||||||||||||||||||
Other geographies(4): | |||||||||||||||||||||||||||||
| All vintages | 340,283 | 551,422 | 23,566 | 574,988 | 1.7 | ||||||||||||||||||||||||
| Subtotal | 340,283 | 551,422 | 23,566 | 574,988 | 1.7 | ||||||||||||||||||||||||
| Total | $ | 15,616,080 | $ | 29,245,295 | $ | 9,455,924 | $ | 38,701,219 | 2.5 | ||||||||||||||||||||
________________________
(1)Purchase price refers to the cash paid to a seller to acquire a portfolio less Put-backs, Recalls, and other adjustments. Put-Backs and Recalls represent ineligible accounts that are returned by us or recalled by the seller pursuant to specific guidelines as set forth in the respective purchase agreement.
(2)Cumulative collections from inception through September 30, 2025, excluding collections on behalf of others.
(3)Purchase Price Multiple represents total estimated gross collections divided by the purchase price.
(4)Annual pool groups for other geographies have been aggregated for disclosure purposes.
43
Estimated Remaining Gross Collections by Year of Purchase
The following table summarizes our estimated remaining gross collections from purchased receivable portfolios and estimated future cash flows from real estate-owned assets (in thousands):
Estimated Remaining Gross Collections by Year of Purchase(1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2025(3) | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | >2033 | Total(2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| United States: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
<2016 | $ | 19,796 | $ | 53,289 | $ | 30,870 | $ | 21,002 | $ | 13,964 | $ | 9,059 | $ | 5,621 | $ | 3,350 | $ | 1,676 | $ | 781 | $ | 159,408 | |||||||||||||||||||||||||||||||||||||||||||
| 2016 | 4,558 | 13,220 | 7,097 | 4,990 | 3,515 | 2,481 | 1,754 | 1,244 | 885 | 1,286 | 41,030 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2017 | 6,120 | 18,677 | 11,461 | 7,886 | 5,560 | 3,930 | 2,786 | 1,980 | 1,413 | 2,453 | 62,266 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 | 9,113 | 28,535 | 19,501 | 12,869 | 8,860 | 6,255 | 4,429 | 3,146 | 2,242 | 4,258 | 99,208 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 | 16,353 | 50,699 | 34,584 | 23,530 | 15,622 | 10,805 | 7,611 | 5,375 | 3,804 | 7,538 | 175,921 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 18,323 | 57,317 | 40,788 | 27,821 | 18,927 | 12,644 | 8,799 | 6,206 | 4,388 | 8,803 | 204,016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 17,707 | 56,828 | 39,528 | 26,912 | 18,603 | 12,845 | 8,783 | 6,114 | 4,306 | 9,410 | 201,036 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 34,693 | 108,459 | 75,135 | 49,788 | 34,372 | 24,460 | 17,364 | 12,089 | 8,374 | 17,868 | 382,602 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 84,160 | 257,011 | 172,612 | 121,829 | 84,676 | 59,692 | 41,700 | 29,199 | 20,028 | 39,678 | 910,585 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | 136,416 | 510,134 | 322,406 | 214,981 | 151,775 | 106,720 | 75,768 | 53,087 | 37,067 | 75,840 | 1,684,194 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 103,936 | 480,266 | 426,507 | 268,555 | 184,465 | 132,591 | 93,702 | 66,368 | 46,259 | 96,615 | 1,899,264 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | 451,175 | 1,634,435 | 1,180,489 | 780,163 | 540,339 | 381,482 | 268,317 | 188,158 | 130,442 | 264,530 | 5,819,530 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Europe: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
