Atlanticus Reports First Quarter 2025 Financial Results

First Quarter 2025 net margin growth of 26.4% over prior year, with 3.8 million accounts served (1) ATLANTA, May 08, 2025 (GLOBE NEWSWIRE) -- Atlanticus Holdings Corporation (NASDAQ: ATLC) (Atlanticus, the Company, we, our or us), a financial technology company that enables its bank, retail and healthcare partners to offer more inclusive financial services to millions of everyday Americans, today announced its financial results for the first quarter ended March 31, 2025. An accompanying earnings presentation is available in the Investors section of the Company’s website at www.atlanticus.com or by clicking here. Financial and Operating Highlights First Quarter 2025 Highlights (all comparisons to the First Quarter 2024) Managed receivables2 increased 16.7% to $2.7 billionTotal operating revenue and other income increased 18.9% to $344.9 millionReturn on average equity of 22.0 %3Purchase volume of $661.0 millionOver 415,000 new accounts served during the quarter, 3.8 million total accounts served1Net income attributable to common shareholders of $27.9 million, or $1.49 per diluted common share 1) In our calculation of total accounts served, we include all accounts with account activity and accounts that have open lines of credit at the end of the referenced period. 2) Managed receivables is a non-GAAP financial measure and excludes the results of our Auto Finance receivables. See Calculation of Non-GAAP Financial Measures for important additional information. 3) Return on average equity is calculated using Net income attributable to common shareholders as the numerator and the average of Total equity as of March 31, 2025 and December 31, 2024 as the denominator, annualized. Management Commentary Jeff Howard, President and Chief Executive Officer at Atlanticus stated, “We are pleased to start the year with prudent growth and achieving our profitability targets while adding over 400,000 new customers served. This quarter’s performance continues to highlight our priorities of providing an invaluable service to the consumers we serve, unit level profitability, and finally, growth. On behalf of our bank partners, we now facilitate access to everyday needs through credit to nearly 4 million consumers. The largest purchase volumes on our general-purpose credit card solutions are for food and gas, indicative of the role the services we provide play in the daily lives of everyday Americans. We are proud to partner with these consumers on their financial journey. “We have built a diversified, tech-enabled, credit-as-a-service platform that brings together banks, retail and health-care partners, to meet their customers where they are. This diversified platform capability provides us with significant opportunities for long-term, sustained growth as we work to offer financial solutions to the almost 100 million everyday Americans looking to build or improve their credit. Our analytics, technology, and access to ample capital allow us to offer a best-in-class solution to our partners and their customers. It is this opportunity that leads to our belief that we can deliver above market rates of growth while achieving our targeted return on capital.” Financial Results For the Three Months Ended March 31, ($ in thousands, except per share data) 2025 2024 % ChangeTotal operating revenue and other income $344,873 $290,174 18.9% Other non-operating income 293 532 nm Total revenue and other income 345,166 290,706 18.7% Interest expense (47,530) (35,063) 35.6% Provision for credit losses (1,068) (2,944) nm Changes in fair value of loans (178,345) (159,171) 12.0% Net margin $118,223 $93,528 26.4% Total operating expenses $77,355 $60,707 27.4% Net income $31,122 $25,819 20.5% Net income attributable to controlling interests $31,520 $26,170 20.4% Preferred stock and preferred unit dividends and discount accretion $(3,574) $(6,292) (43.2%) Net income attributable to common shareholders $27,946 $19,878 40.6% Net income attributable to common shareholders per common share—basic $1.85 $1.35 37.0% Net income attributable to common shareholders per common share—diluted $1.49 $1.09 36.7% *nm = not meaningful Managed Receivables Managed receivables increased 16.7% to $2.7 billion with over $388.7 million in net receivables growth from March 31, 2024 driven by growth both in the private label credit and general purpose credit card products offered by our bank partners. Total accounts served increased 8.1% to 3.8 million. The addition of large private label credit retail partners and ongoing purchases of receivables arising in accounts issued by our bank partners to customers of our existing retail partners helped grow our private label credit receivables by $345.8 million in the twelve months ended March 31, 2025. Our general purpose credit card receivables grew by $42.8 million during the twelve months ended March 31, 2025. While some of our merchant partners continue to face year-over-year growth challenges, others are benefiting from continued consumer spending and a growing economy and have expanded their relationship with us. We expect continued growth in 2025 in our managed receivables when compared to prior periods in 2024. Total Operating Revenue and Other Income Total operating revenue and other income consists of: 1) interest income, finance charges and late fees on consumer loans, 2) other fees on credit products including annual and merchant fees and 3) interchange and servicing income on loan portfolios and other customer related fees. We are currently experiencing continued period-over-period growth in private label credit and general purpose credit card receivables — growth that we expect to result in net period-over-period growth in our total interest income and related fees for these operations throughout 2025. During 2024 we experienced higher growth rates for our private label credit receivables than for our general purpose credit card receivables. We expect growth in our private label credit receivables to exceed growth in our general purpose receivables through the second quarter of 2025. Future periods’ growth is dependent on the addition of new retail partners to expand the reach of private label credit operations as well as growth within existing partnerships and the level of marketing investment for the general purpose credit card operations. During the quarter ended March 31, 2025, total operating revenue and other income increased 18.9% to $344.9 million. General purpose credit card receivables tend to have higher total yields than private label credit receivables (and corresponding higher charge off rates). As a result, in periods where we have declines in rates of growth of these general purpose credit card receivables, as was noted in 2024 (relative to growth in private label credit card receivables), we expect to have slightly lower total managed yield ratios. We currently expect increases in the rates of acquisition of our general purpose credit card receivables relative to private label credit receivables in the third and fourth quarters of 2025 and correspondingly higher period-over-period operating revenue and other income for all periods in 2025. This growth includes an expected seasonal shift in our mix of acquired private label receivables