MINNEAPOLIS, Oct. 09, 2025 (GLOBE NEWSWIRE) -- Jefferson Capital, Inc. (NASDAQ: JCAP), a leading analytically driven purchaser and manager of charged-off and insolvency consumer accounts, today announced that Chairman and Chief Executive Officer David Burton will ring the Nasdaq Stock Market Opening Bell on Friday, October 10, 2025, to commemorate the company’s recent initial public offering. Jefferson Capital’s corporate officers, other executives and several members of its board of directors will also par ...

Group 1 - Jefferson Capital, Inc. (NASDAQ: JCAP) is positioned in an increasingly attractive market due to rising consumer loan delinquencies and insolvency rates [1] - The firm benefits from a favorable capital cycle and competitive advantages that enhance its market position [1] - Joseph Noko, an investment analyst, has a proven track record of generating over 100% annualized portfolio returns, indicating strong investment expertise [1]

Financial Data and Key Metrics Changes - Collections for the second quarter reached $256 million, an increase of 85% year over year, with estimated remaining collections (ERC) at $2.9 billion, up 31% year over year [5][11] - Revenue for the quarter was $153 million, up 47% compared to the prior year, with a cash efficiency ratio of 75.9% [5][15] - Adjusted cash EBITDA for the last twelve months was $654 million, improving leverage to 1.76 times [6][18] Business Line Data and Key Metrics Changes - The collections performance was driven by strong deployments, with portfolio purchases for the quarter totaling $125 million [9] - The Conn's portfolio purchase contributed $65 million to collections for the quarter, reinforcing the accuracy of underwriting models [9][14] - Operating expenses were $66 million, up 37% year over year, but expenses remained well controlled relative to collections [15][16] Market Data and Key Metrics Changes - Delinquency trends remain elevated across all non-mortgage consumer asset classes, creating favorable portfolio supply trends [6][8] - The insolvency market has seen a pronounced increase in the number of insolvencies in both the U.S. and Canada, fueling a resurgence in supply portfolios [7][10] - The current level of personal savings is $1 trillion, lower than the pre-pandemic average, indicating limited consumer ability to absorb financial hardships [7] Company Strategy and Development Direction - The company aims to maintain a focus on deploying capital with attractive risk-adjusted returns, with a target leverage ratio of 2 to 2.5 times [18][20] - The company emphasizes owning high-value aspects of the purchasing and collection process while outsourcing commoditized operations [12][14] - The company is prepared to respond to increased opportunities in the market, particularly in the insolvency space [8][58] Management's Comments on Operating Environment and Future Outlook - Management remains bullish on investment opportunities, citing elevated consumer delinquencies and charge-offs as drivers for robust portfolio supply [6][8] - The company expects to collect $889 million of its ERC balance during the next twelve months, indicating strong future cash flow [11] - Management noted that a potential economic slowdown could increase charge-off supply, which would be net positive for the company [68][69] Other Important Information - The company completed its initial public offering on June 25, marking a significant milestone in its growth strategy [4] - A quarterly dividend of $0.24 per share was declared, representing a 5.7% annualized yield [20] - The effective tax rate for the quarter was 23%, influenced by one-time items and a catch-up for taxes [42][46] Q&A Session Summary Question: Deployment mix and changes - The deployment mix remains consistent with recent trends, with no substantial changes noted [24] Question: Supply and pricing updates across markets - Supply trends across asset classes have remained consistent, with increased supply observed [25] Question: Seller pipeline and new potential sellers - The company is expanding its funnel of opportunities, particularly in asset classes where it holds a market leadership position [30] Question: Impact of insolvency growth on consolidated yields - An increase in insolvency deployments could improve cash efficiency ratios over time, but current levels are not expected to have a significant near-term impact [34][36] Question: Effective tax rate and drivers - The effective tax rate was higher than initially expected due to a catch-up provision for taxes [42][46] Question: Performance of the cons portfolio - The performing cons portfolio continues to exceed underwritten expectations, while the non-performing part is incorporated into charge-off purchases [50][51] Question: M&A opportunities and market conditions - The company is seeing more opportunities in performing portfolios due to market dislocations, but remains disciplined in its approach [55][58] Question: Future cash efficiency improvements - Continuous improvement in cash efficiency remains a focus, with expectations for ongoing initiatives to drive down costs [61][62] Question: Economic slowdown impact on portfolio and deployments - Historical data suggests that a recession could lead to increased charge-off supply, which would be beneficial for the company [67][69]

Financial Performance - Collections showed strong growth, reaching $255.7 million, up 85% compared to Q2 2024[9] - Estimated Remaining Collections (ERC) reached a new record of $2.9 billion, a 31% increase compared to Q2 2024[9] - Revenue grew to $152.7 million, a 47% increase compared to Q2 2024[9] - The company declared a dividend of $0.24 per share, payable on September 4, 2025[9] Efficiency and Profitability - The Cash Efficiency Ratio was 75.9%[9], aided by the Conn's portfolio purchase, with the ratio being 71.8% excluding Conn's portfolio[27] - Adjusted Pre-Tax Return On Average Equity (ROAE) was 58.4%[28] - Adjusted Pre-Tax Income increased by 55% compared to Q2 2024[31] Deployments and ERC - Year-to-date deployments as of June 30, 2025, were $300.5 million, up 24% compared to the same period in 2024[17] - U.S Distressed ERC includes $226.5 million related to the Conn's portfolio purchase[22] - The company expects to collect $889.0 million of the June 30, 2025 ERC balance during the next 12 months[22] Leverage and Funding - The leverage ratio was 1.76x, calculated as Net Debt divided by Adjusted Cash EBITDA[9] - At June 30, 2025, $825 million RCF was undrawn with $51.7 million of unrestricted cash on the balance sheet[35]

[Part I. Financial Information](index=6&type=section&id=Part%20I%20Financial%20Information) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section provides the unaudited combined and condensed consolidated financial statements and their explanatory notes [Combined and Condensed Consolidated Balance Sheets](index=9&type=section&id=Combined%20and%20Condensed%20Consolidated%20Balance%20Sheets) | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | Change (Thousands) | % Change | | :-------------------------------- | :-------------------------- | :---------------------------- | :----------------- | :------- | | Total Assets | $1,767,618 | $1,654,284 | $113,334 | 6.85% | | Total Liabilities | $1,356,810 | $1,271,755 | $85,055 | 6.69% | | Total Stockholder's Equity | $410,808 | $382,529 | $28,279 | 7.39% | | Investments in receivables, net | $1,589,801 | $1,497,748 | $92,053 | 6.15% | | Cash and cash equivalents | $51,651 | $35,506 | $16,145 | 45.47% | | Deferred tax liabilities | $94,057 | $2,193 | $91,864 | 4190.88% | [Combined and Condensed Consolidated Statements of Operations and Comprehensive Income](index=10&type=section&id=Combined%20and%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) | Metric (Thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (Thousands) | YoY % Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (Thousands) | YoY % Change | | :--------------------------------- | :--------------------------- | :--------------------------- | :--------------------- | :----------- | :--------------------------- | :--------------------------- | :--------------------- | :----------- | | Total Revenues | $152,708 | $103,804 | $48,904 | 47.11% | $307,651 | $203,759 | $103,892 | 50.99% | | Net Operating Income | $86,641 | $55,147 | $31,494 | 57.11% | $175,908 | $107,075 | $68,833 | 64.29% | | Income Before Income Taxes | $61,906 | $34,067 | $27,839 | 81.72% | $128,811 | $68,898 | $59,913 | 86.96% | | Net Income | $47,651 | $32,168 | $15,483 | 48.14% | $111,876 | $65,059 | $46,817 | 71.96% | | Basic EPS | $18.61 | $— | N/A | N/A | $86.88 | $— | N/A | N/A | | Diluted EPS | $16.76 | $— | N/A | N/A | $78.26 | $— | N/A | N/A | [Combined and Condensed Consolidated Statements of Shareholders' Equity](index=11&type=section&id=Combined%20and%20Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) | Metric (Thousands) | June 30, 2025 | December 31, 2024 | Change | | :--------------------------------- | :------------ | :---------------- | :----- | | Total Stockholder's Equity | $410,808 | $382,529 | $28,279 | | Retained earnings | $477,576 | $398,122 | $79,454 | | Accumulated other comprehensive income (loss) | $2,723 | $(15,593) | $18,316 | | Dividends to stockholders (6 months) | $(32,422) | N/A | N/A | | Net income (6 months) | $111,876 | N/A | N/A | | Foreign currency translation (6 months) | $18,316 | N/A | N/A | | Reorganization adjustments (6 months) | $(78,216) | N/A | N/A | | Shares issued (6 months) | $8,725 | N/A | N/A | [Combined and Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Combined%20and%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric (Thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (Thousands) | YoY % Change | | :-------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------- | :----------- | | Net cash provided by operating activities | $130,565 | $83,146 | $47,419 | 57.03% | | Net cash used in investing activities | $(66,938) | $(164,008) | $97,070 | (59.19)% | | Net cash (used in) / provided by financing activities | $(43,109) | $73,692 | $(116,801) | (158.50)% | | Net (decrease) increase in cash and restricted cash | $17,257 | $(7,055) | $24,312 | (344.62)% | | Cash and cash equivalents and restricted cash, end of period | $55,500 | $13,549 | $41,951 | 309.62% | [Notes to Combined and Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Combined%20and%20Condensed%20Consolidated%20Financial%20Statements) [1. Organization, Description of Business and Summary of Significant Accounting Policies](index=14&type=section&id=1.