<2016 | 29,828 | 110,420 | 97,499 | 85,131 | 75,000 | 65,310 | 57,212 | 51,631 | 46,622 | 220,060 | 838,713 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | 6,749 | 23,913 | 21,578 | 18,664 | 15,745 | 13,185 | 11,297 | 9,483 | 8,078 | 32,417 | 161,109 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2017 | 8,969 | 30,906 | 27,493 | 22,806 | 19,405 | 16,165 | 13,478 | 11,387 | 9,782 | 38,645 | 199,036 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 | 8,866 | 31,445 | 28,535 | 23,532 | 20,643 | 17,866 | 15,589 | 13,726 | 11,943 | 46,557 | 218,702 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 | 9,685 | 33,163 | 27,989 | 23,851 | 19,532 | 16,203 | 13,476 | 11,485 | 9,780 | 38,780 | 203,944 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 5,924 | 20,098 | 15,871 | 12,610 | 10,146 | 8,256 | 6,810 | 5,729 | 4,868 | 19,671 | 109,983 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 11,034 | 39,341 | 35,141 | 29,263 | 24,876 | 21,059 | 17,750 | 14,982 | 12,602 | 43,799 | 249,847 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 12,844 | 44,951 | 38,233 | 29,979 | 24,314 | 19,689 | 16,207 | 13,347 | 10,733 | 36,162 | 246,459 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 16,450 | 57,935 | 48,026 | 40,140 | 32,330 | 25,762 | 20,890 | 17,102 | 14,052 | 45,605 | 318,292 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | 30,786 | 110,350 | 91,947 | 76,199 | 62,578 | 51,178 | 42,348 | 35,797 | 31,041 | 129,565 | 661,789 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 17,960 | 70,651 | 62,492 | 49,591 | 39,986 | 32,031 | 25,778 | 20,964 | 17,740 | 67,761 | 404,954 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | 159,095 | 573,173 | 494,804 | 411,766 | 344,555 | 286,704 | 240,835 | 205,633 | 177,241 | 719,022 | 3,612,828 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other geographies(4): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All vintages | 1,658 | 5,260 | 3,926 | 2,967 | 2,342 | 1,888 | 1,484 | 1,170 | 913 | 1,958 | 23,566 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | 1,658 | 5,260 | 3,926 | 2,967 | 2,342 | 1,888 | 1,484 | 1,170 | 913 | 1,958 | 23,566 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Portfolio ERC | 611,928 | 2,212,868 | 1,679,219 | 1,194,896 | 887,236 | 670,074 | 510,636 | 394,961 | 308,596 | 985,510 | 9,455,924 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
REO ERC(5) | 5,965 | 21,928 | 5,822 | 133 | — | — | — | — | — | — | 33,848 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total ERC | $ | 617,893 | $ | 2,234,796 | $ | 1,685,041 | $ | 1,195,029 | $ | 887,236 | $ | 670,074 | $ | 510,636 | $ | 394,961 | $ | 308,596 | $ | 985,510 | $ | 9,489,772 | |||||||||||||||||||||||||||||||||||||||||||
________________________
(1)As of September 30, 2025, ERC for Zero Basis Portfolios include approximately $30.9 million for purchased consumer and bankruptcy receivables in the United States. ERC for Zero Basis Portfolios in Europe and other geographies was immaterial. ERC also includes approximately $23.6 million from non-accrual portfolios, primarily in other geographies.
(2)Represents the expected remaining gross cash collections over a 180-month period. As of September 30, 2025, ERC for 84-month was:
| 84-Month ERC | |||||||||||||||||
| United States | $ | 5,383,686 | |||||||||||||||
| Europe | 2,666,885 | ||||||||||||||||
| Other geographies | 20,418 | ||||||||||||||||
| Portfolio ERC | 8,070,989 | ||||||||||||||||
| REO ERC | 33,848 | ||||||||||||||||
| Total ERC | $ | 8,104,837 | |||||||||||||||
(3)Amount for 2025 consists of three months data from October 1, 2025 to December 31, 2025.
(4)Annual pool groups for other geographies have been aggregated for disclosure purposes.
44
(5)Real estate-owned assets (“REO”) ERC includes approximately $33.3 million and $0.5 million of estimated future cash flows for Europe and Other Geographies, respectively.
