[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Unaudited consolidated financial statements for Q2 and H1 2025, including balance sheets, income, equity, cash flows, and detailed notes [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited consolidated financial statements for Q2 and H1 2025, with detailed notes on key financial items and accounting policies [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Presents the company's financial position, including assets, liabilities, and equity, as of June 30, 2025, and December 31, 2024 Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change (%) | | :-------------------------- | :------------ | :---------------- | :--------- | | Total assets | $5,434,767 | $4,931,155 | 10.2% | | Finance receivables, net | $4,562,576 | $4,140,742 | 10.2% | | Goodwill | $439,449 | $396,357 | 10.9% | | Total liabilities | $4,038,156 | $3,737,548 | 8.0% | | Borrowings | $3,614,208 | $3,326,621 | 8.6% | | Total equity | $1,396,611 | $1,193,607 | 17.0% | [Consolidated Income Statements](index=5&type=section&id=Consolidated%20Income%20Statements) Reports the company's financial performance, including revenues, expenses, and net income, for the three and six months ended June 30, 2025 and 2024 Consolidated Income Statement Highlights (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (%) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (%) | | :------------------------------------ | :------------------------------- | :------------------------------- | :--------- | :----------------------------- | :----------------------------- | :--------- | | Total revenues | $287,688 | $284,229 | 1.2% | $557,307 | $539,815 | 3.2% | | Income from operations | $85,111 | $89,222 | (4.6)% | $159,688 | $155,618 | 2.6% | | Income before income taxes | $61,128 | $33,816 | 80.8% | $74,504 | $47,955 | 55.4% | | Net income attributable to PRA Group, Inc. | $42,374 | $21,516 | 96.9% | $46,033 | $24,991 | 84.2% | | Diluted EPS | $1.08 | $0.54 | 100.0% | $1.16 | $0.63 | 84.1% | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Details net income and other comprehensive income components, such as foreign currency translation adjustments, for Q2 and H1 2025 and 2024 Consolidated Statements of Comprehensive Income Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $45,713 | $25,114 | $54,777 | $36,867 | | Other comprehensive income/(loss) | $83,892 | $(15,486) | $167,067 | $(60,823) | | Total comprehensive income/(loss) | $129,605 | $9,628 | $221,844 | $(23,956) | | Comprehensive income/(loss) attributable to PRA Group, Inc. | $123,553 | $12,725 | $205,693 | $(26,918) | [Consolidated Statements of Changes in Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) Outlines changes in total equity, including net income, foreign currency adjustments, and stock repurchases, for the six months ended June 30, 2025 Key Changes in Equity (Six Months Ended June 30, 2025, in thousands) | Item | Amount | | :------------------------------------ | :------- | | Balance as of December 31, 2024 | $1,193,607 | | Net income attributable to PRA Group, Inc. | $46,033 | | Foreign currency translation adjustments | $175,339 | | Cash flow hedges | $(8,239) | | Repurchase and cancellation of common stock | $(10,000) | | Balance as of June 30, 2025 | $1,396,611 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | Change | | :------------------------------------------ | :--------- | :--------- | :--------- | | Net cash used in operating activities | $(65,490) | $(102,488) | $36,998 | | Net cash used in investing activities | $(33,408) | $(96,195) | $62,787 | | Net cash provided by financing activities | $105,900 | $203,826 | $(97,926) | | Net increase in cash, cash equivalents and restricted cash | $27,887 | $6,225 | $21,662 | | Cash, cash equivalents and restricted cash, end of period | $135,318 | $119,917 | $15,401 | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures for the consolidated financial statements, covering accounting policies and specific financial items [Note 1. Organization and Business](index=10&type=section&id=Note%201.%20Organization%20and%20Business) Describes PRA Group's global financial services business, focusing on nonperforming loan portfolios and class action claims recoveries - PRA Group, Inc. is a global financial services company primarily focused on the purchase, collection, and management of nonperforming loan portfolios across the Americas, Europe, and Australia. It also provides fee-based services for class action claims recoveries in the U.S[23](index=23&type=chunk) [Note 2. Finance Receivables, net](index=10&type=section&id=Note%202.%20Finance%20Receivables,%20net) Details the composition and changes in finance receivables, net, including expected recoveries and foreign currency adjustments Finance Receivables, net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Balance as of end of period | $4,562,576 | $4,140,742 | Changes in Finance Receivables, net (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | | :---------------------------------------------------- | :--------- | :--------- | | Balance as of beginning of period | $4,140,742 | $3,656,598 | | Initial negative allowance for expected recoveries on current period purchases | $638,207 | $625,186 | | Recoveries collected and applied to Finance receivables, net | $(554,715) | $(520,940) | | Changes in expected recoveries | $61,214 | $124,994 | | Foreign currency translation adjustment | $277,128 | $(65,652) | | Balance as of end of period | $4,562,576 | $3,820,186 | - Changes in expected recoveries for the six months ended June 30, 2025, were **$61.2 million**, primarily due to **$56.8 million** in cash collections overperformance in Europe and Brazil, partially offset by decreases to collections forecasts on the 2023 U.S. Core pool[35](index=35&type=chunk) [Note 3. Investments](index=13&type=section&id=Note%203.%20Investments) Outlines the company's investment portfolio, including debt securities, private equity funds, and significant investment sales Investments (in thousands) | Type | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Debt securities | $64,774 | $55,762 | | Private equity funds | $1,726 | $1,848 | | Equity method investment | $— | $8,694 | | Total investments | $66,500 | $66,304 | - The Company sold its **11.7%** interest in RCB Investimentos S.A. in April 2025, recording a **$38.4 million** pretax gain. This sale does not affect existing or future portfolio investments and operations in Brazil[39](index=39&type=chunk) [Note 4. Goodwill](index=13&type=section&id=Note%204.%20Goodwill) Reports the balance and changes in goodwill, primarily due to foreign currency translation, and discusses impairment risk Goodwill (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Balance as of end of period | $439,449 | $396,357 | Changes in Goodwill (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | | :-------------------------- | :--------- | :--------- | | Balance as of beginning of period | $396,357 | $431,564 | | Foreign currency translation | $43,092 | $(15,918) | | Balance as of end of period | $439,449 | $415,646 | - Goodwill increased by **$43.1 million** due to foreign currency translation. The company determined that an interim impairment test was not required as of June 30, 2025, but noted that goodwill in the Debt Buying and Collection (DBC) reporting unit may be at-risk for future impairment if market indicators or cash flow projections deteriorate[40](index=40&type=chunk) [Note 5. Borrowings](index=14&type=section&id=Note%205.%20Borrowings) Details the company's various borrowing facilities, including revolving credit and senior notes, and compliance with covenants Borrowings (in thousands) | Type | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | North American revolving credit facility | $667,875 | $519,519 | | North American term loan | $465,111 | $470,111 | | United Kingdom revolving credit facility | $479,282 | $494,185 | | European revolving credit facility | $713,529 | $555,726 | | 2028 senior notes | $398,000 | $398,000 | | 2029 senior notes | $350,000 | $350,000 | | 2030 senior notes | $550,000 | $550,000 | | Total borrowings | **$3,614,208** | $3,326,621 | - Total borrowings increased by **$287.6 million** to **$3.6 billion** as of June 30, 2025, primarily due to incremental net borrowings under North American and European revolving credit facilities. The Company was in compliance with all financing arrangement covenants[41](index=41&type=chunk)[44](index=44&type=chunk) [Note 6. Derivatives](index=14&type=section&id=Note%206.