Propel Holdings Inc. (PRL) Earnings Call Transcript

Thank you. Good morning, everyone. Welcome to Propel Holdings' second quarter 2026 Financial Results Conference Call. As a reminder, this conference call is being recorded on August 6, 2026. This time, all participants are in listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for research analysts to queue up for questions. And now I will turn the call over to Devin Galani of Propos Vice President, Capital Markets and Investor Relations. Please go ahead, Devin.

Thank you, Operator. Good morning, everyone, and thank you for joining us today. Propel's second quarter 2026 financial results were released yesterday after market close. The press release, financial statements, and MD&A are available on CDR Plus, as well as on the company's website, propelholdings.com. Before we begin, I would like to remind all participants that our statements and comments today may include forward-looking statements within the meaning of applicable securities laws. The risks and considerations regarding forward-looking statements can be found in our Q2 2026 MD&A and Annual Information Form for the year-end of December 31, 2025, both of which are available and see it or plus. Additionally, during the call, we may refer to non-IFRS measures. Participants are advised to review the section entitled non-IFRS financial measures and industry metrics of the Cummings Q2, 2026 MD&A for definitions of our non-IFRS measures and the reconciliation of these measures to the most comparable IFRS measure. Lastly, all dollar amounts referenced during the call are in U.S. dollars, unless otherwise noted. I am joined in the call today by Clive Kinross, Founder and Chief Executive Officer, and Sheldon Sadikoski, Founder and Chief Financial Officer. Clive will provide an overview of our future results and observations on our consumer segment and overall economic environment before Sheldon covers our financials in more detail. Before we open the call to questions, Clive will provide an update on Propel's growth strategy and outlook for the remainder of 2026. With that, I'll pass the call over to Clive. Thank you, Devin, and welcome everyone to our second quarter conference call.

We delivered another record quarter, building on the strong momentum we established at the beginning of the year. Importantly, this quarter demonstrated that the strategic investments we've made over the past several quarters to expand our platform and serve more consumers across the credit spectrum are translating into measurable results. We expanded into new states, launched new products, and broadened our distribution channels, enabling us to reach more consumers than ever before. supported by strong consumer demand, new customer originations increased by 34% year over year. And if including lending as a service, new customer originations increased by 43%. The growth contributed to record ending C-Lab of $639 million, up 23% from a year ago and record revenue of $179.6 million, an increase of 26%. Our focus on disciplined execution resulted in a record quarterly adjusted EBITDA of $43.7 million and record quarterly adjusted net income of $24.8 million. Importantly, we achieved this growth while maintaining another quarter of stable credit performance. for loan losses and other liabilities represented 50% of revenue, reflecting both the strength of our AI-powered underwriting platform and the resiliency of the consumers we serve. Before turning the call over to Sheldon, I'd like to spend a few minutes discussing those consumers and what we're seeing across the board economy. We often use the term underserved consumer, but today that group represents a much larger segment of the population than it did just a few years ago. As we've discussed on previous calls, we continue to see a K-shaped economy emerge across our markets, with the middle of the credit spectrum shrinking. many consumers have benefited from rising asset prices and migrated into the super prime category. Others, despite remaining employed and maintaining reasonable repayment histories, are finding it increasingly difficult to access traditional sources of credit. According to TransUnion, since 2022, the share of subprime consumers has increased by approximately 7%, rising from 13.8% to 14.8% of the population. The lending market has changed for them. Many large financial institutions have tightened underwriting standards, leaving a growing number of consumers without access to the credit products they have historically relied upon. At the same time, demand for credit remains elevated as households continue to manage the impact of higher everyday living costs. In fact, the Federal Reserve recently reported that credit rejection rates reached 33% in 2025, the highest level in a decade. Furthermore, in Q2 2026, the Federal Reserve Bank of New York found that consumer demand for credit reached its highest level since October 2021. And we see this dynamic in our own business with strong demand and stable credit performance. This is why our mission remains. remain so relevant today. We believe our technology and AI-powered underwriting platform can responsibly expand access to credit by helping us better understand consumers who have been overlooked by traditional underwriting models. At the core of our business is a simple belief. These consumers are often misunderstood. They are resilient, they're employed, they're actively managing their finances, and they're taking practical steps to navigate the macroeconomic environment. Our own data reinforces this. In a recent survey of Propel and our bank partners' customers, the majority of respondents told us they expect to spend more on essentials like gas and groceries this summer, rather Rather than falling behind, the majority said they plan to reduce spending elsewhere. Looking more broadly across our markets, we continue to see an economic backdrop that is resilience. In the United States, unemployment remains low at 4.2 percent, with employment remaining strong across many of the industries where our customers work. Furthermore, our customers continue to benefit from steady wage gains and consumer spending remain strong. In the United Kingdom, inflation has moderated towards the Bank of England's targets, while unemployment has remained relatively stable. Canada, which represents approximately 2% of our business, continues to experience a softer labour market than the United States. However, inflation remains relatively low. and despite ongoing trade uncertainty, the Canadian economy has remained more durable than many had anticipated. Overall, across the markets in which we operate, we continue to see healthy employment, moderating inflation and resilient consumer demands. This is an environment we know well and one in which our AI powered underwriting platform has consistently performed well. To serve the increasing number of underserved consumers and strengthen our business, we spent the past several quarters investing in initiatives that expand both our addressable markets and our competitive advantages. These investments are increasingly contributing to our results. Lending as a service generated record revenue of $11.1 million, an increase of 150% year over year. Propel UK continued its strong performance, with revenue increasing 53% year-over-year in Q2 2026 to a record $17.3 million. And Propel Bank continued expanding its operational capabilities, supporting lending and servicing activities in the U.S. while enhancing long-term strategic flexibility. Overall, we are proud of both our second quarter performance and the momentum we've built through the first half of the year. Reflecting this continued performance and strong financial position, our board approved another increase to our quarterly dividend to $1.02 per share Canadian on an annualized basis, representing a 6% increase in our 12th consecutive quarterly increase. I will speak more about our growth plans and the outlook for the rest of 2026. But first, I will pass it all over to Shelton.