Estimated Future Collections Applied to Receivable Portfolios
As of September 30, 2025, we had $4.3 billion in receivable portfolios. The estimated future collections applied to the receivable portfolios net balance is as follows (in thousands):
| Years Ending December 31, | United States | Europe | Other Geographies | Total Amortization | |||||||||||||||||||
2025(1) | $ | 175,902 | $ | 65,076 | $ | 1,360 | $ | 242,338 | |||||||||||||||
| 2026 | 740,890 | 233,163 | 4,276 | 978,329 | |||||||||||||||||||
| 2027 | 570,024 | 208,287 | 3,202 | 781,513 | |||||||||||||||||||
| 2028 | 361,246 | 171,237 | 2,429 | 534,912 | |||||||||||||||||||
| 2029 | 247,125 | 142,050 | 1,908 | 391,083 | |||||||||||||||||||
| 2030 | 175,494 | 115,606 | 1,527 | 292,627 | |||||||||||||||||||
| 2031 | 124,606 | 95,109 | 153 | 219,868 | |||||||||||||||||||
| 2032 | 88,461 | 81,055 | — | 169,516 | |||||||||||||||||||
| 2033 | 61,854 | 71,011 | — | 132,865 | |||||||||||||||||||
| 2034 | 43,421 | 62,835 | — | 106,256 | |||||||||||||||||||
| 2035 | 31,146 | 59,059 | — | 90,205 | |||||||||||||||||||
| 2036 | 23,366 | 56,071 | — | 79,437 | |||||||||||||||||||
| 2037 | 17,739 | 54,209 | — | 71,948 | |||||||||||||||||||
| 2038 | 13,557 | 56,170 | — | 69,727 | |||||||||||||||||||
| 2039 | 8,402 | 58,053 | — | 66,455 | |||||||||||||||||||
| 2040 | 2,524 | 40,413 | — | 42,937 | |||||||||||||||||||
| Total | $ | 2,685,757 | $ | 1,569,404 | $ | 14,855 | $ | 4,270,016 | |||||||||||||||
________________________
(1)Amount for 2025 consists of three months data from October 1, 2025 to December 31, 2025.
45
Liquidity and Capital Resources
Liquidity
The following table summarizes our cash flow activities for the periods presented (in thousands):
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| (Unaudited) | |||||||||||
| Net cash provided by operating activities | $ | 136,388 | $ | 132,624 | |||||||
| Net cash used in investing activities | (215,549) | (175,705) | |||||||||
| Net cash provided by financing activities | 50,556 | 130,487 | |||||||||
Operating Cash Flows
Cash flows from operating activities represent the cash receipts and disbursements related to all of our activities other than investing and financing activities.
Net cash provided by operating activities was $136.4 million and $132.6 million during the nine months ended September 30, 2025 and 2024, respectively. Operating cash flows are derived by adjusting net income for non-cash operating items such as depreciation and amortization, changes in recoveries, stock-based compensation charges, deferred income tax, and changes in operating assets and liabilities which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in results of operations. Adjusting for the changes in recoveries resulted in a decrease in operating cash flows by $140.7 million during the nine months ended September 30, 2025 and a decrease in operating cash flows by $6.0 million during the nine months ended September 30, 2024. Refer to “Note 5: Receivable Portfolios, Net” in the notes to our condensed consolidated financial statements for discussion relating to changes in recoveries.
Investing Cash Flows
Net cash used in investing activities was $215.5 million and $175.7 million during the nine months ended September 30, 2025 and 2024, respectively. Cash provided by or used in investing activities is primarily affected by receivable portfolio purchases offset by collection proceeds applied to the principal of our receivable portfolios. Receivable portfolio purchases, net of put-backs, were $1,066.2 million and $844.9 million during the nine months ended September 30, 2025 and 2024, respectively. Collection proceeds applied to receivable portfolios were $846.3 million and $642.0 million during the nine months ended September 30, 2025 and 2024, respectively. Refer to Purchases and Collections within “Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations” for discussion relating to purchases and collections.
Financing Cash Flows
Net cash provided by financing activities was $50.6 million and $130.5 million during the nine months ended September 30, 2025 and 2024, respectively. Financing cash flows are generally affected by borrowings under our credit facilities and proceeds from various debt offerings, offset by repayments of amounts outstanding under our credit facilities and repayments of various notes. Borrowings under our credit facilities were $812.8 million and $458.8 million during the nine months ended September 30, 2025 and 2024, respectively. Repayments of amounts outstanding under our credit facilities were $699.5 million and $1,292.6 million during the nine months ended September 30, 2025 and 2024, respectively. During the nine months ended September 30, 2024, we issued two $500.0 million senior secured notes that mature in 2029 and 2030, respectively. We used a portion of the proceeds from the senior secured notes issuance to repay drawings under our Global Senior Facility.