%20Derivatives) Presents the fair value and notional amounts of interest rate swaps and foreign exchange contracts used for hedging Fair Value of Derivatives (in thousands) | Type | Balance Sheet Location | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :-------------------------- | :--------------------- | :----------------------- | :----------------------- | | Interest rate swaps (assets) | Other assets | $2,508 | $8,514 | | Interest rate swaps (liabilities) | Other liabilities | $10,904 | $4,797 | | Foreign exchange contracts (assets) | Other assets | $256 | $2,209 | | Foreign exchange contracts (liabilities) | Other liabilities | $3,167 | $166 | - The notional amount of outstanding interest rate swaps increased to **$908.8 million** as of June 30, 2025, from **$800.7 million** at December 31, 2024. The notional amount of outstanding foreign exchange contracts increased to **$477.6 million** from **$376.4 million** over the same period[46](index=46&type=chunk)[47](index=47&type=chunk) [Note 7. Fair Value](index=15&type=section&id=Note%207.%20Fair%20Value) Discloses the fair value measurements for financial instruments, categorized by valuation levels, as of June 30, 2025 Financial Instruments Carried at Fair Value (June 30, 2025, in thousands) | Asset/Liability | Level 1 | Level 2 | Level 3 | Total | | :-------------------- | :------ | :------ | :------ | :------ | | Government securities | $64,774 | $— | $— | $64,774 | | Derivatives (assets) | $— | $2,764 | $— | $2,764 | | Derivatives (liabilities) | $— | $14,071 | $— | $14,071 | Financial Instruments Not Carried at Fair Value (June 30, 2025, in thousands) | Asset/Liability | Carrying Value | Estimated Fair Value (Level 3) | | :-------------------------- | :------------- | :----------------------------- | | Finance receivables, net | $4,562,576 | $4,338,291 | [Note 8. Accumulated Other Comprehensive Loss](index=17&type=section&id=Note%208.%20Accumulated%20Other%20Comprehensive%20Loss) Details changes in accumulated other comprehensive loss, including debt securities, cash flow hedges, and currency translation adjustments Changes in Accumulated Other Comprehensive Loss (Six Months Ended June 30, 2025, in thousands) | Component | Balance at Beginning of Period | Other Comprehensive Gain/(Loss) before Reclassifications | Reclassifications, net | Net Current Period Other Comprehensive Gain/(Loss) | Balance at End of Period | | :-------------------------- | :----------------------------- | :------------------------------------------------------- | :--------------------- | :------------------------------------------------- | :----------------------- | | Debt Securities Available-for-sale | $205 | $(33) | $— | $(33) | $172 | | Cash Flow Hedges | $2,111 | $(4,010) | $(4,229) | $(8,239) | $(6,128) | | Currency Translation Adjustments | $(445,710) | $167,932 | $— | $167,932 | $(277,778) | | Total Accumulated Other Comp. Loss | $(443,394) | $163,889 | $(4,229) | $159,660 | $(283,734) | [Note 9. Earnings per Share](index=18&type=section&id=Note%209.%20Earnings%20per%20Share) Provides basic and diluted earnings per share calculations and information on common stock repurchases Earnings Per Share (Six Months Ended June 30, in thousands, except per share amounts) | Metric | 2025 | 2024 | | :------------------------------------------ | :--------- | :--------- | | Net income attributable to PRA Group, Inc. | $46,033 | $24,991 | | Basic EPS | $1.17 | $0.64 | | Diluted EPS | $1.16 | $0.63 | | Weighted average number of shares outstanding (Diluted) | 39,536 | 39,497 | - During Q2 2025, the Company repurchased **660,395** shares of common stock for approximately **$10.0 million** at an average price of **$15.14** per share. As of June 30, 2025, **$57.7 million** remained authorized under the share repurchase program[56](index=56&type=chunk) [Note 10. Income Taxes](index=18&type=section&id=Note%2010.%20Income%20Taxes) Details income tax expense and effective tax rates, explaining changes due to jurisdictional income mix and discrete items Income Tax Expense and Effective Tax Rate (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income before income taxes | $61,128 | $33,816 | $74,504 | $47,955 | | Income tax expense | $15,415 | $8,702 | $19,727 | $11,088 | | Effective tax rate | **25.2%** | **25.7%** | **26.5%** | **23.1%** | - The effective tax rate changes were primarily due to shifts in the mix of income from different taxing jurisdictions and the timing/amount of discrete items. The Company is evaluating the impact of the recently signed One Big Beautiful Bill Act in the U.S[57](index=57&type=chunk)[58](index=58&type=chunk) [Note 11. Commitments and Contingencies](index=18&type=section&id=Note%2011.%20Commitments%20and%20Contingencies) Discusses contractual purchase obligations and confirms no material developments in legal proceedings as of June 30, 2025 - The estimated minimum contractual purchase obligation under forward flow agreements was not significant as of June 30, 2025, as most agreements lack minimums and include early termination provisions[59](index=59&type=chunk)[60](index=60&type=chunk) - There were no material developments in previously disclosed legal proceedings as of June 30, 2025[61](index=61&type=chunk) [Note 12. Segments](index=19&type=section&id=Note%2012.%20Segments) Identifies the company's single reportable segment, Accounts Receivable Management, and its components - The Company operates as a single reportable segment, Accounts Receivable Management (ARM), which includes Debt Buying and Collection (DBC) and Claims Compensation Bureau, LLC (CCB). The CEO assesses performance based on consolidated GAAP results[62](index=62&type=chunk) [Note 13. Recently Issued Accounting Standards](index=19&type=section&id=Note%2013.%20Recently%20Issued%20Accounting%20Standards) Outlines recently issued FASB accounting standards and the company's evaluation of their potential disclosure impact - The FASB issued ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation), which will require enhanced annual disclosures. The Company is evaluating the impact of these ASUs on its disclosures[66](index=66&type=chunk)[67](index=67&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's analysis of financial condition and results for Q2 and H1 2025, including revenues, expenses, balance sheet, non-GAAP measures, and performance data [Executive Overview](index=23&type=section&id=Executive%20Overview) Summarizes PRA Group's business, strategic focus, and key financial highlights for Q2 and H1 2025, including portfolio purchases and cash collections - PRA Group's primary business is purchasing, collecting, and managing nonperforming loan portfolios globally. The company focuses on optimizing investments, operational execution, and managing expenses under its new CEO[74](index=74&type=chunk)[75](index=75&type=chunk) Financial Highlights (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :------------------------------------ | :-------- | :-------- | :--------- | | Portfolio purchases | $346.5M | $379.4M | (8.7)% | | Cash collections | $536.3M | $473.9M | 13.2% | | Net income attributable to PRA | $42.4M | $21.5M | 96.9% | | Diluted earnings per share | $1.08 | $0.54 | 100.0% | Financial Highlights (YTD June 30, 2025 vs YTD June 30, 2024) | Metric | YTD 2025 | YTD 2024 | Change (%) | | :------------------------------------ | :--------- | :--------- | :--------- | | Portfolio purchases | $638.2M | $625.2M | 2.1% | | Cash collections | $1,033.7M | $923.4M | 11.9% | | Net income attributable to PRA | $46.0M | $25.0M | 84.2% | | Diluted earnings per share | $1.16 | $0.63 | 84.1% | - Estimated remaining collections (ERC) increased by **11.2%** to **$8.3 billion** as of June 30, 2025, compared to December 31, 2024[76](index=76&type=chunk) - The Company completed the sale of its **11.7%** interest in RCB Investimentos S.A. for a pre-tax gain of **$38.4 million**, with proceeds used for portfolio purchases and general corporate needs[77](index=77&type=chunk) [Summary of Selected Financial