%20Organization,%20Description%20of%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) - Jefferson Capital, Inc. provides **debt recovery solutions** and related services across consumer receivables in the U.S., Canada, U.K., and Latin America, primarily purchasing **charged-off portfolios** at **deep discounts**[23](index=23&type=chunk) - The Company completed its IPO in June 2025, issuing **625,000 shares** for net proceeds of **$4.5 million**, and underwent a Reorganization where Jefferson Capital, Inc. became a holding company for JCAP TopCo, LLC[25](index=25&type=chunk)[26](index=26&type=chunk) - Following the IPO and Reorganization, IPO investors own **17.8%** of common stock, JCF Stockholders own **67.6%**, and Management Stockholders own **14.3%**[26](index=26&type=chunk)[32](index=32&type=chunk) - Revenue from investments in receivables is recognized under **ASC 326 (CECL model)**, based on **expected future collections discounted to present value**, and includes "**Total portfolio income**" and "**Changes in recoveries**"[42](index=42&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) [2. Earnings Per Share](index=22&type=section&id=2.%20Earnings%20Per%20Share) - Basic and diluted EPS are calculated from **June 27, 2025 (IPO date)** through June 30, 2025, and are not presented for prior periods due to the company's predecessor structure as a single-member LLC and the nature of the Reorganization[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk) | Metric (Thousands, except per share) | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | | :--------------------------------- | :--------------------------- | :--------------------------- | | Net income | $47,651 | $111,876 | | Weighted-average common shares outstanding (Basic) | 2,561 | 1,288 | | Weighted-average common shares outstanding (Diluted) | 2,843 | 1,430 | | Basic Earnings per common share | $18.61 | $86.88 | | Diluted Earnings per common share | $16.76 | $78.26 | [3. Acquisitions](index=23&type=section&id=3.%20Acquisitions) - Effective December 3, 2024, the Company acquired certain assets from Conn's, Inc. for **$244.9 million** in cash, including performing receivables, and hired **197 former Conn's FTEs**[56](index=56&type=chunk)[57](index=57&type=chunk) | Allocation of Purchase Price (Thousands) | Amount | | :------------------------------------- | :----- | | Total purchase consideration paid | $244,937 | | Investments in receivables, net | $238,028 | | Other intangible assets (Intellectual property, Assembled workforce) | $5,272 | - For the six months ended June 30, 2025, the Conn's portfolio purchase contributed **$54.7 million** in portfolio revenue, **$6.8 million** in servicing revenue, and **$42.8 million** in net operating income[62](index=62&type=chunk) [4. Fair Value Measurements](index=26&type=section&id=4.%20Fair%20Value%20Measurements) - The Company does not have financial instruments subject to recurring fair value measurements. Fair value estimates for non-recurring instruments are categorized into Level 1, 2, or 3 inputs[64](index=64&type=chunk)[68](index=68&type=chunk) | Financial Instrument (Thousands) | June 30, 2025 Carrying Amount | June 30, 2025 Estimated Fair Value | December 31, 2024 Carrying Amount | December 31, 2024 Estimated Fair Value | | :------------------------------- | :---------------------------- | :------------------------------- | :------------------------------ | :------------------------------- | | Investments in receivables, net | $1,589,801 | $1,762,369 | $1,497,748 | $1,646,535 | | Senior unsecured bond due 2026 | $298,514 | $301,308 | $297,828 | $299,478 | | Senior unsecured bond due 2029 | $395,090 | $422,333 | $394,405 | $424,792 | | Senior unsecured bond due 2030 | $492,651 | $519,075 | $— | $— | - Fair value of investments in receivables, net, is measured using **Level 3 inputs** (discounted estimated future cash flows), while senior unsecured bonds use **Level 2 inputs** (quoted market prices from secondary broker quotes)[66](index=66&type=chunk)[70](index=70&type=chunk) [5. Investment in receivables, net](index=28&type=section&id=5.%20Investment%20in%20receivables,%20net) | Metric (Thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Balance, beginning of period | $1,561,595 | $1,047,174 | $1,497,748 | $984,496 | | Purchases | $125,278 | $140,463 | $300,501 | $241,883 | | Cash collections | $(255,739) | $(137,889) | $(516,629) | $(265,080) | | Total portfolio income | $138,877 | $94,699 | $277,571 | $186,103 | | Changes in expected current period recoveries | $4,178 | $(371) | $10,575 | $2,725 | | Changes in expected future period recoveries | $(2,622) | $330 | $(5,399) | $(2,850) | | Foreign currency adjustments | $18,234 | $(5,206) | $25,434 | $(8,077) | | Balance, end of period | $1,589,801 | $1,139,200 | $1,589,801 | $1,139,200 | - Actual collections overperformed projected collections by approximately **$10.6 million** for the six months ended June 30, 2025, and **$2.7 million** for the same period in 2024, driven by strong collection performance[71](index=71&type=chunk) - For the six months ended June 30, 2025, the Company purchased receivable portfolios with face values of **$4,517.0 million** for a purchase price of **$300.5 million (6.7% of face value)**, compared to **$4,060.6 million** for **$241.9 million (6.0% of face value)** in 2024[75](index=75&type=chunk) [6. Credit Card Receivables](index=29&type=section&id=6.%20Credit%20Card%20Receivables) | Geography (Thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | United States | $7,465 | $7,470 | | Canada | $10,506 | $11,613 | | Total | $17,971 | $19,083 | - Credit card receivables are placed on **nonaccrual status** when greater than 90 days past due or within 60 days of bankruptcy notification[76](index=76&type=chunk) | Metric (Thousands) | June 30, 2025 | December 31, 2024 | | :----------------- | :------------ | :---------------- | | Allowance for Credit Losses | $1,733 | $1,907 | | Nonaccrual Credit Card Receivables | $660 | $890 | [7. Goodwill](index=30&type=section&id=7.%20Goodwill) - The Company tests goodwill for impairment annually as of June 30. No impairments were recorded for the six months ended June 30, 2025, or fiscal year 2024[83](index=83&type=chunk) | Segment (Thousands) | December 31, 2024 | June 30, 2025 | Change | | :------------------ | :---------------- | :------------ | :----- | | United States | $31,633 | $31,633 | $0 | | United Kingdom | $19,209 | $19,209 | $0 | | Canada | $6,841 | $7,201 | $360 | | Latin America | $— | $— | $0 | | Total Goodwill | $57,683 | $58,043 | $360 | [8. Notes Payable, Net](index=31&type=section&id=8.%20Notes%20Payable,%20Net) | Debt Instrument (Thousands) | June 30, 2025 Amount Outstanding | June 30, 2025 Interest Rate | December 31, 2024 Amount Outstanding | December 31, 2024 Interest Rate | | :-------------------------- | :------------------------------- | :-------------------------- | :------------------------------- | :-------------------------- | | Senior unsecured bond due 2026 | $300,000 | 6.00% | $300,000 | 6.00% | | Senior unsecured bond due 2029 | $400,000 | 9.50% | $400,000 | 9.50% | | Senior unsecured bond due 2030 | $500,000 | 8.25% | $— | — | | Credit agreements | $— | 7.52% | $508,146 | 7.51% | | Total Notes Payable, net | $1,181,470 | 8.10% (Avg) | $1,194,726 | 7.79% (Avg) | - The Company issued **$500.0 million** aggregate principal amount of **8.250% senior notes due 2030** in May 2025, using proceeds to pay down the Revolving Credit Facility[96](index=96&type=chunk)[261](index=261&type=chunk) - As of June 30, 2025, the Company was in **compliance with all financial covenants** of its notes payable[100](index=100&type=chunk) [9. Leases](index=36&type=section&id=9.%20Leases) | Metric (Thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Operating lease costs | $536 | $321 | $1,184 | $710 | | Metric (Thousands) | June 30, 2025 | December 31, 2024 | | :----------------- | :------------ | :---------------- | | Operating lease right-of-use assets | $4,386 | $4,449 | | Operating lease liabilities | $4,858 | $4,861 | | Weighted-average remaining lease term (years) | 5.0 | 5.5 | | Weighted-average discount rate | 7.5% | 7.5% | [10. Stock Based Compensation](index=37&type=section&id=10.