Capital Resources
Our primary sources of capital are cash collections from our receivable portfolios, bank borrowings, debt offerings, and equity offerings. Depending on the capital markets, we consider additional financings to fund our operations and any potential acquisitions. From time to time, we may repurchase outstanding debt or equity and/or restructure or refinance debt obligations. Our primary cash requirements include funding the purchase of receivable portfolios, operating expenses, the payment of interest and principal on borrowings, the payment of income taxes, funding any entity acquisitions and share repurchases.
We are in material compliance with all covenants under our financing arrangements. See “Note 7: Borrowings” in the notes to our condensed consolidated financial statements for a further discussion of our debt. Available capacity under our Global Senior Facility, was $491.1 million as of September 30, 2025.
46
On October 1, 2025, we issued $500.0 million in aggregate principal amount of 6.625% Senior Secured Notes due April 2031 at an issue price of 100.000%. Also on October 1, 2025, we settled our $100.0 million 2025 Convertible Notes upon conversion in cash for $106.2 million, of which $6.2 million (the excess above the principal amount) represented the conversion spread.
In May 2021, our Board of Directors approved a $300.0 million share repurchase program. During the three and nine months ended September 30, 2025, we repurchased 243,174 and 951,098 shares of our common stock for approximately $10.0 million and $35.0 million, respectively, under the share repurchase program. We did not make any repurchases under the share repurchase program during the three and nine months ended September 30, 2024. Our practice is to retire the shares repurchased. As of September 30, 2025, authorization for $56.9 million of share repurchases remained under the share repurchase program. In November 2025, our Board of Directors approved an additional $300.0 million under the share repurchase program. Repurchases under this program are expected to be made from cash on hand and/or a drawing from our Global Senior Facility and may be made from time to time, subject to market conditions and other factors, in the open market, through private transactions, block transactions, or other methods as determined by our management and Board of Directors, and in accordance with market conditions, other corporate considerations, and applicable regulatory requirements. The program does not obligate us to acquire any particular amount of common stock, and it may be modified or suspended at our discretion.
Our cash and cash equivalents as of September 30, 2025, consisted of $60.1 million held by U.S.-based entities and $112.4 million held by foreign entities. Most of our cash and cash equivalents held by foreign entities is indefinitely reinvested and may be subject to material tax effects if repatriated. However, we believe that our sources of cash and liquidity are sufficient to meet our business needs in the United States and do not expect that we will need to repatriate the funds.
Included in cash and cash equivalents is cash that was collected on behalf of, and remains payable to, third-party clients. The balance of cash held for clients was $24.5 million as of September 30, 2025.
Cash from operations could also be affected by various risks and uncertainties, including, but not limited to, timing of cash collections from our consumers, and other risks detailed in our Risk Factors. However, we believe that we have sufficient liquidity to fund our operations for at least the next twelve months, given our expectation of continued positive cash flows from operations, our cash and cash equivalents, our access to capital markets, and availability under our credit facilities. Our future cash needs will depend on our acquisitions of portfolios and businesses.
Critical Accounting Estimates
Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions based on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Our actual results could differ from these estimates under different assumptions or conditions. Refer to “Critical Accounting Estimates” contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, for a complete discussion of our critical accounting estimates. Other than the ongoing reassessment of expected future recoveries of our receivable portfolios during each reporting period under our CECL accounting policy as discussed in “Note 5: Receivable Portfolios, Net” to our condensed consolidated financial statements, there have been no material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year ended December 31, 2024.
47
Item 3 – Quantitative and Qualitative Disclosures About Market Risk
Foreign Currency Exchange Rates. As of September 30, 2025, there had not been a material change in any of the foreign currency risk information disclosed in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Interest Rates. As of September 30, 2025, there had not been a material change in the interest rate risk information disclosed in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Item 4 – Controls and Procedures
Attached as exhibits to this Form 10-Q are the certifications required by Rule 13a-14 of the Securities Exchange Act of 1934, as amended. This section includes information concerning the controls and controls evaluation referred to in the certifications.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”) and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and accordingly, management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based on their most recent evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, are effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
48
PART II – OTHER INFORMATION
Item 1 – Legal Proceedings
Information with respect to this item may be found in “Note 11: Commitments and Contingencies,” to the condensed consolidated financial statements.