Data](index=24&type=section&id=Summary%20of%20Selected%20Financial%20Data) Presents key financial metrics for Q2 and H1 2025, including revenues, expenses, net income, EPS, portfolio purchases, and cash collections Summary of Selected Financial Data (Q2 2025 vs Q2 2024, in thousands, except per share/ratio) | Metric | 2025 | 2024 | % Change | | :------------------------------------ | :--------- | :--------- | :--------- | | Portfolio income | $250,934 | $209,290 | 19.9% | | Changes in expected recoveries | $33,292 | $73,320 | (54.6)% | | Total revenues | $287,688 | $284,229 | 1.2% | | Total operating expenses | $202,577 | $195,007 | 3.9% | | Interest expense, net | $62,361 | $55,353 | 12.7% | | Net income attributable to PRA Group, Inc. | $42,374 | $21,516 | 96.9% | | Diluted earnings per share | $1.08 | $0.54 | 100.0% | | Portfolio purchases | $346,505 | $379,369 | (8.7)% | | Cash collections | $536,288 | $473,882 | 13.2% | | Estimated remaining collections (period-end) | $8,294,310 | $6,802,246 | 21.9% | | Total stockholders' equity - PRA Group, Inc. | $1,336,925 | $1,145,463 | 16.7% | | Credit facility availability (Total) | $840,670 | $1,448,541 | (42.0)% | | Full-time equivalents | 2,897 | 3,158 | (8.3)% | [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Analyzes the company's operational performance, detailing trends in portfolio purchases, cash collections, revenues, and expenses for Q2 and H1 2025 [Portfolio purchases](index=25&type=section&id=Portfolio%20purchases) Examines portfolio purchase trends by region for Q2 and H1 2025, highlighting changes in Americas and Australia versus Europe Portfolio Purchases (in thousands) | Region | Q2 2025 | Q2 2024 | $ Change | % Change | YTD 2025 | YTD 2024 | $ Change | % Change | | :---------------------- | :-------- | :-------- | :--------- | :--------- | :--------- | :--------- | :--------- | :--------- | | Americas and Australia | $199,283 | $225,388 | $(26,105) | (11.6)% | $377,739 | $422,204 | $(44,465) | (10.5)% | | Europe | $147,222 | $153,981 | $(6,759) | (4.4)% | $260,468 | $202,982 | $57,486 | 28.3% | | Total | $346,505 | $379,369 | $(32,864) | (8.7)% | $638,207 | $625,186 | $13,021 | 2.1% | - Total portfolio purchases decreased by **8.7%** in Q2 2025 compared to Q2 2024, driven by decreases in both Americas and Australia and Europe. However, year-to-date purchases increased by **2.1%** due to a significant increase in Europe, partially offset by a decrease in Americas and Australia[83](index=83&type=chunk)[84](index=84&type=chunk) [Cash collections](index=25&type=section&id=Cash%20collections) Analyzes cash collection performance by region for Q2 and H1 2025, noting drivers like U.S. and Europe Core collections Cash Collections (in thousands) | Region | Q2 2025 | Q2 2024 | $ Change | % Change | YTD 2025 | YTD 2024 | $ Change | % Change | | :---------------------- | :-------- | :-------- | :--------- | :--------- | :--------- | :--------- | :--------- | :--------- | | Americas and Australia | $326,027 | $290,799 | $35,228 | 12.1% | $637,887 | $572,868 | $65,019 | 11.3% | | Europe | $210,261 | $183,083 | $27,178 | 14.8% | $395,837 | $350,532 | $45,305 | 12.9% | | Total | $536,288 | $473,882 | $62,406 | 13.2% | $1,033,724 | $923,400 | $110,324 | 11.9% | - Total cash collections increased by **13.2%** in Q2 2025 and **11.9%** year-to-date, primarily driven by higher U.S. and Europe Core cash collections due to increased recent purchasing levels. This was partially offset by a decrease in Brazil due to foreign exchange rate variations and lower recent purchasing[85](index=85&type=chunk)[86](index=86&type=chunk) [Portfolio revenue](index=26&type=section&id=Portfolio%20revenue) Details portfolio revenue components, including portfolio income and changes in expected recoveries, for Q2 and H1 2025 Portfolio Revenue (in thousands) | Metric | Q2 2025 | Q2 2024 | $ Change | % Change | YTD 2025 | YTD 2024 | $ Change | % Change | | :-------------------------- | :-------- | :-------- | :--------- | :--------- | :--------- | :--------- | :--------- | :--------- | | Portfolio income | $250,934 | $209,290 | $41,644 | 19.9% | $491,892 | $411,346 | $80,546 | 19.6% | | Changes in expected recoveries | $33,292 | $73,320 | $(40,028) | (54.6)% | $61,214 | $124,994 | $(63,780) | (51.0)% | | Total portfolio revenue | $284,226 | $282,610 | 1.616 | 0.6% | $553,106 | $536,340 | $16,766 | 3.1% | - Total portfolio revenue increased slightly by **0.6%** in Q2 2025 and **3.1%** year-to-date. Portfolio income saw strong growth (**19.9%** in Q2, **19.6%** YTD) due to higher purchasing and improved pricing in the U.S. since 2023, but this was largely offset by a significant decrease in changes in expected recoveries[88](index=88&type=chunk)[89](index=89&type=chunk) [Operating expenses](index=26&type=section&id=Operating%20expenses) Breaks down operating expenses by category for Q2 and H1 2025, identifying key drivers like legal costs and agency fees Operating Expenses (in thousands) | Expense Category | Q2 2025 | Q2 2024 | $ Change | % Change | YTD 2025 | YTD 2024 | $ Change | % Change | | :------------------------------------ | :-------- | :-------- | :--------- | :--------- | :--------- | :--------- | :--------- | :--------- | | Compensation and benefits | $75,724 | $74,241 | $1,483 | 2.0% | $149,047 | $147,838 | $1,209 | 0.8% | | Legal collection costs | $37,583 | $35,274 | $2,309 | 6.5% | $70,977 | $61,965 | $9,012 | 14.5% | | Legal collection fees | $15,625 | $13,762 | $1,863 | 13.5% | $30,855 | $25,874 | $4,981 | 19.3% | | Agency fees | $22,688 | $21,008 | $1,680 | 8.0% | $44,056 | $40,731 | $3,325 | 8.2% | | Professional and outside services | $21,071 | $18,124 | $2,947 | 16.3% | $42,174 | $43,174 | $(1,000) | (2.3)% | | Communication | $9,417 | $11,577 | $(2,160) | (18.7)% | $19,894 | $24,155 | $(4,261) | (17.6)% | | Total operating expenses | $202,577 | $195,007 | $7,570 | 3.9% | $397,619 | $384,197 | $13,422 | 3.5% | - Total operating expenses increased by **3.9%** in Q2 2025 and **3.5%** year-to-date. Key drivers include higher legal collection costs and fees due to increased U.S. legal activity, increased agency fees, and higher professional services expenses from call center offshoring. Communication expenses decreased due to lower-cost strategies in the U.S[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) [Interest expense, net](index=27&type=section&id=Interest%20expense,%20net) Analyzes net interest expense for Q2 and H1 2025, attributing changes primarily to higher average debt balances Interest Expense, Net (in thousands) | Metric | Q2 2025 | Q2 2024 | $ Change | % Change | YTD 2025 | YTD 2024 | $ Change | % Change | | :-------------------------- | :-------- | :-------- | :--------- | :--------- | :--------- | :--------- | :--------- | :--------- | | Interest on revolving credit facilities and term loan, and unused line fees | $38,534 | $33,180 | $5,354 | 16.1% | $75,116 | $67,135 | $7,981 | 11.9% | | Interest on senior notes | $24,911 | $22,246 | $2,665 | 12.0% | $49,823 | $40,448 | $9,375 | 23.2% | | Interest expense, net | $62,361 | $55,353 | $7,008 | 12.7% | $123,331 | $107,631 | $15,700 | 14.6% | - Net interest expense increased by **12.7%** in Q2 2025 and **14.6%** year-to-date, primarily due to a higher average debt balance supporting increased portfolio investments[97](index=97&type=chunk) [Income tax expense](index=27&type=section&id=Income%20tax%20expense) Details income tax expense and effective tax rates for Q2 and H1 2025, explaining changes due to jurisdictional income mix Income Tax Expense (in thousands) | Metric | Q2 2025 | Q2 2024 | $ Change | % Change | YTD 2025 | YTD 2024 | $ Change | % Change | | :-------------------- | :-------- | :-------- | :--------- | :--------- | :--------- | :--------- | :--------- | :--------- | | Income tax expense | $15,415 | $8,702 | $6,713 | 77.1% | $19,727 | $11,088 | $8,639 | 77.9% | | Effective tax rate | **25.2%** | **25.7%** | | | **26.5%** | **23.1%** | | | - Income tax expense increased significantly (**77.1%** in Q2, **77.9%** YTD) due to changes in the mix of income from different taxing jurisdictions and the timing/amount of discrete items[98](index=98&type=chunk) [Balance sheet](index=28&type=section&id=Balance%20sheet) Reviews key balance sheet items, including finance receivables, goodwill, and