Thank you, Clyde, and good morning, everyone. We continue to build on the strong momentum established earlier this year. Strong consumer demand, together with the continued expansion of our platform, supported another quarter of record results. Against this backdrop, total originations funded increased by 25% year-over-year to $243.4 million, representing another quarterly record. New customer origination growth was strong, increasing by approximately 34% year-over-year to a record $111 million. And if including lending as a service, new customer originations increased by 43% year-over-year. The MoneyKey Bank Service Program in particular continued to experience significant growth during the quarter, with ending C-Lab increasing by approximately 79% year-over-year and by 29% sequentially over Q1. New customer originations within this program increased by approximately 56% sequentially from Q1, driven by continued geographic expansion, the ongoing transition from legacy products, and the addition of new marketing partners and channels. Lending as a Service also delivered another record quarter, with revenue increasing approximately 150% year-over-year to a record $11.1 million. In the UK, the quid market continued to grow significantly, delivering another quarter of record originations in revenue, with revenue increasing in excess of 50% year-over-year as the business further expanded its market presence. The strong performance across these businesses drove Ending C-Lab to a record $639.1 million, an increase of 23% year-over-year, and supported record quarterly revenue of $179.6 million, an increase of 26% year-over-year. The annualized revenue yield increased to 117% in Q2 from 114% in the prior year period. The increase primarily reflects the strong growth from new customer originations, the expansion of lending as a service, and the higher contribution from higher-yielding programs, including quid market and the weekly loan service program. Overall, we are pleased with the continued execution of our growth strategy during the quarter and the expansion of our platform across products, geographies, and customer segments. Turning to provisioning and charge-offs, credit performance remained stable during the second quarter and was consistent with our expectations. Provision for loan losses and other liabilities represented 50% of revenue in Q2 2026, while net charge-offs as a percentage of average C-Lab was 12%, both consistent with the prior year period, reflecting the strength of our AI-powered underwriting platform, disciplined approach, and a lot more. consumer resiliency, and continued strong portfolio performance. Notably, we achieved this performance while delivering overall record originations and growing NDC lab by 23% year-over-year, demonstrating our ability to successfully balance significant growth with prudent risk management. Overall, credit performance was in line with our expectations and remains in line as we move forward through Q3. Turning to profitability, our net income increased by 7% year-over-year to $16.2 million, while our adjusted net income increased 29% year-over-year to a record $24.8 million. Furthermore, diluted EPS increased by 7% to $0.38, while adjusted diluted EPS increased 28% to a record $0.58 per diluted share. Adjusted return on equity improved to 35% on an annualized basis compared to 32% in the prior year period, reflecting another quarter of strong earnings growth and efficient capital deployment. As discussed earlier, the significant growth of the MoneyKey Bank Service Program over Q1 resulted in a larger non-cash adjustment to net income during the quarter. This adjustment was driven by the increase in the bank service program liability relating to the increase in the off-balance sheet receivables associated with this program. In addition, the growth in the other programs and the corresponding increase in the stage one expected credit loss allowance also contributed to the higher adjustment to net income during the quarter. As a reminder, we believe that these adjustments and consequently our non-IFRS metrics provide a better representation of the portfolio's performance, particularly in a period of higher growth. Turning to operating expenses, we continue to invest in a number of strategic initiatives designed to support