%20Stock%20Based%20Compensation) - Prior to the IPO in June 2025, Class B Units were issued under the JCAP TopCo, LLC 2018 Underlying Units Plan and Management Invest LLC 2018 Management Incentive Plan[103](index=103&type=chunk)[104](index=104&type=chunk) - As part of the IPO, all **in-the-money Class B Units** were converted into common stock (vested) or restricted stock (unvested), while **out-of-the-money units** were canceled and replaced with new stock options under the 2025 Incentive Award Plan[105](index=105&type=chunk)[106](index=106&type=chunk) | Metric | June 30, 2025 | | :---------------------------------- | :------------ | | Restricted Shares Outstanding | 6,418,775 | | Weighted-Average Grant Date Fair Value (Restricted Shares) | $15.00 | | Stock Options Outstanding | 457,542 | | Weighted-Average Exercise Price (Stock Options) | $24.81 | | Weighted-Average Remaining Contractual Term (Years) | 5.0 | | Total unrecognized equity-based compensation expense | $96.3 million | | Weighted average term for recognition | 3.0 years | - Stock-based compensation expense recognized for the six months ended June 30, 2025, was **$(7.9) million**, a decrease from **$1.9 million** in 2024, primarily due to the **reversal of expense** from the IPO's impact on Class B units[108](index=108&type=chunk) [11. Commitments and Contingencies](index=39&type=section&id=11.%20Commitments%20and%20Contingencies) - As of June 30, 2025, the Company had forward flow purchase agreements for receivables with an estimated minimum aggregate purchase price of approximately **$257.3 million**, down from **$332.1 million** in 2024[112](index=112&type=chunk) - The Company sponsors defined contribution plans (401k, DPSP, government contribution plan) in the U.S., Canada, and U.K., with total contributions of **$0.5 million** for the six months ended June 30, 2025[113](index=113&type=chunk) - The Company has an obligation to purchase credit card receivables from issuing banks, with maximum credit limits of **$15.5 million** as of June 30, 2025[114](index=114&type=chunk) - A liability of **$8.6 million** was accrued as of June 30, 2025, for the Canaccede Exit Incentive Payment, reflecting the net present value of an anticipated maximum payment contingent on a Liquidity Event by December 31, 2027[115](index=115&type=chunk) [12. Income Taxes](index=43&type=section&id=12.%20Income%20Taxes) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Effective Tax Rate | 23.0% | 5.6% | 13.1% | 5.6% | - The Company incurred a year-to-date provision of **$16.9 million** for income taxes to reflect the change in taxpayer status to a corporation as a result of the IPO reorganization[185](index=185&type=chunk)[213](index=213&type=chunk) [13. Related Party Transactions](index=43&type=section&id=13.%20Related%20Party%20Transactions) - In February 2023, Jefferson Capital Systems, LLC sold a **26.75% beneficial ownership interest** in a portfolio of performing installment loans to HH Warehouse LLC for **$2.9 million**, and repurchased it in July 2024 for **$1.4 million**. Christopher Giles, a board member, held a **12.86% interest** in HH Warehouse[119](index=119&type=chunk) [14. Segment Reporting](index=43&type=section&id=14.%20Segment%20Reporting) - The Company operates through four geographic segments: United States, United Kingdom, Canada, and Latin America. The CEO acts as the Chief Operating Decision Maker (CODM) and uses net operating income to allocate resources and assess performance[120](index=120&type=chunk)[121](index=121&type=chunk) | Segment (Thousands) | 3 Months Ended June 30, 2025 Net Operating Income | 3 Months Ended June 30, 2024 Net Operating Income | YoY Change (Thousands) | YoY % Change | 6 Months Ended June 30, 2025 Net Operating Income | 6 Months Ended June 30, 2024 Net Operating Income | YoY Change (Thousands) | YoY % Change | | :------------------ | :------------------------------------------ | :------------------------------------------ | :--------------------- | :----------- | :------------------------------------------ | :------------------------------------------ | :--------------------- | :----------- | | United States | $63,781 | $35,884 | $27,897 | 77.74% | $131,700 | $69,400 | $62,300 | 89.77% | | United Kingdom | $3,470 | $5,158 | $(1,688) | (32.73)% | $5,200 | $10,300 | $(5,100) | (49.51)% | | Canada | $14,112 | $9,171 | $4,941 | 53.88% | $27,100 | $18,000 | $9,100 | 50.56% | | Latin America | $5,278 | $4,934 | $344 | 6.97% | $11,900 | $9,400 | $2,500 | 26.60% | | Total | $86,641 | $55,147 | $31,494 | 57.11% | $175,908 | $107,075 | $68,833 | 64.29% | [15. Subsequent Events](index=45&type=section&id=15.%20Subsequent%20Events) - On August 13, 2025, the Company declared a dividend of **$0.24 per share**[125](index=125&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=46&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Jefferson Capital's financial condition, operational results, liquidity, and key accounting estimates [Overview](index=46&type=section&id=Overview) - Jefferson Capital, Inc. provides **debt recovery solutions** for various consumer receivables (credit card, automotive, telecom, utilities), primarily purchasing **charged-off portfolios** at **deep discounts**[127](index=127&type=chunk) - The business operates through four geographic segments (U.S., U.K., Canada, Latin America) and two primary lines: **Distressed** (nonperforming consumer loans) and **Insolvency** (financial assets of consumers in bankruptcy/insolvency)[128](index=128&type=chunk)[131](index=131&type=chunk) [Our Business Model](index=46&type=section&id=Our%20Business%20Model) - The Company purchases **nonperforming loans** (and sometimes performing loans with significant credit deterioration) via spot sales or forward flow agreements, leveraging proprietary valuation models to maximize collections[129](index=129&type=chunk)[130](index=130&type=chunk)[134](index=134&type=chunk) - Operational costs and regulatory pressures favor larger market participants like Jefferson Capital, enabling them to adapt and commit to larger purchases and forward flow agreements[136](index=136&type=chunk) - The average purchase price as a percentage of face value increased in the period ended June 30, 2025, compared to prior year periods, primarily due to changes in portfolio mix (e.g., higher percentage of newly charged-off or paying portfolios)[138](index=138&type=chunk) - Collection channels include **legal** (internal legal channel, retained law firms) and **voluntary** (domestic/offshore call centers, direct mail, digital collections, third-party collection agencies)[139](index=139&type=chunk) [Key Business Metrics and Non-GAAP Financial Measures](index=48&type=section&id=Key%20Business%20Metrics%20and%20Non-GAAP%20Financial%20Measures) - Estimated Remaining Collections (ERC) is defined as the **undiscounted sum of all future projected collections** on owned finance receivables portfolios, calculated using proprietary behavioral and asset valuation models[143](index=143&type=chunk) | ERC by Geographic Area (Millions) | June 30, 2025 | June 30, 2024 | Increase (Decrease) | % Change | | :-------------------------------- | :------------ | :------------ | :------------------ | :------- | | United States | $2,101.7 | $1,616.4 | $485.3 | 30.0% | | Canada | $348.5 | $221.6 | $126.9 | 57.3% | | United Kingdom | $158.4 | $146.5 | $12.0 | 8.2% | | Latin America | $244.3 | $185.8 | $58.5 | 31.5% | | Total | $2,852.9 | $2,170.2 | $682.7 | 31.5% | - Deployments (portfolio purchases) for the six months ended June 30, 2025, increased by **$58.6 million (24.2%)** to **$300.5 million**, acquiring portfolios with face values aggregating **$4,517.0 million** at an average purchase price of **6.7% of face value**[146](index=146&type=chunk) | Deployments by Geographic Area (Millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change | YoY % Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | YoY % Change | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------- | :----------- | :--------------------------- | :--------------------------- | :--------- | :----------- | | United States | $80.6 | $91.8 | $(11.2) | (12.2)% | $200.2 | $155.2 | $45.0 | 29.0% | | Canada | $26.6 | $24.1 | $2.5 | 10.4% | $78.6 | $44.6 | $34.0 | 76.2% | | United Kingdom | $4.7 | $8.5 | $(3.8) | (44.7)% | $6.6 | $18.0 | $(11.4) | (63.3)% | | Latin America | $13.4 | $16.1 | $(2.7) | (16.8)% | $15.1 | $24.1 | $(9.0) | (37.3)% | | Total Purchases | $125.3 | $140.5 | $(15.2) | (10.8)% | $300.5 | $241.9 | $58.6 | 24.2% | | Collections by Geographic Area (Millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change | YoY % Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | YoY % Change | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------- | :----------- | :--------------------------- | :--------------------------- | :--------- | :----------- | | United States | $202.4 | $97.7 | $104.7 | 107.2% | $416.8 | $189.0 | $227.8 | 120.5% | | Canada | $30.8 | $21.4 | $9.4 | 43.9% | $56.5 | $40.8 | $15.7 | 38.5% | | United Kingdom | $10.7 | $9.8 | $0.9 | 9.2% | $20.9 | $18.5 | $2.4 | 13.0% | | Latin America | $11.8 | $9.0 | $2.8 | 31.1% | $22.4 | $16.8 | $5.6 | 33.3% | | Total Collections | $255.7 | $137.9 | $117.8 | 85.4% | $516.6 | $265.1 | $251.5 | 94.9% | - Adjusted Net Income, a non-GAAP measure, increased by **57.7%** to **$59.6 million** for the three months ended June 30, 2025, and by **70.1%** to **$122.3 million** for the six months ended June 30, 2025, compared to the prior year periods[153](index=153&type=chunk)[155](index=155&type=chunk) | Metric (Millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change | YoY % Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | YoY % Change | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------- | :----------- | :--------------------------- | :--------------------------- | :--------- | :----------- | | Net Income | $47.7 | $32.2 | $15.5 | 48.1% | $111.9 | $65.1 | $46.8 | 71.9% | | Adjusted Net Income | $59.6 | $37.8 | $21.8 | 57.7% | $122.3 | $71.9 | $50.4 | 70.1% | | Pro Forma EPS (Thousands, except per share) | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | | :---------------------------------------- | :--------------------------- | :--------------------------- | | Pro Forma Adjusted Basic