borrowings, as of June 30, 2025 [Finance receivables, net](index=28&type=section&id=Finance%20receivables,%20net) Analyzes the increase in finance receivables, net, driven by portfolio acquisitions and foreign currency adjustments - Finance receivables, net, increased by **$421.8 million** (**10.2%**) to **$4.6 billion** as of June 30, 2025, primarily driven by portfolio acquisitions (**$638.2 million**) and foreign currency translation adjustments (**$277.1 million**), partially offset by recoveries collected (**$554.7 million**)[99](index=99&type=chunk) [Goodwill](index=28&type=section&id=Goodwill) Discusses the increase in goodwill due to foreign currency translation and potential future impairment risks - Goodwill increased by **$43.1 million** (**10.9%**) to **$439.4 million** as of June 30, 2025, due to foreign currency translation adjustments. The company noted that goodwill in its Debt Buying and Collection (DBC) reporting unit may be at-risk for future impairment[100](index=100&type=chunk) [Borrowings](index=28&type=section&id=Borrowings) Details the increase in borrowings, primarily from revolving credit facilities, as of June 30, 2025 - Borrowings increased by **$287.6 million** (**8.6%**) to **$3.6 billion** as of June 30, 2025, mainly due to incremental net borrowings under North American and European revolving credit facilities[101](index=101&type=chunk) [Non-GAAP Financial Measures](index=28&type=section&id=Non-GAAP%20Financial%20Measures) Presents and reconciles non-GAAP financial measures, including Adjusted EBITDA and Adjusted Return on Average Tangible Equity [Adjusted EBITDA](index=28&type=section&id=Adjusted%20EBITDA) Explains Adjusted EBITDA as a non-GAAP measure for evaluating operational and financial performance - Adjusted EBITDA is a non-GAAP measure used by management to evaluate operational and financial performance, excluding items whose fluctuations do not necessarily correspond to business operations[102](index=102&type=chunk) Adjusted EBITDA Reconciliation (Twelve Months Ended, in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------------------------------------------- | :------------ | :---------------- | | Net income attributable to PRA Group, Inc. | $91,643 | $70,601 | | Adjustments (Income tax, FX, Interest, Depreciation, etc.) | $1,148,449 | $1,066,951 | | Adjusted EBITDA | $1,240,092 | $1,137,552 | [Return on average tangible equity and adjusted return on average tangible equity](index=30&type=section&id=Return%20on%20average%20tangible%20equity%20and%20adjusted%20return%20on%20average%20tangible%20equity) Defines ROATE and Adjusted ROATE as non-GAAP measures for monitoring operating performance relative to equity - Return on average tangible equity (ROATE) and Adjusted ROATE are non-GAAP measures used to monitor operating performance relative to equity, with Adjusted ROATE standardizing performance by excluding non-recurring transactions[106](index=106&type=chunk)[107](index=107&type=chunk) ROATE and Adjusted ROATE (Six Months Ended June 30, in thousands, except ratio data) | Metric | YTD 2025 | YTD 2024 | | :------------------------------------------ | :--------- | :--------- | | Average tangible equity | $810,021 | $725,947 | | Net income attributable to PRA Group, Inc. | $46,033 | $24,991 | | Return on average tangible equity (ROATE) | **11.4%** | **6.9%** | | Adjusted net income attributable to PRA Group, Inc. | $16,347 | $24,991 | | Adjusted ROATE | **4.0%** | **6.9%** | [Supplemental Performance Data](index=32&type=section&id=Supplemental%20Performance%20Data) Provides additional performance data, including details on purchasing, estimated remaining collections (ERC), and cash collections [Purchasing](index=32&type=section&id=Purchasing) Explains the company's classification of purchased nonperforming loan portfolios and factors influencing purchase price multiples - The Company segregates purchased nonperforming loan portfolios into Core (non-insolvent) or Insolvency (bankruptcy/similar proceedings) based on account status at acquisition, and further by geographical regions and year of acquisition[114](index=114&type=chunk) - Purchase price multiple represents estimated total cash collections over the original purchase price, influenced by factors like pricing competition, supply levels, account age, and expected collection costs[115](index=115&type=chunk) [ERC and TEC](index=32&type=section&id=ERC%20and%20TEC) Defines Estimated Remaining Collections (ERC) and Total Estimated Collections (TEC) and their updates based on collection experience - Estimated Remaining Collections (ERC) is the sum of all future projected cash collections, while Total Estimated Collections (TEC) includes actual cash collections plus ERC. These are updated based on collection experience and cash forecasting[116](index=116&type=chunk)[159](index=159&type=chunk) [Estimated remaining collections](index=33&type=section&id=Estimated%20remaining%20collections) Presents a detailed breakdown of Estimated Remaining Collections (ERC) by geography and portfolio type as of June 30, 2025 Total Estimated Remaining Collections (ERC) by Geography and Portfolio (as of June 30, 2025, in thousands) | Region | Core | Insolvency | Total | | :---------------------- | :--------- | :--------- | :--------- | | Americas and Australia | $3,811,600 | $239,678 | $4,051,278 | | Europe | $4,062,305 | $180,727 | $4,243,032 | | Total ERC | | | $8,294,310 | [Cash collections](index=33&type=section&id=Cash%20collections) Provides a detailed breakdown of cash collections by geography and portfolio type for the six months ended June 30, 2025 Cash Collections by Geography and Portfolio (YTD June 30, 2025, in thousands) | Region | Call center and other | Legal | Core Total | Insolvency | Total | | :---------------------- | :-------------------- | :------ | :--------- | :--------- | :--------- | | Americas and Australia | $326,990 | $262,868 | $589,858 | $48,029 | $637,887 | | Europe | $211,289 | $138,734 | $350,023 | $45,814 | $395,837 | | Total Company | $538,279 | $401,602 | $939,881 | $93,843 | $1,033,724 | [Purchase Price Multiples](index=34&type=section&id=Purchase%20Price%20Multiples) Details current and original purchase price multiples by portfolio type, reflecting estimated total cash collections over purchase price Purchase Price Multiples (as of June 30, 2025) | Portfolio Type | Current Purchase Price Multiple | Original Purchase Price Multiple | | :-------------------------- | :------------------------------ | :------------------------------- | | Americas and Australia Core | **234%** | **202%** | | Americas Insolvency | **169%** | **135%** | | Europe Core | **199%** | **165%** | | Europe Insolvency | **145%** | **133%** | | Total PRA Group | **211%** | **179%** | [Portfolio Financial Information](index=36&type=section&id=Portfolio%20Financial%20Information) Presents comprehensive portfolio financial data, including cash collections, income, and net finance receivables, by purchase period Portfolio Financial Information (YTD June 30, 2025, in thousands) | Purchase Period | Cash Collections | Portfolio Income | Changes in Expected Recoveries | Total Portfolio Revenue | Net Finance Receivables (as of June 30, 2025) | | :-------------------------- | :--------------- | :--------------- | :----------------------------- | :---------------------- | :-------------------------------------------- | | Americas and Australia Core | $589,858 | $320,037 | $(1,307) | $318,730 | $1,971,534 | | Americas Insolvency | $48,029 | $13,780 | $1,254 | $15,034 | $183,844 | | Europe Core | $350,023 | $148,866 | $52,974 | $201,840 | $2,262,735 | | Europe Insolvency | $45,814 | $9,209 | $8,293 | $17,502 | $144,463 | | Total PRA Group | $1,033,724 | $491,892 | $61,214 | $553,106 | $4,562,576 | [Cash Collections by Year, By Year of Purchase](index=38&type=section&id=Cash%20Collections%20by%20Year,%20By%20Year%20of%20Purchase) Illustrates historical cash collection patterns by year of purchase and collection, showing long-term performance across vintages and geographies - The table provides a detailed breakdown of historical cash collections by the year of purchase and the year of collection, illustrating the long-term collection patterns across different portfolio vintages and geographies[131](index=131&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Outlines the company's primary market risks, including interest rate and foreign currency exposure, confirming no material changes since December 31, 2024 - As of June 30, 2025, **58%** of the Company's total debt (**$3.6 billion**) was either fixed rate or converted to a fixed rate through interest rate hedges[161](index=161&type=chunk) - Revenues from operations outside the U.S. were **$150.2 million** during Q2 2025, indicating significant foreign currency exposure[162](index=162&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Details the evaluation of disclosure controls and procedures, confirming their effectiveness and no material changes in internal control over financial reporting for Q2 2025 - The principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[163](index=163&type=chunk) - There were no material changes in the Company's internal control over financial reporting during the quarter ended June 30, 2025[164](index=164&type=chunk) [PART II. OTHER INFORMATION](index=46&type=section&id=PART%20II.