Item 1A – Risk Factors
There is no material change in the information reported under “Part I-Item 1A-Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Repurchases of Equity Securities
As announced on May 5, 2021, the Company’s Board of Directors approved a $300.0 million share repurchase program. Repurchases under this program are expected to be made from cash on hand and/or a drawing from its Global Senior Facility, and may be made from time to time, subject to market conditions and other factors, in the open market, through private transactions, block transactions, or other methods as determined by management and its Board of Directors, and in accordance with market conditions, other corporate considerations, and applicable regulatory requirements. During the three months ended September 30, 2025, the Company repurchased 243,174 shares of our common stock for approximately $10.0 million. The following table presents information with respect to purchases of common stock of the Company during the three months ended September 30, 2025, by the Company or an “affiliated purchaser” of the Company, as defined in Rule 10b-18(a)(3) under the Exchange Act:
| Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Publicly Announced Plans or Programs | |||||||||||||||||||
| July 1, 2025 to July 31, 2025 | 87,806 | $ | 39.20 | 87,806 | $ | 63,477,985 | |||||||||||||||||
| August 1, 2025 to August 31, 2025 | 69,200 | $ | 40.27 | 69,200 | $ | 60,691,067 | |||||||||||||||||
| September 1, 2025 to September 30, 2025 | 86,168 | $ | 43.94 | 86,168 | $ | 56,904,653 | |||||||||||||||||
| Total | 243,174 | $ | 41.18 | 243,174 | $ | 56,904,653 | |||||||||||||||||
________________________
(1)This column discloses the number of shares purchased pursuant to the program during the indicated time periods.
Item 5 - Other Information
49
Item 6 – Exhibits
| Number | Description | |||||||
| 3.1.1 | ||||||||
| 3.1.2 | ||||||||
| 3.1.3 | ||||||||
| 3.2 | ||||||||
| 4.1 | Indenture dated October 1, 2025 between Encore Capital Group, Inc., the subsidiary guarantors party thereto, GLAS Trust Company LLC as trustee and Truist Bank as security agent for Encore 2031 Notes (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on October 2, 2025) | |||||||
| 31.1 | ||||||||
| 31.2 | ||||||||
| 32.1 | ||||||||
| 101.INS | Inline XBRL Instance Document - The instance document does not appear in the interactive data file because XBRL tags are embedded within the inline XBRL document. (filed herewith) | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document (filed herewith) | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith) | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith) | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith) | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith) | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 | |||||||
In accordance with Item 601(b)(4)(iii)(A) of Regulation S-K, copies of certain instruments defining the rights of holders of long-term debt of the company are not filed herewith. Pursuant to this regulation, we hereby agree to furnish a copy of any such instrument to the SEC upon request. | |||||
50
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ENCORE CAPITAL GROUP, INC. | |||||||||||
| By: | /s/ Tomas Hernanz | ||||||||||
Tomas Hernanz | |||||||||||
| Executive Vice President, | |||||||||||
| Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) | |||||||||||
Date: November 5, 2025
51
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
I, Ashish Masih, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Encore Capital Group, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| By: | /S/ ASHISH MASIH | |||||||
| Ashish Masih President and Chief Executive Officer | ||||||||
Date: November 5, 2025
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
I, Tomas Hernanz, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Encore Capital Group, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| By: | /S/ TOMAS HERNANZ | |||||||
| Tomas Hernanz Executive Vice President, Chief Financial Officer and Treasurer | ||||||||
Date: November 5, 2025
Exhibit 32.1
ENCORE CAPITAL GROUP, INC.
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Encore Capital Group, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:
(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company.
/s/ ASHISH MASIH | |||||
| Ashish Masih | |||||
| President and Chief Executive Officer | |||||
November 5, 2025
| /s/ TOMAS HERNANZ | |||||
| Tomas Hernanz | |||||
| Executive Vice President, Chief Financial Officer and Treasurer | |||||
November 5, 2025
This certification accompanies the above described Report and is being furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed as part of the Report.