EPS | $0.82 | $1.92 | | Pro Forma Adjusted Diluted EPS | $0.81 | $1.92 | [Components of Results of Operations](index=53&type=section&id=Components%20of%20Results%20of%20Operations) - Revenue primarily comes from previously **charged-off receivables** (debt purchasing and recovery), credit card revenue, and servicing revenue[159](index=159&type=chunk) - Total portfolio revenue includes **portfolio income** (accretion of discount on negative allowance) and **changes in recoveries** (difference between actual and expected collections, and changes in expected future recoveries)[160](index=160&type=chunk) - Provision for credit losses is an allowance for expected credit losses on loans and fees receivable, computed at the pool level using a **roll-rate methodology**, considering historical loss rates, delinquency trends, and economic factors[164](index=164&type=chunk) - Operating expenses include salaries and benefits (expected to decline as a percentage of revenue over time), servicing expenses (expected to decrease as a percentage of revenue long-term), depreciation and amortization, professional fees (increased due to IPO costs), and other selling, general and administrative expenses[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) [Results of Operations (Three months ended June 30, 2025 compared to the three months ended June 30, 2024)](index=57&type=section&id=Results%20of%20Operations%20(Three%20months%20ended%20June%2030,%202025%20compared%20to%20the%20three%20months%20ended%20June%2030,%202024)) For the three months ended June 30, 2025, total revenues increased by 47.1% to $152.8 million, with net income growing by 47.7% to $47.7 million | Metric (Millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change | YoY % Change | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------- | :----------- | | Total Revenues | $152.8 | $103.9 | $48.9 | 47.1% | | Total Operating Expenses | $65.5 | $47.7 | $17.8 | 37.4% | | Net Operating Income | $86.7 | $55.2 | $31.5 | 57.1% | | Income Before Income Taxes | $62.0 | $34.2 | $27.8 | 81.3% | | Net Income | $47.7 | $32.3 | $15.4 | 47.7% | [Revenues](index=58&type=section&id=Revenues_3M) - Total revenues increased by **$48.9 million (47.1%)** to **$152.8 million** for the three months ended June 30, 2025, primarily due to strong deployment growth in prior periods[176](index=176&type=chunk) | Revenue Component (Millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change | YoY % Change | | :--------------------------- | :--------------------------- | :--------------------------- | :--------- | :----------- | | Total portfolio revenue | $140.5 | $94.7 | $45.8 | 48.4% | | Credit card revenue | $1.8 | $2.1 | $(0.3) | (14.3)% | | Servicing revenue | $10.5 | $7.1 | $3.4 | 47.9% | [Operating Expenses](index=58&type=section&id=Operating%20Expenses_3M) - Total operating expenses increased by **$17.8 million (37.4%)** to **$65.5 million** for the three months ended June 30, 2025, mainly due to a **$12.7 million increase** in court costs, agency/repo commission, and other servicing expenses[177](index=177&type=chunk) - Salaries and benefits decreased by **$6.0 million (48.8%)** to **$6.3 million**, driven by the **reversal of stock-based compensation expense** due to the IPO[178](index=178&type=chunk) - Servicing expenses increased by **$12.7 million (41.2%)** to **$43.5 million**, primarily due to increased collections[179](index=179&type=chunk) - Professional fees increased by **$7.3 million (347.6%)** to **$9.4 million**, mainly due to one-time legal and professional fees incurred for the IPO[181](index=181&type=chunk) - Other selling, general and administrative expenses increased by **$3.0 million (150.0%)** to **$5.0 million**, primarily due to data processing and rent expenses from the Conn's purchase and a **$0.7 million cost** related to the Canada acquisition exit incentive[182](index=182&type=chunk) [Other Income (Expense)](index=60&type=section&id=Other%20Income%20(Expense)_3M) - Total interest expense increased by **$7.6 million (41.0%)** to **$25.8 million**, driven by higher credit facility debt balance from increased deployments and increased amortization of note payable origination costs[183](index=183&type=chunk) [Provision for Income Tax Expense](index=60&type=section&id=Provision%20for%20Income%20Tax%20Expense_3M) - The Company incurred a year-to-date provision of **$16.9 million** to reflect the change in taxpayer status to a corporation as a result of the IPO reorganization[185](index=185&type=chunk) [Segment Results of Operations (Three Months)](index=61&type=section&id=Segment%20Results%20of%20Operations%20(Three%20Months)) [United States](index=61&type=section&id=United%20States_3M) - Total Revenue increased by **$42.4 million (61.9%)** to **$110.9 million**, with portfolio revenue growing **59.0%** and servicing revenue growing **375.0%**, largely due to the Conn's Portfolio Purchase[187](index=187&type=chunk)[188](index=188&type=chunk) - Net Operating Income increased by **$28.1 million (78.5%)** to **$63.9 million**, with a margin of **57.6%**, driven by the Conn's portfolio contribution of **$19.5 million**[192](index=192&type=chunk) - Salaries and benefits decreased by **$6.6 million (90.4%)** due to the reversal of stock-based compensation expense from the IPO[189](index=189&type=chunk) [United Kingdom](index=63&type=section&id=United%20Kingdom_3M) - Total Revenue increased by **$0.6 million (4.6%)** to **$13.7 million**, with portfolio revenue up **7.2%** and servicing revenue up **1.6%**[193](index=193&type=chunk)[194](index=194&type=chunk) - Net Operating Income declined by **$1.8 million (34.6%)** to **$3.4 million**, with a margin of **24.8%**, due to lower deployments and higher servicing expenses[196](index=196&type=chunk) [Canada](index=64&type=section&id=Canada_3M) - Total Revenue increased by **$4.7 million (32.4%)** to **$19.2 million**, driven by higher deployments leading to a **35.4% increase** in portfolio revenue and **300.0%** in servicing revenue[197](index=197&type=chunk)[198](index=198&type=chunk) - Net Operating Income increased by **$4.9 million (53.3%)** to **$14.1 million**, with a margin of **73.4%**, due to higher revenue growth and prudent expense management[198](index=198&type=chunk) [Latin America](index=65&type=section&id=Latin%20America_3M) - Total Revenue increased by **$1.2 million (15.4%)** to **$9.0 million**, primarily from strong collection performance[199](index=199&type=chunk) - Net Operating Income increased by **$0.3 million (6.0%)** to **$5.3 million**, with a margin of **58.9%**, due to higher revenues[201](index=201&type=chunk) [Six months ended June 30, 2025 compared to six months ended June 30, 2024)](index=66&type=section&id=Six%20months%20ended%20June%2030,%202025%20compared%20to%20six%20months%20ended%20June%2030,%202024)) For the six months ended June 30, 2025, total revenues increased by 50.9% to $307.6 million, with net income growing by 71.9% to $111.9 million | Metric (Millions) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | YoY % Change | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------- | :----------- | | Total Revenues | $307.6 | $203.8 | $103.8 | 50.9% | | Total Operating Expenses | $130.6 | $94.9 | $35.7 | 37.6% | | Net Operating Income | $175.9 | $107.1 | $68.8 | 64.2% | | Income Before Income Taxes | $128.8 | $68.9 | $59.9 | 86.9% | | Net Income | $111.9 | $65.1 | $46.8 | 71.9% | [Revenues](index=66&type=section&id=Revenues_6M) - Total revenues increased by **$103.8 million (50.9%)** to **$307.6 million** for the six months ended June 30, 2025, primarily due to increased deployments[203](index=203&type=chunk) | Revenue Component (Millions) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | YoY % Change | | :--------------------------- | :--------------------------- | :--------------------------- | :--------- | :----------- | | Total portfolio revenue | $282.8 | $186.0 | $96.8 | 52.0% | | Credit card revenue | $3.7 | $4.3 | $(0.6) | (14.0)% | | Servicing revenue | $21.1 | $13.5 | $7.6 | 56.3% | [Operating Expenses](index=67&type=section&id=Operating%20Expenses_6M) - Total operating expenses increased by **$35.7 million (37.6%)** to **$130.6 million**, driven by higher servicing expenses (**$23.7 million**), professional fees (**$7.6 million** for IPO), and other SG&A expenses (**$5.8 million**)[204](index=204&type=chunk) - Salaries and benefits decreased by **$3.1 million (13.2%)** to **$20.3 million**, due to the reversal of stock-based compensation expense from the IPO, partially offset by **$6.0 million** in costs for additional employees from the Conn's acquisition[205](index=205&type=chunk) - Servicing expenses increased by **$23.7 million (37.9%)** to **$86.3 million**, primarily due to increased collections and **$6.7 million** from the Conn's portfolio acquisition[206](index=206&type=chunk) - Professional fees increased by **$7.6 million (190.0%)** to **$11.6 million**, primarily due to one-time legal and professional fees incurred for the IPO[208](index=208&type=chunk) - Other selling, general and administrative expenses increased by **$5.7 million (150.0%)** to **$9.5 million**, mainly due to **$4.0 million** for data processing and rent from the Conn's location and a **$1.0 million cost** for the Canada acquisition exit incentive[209](index=209&type=chunk) [Other Income (Expense)](index=67&type=section&id=Other%20Income%20(Expense)_6M) - Total interest expense increased by **$15.2 million (42.8%)** to **$50.7 million**, driven by increased deployments leading to higher credit facilities debt balance and increased amortization of note payable origination costs[210](index=210&type=chunk)[211](index=211&type=chunk) [Provision for