%20OTHER%20INFORMATION) Presents other required information, including legal proceedings, risk factors, equity sales, and exhibits, for the reporting period [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) Refers to Note 11 for legal proceedings information, confirming no material developments as of June 30, 2025 - No material developments in legal proceedings were reported as of June 30, 2025[166](index=166&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) States no material changes to the company's risk factors since those disclosed in the 2024 Form 10-K - No material changes in risk factors were reported from those disclosed in the 2024 Form 10-K[167](index=167&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details the company's share repurchase program, including Q2 2025 repurchases and remaining authorization Common Stock Repurchases (Q2 2025, in thousands, except per share) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Maximum Remaining Purchase Price for Share Repurchases Under the Program | | :------------------------------ | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------- | | May 1, 2025 to May 31, 2025 | 660,395 | $15.14 | $57,742 | | Total | 660,395 | $15.14 | $57,742 | - The Board of Directors authorized a **$150.0 million** share repurchase program in February 2022, with **$57.7 million** remaining as of June 30, 2025[168](index=168&type=chunk)[170](index=170&type=chunk) [Item 3. Defaults Upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Indicates this item is not applicable, signifying no defaults upon senior securities - This item is not applicable[172](index=172&type=chunk) [Item 4. Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Indicates this item is not applicable, signifying no mine safety disclosures - This item is not applicable[173](index=173&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) Confirms no Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during Q2 2025 - None of the Company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or non-rule 10b5-1 trading arrangement during the second quarter of 2025[174](index=174&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) Provides a comprehensive list of all exhibits filed with the Form 10-Q, including corporate documents, indentures, and certifications - The exhibits include corporate governance documents (Certificate of Incorporation, By-Laws), common stock certificates, indentures for senior notes, and various certifications (CEO, CFO, Sarbanes Oxley Act)[175](index=175&type=chunk)[176](index=176&type=chunk) [Signatures](index=48&type=section&id=Signatures) Contains official signatures of PRA Group, Inc.'s CEO and CFO, certifying the filing of the report - The report is signed by Martin Sjolund, President and Chief Executive Officer, and Rakesh Sehgal, Executive Vice President and Chief Financial Officer, on August 6, 2025[180](index=180&type=chunk)

Core Insights - PRA Group reported a Q2 2025 GAAP EPS of $1.08, significantly exceeding the consensus estimate of $0.44, largely due to a nonrecurring gain from the sale of its Brazilian servicing affiliate [1][5] - Revenue for Q2 2025 reached $284.2 million, surpassing analyst expectations of $279.3 million, with net income attributable to PRA Group at $42.4 million, reflecting a year-over-year increase of 96.9% [1][2] Financial Performance - Total cash collections increased by 13.2% year-over-year to $536.3 million, with European collections rising by 18.5% to $185.7 million and Americas and Australia collections up by 14.4% to $301.7 million [6][2] - Portfolio income grew by 19.9% to $250.9 million, while adjusted EBITDA for the last twelve months reached $1.24 billion, up 16.4% [7][2] - Operating expenses rose by 3.9% to $202.6 million, primarily due to investments in call center offshoring and legal collection capacity [10] Business Strategy - PRA Group focuses on acquiring nonperforming loan portfolios at a discount and aims to recover debts through various collection channels, including digital tools and legal processes [3][4] - The company is adopting a more selective approach to portfolio purchases, targeting $1.2 billion for FY2025, down from $1.4 billion in FY2024 [8][11] - Management emphasizes the importance of collection efficiency and plans to align U.S. operations more closely with successful European practices [12][11] Future Outlook - The company maintains a cautious stance on new portfolio purchases, prioritizing quality and returns amid macroeconomic uncertainties [11][12] - Estimated Remaining Collections (ERC) reached a record $8.3 billion, providing visibility into future revenue potential [9]

Core Viewpoint - PRA Group reported quarterly earnings of $1.08 per share, significantly exceeding the Zacks Consensus Estimate of $0.62 per share, and showing an increase from $0.54 per share a year ago, representing an earnings surprise of +74.19% [1][2] Financial Performance - The company posted revenues of $287.69 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 4.24%, and showing an increase from $284.23 million year-over-year [2] - Over the last four quarters, PRA Group has exceeded consensus EPS estimates three times and has topped consensus revenue estimates three times as well [2] Stock Performance and Outlook - PRA Group shares have declined approximately 27.9% since the beginning of the year, contrasting with the S&P 500's gain of 6.1% [3] - The current consensus EPS estimate for the upcoming quarter is $0.44 on revenues of $284.66 million, and for the current fiscal year, it is $1.75 on revenues of $1.12 billion [7] Industry Context - The Financial - Miscellaneous Services industry, to which PRA Group belongs, is currently ranked in the top 23% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8]

Financial Data and Key Metrics Changes - The company purchased $347 million of portfolios during the quarter, with $199 million in The Americas and $147 million in Europe [25] - The year-to-date purchase price multiple for 2025 was 2.14 times for Americas Core and 1.82 times for Europe Core, reflecting an upward trend in purchase price multiples [25] - ERC grew to a record $8.3 billion at the end of Q2, up 22% year over year and 6% sequentially [26] - Cash collections for the quarter were $536 million, up 13% from the prior year period [27] - Net income attributable to PRA was $42 million or $1.08 in diluted earnings per share, including a $30 million after-tax gain from the sale of equity interest in Brazil [34] - Adjusted EBITDA grew 20% this quarter, reflecting strong cash collections growth and disciplined expense management [35] Business Line Data and Key Metrics Changes - Q2 US legal cash collections grew 24% year over year to $119 million, indicating strong performance in the legal channel [28] - Total portfolio revenue was $284 million for the quarter, up 1%, while portfolio income was $251 million, up 20% [29] - Operating expenses were $203 million, up 4% from the prior year, driven by increases in professional services and legal collection costs [30] Market Data and Key Metrics Changes - The overall buying environment in The US is described as elevated, with attractive opportunities to deploy capital [43] - The competitive dynamic in Europe is