the company's long-term growth, including the ongoing build-out and expanded operations of Propel Bank. scaling of our lending as a service platform, and ongoing investment in AI-powered capabilities, technology infrastructure, and customer acquisition initiatives. At the same time, we realized operating leverage across several areas of the business. Salaries, wages, and benefits declined to approximately 8% of revenue from 8.4% in the prior year period, while G&A declined to approximately 2% of revenue from 2.5%, reflecting the scalability of our platform as we continue to grow the business. Acquisition and data expense increased to 14.5% of revenue during the quarter from 13% in the prior year period. Costs for funded origination increased to $0.11 from $0.10, while costs for new customer funded origination increased to $0.24 from $0.22. As we've noted in the prior quarters, the year-over-year increases reflect a continued investment in expanding and diversifying our customer acquisition platform through approximately 20 new marketing partners, together with a broader investment across diversified marketing channels. In addition, the ongoing growth of QuidMark had contributed to the increase as we continue investing to expand its customer base and market position. Underwriting and data costs per funded loan also contributed to this increase as application volumes grew even more significantly than originations, reflecting the disciplined approach maintained with our bank partners. Effectively, we and our bank partners are evaluating more applications relative to each funded origination. Importantly, both cost per funded origination and cost per new customer funded origination improved sequentially from the first quarter of 2020 CIPs, reflecting early benefits from our expanding marketing platform and continued optimization of our acquisition strategy. We believe these investments support long-term growth while maintaining disciplined underwriting and stable credit performance. Processing technology and program servicing expense increased primarily due to the ongoing scaling of our lending as a service platform, which as we mentioned, grew by 150% year over year. As a reminder, these expenses include customer acquisition and servicing costs associated with our lending as a service programs. Notably, Lending as a Service costs declined to 62% of Lending as a Service revenue from 76% in the prior year, demonstrating improving unit economics and operating leverage as the program scales. Our overall cost of debt also continued to improve, declining to 10.2% from 11.4% in the prior year period, reflecting enhanced credit facility pricing together with lower benchmark interest rates. Lower funding costs further enhance the earnings power of the business while providing additional flexibility to support future growth in the shares. Overall, we delivered record adjusted net income and adjusted diluted EPS while continuing to invest in strategic initiatives across the business. Strong profitability was supported by record revenue, stable credit performance, and disciplined execution. Our investments are delivering results and will continue delivering attractive long-term revenue and earnings growth and returns on equity. Turning to Propel's capitalization, we continue to maintain a strong financial position, supporting the ongoing growth of our lending programs and strategic initiatives. quarter end, we had approximately $97 million of undrawn credit commitment capacity across our credit facilities with a debt-to-equity ratio of 1.2 times, providing significant liquidity and financial flexibility. Even though ending C-Lab grew by approximately $50 million since year end, our outstanding debt balance remained essentially unchanged at $332 million. This reflects the strong earnings and cash flow profile of the business, which enabled us to fund meaningful portfolio growth, an increase in quarterly dividend, and continued investment in our strategic initiatives without increasing our outstanding debt. We believe our strong financial position, growing earnings profile, and disciplined capital management position us well to continue funding future growth while delivering attractive long-term returns for shareholders. I'll now turn the call back to Bob. Thank you, Sheldon.