Income Tax Expense](index=69&type=section&id=Provision%20for%20Income%20Tax%20Expense_6M) - The Company incurred a year-to-date provision of **$16.9 million** to reflect the change in taxpayer status to a corporation as a result of the IPO reorganization[213](index=213&type=chunk) [Segment Results of Operations (Six Months)](index=69&type=section&id=Segment%20Results%20of%20Operations%20(Six%20Months)) [United States](index=70&type=section&id=United%20States_6M) - Total Revenue grew **$91.7 million (67.4%)** to **$227.8 million**, with portfolio revenue up **64.2%** and servicing revenue up **388.2%**, significantly boosted by the Conn's Portfolio Purchase (**$54.7 million** revenue, **$6.8 million** servicing revenue)[215](index=215&type=chunk)[216](index=216&type=chunk) - Net Operating Income increased by **$62.3 million (89.8%)** to **$131.7 million**, primarily due to deployment growth and **$36.9 million** contributed from the Conn's portfolio[221](index=221&type=chunk) - Salaries and benefits decreased by **$4.1 million (29.9%)** due to the IPO's stock-based compensation reversal, despite a **$6.0 million** increase from Conn's acquisition employees[217](index=217&type=chunk) [United Kingdom](index=72&type=section&id=United%20Kingdom_6M) - Total Revenue decreased by **$1.4 million (5.5%)** to **$24.0 million**, primarily due to lower deployments leading to a **13.1% decrease** in portfolio revenue[222](index=222&type=chunk) - Net Operating Income declined by **$5.1 million (49.5%)** to **$5.2 million**, due to lower deployments and higher servicing costs[225](index=225&type=chunk) [Canada](index=73&type=section&id=Canada_6M) - Total Revenue increased by **$9.1 million (32.9%)** to **$36.8 million**, driven by higher deployments resulting in a **35.9% increase** in portfolio revenue and **600.0%** in servicing revenue[226](index=226&type=chunk)[227](index=227&type=chunk) - Net Operating Income increased by **$9.1 million (50.6%)** to **$27.1 million**, primarily due to increased deployments[227](index=227&type=chunk) [Latin America](index=73&type=section&id=Latin%20America_6M) - Total Revenue increased by **$4.4 million (30.1%)** to **$19.0 million**, primarily due to strong collection performance[228](index=228&type=chunk) - Net Operating Income increased by **$2.5 million (26.6%)** to **$11.9 million**, driven by strong collection performance[229](index=229&type=chunk) [Supplemental Performance Data as of June 30, 2025](index=74&type=section&id=Supplemental%20Performance%20Data%20as%20of%20June%2030,%202025) - The Company's investment in receivables portfolios is categorized into **Distressed** and **Insolvency**, with collection practices adjusted for bankruptcy/insolvency status[231](index=231&type=chunk) - Purchase price multiples vary based on factors like pricing competition, supply levels, age and quality of receivables, and operational efficiency, with fresher accounts typically having lower collection expenses[232](index=232&type=chunk)[234](index=234&type=chunk) | Segment (Millions) | Purchase Price | Life-to-Date Collections | Total ERC | Grand Total | Current Collection Multiple | Original Collection Multiple | | :----------------- | :------------- | :----------------------- | :-------- | :---------- | :-------------------------- | :--------------------------- | | US Distressed | $1,824.8 | $2,670.3 | $1,877.0 | $4,547.3 | 2.06x (2024) | 1.98x (2024) | | US Insolvency | $716.7 | $799.8 | $224.6 | $1,024.4 | 1.36x (2024) | 1.39x (2024) | | UK Distressed & Insolvency | $148.0 | $209.4 | $158.4 | $367.8 | 1.80x (2024) | 1.70x (2024) | | Canada Insolvency | $435.8 | $534.6 | $222.0 | $756.6 | 1.48x (2024) | 1.38x (2024) | | Canada Distressed | $224.9 | $393.8 | $126.5 | $520.3 | 1.90x (2024) | 1.83x (2024) | | Latin America Distressed | $136.5 | $105.4 | $244.3 | $349.8 | 2.52x (2024) | 2.35x (2024) | | Total (2025) | $300.5 | $33.9 | $540.8 | $574.7 | 1.91x | 1.91x | | Total (2024) | $723.3 | $391.4 | $1,020.9 | $1,412.3 | 1.95x | 1.88x | | Deployments by Geography and Business Line (Millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :-------------------------------------------------- | :--------------------------- | :--------------------------- | | US Distressed | $57.3 | $76.7 | | US Insolvency | $23.3 | $15.1 | | UK Distressed & Insolvency | $4.7 | $8.5 | | Canada Insolvency | $20.6 | $15.1 | | Canada Distressed | $6.1 | $9.0 | | Latin America Distressed | $13.3 | $16.1 | | Total Purchases | $125.3 | $140.5 | [Liquidity and Capital Resources](index=83&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, unrestricted cash and cash equivalents totaled **$51.7 million**, with **$16.0 million** related to international operations. Management believes the Company has **sufficient liquidity** for the next twelve months and foreseeable future[252](index=252&type=chunk) - Total borrowings outstanding were **$1,148.3 million** (net of unamortized debt issuance costs) as of June 30, 2025, with **$825.0 million** available under the Revolving Credit Facility (subject to borrowing base and covenants)[253](index=253&type=chunk) | Metric (Millions) | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Total borrowings | $1,181.5 | $845.0 | | Unamortized debt issuance costs | $18.5 | $15.2 | | Unrestricted cash and cash equivalents | $(51.7) | $(10.5) | | Net debt | $1,148.3 | $849.7 | | Adjusted cash EBITDA (12 months) | $654.0 | $343.5 | | Leverage ratio (net debt / adjusted cash EBITDA) | 1.76x | 2.47x | - The Company was in **compliance with all financing arrangement covenants** as of June 30, 2025[256](index=256&type=chunk) | Metric (Millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $158.4 | $47.8 | $210.0 | $83.1 | | Adjusted Cash EBITDA | $204.1 | $101.7 | $414.7 | $191.4 | [Cash Flows Analysis for the Six months Ended June 30, 2025 and 2024](index=86&type=section&id=Cash%20Flows%20Analysis%20for%20the%20Six%20months%20Ended%20June%2030,%202025%20and%202024) | Cash Flow Activity (Millions) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | YoY % Change | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------- | :----------- | | Operating activities | $210.0 | $83.1 | $126.9 | 152.7% | | Investing activities | $(66.9) | $(164.0) | $97.1 | (59.2)% | | Financing activities | $(122.6) | $73.7 | $(196.3) | (266.4)% | | Net increase (decrease) in cash and restricted cash | $17.3 | $(7.1) | $24.4 | (343.7)% | - Net cash provided by operating activities increased by **$126.9 million (152.7%)**, primarily due to collections recognized as revenue offset by operating expenses, interest, and income taxes[268](index=268&type=chunk) - Cash used in investing activities decreased by **$97.1 million**, primarily due to increased collections applied to investment in receivables (**$154.7 million** increase)[270](index=270&type=chunk) - Cash flow from financing activities decreased by **$196.3 million**, primarily due to payments on borrowings under the credit facility[271](index=271&type=chunk) [Contractual Obligations](index=88&type=section&id=Contractual%20Obligations) | Obligation (Millions) | Total | Less Than 1 Year | 1 - 3 Years | 3 - 5 Years | More Than 5 Years | | :-------------------- | :---- | :--------------- | :---------- | :---------- | :---------------- | | Operating Leases | $5.9 | $1.4 | $2.3 | $1.4 | $0.8 | | Long-term debt | $847.8 | $42.0 | $380.5 | $425.3 | $— | | Purchase commitments | $257.3 | $218.8 | $38.5 | $— | $— | | Other Liabilities | $9.0 | $— | $9.0 | $— | $— | | Total | $1,120.0 | $262.2 | $430.3 | $426.7 | $0.8 | [Critical Accounting Estimates](index=89&type=section&id=Critical%20Accounting%20Estimates) - Critical accounting estimates include **total portfolio revenue** (forecasting cash collections, applying discounted cash flow methodology) and **allowance for credit losses** (estimating expected credit losses on credit card receivables)[275](index=275&type=chunk)[276](index=276&type=chunk)[278](index=278&type=chunk) | Impact of ERC Change (Millions) | 1% Reduction in ERC | 1% Increase in ERC | | :------------------------------ | :------------------ | :----------------- | | 2025 Impact on Income Before Taxes | $(24.3) | $24.3 | | 2024 Impact on Income Before Taxes | $(18.2) | $18.2 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=92&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company is exposed to market risks including interest rate, foreign currency, inflation, and concentration risks [Interest Rate Risk](index=92&type=section&id=Interest%20Rate%20Risk) - The Company is subject to interest rate risk from borrowings on its Revolving Credit Facility and interest-bearing deposits. As of June 30, 2025, with **$0.0 million** in variable rate credit facilities, a **50 basis point change** in interest rates would result in an estimated **$0.0 million** change in interest expense over 12 months[284](index=284&type=chunk) [Foreign Currency Exchange Risk](index=92&type=section&id=Foreign%20Currency%20Exchange%20Risk) - International operations expose the Company to foreign currency exchange rate fluctuations (e.g., British pound, Canadian dollar) against the U.S. dollar, which can affect revenue and operating expenses. The Company does not currently hedge against these risks[285](index=285&type=chunk)[286](index=286&type=chunk) [Inflation Risk](index=92&type=section&id=Inflation%20Risk) - Inflation has not had a material effect on the business, but significant inflationary pressures, especially on labor costs, could harm financial results if not offset by price increases[287](index=287&type=chunk) [Concentration Risk](index=92&type=section&id=Concentration%20Risk) - A substantial percentage of purchases are concentrated with a few