more rational compared to previous years, with fewer new entrants overpaying for portfolios [12] Company Strategy and Development Direction - The company is focused on three core strategic pillars: optimizing investments, operational execution, and managing expenses [14] - A restructuring of US operations is underway to create a more empowered operational team, aiming for improved accountability and faster decision-making [61] - The company plans to modernize its US technology platform, leveraging successful strategies from its European operations [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to drive change and deliver value, citing a strong foundation built through decades of experience [10] - The company expects portfolio supply to remain elevated in The US and stable in Europe, with a focus on higher return opportunities [26] - Management acknowledged that financial performance is not yet where desired but is committed to implementing necessary changes [39] Other Important Information - The company has no debt obligations maturing until 2027, providing ample funding capacity and financial flexibility [36] - A stock repurchase of $10 million was executed during the quarter, with plans to evaluate further opportunities to enhance shareholder value [37] Q&A Session Summary Question: Can you provide insights on the US supply and opportunity? - Management noted that the buying environment in The US is elevated, with strong seller relationships and opportunities to expand into new asset classes [43][45] Question: How should we think about the legal channel's role in the collection mix? - The legal channel is important but not the primary approach; it is used when customers do not engage voluntarily, and its value is maximized through sophisticated analysis [48][49] Question: What drove the collections overperformance in Q2? - Overperformance was attributed to strong operational initiatives and a favorable consumer position in various markets [57] Question: Can you elaborate on the restructuring in the US? - The restructuring aims to create a more empowered operational team with accountability for cash performance and costs, measured on a single P&L [61][62] Question: What are the expectations for cost savings from restructuring? - Management indicated that while cost savings are a focus, immediate impacts on numbers are not expected, and the emphasis is on operational efficiency [75][76]

Financial Data and Key Metrics Changes - The company reported a net income attributable to PRA of $42 million or $1.08 in diluted earnings per share, which includes a $30 million after-tax gain from the sale of equity interest in RCB [36] - Adjusted EBITDA grew 20% this quarter, reflecting strong cash collections growth and disciplined expense management [37] - The net leverage ratio, defined as net debt to adjusted EBITDA, was 2.81 times as of June 30, operating within the long-term target of two to three times [37] Business Line Data and Key Metrics Changes - The company purchased $347 million of portfolios during the quarter, with $199 million in The Americas and $147 million in Europe [27] - Cash collections for the quarter were $536 million, up 13% from the prior year, driven by higher portfolio purchases and investments in the US legal channel [29] - The legal cash collections in the US grew 24% year over year to $119 million, indicating the effectiveness of investments in the legal channel [30] Market Data and Key Metrics Changes - The company’s ERC (Expected Remaining Collections) reached a record $8.3 billion at the end of Q2, up 22% year over year and 6% sequentially [28] - The purchase price multiple for the Americas Core was 2.14 times, while Europe Core was 1.82 times, reflecting an upward trend in purchase price multiples [27] Company Strategy and Development Direction - The company is focused on three core strategic pillars: optimizing investments, operational execution, and managing expenses [15] - There is a strong emphasis on transforming the US business, leveraging learnings from the successful European operations [10][15] - The company plans to modernize its US technology platform and restructure operations to enhance accountability and decision-making [20][21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong foundation of the company and the potential for significant transformation to drive shareholder value [15][41] - The outlook for portfolio supply remains elevated in the US and stable in Europe, with expectations for continued cash collections growth [28][40] - Management acknowledged the need for ongoing improvements in operational efficiency and cost management [23][24] Other Important Information - The company has no debt maturities until November 2027, providing financial flexibility for growth and transformation initiatives [38] - A total of $10 million of stock was repurchased during the quarter, with plans to evaluate further repurchases as debt covenants allow [39] Q&A Session Summary Question: Insights on US supply and opportunity - Management noted that the buying environment in the US is elevated, with strong seller relationships and opportunities to expand into new asset classes [46][48] Question: Long-term outlook for the legal channel - The legal channel is not the primary focus but will be utilized when necessary, with a sophisticated analysis to maximize value [50][52] Question: Drivers of collections overperformance - The overperformance was attributed to strong operational initiatives and a favorable consumer position in various markets [60][61] Question: Details on US restructuring - The restructuring aims to create a more empowered US operational team, focusing on speed and accountability for cash performance [64][65] Question: Purchase price multiples and market competitiveness - The fluctuation in purchase price multiples is influenced by mix and demand-supply variables, with a focus on maximizing returns rather than just chasing volumes [66][67]

Financial Performance - PRA Group achieved net income of $42 million in Q2 2025, or $13 million excluding the after-tax gain from the RCB sale in Brazil[24] - The company's revenues increased by 1% to $288 million in Q2 2025[25] - Adjusted EBITDA grew by 16% year-over-year[29] Portfolio and Investments - The company's purchase price multiples (PPMs) have improved, with 1H 2025 PPMs at 1.82x for Purchases and 2.14x for ERC[16] - Total cash collections increased by 13%[19] - Portfolio income is growing, with a 14% increase in Q1 2025 and a 20% increase in Q2 2025[22] Capital Structure and Strategy - PRA Group has no debt maturities until 2027[12] - The company repurchased $10 million of shares during the quarter[32, 34] - The company has $841 million available under its credit facilities as of June 30, 2025[34]

[Q2 2025 Financial and Operational Highlights](index=1&type=section&id=Q2%202025%20Financial%20and%20Operational%20Highlights) PRA Group delivered strong Q2 2025 results, with significant net income and EPS growth, record ERC, and strategic focus on high-return opportunities [Q2 2025 Key Financial Highlights](index=1&type=section&id=Q2%202025%20Key%20Financial%20Highlights) PRA Group achieved strong Q2 2025 results, with significant net income and diluted EPS growth, record ERC, and robust cash collections | Indicator | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :------- | | Net Income attributable to PRA Group, Inc. | 42,374 | 21,516 | 96.9% | | Diluted Earnings Per Share | 1.08 | 0.54 | 100.0% | - Total portfolio purchases were **$346.5 million**, down **8.7%** year-over-year, reflecting a lower full-year target of **$1.2 billion** for 2025 compared to **$1.4 billion** in 2024[4](index=4&type=chunk) - Estimated Remaining Collections (ERC) reached a record **$8.3 billion**, up **21.9%** year-over-year[4](index=4&type=chunk) - Total cash collections were **$536.3 million**, up **13.2%** year-over-year[4](index=4&type=chunk) - Cash efficiency ratio was **62.4%**, an improvement of **355 basis points**[4](index=4&type=chunk) - Adjusted EBITDA (LTM as of June 30, 2025) was **$1.2 billion**, up **16.4%** year-over-year[4](index=4&type=chunk) - Net income included a **$29.7 million** (after-tax) gain from the sale of RCB equity in Brazil[4](index=4&type=chunk) [CEO Commentary and Strategic