As we look ahead to the second half of 2026, we continue to see strong momentum across the business. Command remains strong, credit performance remains in line with our expectations, and the investments we've made are translating into measurable results. In the US, we continue to expand our addressable market by introducing new products like Freshline, entering additional states, and adding new marketing and distribution partners. As our business grows, our marketing strategy is evolving alongside it. In addition to expanding our partner network, we're investing further up the marketing funnel through connected television, online video, and AI-optimized digital content to build awareness, strengthen our brand, and support customer acquisition. We're equally encouraged by the momentum we're seeing in Lending as a Service and expect strong growth going forward, supported by committed long-term capital partners. As the program continues to scale, Lending as a Service is becoming an increasingly meaningful contributor to Propel's revenue and profitability. while expanding our capital-like fee-based business segment, allowing us to serve more consumers and generate attractive recurring revenue. Internationally, almost two years since the acquisition of QuidMarket, we continue to grow the business while leveraging Propel's expertise and infrastructure. Growth has been strong and we expect it to continue. Supporting many of these initiatives is a continued operation Sorry, this is a difficult word. It was difficult in the last quarter as well. Operationalization or propel bank. I'm pretty sure I said that wrong, but you know what I mean, which provides long-term strategic flexibility as we scale. A bank. license expands our capabilities and creates additional options for growth over time. As with every aspect of our business, that flexibility is supported by a strong commitment to regulatory compliance and disciplined risk management. Finally, I'd like to touch on AI. We've been an early investor in artificial intelligence, developing our AI-powered underwriting platform in 2015, well before AI became central to most business conversations today. Today we're applying the same philosophy across the entire organization. For example, AI supports our customer service representatives during live customer interactions, helping to drive efficiency and enable agents to serve more consumers in a day. With loans originated per customer service representative reaching an all-time high this quarter, up roughly 30% 50% year over year. Our technology and engineering teams are also using AI to enhance Propel's proprietary platform more efficiently, with AI contributing to almost 50% of new code written during the quarter. The next phase of our AI strategy is focused on automating core operational, technology, and finance processes. This work is already underway. Ultimately, our objective is simple. ensure every estimate we make in AI translates into greater efficiency and stronger execution and support long-term profitable growth. Although these initiatives span different parts of our business, they are all designed to achieve the same objectives, expanding our platform, increasing our competitive advantages in creating long-term shareholder value. In September, Propel will celebrate its 15th anniversary. Reaching that milestone reflects 15 years of disciplined execution, continuous innovation, and the ability to successfully navigate the multiple economic cycles where we have grown every year since our inception, including a revenue and adjusted EPS CAGR of 43% and 64% respectively since 2019. It's also a testament to the extraordinary team we have built. Teams' dedication, tenacity, and relentless focus on execution have transformed Propel from a single product fintech company into the global fintech platform we are today. While the business has evolved significantly, our mission has remained constant, expanding access to credit while delivering sustainable, profitable growth for our shareholders. The opportunities in front of us today are greater than at any point in our history. More consumers than ever, a lot of time with the credit markets, and we have built the platform to meet that need. Okay. The strength of our platform, the resilience of the consumers we serve, and the exceptional team we've built. I believe Propel is exceptionally well positioned for the quarters and years ahead. With that operator, you may now open the line for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchtone phone. you will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. And your first question comes from the line of Matthew Lee of Calicard. Please go ahead.