large sellers; the top five clients accounted for **41.0%** and **40.4%** of deployments for the six months ended June 30, 2025 and 2024, respectively[288](index=288&type=chunk) - The Company mitigates concentration risk through a diversified client base and forward flow purchase agreements, with **$257.3 million** in committed forward flows as of June 30, 2025[289](index=289&type=chunk)[290](index=290&type=chunk) [Item 4. Controls and Procedures](index=93&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, with no material changes to internal control over financial reporting [Limitation on Effectiveness of Controls and Procedures](index=93&type=section&id=Limitation%20on%20Effectiveness%20of%20Controls%20and%20Procedures) - Management recognizes that controls and procedures can only provide **reasonable assurance** due to inherent limitations and resource constraints[291](index=291&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=93&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - The CEO and CFO concluded that disclosure controls and procedures were **effective** at the reasonable assurance level as of June 30, 2025[292](index=292&type=chunk) [Changes in Internal Control over Financial Reporting](index=93&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - No **material changes** in internal control over financial reporting occurred during the quarter ended June 30, 2025[293](index=293&type=chunk) [Part II. Other Information](index=94&type=section&id=Part%20II%20Other%20Information) [Item 1. Legal Proceedings](index=94&type=section&id=Item%201.%20Legal%20Proceedings) The Company is subject to various legal proceedings, none expected to materially affect its financial condition or operations - No **material pending legal proceedings** to which the Company or its subsidiaries are a party as of June 30, 2025, and December 31, 2024[116](index=116&type=chunk)[295](index=295&type=chunk) [Item 1A. Risk Factors](index=94&type=section&id=Item%201A.%20Risk%20Factors) Investing in the Company's common stock involves substantial risks across business, international operations, regulation, IT, and finance [Risks Related to our Business](index=94&type=section&id=Risks%20Related%20to%20our%20Business) - Deterioration in economic or inflationary environments could adversely affect revenues and asset values, as well as consumers' ability to pay debts, impacting business and financial results[297](index=297&type=chunk) - Inability to continually replace nonperforming loans at appropriate prices or collect sufficient amounts could lead to operational inefficiencies, reduced profitability, and difficulties funding operations[300](index=300&type=chunk)[303](index=303&type=chunk)[304](index=304&type=chunk) - Increased insolvency proceedings and bankruptcy filings involving liquidations could decrease collections on unsecured receivables, adversely impacting financial condition[305](index=305&type=chunk)[306](index=306&type=chunk) - Disruptions or failures by third-party outsourcing/offshoring partners (e.g., Mumbai co-sourced operation) could adversely affect business operations, financial condition, and reputation[308](index=308&type=chunk)[309](index=309&type=chunk) - Goodwill impairment charges could negatively impact net income and stockholders' equity due to adverse macroeconomic conditions, significant variances in financial results, or other factors[310](index=310&type=chunk)[311](index=311&type=chunk) - Loss contingency accruals may not be adequate to cover actual losses from legal proceedings, potentially impacting business and financial condition[312](index=312&type=chunk)[314](index=314&type=chunk) - Solicitors of Moriarty (UK law firm subsidiary) must prioritize client interests, which may conflict with the Company's financial interests, and regulatory bodies could impose sanctions[315](index=315&type=chunk) - Expected collections from the Conn's Portfolio Purchase may not be realized, or associated expenses (e.g., FTE integration, vendor contracts) may be higher than anticipated, adversely impacting financial results[317](index=317&type=chunk) [Risks Related to Our International Operations](index=100&type=section&id=Risks%20Related%20to%20Our%20International%20Operations) - International operations expose the Company to adverse economic, political, and social conditions, foreign exchange controls, currency fluctuations, and varying regulatory environments, which could harm business and financial results[318](index=318&type=chunk)[319](index=319&type=chunk)[320](index=320&type=chunk) - Lack of collection experience with new asset classes or in new geographies could lead to losses and negatively impact expected profits[321](index=321&type=chunk) - Compliance with complex and evolving international and U.S. laws (e.g., anti-corruption, sanctions, tax laws like OECD Pillar Two) could increase costs, restrict operations, and harm the business[322](index=322&type=chunk)[324](index=324&type=chunk) - Evolving regulation in Latin America, particularly regarding new technologies like AI, could impose greater restrictions on debt collection practices, increasing compliance costs or limiting operational effectiveness[325](index=325&type=chunk)[326](index=326&type=chunk) [Risks Related to Government Regulation and Litigation](index=104&type=section&id=Risks%20Related%20to%20Government%20Regulation%20and%20Litigation) - The ability to collect and enforce loans is limited by extensive and evolving federal, state, and international laws and regulations, including consumer protection and data privacy laws[327](index=327&type=chunk) - Failure to comply with collections industry regulations (e.g., licensing, consumer protection, unfair practices) could result in penalties, fines, litigation, reputational damage, or suspension of business operations[328](index=328&type=chunk)[330](index=330&type=chunk)[333](index=333&type=chunk)[334](index=334&type=chunk) - Investigations or enforcement actions by governmental authorities (e.g., CFPB) could lead to changes in business practices, reduced deployment volume, increased collection difficulty, fines, restitution, and litigation[335](index=335&type=chunk) - Changes in tax provisions or successful challenges by tax authorities could result in additional tax liabilities, significantly impacting financial condition or results of operations[336](index=336&type=chunk)[337](index=337&type=chunk) - Recent changes in U.S. trade policy (e.g., tariffs) could indirectly affect the debt purchasing and collections industry by influencing consumer behavior, financial stability, and market volatility[338](index=338&type=chunk)[339](index=339&type=chunk) [Risks Related to Information Technology, Cybersecurity and Intellectual Property](index=108&type=section&id=Risks%20Related%20to%20Information%20Technology,%20Cybersecurity%20and%20Intellectual%20Property) - Evolving data privacy regulations globally (e.g., EU GDPR, U.K. GDPR, GLBA, CCPA) and an inability to manage data governance structures could increase compliance costs and decrease competitiveness[340](index=340&type=chunk)[341](index=341&type=chunk) - Dependence on data gathering systems and proprietary consumer profiles means loss of access or public disclosure of such data could materially and adversely affect the business and competitive advantage[345](index=345&type=chunk)[346](index=346&type=chunk) - Cybersecurity incidents could damage reputation, disrupt systems, compromise sensitive information, and lead to significant costs, fines, penalties, and litigation, potentially not fully covered by insurance[347](index=347&type=chunk)[349](index=349&type=chunk)[350](index=350&type=chunk) - Underperformance or failure of IT infrastructure, networks, or communication systems could result in productivity loss, competitive disadvantage, and business disruption[351](index=351&type=chunk) - Inadequate protection of proprietary software, processes, and techniques (trade secrets) could diminish competitive advantage. Claims of intellectual property infringement by third parties could be costly to defend and result in significant damages[352](index=352&type=chunk)[353](index=353&type=chunk) - Use of third-party open-source software components carries risks, including potential requirements to disclose proprietary software source code under "**copyleft**" licenses, which could erode competitive advantages[354](index=354&type=chunk)[355](index=355&type=chunk) - The use of machine learning and AI technologies, if incorrectly designed, reliant on poor data, or lacking sufficient oversight, could adversely affect products/services, harm reputation, or incur liability[358](index=358&type=chunk)[360](index=360&type=chunk) [Risks Related to Our Financial Condition and Indebtedness](index=114&type=section&id=Risks%20Related%20to%20Our%20Financial%20Condition%20and%20Indebtedness) - The Company expects to use substantial leverage, with **$1,181.5 million** in consolidated indebtedness as of June 30, 2025, which could make it difficult to satisfy obligations, increase vulnerability to adverse conditions, and limit access to additional financing[361](index=361&type=chunk)[362](index=362&type=chunk) - Inability to generate sufficient cash flow or complete alternative financing plans (refinancing, asset sales, raising capital) to meet debt service obligations could materially affect the business and delay expansion[363](index=363&type=chunk)[364](index=364&type=chunk) - Agreements governing indebtedness contain restrictive covenants that may limit financial and business operations, and failure to satisfy these could lead to acceleration of debt, inability to purchase loans, or inability to secure alternative