Atlanticus (ATLC) - 2025 Q1 - Quarterly Report

Financial Performance - Total operating revenue and other income for Q1 2025 was $344.873 million, an increase of$54.699 million from $290.174 million in Q1 2024, representing an 18.9$31.520 million, up from $26.170 million in Q1 2024, reflecting an increase of$5.350 million or 20.4%[170]. - The net margin for Q1 2025 was $118.223 million, an increase of$24.695 million from $93.528 million in Q1 2024, reflecting a 26.4$77.355 million in Q1 2025, an increase of $16.648 million from$60.707 million in Q1 2024, representing a 27.4% rise[170]. - The total managed yield ratio for Q1 2025 was 38.5%, down from 40.0% in Q4 2024[207]. - The combined principal net charge-off ratio for Q1 2025 was 24.1%, an increase from 22.0% in Q4 2024[207]. - The average managed receivables for Q1 2025 were $2,715.5 million, slightly up from$2,689.4 million in Q4 2024[207]. - The interest expense ratio for Q1 2025 was 6.9%, compared to 6.5% in Q4 2024[207]. - The net interest margin ratio for Q1 2025 was 7.5%, down from 11.5% in Q4 2024[207]. Credit Losses and Delinquency - The provision for credit losses decreased to $1.068 million in Q1 2025 from$2.944 million in Q1 2024, indicating a reduction of $1.876 million or 63.8$1.9 million for the three months ended March 31, 2025, compared to the same period in 2024, mainly due to lower receivable balances[179]. - Losses in changes in fair value of loans totaled $178.3 million for the three months ended March 31, 2025, compared to$159.2 million for the same period in 2024[181]. - Delinquency rates for receivables showed that 30-59 days past due were 3.3% in Q1 2025, down from 3.8% in Q4 2024[207]. - The company’s strategy for managing delinquency includes credit line management and pricing based on risks[206]. - Delinquency rates for private label credit receivables increased in early 2024 due to a mix shift towards higher delinquency receivables but with limited loss exposure[214]. - The first quarter of 2025 saw lower overall delinquency rates in both general purpose and private label credit receivables, which is expected to lead to lower charge-off rates in the second and third quarters of 2025[214]. Receivables and Growth - Managed receivables grew to $2,706.3 million as of March 31, 2025, up from$2,317.6 million as of March 31, 2024, indicating significant growth in the receivables portfolio[192]. - The total accounts of new credit card and private label customers increased by over 230,000 as of March 31, 2025, compared to the same period in 2024[172]. - Private label credit receivables increased by $345.8 million in the twelve months ended March 31, 2025, while general purpose credit card receivables grew by$42.8 million during the same period[211]. - The company expects continued quarterly receivables growth, dependent on new retail partner additions and consumer purchase activity[211]. - The company anticipates modest growth in managed receivables throughout 2025, despite recent declines[235]. Financing and Debt - The company anticipates additional debt financing in the coming quarters as it continues to grow, with higher effective interest rates on new debt compared to maturing debt[176]. - The company issued $150.0 million of 6.125$57.2 million of 2029 Senior Notes, followed by an additional $60.0 million in July 2024, bearing interest at 9.25% per annum[247]. - The company expects to continue evaluating debt and equity issuances to fund investment opportunities and acquisitions of credit card receivables portfolios[257]. Operational Efficiency - Total operating expenses showed greater efficiency as fixed costs remained stable despite significant growth in managed receivables over the past two years[189]. - Operating expenses have increased due to anticipated growth in private label credit and general purpose credit card operations, with variable costs expected to rise alongside new receivable acquisitions[190]. - The company expects continued increases in salaries and benefits costs in 2025 due to employee growth and inflationary pressures[192]. Market and Economic Conditions - The company faces risks related to general economic conditions, credit losses, and competition in the financial products market[270]. - Forward-looking statements made by the company involve substantial risks and uncertainties that could affect expected results[269]. - The company is not required to provide quantitative and qualitative disclosures about market risk as a smaller reporting company[273]. Technology and Innovation - The company’s flexible technology solutions allow bank partners to integrate a paperless process and instant decisioning platform, improving access to credit for underserved consumers[154]. - The company relies on proprietary and third-party technology, which poses risks related to security breaches[270].