Hi, guys. They saved my question. Really nice quarter here. Just a couple items I want to touch on. Maybe we can start with this geographical expansion that you talked about. Can you spend that opportunity in terms of, you know, what states you're going into, the size of the addressable market, and maybe just context it with, you know, where was your digital market last year versus now? And maybe where do you expect it to be in a couple of years as Propel Bank ran? Thanks.

Yes, so Matt, first of all, thank you so much for the calm words. We're also very, very pleased with the quarter. I think it was an incredibly strong quarter and as I mentioned in my prepared remarks, we're ready to go on from a one-product company in one market to now a global, fantastic tech powerhouse operate up operating in the US in the UK and Canada on balance sheet program off balance sheet program lending as a service so all of that is has created lots of different growth drivers and we're seeing that starting to really accelerate and will continue to accelerate over the course of the year and is also diversifying not only the growth drivers, but also the risk profile across the business. As you mentioned, the additional geography Geographies are also furthering that growth. We're in states today as a combination of our partnership with column bank out of California, with the launch of Propel Global Bank, it's allowed us to operate in new jurisdictions that even 12 months ago we weren't operating in, and that geographic expansion is also fueling lots of the growth. By the way, expect more states to be added as we continue to as we continue to roll out the bank service program and as we also continue to expand propel global banks propel global banks servicing across the platform order which is to say our addressable market is increasing for two reasons number one as I mentioned subprime segment has increased 7% since 2022. That alone on a macro perspective is increasing the market, but we're expanding into new geographies and new products, which is why you saw roughly 43% new customer growth, including lending as a service for the most recent quarter, outperforming the natural growth in the market. We expect, if anything, growth to accelerate in Q3 and Q4 relative to the first half of the year.

That's really helpful. And then maybe on the cost side, I'm just trying to think about how margin should improve as it continues to grow. So can you just talk about maybe how much your current costs relate to the ramping of Propel Bank and lending as a service versus what you consider to be kind of core operating expenses? Just bring an idea of how much you think about margin.

as it did in scale. Yes, hey Matt, thanks a lot for the question and for the kind words. As you referenced, obviously there's a lot of initiatives that we've been rolling out and investing in over the last, I would say, two, three quarters, that are actually paying off quite a lot right now. We started saying back in Q3 last year that we started investing deliberately in expanding our acquisition channels. You started to see the uptake in our acquisition costs in Q4, continued into Q1. And I will note that, as I said in my prepared remarks, that our acquisition costs for new customer dollar funding actually take down in Q2 from Q1 sequentially. So we're seeing some of that benefit already, even on the cost side, but most importantly, those investments are generating all this significant and the increase in the application volume, that's driving the sizable growth that you're seeing, not only in Q1, now in Q2 as well, that's frankly outpacing expectations. So those investments are paying off. As Clive said, we're making, deliberate investments in rolling out Propel Bank, which is which is right on schedule and it's helping to, you know, to fuel that geographic expansion across the U.S. and product product expansion ultimately as well. The relationship with column bank that we invested in is leading to a lot of growth on the lending as a service side and then to new states. So all of these investments are starting really to pay off. I think from a margin, when you really boil it down from a margin perspective, as you know, we have a seasonal business. So I think expect the margins in the second half of the year to be a little bit worse. lower than what you saw in the first half of the year this year. But with that said, they will be better than what we saw in the second half of last year. As you may recall, we slowed down growth as a result of several factors last year in Q3. Some additional upticks in delinquency that we saw back then and coupled with starting to make the investments that I just spoke about compress some margins. So absolutely expect margin expansion in the second half of this year, relative to last year.

That's great, Collin. Congrats on the corner. And again, congrats on the 15 years of growth.

Thanks so much, Matt. Thank you. And your next question comes from the line of Rob Goff of Ventum. Your line is now open.

Good morning. And let me echo Matt's comments in terms of congratulations on the quarter and the 15 years behind it. Very well done. It's commendable.

Thank you so much, really appreciate it. Time flies, man. It's amazing it's been 15 years and I was reflecting yesterday, amazing it's been five years, almost five years since we've been a public company. I think this is the 20th time we're doing this.

I thought you guys were both teenagers when you started this, right? Sorry, bad joke. Yes. More seriously, can you discuss the pacing and the evolution of the money key direct to bank services? How do you see the states transitioning across the year? And where you have transitioned, what have you seen in terms of the impact on long growth, yield, you know, COA, and quality of credit?.