financing[365](index=365&type=chunk)[366](index=366&type=chunk)[368](index=368&type=chunk) - Adverse changes in credit ratings could negatively impact the ability to access capital markets at attractive rates and increase borrowing costs[371](index=371&type=chunk) [Risks Related to Ownership of Our Common Stock](index=118&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) - JCF Stockholders control approximately **67.6%** of voting power, enabling them to control corporate decisions and potentially pursue interests conflicting with other stockholders, as the corporate opportunities doctrine is waived[372](index=372&type=chunk)[374](index=374&type=chunk)[375](index=375&type=chunk) - An active, liquid trading market for common stock may not be sustained, limiting the ability to sell shares and potentially causing the stock price to decline due to market volatility or company-specific factors[376](index=376&type=chunk)[377](index=377&type=chunk) - Sales of a substantial number of shares after lock-up periods or under equity compensation plans could significantly reduce the market price of common stock[378](index=378&type=chunk)[380](index=380&type=chunk) - There is no assurance that the Company will continue to declare cash dividends or repurchase shares, as policies may change based on financial condition, capital requirements, and contractual restrictions[381](index=381&type=chunk) - As a "**controlled company**" under Nasdaq rules, the Company qualifies for exemptions from certain corporate governance requirements, meaning stockholders will not have the same protections as those of fully compliant companies[382](index=382&type=chunk)[383](index=383&type=chunk) - As an "**emerging growth company**," the Company uses reduced reporting and disclosure requirements, which might make its common stock less attractive to some investors and lead to more volatile stock prices[384](index=384&type=chunk)[386](index=386&type=chunk)[387](index=387&type=chunk) - The requirements of being a public company may strain resources and distract management, particularly after losing "**emerging growth company**" status, increasing legal and financial compliance costs[388](index=388&type=chunk)[389](index=389&type=chunk)[391](index=391&type=chunk) - If securities or industry analysts cease coverage, adversely change recommendations, or if results do not meet expectations, the stock price and trading volume could decline[393](index=393&type=chunk) [General Risk Factors](index=126&type=section&id=General%20Risk%20Factors) - Failure to develop and maintain **effective internal control over financial reporting** to comply with Section 404 of Sarbanes-Oxley Act could adversely affect investor confidence and stock value[394](index=394&type=chunk)[395](index=395&type=chunk)[397](index=397&type=chunk) - Future issuances or sales of common stock will be **dilutive** to existing stockholders and could adversely affect the prevailing price of common stock[401](index=401&type=chunk) - Anti-takeover provisions in the Company's charter and bylaws, and certain Delaware law provisions, may delay or prevent a change of control, potentially affecting the stock price[402](index=402&type=chunk)[403](index=403&type=chunk)[405](index=405&type=chunk) - Exclusive forum provisions in the charter and bylaws for certain disputes may limit stockholders' ability to bring claims in preferred judicial forums, potentially discouraging claims or increasing costs[406](index=406&type=chunk)[409](index=409&type=chunk) - As a holding company, reliance on dividends and distributions from subsidiaries means restrictions on subsidiaries' ability to pay dividends or deterioration of their earnings could limit the Company's ability to meet its obligations[412](index=412&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=132&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company completed its IPO on June 27, 2025, generating **$3.1 million** net proceeds, with no unregistered sales or changes in use - The Company issued and sold **10 million shares** of common stock in its IPO on June 27, 2025, at **$15.00 per share**, generating net proceeds of **$3.1 million** after expenses[415](index=415&type=chunk) - No **unregistered sales of equity securities** occurred, and there have been no material changes in the expected use of net proceeds from the IPO[414](index=414&type=chunk)[416](index=416&type=chunk) [Item 3. Defaults Upon Senior Securities](index=132&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities - No defaults upon senior securities[418](index=418&type=chunk) [Item 4. Mine Safety Disclosures](index=132&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[419](index=419&type=chunk) [Item 5. Other Information](index=133&type=section&id=Item%205.%20Other%20Information) This section reports no Form 8-K disclosures, no changes to board nominee procedures, and no Rule 10b5-1 trading activity - No disclosure in lieu of reporting on a Current Report on Form 8-K[420](index=420&type=chunk) - No material changes to the procedures by which security holders may recommend nominees to the board of directors[420](index=420&type=chunk) - None of the directors or officers adopted, modified, or terminated a "**Rule 10b5-1 trading arrangement**" or "**non-Rule 10b5-1 trading arrangement**" during the three months ended June 30, 2025[421](index=421&type=chunk) [Item 6. Exhibits](index=133&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, indentures, plans, and certifications - The exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, Specimen Stock Certificate, Indentures for **6.000% Senior Notes due 2026**, **9.500% Senior Notes due 2029**, and **8.250% Senior Notes due 2030**[422](index=422&type=chunk) - Also included are the 2025 Incentive Award Plan, forms of Restricted Stock Unit Grant Notice and Agreement, Stock Option Grant Notice and Agreement, Restricted Stock Agreement, and Indemnification Agreement[423](index=423&type=chunk) - Certifications by the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are filed/furnished[423](index=423&type=chunk) [Signatures](index=135&type=section&id=Signatures) The report was duly signed by David Burton, CEO, and Christo Realov, CFO, on August 14, 2025 - The report was signed by David Burton, CEO, and Christo Realov, CFO, on August 14, 2025[426](index=426&type=chunk)

[Jefferson Capital Q2 2025 Earnings Release](index=1&type=section&id=Jefferson%20Capital%20Q2%202025%20Earnings%20Release) [Q2 2025 Financial & Operational Highlights](index=1&type=section&id=Q2%202025%20Financial%20%26%20Operational%20Highlights) Jefferson Capital reported strong Q2 2025 results with significant year-over-year growth in revenue, collections, and profitability, achieving a record ERC and improved leverage Q2 2025 Key Performance Indicators (vs. Q2 2024) | Metric | Q2 2025 | Growth vs. Q2 2024 | | :--- | :--- | :--- | | Revenue | $152.7 Million | 47% | | Collections | $255.7 Million | 85% | | Estimated Remaining Collections (ERC) | $2.9 Billion | 31% | | Pre-tax Income | $62.0 Million | 82% | | Net Income | $47.7 Million | 48% | | Adjusted Pre-tax Income | $61.7 Million | 55% | | Cash Efficiency Ratio | 75.9% | +638 bps | | Leverage Ratio | 1.76x | Improved from 2.47x | - The company announced a Pro Forma Adjusted Diluted EPS of **$0.81** for the quarter[5](index=5&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted robust post-listing quarterly results, strong collections, record ERC, and a favorable investment environment - CEO David Burton emphasized the company's strong inaugural quarterly results following its successful share listing[2](index=2&type=chunk) - The company's Cash Efficiency Ratio of **75.9%** is considered a powerful competitive advantage, resulting from a relentless focus on optimizing the collections platform's performance and cost[2](index=2&type=chunk) - The investment environment is considered favorable due to elevated consumer credit delinquencies driving portfolio supply and low unemployment supporting liquidation rates[2](index=2&type=chunk) [Detailed Operational Performance](index=1&type=section&id=Detailed%20Operational%20Performance) Operational performance in Q2 2025 was driven by an 85.4% increase in collections and a 31.5% rise in ERC, despite a 10.8% decrease in portfolio deployments [Collections](index=1&type=section&id=Collections) Total collections surged by 85.4% to $255.7 million in Q2 2025, led by a 107.2% increase in the United States Collections by Geographic Area (Three Months Ended June 30, in Millions) | Region | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | United States | $202.4 | $97.7 | 107.2% | | Canada | $30.8 | $21.4 | 43.9% | | United Kingdom | $10.7 | $9.8 | 9.2% | | Latin America | $11.8 | $9.0 | 31.1% | | **Total Collections** | **$255.7** | **$137.9** | **85.4%** | - Collections in the United States for Q2 2025 included **$65.1 million** from the Conn's Portfolio acquired in Q4 2024[6](index=6&type=chunk) [Estimated Remaining Collections (ERC)](index=2&type=section&id=Estimated%20Remaining%20Collections%20(ERC)) Estimated Remaining Collections (ERC) reached a record **$2.9 billion** as of June 30, 2025, a 31.5% increase year-over-year ERC by Geographic Area (as of June 30, in Millions) | Region | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | United States | $2,101.7 | $1,616.4 | 30.0% | | Canada | $348.5 | $221.6 | 57.3% | | United Kingdom | $158.4 | $146.5 | 8.2% | | Latin America | $244.3 | $185.8 | 31.5% | | **Total ERC** | **$2,852.9** | **$2,170.2** | **31.5%** | [Deployments](index=2&type=section&id=Deployments) The company deployed **$125.3 million** for receivable portfolio acquisitions in Q2 2025, a 10.8% decrease from the prior year Deployments