Focus](index=2&type=section&id=CEO%20Commentary%20and%20Strategic%20Focus) CEO highlighted positive progress in portfolio investments, ERC, and income, affirming focus on high-return opportunities and US business transformation - The company made positive progress in portfolio investments, record ERC, and improved portfolio income, maintaining focus on high-return opportunities[3](index=3&type=chunk) - Improved cash efficiency ratio reflects efforts in increasing cash collections and managing expenses, leading to Adjusted EBITDA growth exceeding cash collections growth[3](index=3&type=chunk) - The company is accelerating its US business transformation, focusing on three strategic pillars: optimizing investments, operational execution, and expense management[6](index=6&type=chunk) [Detailed Financial Performance](index=2&type=section&id=Detailed%20Financial%20Performance) Detailed Q2 2025 financial performance covers cash collections, revenues, expenses, and portfolio purchases [Cash Collections and Revenues](index=2&type=section&id=Cash%20Collections%20and%20Revenues) Total cash collections increased by **13.2%** to **$536.3 million** in Q2 2025, driven by strong European core performance and significant portfolio income growth - Total cash collections in Q2 2025 increased by **13.2%** to **$536.3 million**, compared to **$473.9 million** in Q2 2024[7](index=7&type=chunk) | Cash Collections Source | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | Change (%) | | :--------------------- | :----------------------------- | :----------------------------- | :------- | | Americas and Australia Core | 301,698 | 263,828 | 14.3% | | Americas Bankruptcy | 24,329 | 26,971 | -9.7% | | Europe Core | 185,652 | 156,739 | 18.4% | | Europe Bankruptcy | 24,609 | 26,344 | -6.6% | | **Total Cash Collections** | **536,288** | **473,882** | **13.2%** | - Portfolio income in Q2 2025 increased by **19.9%** to **$250.9 million**, compared to **$209.3 million** in Q2 2024[8](index=8&type=chunk) - Total portfolio revenue in Q2 2025 increased by **0.6%** to **$284.2 million**, compared to **$282.6 million** in Q2 2024[8](index=8&type=chunk) [Expenses](index=2&type=section&id=Expenses) Operating expenses increased by **3.9%** in Q2 2025 due to strategic investments in call center offshoring and US legal collections, with rising interest expense - Operating expenses in Q2 2025 increased by **3.9%** to **$202.6 million**, compared to **$195.0 million** in Q2 2024[9](index=9&type=chunk) - The increase in expenses is primarily attributed to investments in call center offshoring for greater operational flexibility and continued investment in US legal collection channels to drive future cash collections growth[9](index=9&type=chunk)[10](index=10&type=chunk) - Net interest expense in Q2 2025 increased by **12.6%** to **$62.4 million**, compared to **$55.4 million** in Q2 2024, primarily reflecting increased debt balances supporting portfolio investments[17](index=17&type=chunk) [Portfolio Purchases](index=3&type=section&id=Portfolio%20Purchases) The company purchased **$346.5 million** in nonperforming loan portfolios in Q2 2025, an **8.7%** decrease, aligning with lower targets, and has **$311.2 million** in forward commitments - In Q2 2025, the company purchased **$346.5 million** in nonperforming loan portfolios, a decrease of **8.7%** year-over-year[18](index=18&type=chunk) | Portfolio Purchase Source | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | Change (%) | | :--------------------- | :----------------------------- | :----------------------------- | :------- | | Americas and Australia Core | 177,097 | 198,761 | -10.9% | | Americas Bankruptcy | 22,186 | 26,627 | -16.7% | | Europe Core | 142,465 | 127,991 | 11.3% | | Europe Bankruptcy | 4,757 | 25,990 | -81.7% | | **Total Portfolio Acquisitions** | **346,505** | **379,369** | **-8.7%** | - As of the end of Q2 2025, the company has **$311.2 million** in estimated forward purchase commitments over the next 12 months, with **$210.6 million** in the Americas and Australia and **$100.5 million** in Europe[18](index=18&type=chunk) [Credit Availability](index=3&type=section&id=Credit%20Availability) As of June 30, 2025, PRA Group had **$840.7 million** in total credit facility availability, including **$521.6 million** based on current ERC - As of June 30, 2025, the company's total credit facility availability was **$840.7 million**[12](index=12&type=chunk) - Availability includes **$521.6 million** based on current ERC and an additional **$319.1 million** subject to borrowing base and debt covenants[12](index=12&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) Unaudited consolidated income statements and balance sheets detail Q2 2025 revenue, net income, assets, liabilities, and equity [Unaudited Consolidated Income Statements](index=5&type=section&id=Unaudited%20Consolidated%20Income%20Statements) Total revenue slightly increased to **$287.7 million** in Q2 2025, with net income attributable to PRA Group, Inc. significantly rising to **$42.4 million** due to equity investment sales | Indicator | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | Change (%) | | :------------------------------------ | :----------------------------- | :----------------------------- | :------- | | Total Revenue | 287,688 | 284,229 | 1.2% | | Total Operating Expenses | 202,577 | 195,007 | 3.9% | | Operating Income | 85,111 | 89,222 | -4.6% | | Gain on Sale of Equity Investment | 38,403 | — | N/A | | Income Before Income Taxes | 61,128 | 33,816 | 80.7% | | Net Income attributable to PRA Group, Inc. | 42,374 | 21,516 | 96.9% | | Diluted Earnings Per Share | 1.08 | 0.54 | 100.0% | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$5.43 billion** as of June 30, 2025, driven by higher net finance receivables, with total liabilities and equity also rising | Indicator | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | Change (%) | | :------------------------------------ | :----------------------------- | :----------------------------- | :------- | | Total Assets | 5,434,767 | 4,931,155 | 10.2% | | Net Finance Receivables | 4,562,576 | 4,140,742 | 10.2% | | Goodwill | 439,449 | 396,357 | 10.9% | | Total Liabilities | 4,038,156 | 3,737,548 | 8.0% | | Borrowings | 3,614,208 | 3,326,621 | 8.6% | | Total Stockholders' Equity | 1,396,611 | 1,193,607 | 17.0% | [Select Expenses (Income)](index=7&type=section&id=Select%20Expenses%20%28Income%29) In Q2 2025, the company reported **$1,962 thousand** in non-cash interest expense and **$4,465 thousand** in share-based compensation expense - Non-cash interest expense (amortization of debt premium and issuance costs) in Q2 2025 was **$1,962 thousand**[26](index=26&type=chunk) - Share-based compensation expense in Q2 2025 was **$4,465 thousand**[26](index=26&type=chunk) - Fair value changes in derivatives in Q2 2025 were **negative $1,748 thousand**[26](index=26&type=chunk) [Portfolio Performance Metrics](index=8&type=section&id=Portfolio%20Performance%20Metrics) Detailed portfolio performance metrics include purchase price multiples, financial information, and historical cash collections [Purchase Price Multiples](index=8&type=section&id=Purchase%20Price%20Multiples) This section details purchase price multiples for various portfolio segments, including current and original multiples, with total estimated remaining collections at **$8.29 billion** - As of June 30, 2025, PRA Group's total Estimated Remaining Collections (ERC) were **$8,294,310 thousand**[28](index=28&type=chunk) | Segment | Current Purchase Price Multiple | Original Purchase Price Multiple | | :--------------------- | :------------------- | :------------------- | | Americas and Australia Core | 214% | 214% | | Americas Bankruptcy | 159% | 159% | | Europe Core | 182% | 182% | | Europe Bankruptcy | 151% | 151% | [Portfolio Financial Information](index=10&type=section&id=Portfolio%20Financial%20Information) This section details cash collections, portfolio income, and expected recovery changes by purchase period and region, with year-to-date total cash collections of **$1.03 billion** | Indicator | Amount ($ in thousands) | | :------------------------ | :-------------------- | | Cash Collections | 1,033,724 | | Portfolio Income | 491,892 | | Change in Expected Recoveries | 61,214 | | Total Portfolio