Yes, so it's a great question. And just to take a step back over here, transitioning from the Maniaki states to the Maniaki service program, the Maniaki states are the legacy states that we started all the way back, going back to our inception. And to a large degree, those were those were some of the states where we weren't seeing a lot of growth, they were a smaller part of the business, and frankly they weren't getting the TLC that they otherwise might have gotten if they'd been a larger share of our business. And what we consciously decided to do as a result was transition them across to the money key services. service program where ultimately we have a lot more distribution channels, marketing partners, and where there's a lot more focus from a risk perspective. That has turned out to be obviously a really good move, not only from our perspective, but also from the many, many more consumers that we're able to now serve as a result. The impact has been twofold. First of all, on aggregates, we've grown the volumes in those states close to 2x. across the board. Some states a little bit more than that, some states a little bit less than that, but in those states you're seeing significant growth and obviously that's one of the things that's really propelling the growth of the Mannequai Bank Service Program. At the same time, because it's getting even more attention by us and our bank partners, there as well. It's getting access to what I would call even better enhanced risk models. So the dramatic acceleration you're seeing on the demand side over there is leading to even better relative credit performance than otherwise would have been the case. And as you know, Rob, that's at its early stages. of transition. In fact, there's a couple more states still to transition across. So we expect, if anything, that to fuel more growth on a growth-forward basis. At the same time, the other thing fueling the bank service program is the addition of new states that we're in today that we weren't in as recently even as 12 months ago. That's fueling tremendous growth on top of the transition of MoneyKey to the MoneyKey Bank Service Program. And if anything, expect that also to continue to accelerate and new states to be added to that program as well on a go-forward basis. So we feel really good about our ability to continue to grow. that program on a go-forward basis. And it's one of the reasons that I'm confident in saying that we expect the growth of the business to accelerate in Q3 and even further in Q4 of this year relative to that.

Thank you. Very good. If I could have a follow-up for Sheldon. You had mentioned the strength in applications. Can you talk to the growth you were seeing in applications or inbounds and will that.

where your current screening parameters are? Yes, hey Rob, thanks for the question. We're looking at an excess of 100,000 applications every single day right now. And if you follow kind of what we've been saying and reporting, that's been growing quite significantly month over month. quarter over quarter and it's it's it's getting to a very high rate over here as we continue to expand the marketing channels enter new states and just overall enhance our existing programs and new products, et cetera. So we're benefiting a lot from the increases in application volume and the investments are absolutely paying off on the marketing side. And what that enables us to do Rob, as we've talked about, right? We were kind of opening up the top of the funnel, we're seeing a lot more applications. And because of that, we can originate more with, while keeping the same prudent underwriting posture. So if you kind of, you know, triangulate that, if we're seeing a lot more application volumes, maintaining kind of the same risk parameters, our acceptance rate, all else being equal, actually comes down a little bit. So, you know, if you look at where we are today, you know, our acceptance rate is probably in the, 6 to 7% range, which is not too dissimilar from what we saw in Q1, probably ticked down slightly. But week over week, month over month, as we're expanding across these different programs, we're seeing the output. volume increase. That's why right now we're not giving the specific number on the application volume and actually saying it's well in excess of 100,000 a day right now. We spent, we actually, let me just layer onto that a little bit, we actually spent quite a bit of time discussing where we should position that number and ultimately say,.

we're going to go with in excess of 100,000 applications a day. But Rob, if I were to take a step back and say, what's driving such healthy demand? I mentioned it in my prepared remarks, but it's worthwhile mentioning it again because the fundamentals of what's driving this growth in our industry with stable credit performance, I think are set in for the long term. for certainly the medium term over here, if not the long term. As I mentioned, the subprime segment of the market in this K-shaped economy has grown by about 7% since 2022, which is significant growth in this otherwise stable economy from 13.7% to 14.7%. So that's one of the tailwinds. And we're capitalizing on that even more by adding more products and more geography. So that's number one. Number two is you saw the strongest... rejection rates last year in 2025. I think over a decade. That's what the Fed came up with in 2025, and we've been expressing that on calls as well, that there's tightening ahead of us. And I think those two data points go hand in hand. They're not inconsistent with one another. And finally, In Q2 alone, I think we saw the strongest demand from a credit perspective. The New York Fed came up with that data point since Q3 of 2021. All of that is fueling incredibly strong demand across the board with stable credit performance. I think yesterday, Bank of America came out and said, Not only do we all know the unemployment rate is really low, but they came out yesterday and said that income levels of what I would call generally lower income consumers has actually risen faster than the general population. So all of those dynamics are leading to strong demand, stable credit performance, and because demand. If anything, we and our bank partners can be really selective with the loans that we originate while fueling tremendous growth as well as stable credit performance. If anything, as we're heading to Q3, which typically has higher delinquencies, saving Q2, in Q1, our and our bank partners' orientation has been to tighten that underwriting more so, let's say, than Q1 and Q2. So the growth that you're seeing heading into Q3 and continuing into Q3 is being achieved because of those variables and from our personal perspective, a tight fit.