by Geographic Area (Three Months Ended June 30, in Millions) | Region | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | United States | $80.6 | $91.8 | (12.2)% | | Canada | $26.6 | $24.1 | 10.4% | | United Kingdom | $4.7 | $8.5 | (44.7)% | | Latin America | $13.4 | $16.1 | (16.8)% | | **Total Purchases** | **$125.3** | **$140.5** | **(10.8)%** | - As of quarter-end, the company had **$257.3 million** of deployments secured through forward flow agreements, with **$218.8 million** scheduled for the next twelve months[12](index=12&type=chunk) [Detailed Financial Performance](index=2&type=section&id=Detailed%20Financial%20Performance) The company's financial performance for Q2 2025 showed strong top-line growth with revenues increasing 47.1% to $152.7 million, while operating expenses rose 37.3% due to higher servicing costs [Revenues](index=2&type=section&id=Revenues) Total revenues for Q2 2025 increased by **47.1%** to **$152.7 million**, primarily driven by strong deployment growth in prior periods - Total revenues grew by **$48.9 million**, or **47.1%**, to **$152.7 million**, mainly due to strong deployment growth in prior periods[9](index=9&type=chunk) [Operating Expenses](index=2&type=section&id=Operating%20Expenses) Operating expenses in Q2 2025 rose by **37.3%** to **$65.5 million**, mainly due to a **$12.7 million** increase in servicing-related expenses - Total operating expenses increased by **$17.8 million (37.3%)** to **$65.5 million**, primarily due to a **$12.7 million** increase in servicing-related expenses tied to higher collections[10](index=10&type=chunk) [Leverage, Liquidity and Capital Resources](index=2&type=section&id=Leverage%2C%20Liquidity%20and%20Capital%20Resources) The company significantly improved its leverage ratio to 1.76x, maintained strong liquidity with an undrawn $825 million RCF, and pre-funded its 2026 maturity - The leverage ratio improved to **1.76x** as of June 30, 2025, compared to **2.47x** at June 30, 2024, due to strong growth in portfolio cash flow[13](index=13&type=chunk) - The company had significant liquidity with an undrawn **$825 million** Revolving Credit Facility and **$51.7 million** of unrestricted cash at quarter-end[13](index=13&type=chunk) - A **$500 million** unsecured debt offering in May 2025 was used to pay down the RCF and pre-fund the 2026 maturity[13](index=13&type=chunk) [Shareholder Returns](index=4&type=section&id=Shareholder%20Returns) The Board of Directors has declared a quarterly cash dividend, signaling a commitment to returning capital to shareholders - The Board of Directors declared a quarterly cash dividend of **$0.24 per share**, payable on September 4, 2025, to shareholders of record as of August 25, 2025[14](index=14&type=chunk) [Financial Statements (Appendix)](index=7&type=section&id=Financial%20Statements%20(Appendix)) The appendix contains the unaudited condensed consolidated financial statements as of June 30, 2025, and for the three and six months then ended, including Balance Sheets, Statements of Operations, and Cash Flows [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to **$1.77 billion**, driven by investments in receivables, while total liabilities and stockholder's equity also rose Selected Balance Sheet Data (in Thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $51,651 | $35,506 | | Investments in receivables, net | $1,589,801 | $1,497,748 | | **Total Assets** | **$1,767,618** | **$1,654,284** | | Notes payable, net | $1,181,470 | $1,194,726 | | **Total Liabilities** | **$1,356,810** | **$1,271,755** | | **Total stockholder's equity** | **$410,808** | **$382,529** | [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) For Q2 2025, total revenues reached **$152.7 million** and net income was **$47.7 million**, significantly higher than the prior year, with diluted EPS at **$16.76** Selected Statement of Operations Data (Three Months Ended June 30, in Thousands) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $152,708 | $103,804 | | Total Operating Expenses | $65,507 | $47,674 | | Income Before Income Taxes | $61,906 | $34,067 | | **Net Income** | **$47,651** | **$32,168** | | Diluted Earnings Per Share | $16.76 | N/A | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities was **$130.6 million**, while investing and financing activities resulted in net cash usage Cash Flow Summary (Six Months Ended June 30, in Thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $130,565 | $83,146 | | Net cash used in investing activities | ($66,938) | ($164,008) | | Net cash (used in) / provided by financing activities | ($43,109) | $73,692 | | **Net increase (decrease) in cash** | **$17,257** | **($7,055)** | [Non-GAAP Financial Measures (Appendix)](index=11&type=section&id=Non-GAAP%20Financial%20Measures%20(Appendix)) This section provides reconciliations for non-GAAP financial measures, including Cash Efficiency Ratio, Adjusted Pre-tax Income, Pro Forma EPS, and Leverage Ratio, to enhance comparability - The company uses non-GAAP measures like Leverage, Adjusted Pre-Tax Income, and Adjusted EPS to provide enhanced period-to-period comparability of its financial performance[17](index=17&type=chunk) [Reconciliation of Cash Efficiency Ratio](index=11&type=section&id=Reconciliation%20of%20Cash%20Efficiency%20Ratio) The Cash Efficiency Ratio, a non-GAAP measure, improved to **75.9%** in Q2 2025 from 69.5% in Q2 2024, reflecting adjustments to operating expenses Cash Efficiency Ratio Calculation (in Millions) | Component | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Cash Receipts (A) | $268.0 | $147.1 | | Adjusted Operating Expenses (B) | $64.7 | $44.9 | | **Cash Efficiency Ratio (A-B)/A** | **75.9%** | **69.5%** | [Reconciliation of Adjusted Pre-tax Income](index=11&type=section&id=Reconciliation%20of%20Adjusted%20Pre-tax%20Income) Adjusted Pre-tax Income for Q2 2025 was **$61.7 million**, a **55.4%** increase from Q2 2024, after adjusting GAAP pre-tax income for various items Adjusted Pre-tax Income Reconciliation (in Millions) | Component | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Pre-tax Income (GAAP) | $62.0 | $34.1 | | Adjustments | ($0.3) | $5.6 | | **Adjusted Pre-tax Income** | **$61.7** | **$39.7** | [Reconciliation of Pro Forma Earnings Per Share](index=12&type=section&id=Reconciliation%20of%20Pro%20Forma%20Earnings%20Per%20Share) The company reported a Pro Forma Adjusted Diluted EPS of **$0.81** for Q2 2025, adjusting weighted average shares for IPO comparability Pro Forma EPS Reconciliation (Q2 2025) | Metric | As Reported | Pro Forma Adjusted | | :--- | :--- | :--- | | Net Income (Thousands) | $47,651 | $47,651 | | Weighted Avg. Diluted Shares (Thousands) | 2,843 | 58,548 | | **Diluted EPS** | **$16.76** | **$0.81** | [Reconciliation of Leverage and Adjusted Cash EBITDA](index=13&type=section&id=Reconciliation%20of%20Leverage%20and%20Adjusted%20Cash%20EBITDA) The company's leverage ratio improved to **1.76x** as of June 30, 2025, calculated by dividing Net Debt of **$1.15 billion** by TTM Adjusted Cash EBITDA of **$654.0 million** Leverage Ratio Calculation (as of June 30, in Millions) | Component | 2025 | 2024 | | :--- | :--- | :--- | | Adjusted Cash EBITDA (A) | $654.0 | $343.5 | | Net Debt (B) | $1,148.3 | $849.7 | | **Leverage (B / A)** | **1.76x** | **2.47x** |

Financial Performance - Revenue increased by 47% to $152.7 million compared to $103.8 million in the second quarter of 2024 [9][5] - Collections grew by 85% to $255.7 million, with significant contributions from the United States, which saw a 107.2% increase [4][6] - Estimated Remaining Collections (ERC) rose by 31% to a record $2.9 billion [5][6] - Pre-tax income increased by 82% to $62.0 million, while net income rose by 48% to $47.7 million [5][10] Operational Efficiency - The company achieved a Cash Efficiency Ratio of 75.9%, an improvement of 638 basis points from the previous year [5][30] - Adjusted pre-tax income increased by 55% to $61.7 million [5][32] - Operating expenses rose by 37.3% to $65.5 million, primarily due to increased servicing expenses [10][5] Capital Management - The Board of Directors declared a quarterly cash dividend of $0.24 per share [12][14] - The company invested $125.3 million in acquiring receivable portfolios, a decrease from $140.5 million in the same quarter of 2024 [12][5] - Leverage improved to 1.76x from 2.47x year-over-year, reflecting strong portfolio cash flow growth [13][5] Market Position and Strategy - The investment environment is favorable, characterized by high consumer credit delinquencies and charge-offs, which support portfolio supply [2] - The company is well-positioned with low leverage and ample capital resources to capitalize on upcoming opportunities [2][5] - The CEO highlighted the strong collections growth and record ERC as indicators of the company's competitive advantage [2][5]

Company Overview - Jefferson Capital, Inc. is a leading analytically driven purchaser and manager of charged-off and insolvency consumer accounts, with operations in the United States, Canada, the United Kingdom, and Latin America [3] - The company was founded in 2002 and has a growing client base that includes Fortune 500 creditors, banks, fintech origination platforms, telecommunications providers, credit card issuers, and auto finance companies [3] Financial Results Announcement - Jefferson Capital will release its financial results for the second quarter of 2025 after the market close on Thursday, August 14 [1] - A webcast to discuss the company's results will take place at 5:00 pm Eastern Time on the same day [1][2] Access to Information - The live webcast and archived replay can be accessed in the investor relations section of the company's website [2]