Revenue | 553,106 | | Net Finance Receivables | 4,562,576 | - Year-to-date cash collections for Americas and Australia Core business were **$589,858 thousand**[31](index=31&type=chunk) - Year-to-date cash collections for Europe Core business were **$350,023 thousand**[31](index=31&type=chunk) [Cash Collections by Year, By Year of Purchase](index=12&type=section&id=Cash%20Collections%20by%20Year,%20By%20Year%20of%20Purchase) This table provides a comprehensive breakdown of cash collections by region and purchase period, illustrating long-term recovery performance, with total cash collections across all periods reaching **$24.89 billion** - PRA Group's total cash collections across all purchase periods were **$24,886.5 million**[33](index=33&type=chunk) - Cash collections for Americas and Australia Core business purchased between 1996-2014 were **$6,587.4 million**[33](index=33&type=chunk) - Cash collections for Europe Core business purchased between 1996-2014 were **$2,036.7 million**[33](index=33&type=chunk) [Non-GAAP Financial Measures Reconciliation](index=14&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) Reconciliations for non-GAAP financial measures, including Adjusted EBITDA and ROATE, are provided to GAAP equivalents [Adjusted EBITDA Reconciliation](index=14&type=section&id=Adjusted%20EBITDA%20Reconciliation) The company provides a reconciliation of net income to Adjusted EBITDA, a non-GAAP metric, with LTM Adjusted EBITDA as of June 30, 2025, at **$1.24 billion**, up from **$1.14 billion** - Last Twelve Months (LTM) Adjusted EBITDA as of June 30, 2025, was **$1,240,092 thousand**[37](index=37&type=chunk) - Adjusted EBITDA for the year ended December 31, 2024, was **$1,137,552 thousand**[37](index=37&type=chunk) - Adjustments include income tax expense, net interest expense, depreciation and amortization, and collections recovered and applied to net finance receivables less change in expected recoveries[37](index=37&type=chunk) [Return on Average Tangible Equity (ROATE) Reconciliation](index=15&type=section&id=Return%20on%20Average%20Tangible%20Equity%20%28ROATE%29%20Reconciliation) The company reconciles total stockholders' equity to average tangible equity and net income to adjusted net income to present ROATE and Adjusted ROATE, with Q2 2025 ROATE at **20.0%** and Adjusted ROATE at **6.0%** - Q2 2025 ROATE was **20.0%**, higher than **11.9%** in Q2 2024[39](index=39&type=chunk) - Q2 2025 Adjusted ROATE was **6.0%**, lower than **11.9%** in Q2 2024, excluding the **$29,686 thousand** (after-tax) gain from the sale of equity investment[39](index=39&type=chunk) - Average tangible equity in Q2 2025 was **$846,419 thousand**[39](index=39&type=chunk) [Additional Information](index=3&type=section&id=Additional%20Information) Conference call details, an overview of PRA Group, Inc., and forward-looking statement disclosures are provided [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) PRA Group, Inc. held a conference call on August 4, 2025, to discuss financial and operational results, offering webcast and replay options - The conference call was held on August 4, 2025, at 5:00 p.m. ET[13](index=13&type=chunk) - Webcast and replay options are available via the company's investor relations website or a designated phone number[13](index=13&type=chunk) [About PRA Group, Inc.](index=3&type=section&id=About%20PRA%20Group,%20Inc.) PRA Group, Inc. is a global leader in acquiring and collecting nonperforming loans, returning capital to creditors and helping consumers resolve debt - PRA Group, Inc. is a global leader in acquiring and collecting nonperforming loans[14](index=14&type=chunk) - The company operates across the Americas, Europe, and Australia[14](index=14&type=chunk) - Committed to returning capital to banks and other creditors and working with customers to help them resolve their debt[14](index=14&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements based on management's current beliefs and expectations, subject to risks and uncertainties, with no obligation for the company to update them - Statements in this report that are not historical in nature, including intentions, hopes, beliefs, expectations, representations, predictions, plans, or projections of PRA Group, Inc. or its management for the future, constitute forward-looking statements[15](index=15&type=chunk) - Forward-looking statements involve risks and uncertainties, and actual events or results could differ materially from those expressed or implied in any such forward-looking statements[19](index=19&type=chunk) - PRA Group, Inc. undertakes no obligation to publicly update or revise its forward-looking statements, except as required by law[20](index=20&type=chunk)

Core Insights - PRA Group, Inc. reported a net income of $42.4 million for Q2 2025, a significant increase of 96.9% compared to $21.5 million in Q2 2024, driven by strong portfolio purchases and cash collections growth [3][6][15] - The company achieved a record estimated remaining collections (ERC) of $8.3 billion, reflecting a 21.9% increase year-over-year [6] - Adjusted EBITDA grew by 16.4% to $1.2 billion for the 12 months ended June 30, 2025, outpacing cash collections growth of 13.2% [6][15] Financial Performance - Total cash collections for Q2 2025 reached $536.3 million, up 13.2% from $473.9 million in Q2 2024 [4][6] - Portfolio income increased by 19.9% to $250.9 million in Q2 2025 compared to $209.3 million in Q2 2024 [15] - Total revenues for Q2 2025 were $287.7 million, a slight increase of 1.6% from $284.2 million in Q2 2024 [14][15] Portfolio and Investment Activity - The company made total portfolio purchases of $346.5 million in Q2 2025, an 8.7% decrease from $379.4 million in Q2 2024 [6][16] - The company has forward flow commitments of $311.2 million over the next 12 months, with $210.6 million in the Americas and Australia and $100.5 million in Europe [16] - The cash efficiency ratio improved to 62.4%, an increase of 355 basis points year-over-year, indicating better management of cash collections and expenses [6] Operational Strategy - The CEO emphasized a focus on transforming the U.S. business while leveraging the company's strong European performance [3] - The company is prioritizing high-return opportunities and optimizing investments, operational execution, and expense management as part of its strategic pillars [3][6] - The company aims to enhance its financial and operational results over the long term, building on its global scale and strong foundation [3]

Core Viewpoint - PRA Group, Inc. is set to report its second quarter 2025 financial results on August 4, 2025, after market close, followed by a conference call and webcast [1] Company Overview - PRA Group, Inc. is a global leader in acquiring and collecting nonperforming loans, aiming to return capital to banks and other creditors to enhance financial services for consumers across the Americas, Europe, and Australia [4] - The company employs thousands of individuals worldwide and collaborates with customers to assist them in resolving their debt [4] Upcoming Financial Reports - The company plans to report its third quarter 2025 results after market close on November 3, 2025 [3]

Core Insights - PRA Group, Inc. has promoted Owen James to president of PRA Group Europe, succeeding Martin Sjolund [2][3] - James will oversee portfolio investments across Europe and lead operations in 15 markets, aiming to enhance profitability [1][4] - The European business has successfully invested over $3 billion in portfolios in the past seven years, becoming a key performance driver for the company [4][5] Leadership and Experience - Owen James has over 30 years of experience in financial services, including 13 years at PRA Group [5] - He has held various leadership roles within PRA Group's European business and previously worked at Intrum for over 15 years [5][6] - Martin Sjolund expressed confidence in James's ability to lead PRA Group Europe, highlighting his investment experience and operational expertise [6] Company Overview - PRA Group is a global leader in acquiring and collecting nonperforming loans, helping to return capital to banks and creditors [7] - The company operates in the Americas, Europe, and Australia, employing thousands of staff to assist customers in resolving debt [7]