to underwriting posture. Very good. Thank you very much.

And your next question comes from the line of Susan Sukumar of Stifel. Please go ahead.

Good morning, gents, and congrats on a very solid earnings print. For my first question, I want to touch on revenue yield. You know, obviously an impressive lift both sequentially year over year. Is this reflecting really more near-term benefits, which we should expect to normalize, or is this more reflective of more of a longer-term structural improvement given the evolving mix of the business? Yes.

Thanks for the question, Sutan. This is something that we've been messaging for the last couple quarters. It's a result of a number of different factors. Number one, we're doing more new customer originations now. than we were doing previously. You're seeing that our new customer proportion of total originations has increased. So when we're originating more new customers, they generally speaking have higher yields. Lending as a service is growing significantly and now, that contributes to the higher revenue yield. Our MoneyKey bank service program serves a higher yielding segment of consumers. So that's driving the yield up. And Quid Market also, which is continuing to demonstrate outpace growth, has higher yielding. So all of those factors together are driving the yield up. I think last quarter I said that expect yields to be in excess of 115%. The fact that we hit 117, frankly, we beat our expectations and that's not a good thing. large part, obviously, to the growth and all the other factors that I just mentioned. This will continue, Suzanne, as these programs continue to show outpaced growth on a go-forward basis. I think Clive mentioned accelerated growth in lending as a service going forward and in the coming quarters, accelerated growth on the quid market UK side. And we, you know, given the way risk is performing right now and the way portfolios compose, we continue to expect to generally a higher proportion of new customer origination. So if you put all of that together, I would expect revenue yields to be somewhere between 115 and 120 for the remainder of the year. And, you know, I'm probably being a bit conservative on the low end side, given we're at 117 right now, I expect that to,.

up a little bit as we go forward. Great. Great. Perfect. Thanks for that color. My second question, I wanted to touch on debt capacity. You know, what we're seeing here is a sustaining pace of strong debt Strong originations activity, you guys increasing your dividend consistently. From a balance sheet perspective, do you guys have sufficient funding room to support continued loan book growth?.

Yes, the answer to the question is absolutely. I mean, you touched on a couple of really key points over there. I don't think they're lost on the investor community. I think they're actually quite well understood, but let me me just repeat that. The debt balance since the end of the year has actually not grown. Notwithstanding the significant growth we've seen in our C-Lab, the significant growth we've seen in our revenues, and an ever-increasing dividend, we actually haven't increased our debt balance. If anything, our liquidity has improved since then. We've already mentioned we expect the growth top and bottom line, certainly relative to 2025, to accelerate relatively. relative to the impressive growth we've already seen year to date. And we could do all of that and largely maintain the debt balance where it is. So from a liquidity perspective, we have more than enough liquidity, including growing liquidity actually, that might be helpful in the event that there's any M&A opportunities on a go forward basis. Obviously, I think we've got just shy of $100 million of liquidity at the moment. So from that perspective, there certainly is a cap if we were to do an acquisition on how large that acquisition could be without needing some form of additional liquidity. But that's the only scenario scenario that we currently contemplate where we would potentially need additional liquidity.

Okay, great. Thank you for that, Collin. And if I could just squeeze in one more, guys, on lending as a service, can you speak to kind of the level of demand interest from investors, from a forward flow perspective, you're seeing strong growth here and you guys have telegraphed a 10% target for lending as a service revenues this year, but is there room to potentially,.