to higher FICO receivables that have lower gross yields (and correspondingly lower charge-off expectations) in the third quarter each year, which may result in marginally lower managed yield ratios when compared to the corresponding periods in 2024. Interest Expense Interest expense was $47.5 million for the quarter ended March 31, 2025, compared to $35.1 million for the quarter ended March 31, 2024. The higher expenses were primarily driven by the increases in outstanding debt in proportion to growth in our receivables coupled with increases in the cost of borrowing. Outstanding notes payable, net of unamortized debt issuance costs and discounts, associated with our private label credit and general purpose credit card platform increased to $2,137.6 million as of March 31, 2025 from $1,795.4 million as of March 31, 2024. The majority of this increase in outstanding debt relates to the addition of multiple credit facilities in 2024 and 2025 coupled with the issuance of our 9.25% Senior Notes due 2029. Recent increases in the effective interest rates on debt have increased our interest expense as we have raised additional capital (or replaced existing facilities) over the last two years. We anticipate additional debt financing over the next few quarters as we continue to grow coupled with higher effective interest rates on new debt compared to rates on maturing debt. As such, we expect our quarterly interest expense for these operations to increase compared to prior periods. Changes in Fair Value of Loans Changes in fair value of loans increased to $178.3 million for the quarter ended March 31, 2025 compared to $159.2 million for the quarter ended March 31, 2024. This increase was largely driven by growth in our acquisition and relative mix of receivables, offset by improvements in the fair value assessment for receivables due to improvements in the underlying performance in the form of improved delinquencies and improved net returns. We include asset performance degradation in our forecasts to reflect both changes in assumed asset level economics and the possibility of delinquency rates increasing in the near term (and the corresponding increase in charge-offs and decrease in payments) above the level that current trends would suggest. Based on observed asset stabilization, implementation of product, policy, and pricing changes and general improvements in U.S. economic expectations due to the improved inflation environment, some expected degradation has been removed in recent periods. Tightened underwriting standards have resulted in improved overall credit performance of our acquired receivables. When coupled with those existing assets negatively impacted by inflation gradually becoming a smaller percentage of the outstanding portfolio, we expect to see overall improvements in the measured fair value of our portfolios of acquired receivables. Total Operating Expenses Total operating expenses increased 27.4% in the quarter when compared to the same period in 2024, driven primarily by increases in variable servicing costs associated with growth in our receivables and costs associated with the implementation of product, policy and pricing changes. In addition, we experienced growth in both the number of employees and inflationary compensation pressure, partially offset by decreases in certain other nonrecurring accounting and legal expenditures as compared to the first quarter of 2024. We expect some continued increase in salaries and benefits in 2025 compared to corresponding periods in 2024 as we continue to add resources across our business and as a result we expect to increase our number of employees. We expect increased levels of expenditures associated with anticipated growth in private label credit and general purpose credit card operations. These expenses will primarily relate to the variable costs of marketing efforts and card and loan servicing expenses associated with new receivable acquisitions. Offsetting a portion of this increase are significant reductions in our servicing costs per account, resulting from the realization of greater economies of scale and increased use of automation as our receivables have grown. In addition, as we continue to adjust our underwriting standards to reflect changes in fee and finance assumptions on new receivables, and allow for overall increases in the cost to successfully market to consumers, we expect period over period marketing costs for 2025 to increase relative to those experienced in 2024, although the frequency and timing of increased marketing efforts could vary and are dependent on macroeconomic factors such as national unemployment rates and federal funds rates. Net Income Attributable to Common Shareholders Net income attributable to common shareholders increased 40.6% to $27.9 million, or $1.49 per diluted share for the quarter ended March 31, 2025. Share Repurchases We repurchased and retired 27,252 shares of our common stock at an aggregate cost of $1.25 million, in the quarter ended March 31, 2025. We will continue to evaluate the best use of our capital to increase shareholder value over time. About Atlanticus Holdings Corporation Empowering Better Financial Outcomes for Everyday Americans Atlanticus™ technology enables bank, retail, and healthcare partners to offer more inclusive financial services to everyday Americans through the use of proprietary technology and analytics. We apply the experience gained and infrastructure built from servicing over 20 million customers and $43 billion in consumer loans over more than 25 years of operating history to support lenders that originate a range of consumer loan products. These products include retail and healthcare private label credit and general purpose credit cards marketed through our omnichannel platform, including retail point-of-sale, healthcare point-of-care, direct mail solicitation, internet-based marketing, and partnerships with third parties. Additionally, through our Auto Finance subsidiary, Atlanticus serves the individual needs of automotive dealers and automotive non-prime financial organizations with multiple financing and service programs. Forward-Looking Statements This press release contains forward-looking statements that reflect the Company's current views with respect to, among other things, its business, long-term growth plans and opportunities, operations, return on capital, financial performance, revenue and other income, amount and pace of growth of managed receivables, mix of receivables, underwriting approach, total interest income and related fees and charges, managed yield ratio, debt financing, liquidity, interest rates, interest expense, operating expense, marketing efforts and fair value of receivables. You generally can identify these statements by the use of words such as outlook, potential, continue, may, seek, approximately, predict, believe, expect, plan, intend, estimate or anticipate and similar expressions or the negative versions of these words or comparable words, as well as future or conditional verbs such as will, should, would, likely and could. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those included in the forward-looking statements. These risks and uncertainties include those risks described in the Company's filings with the Securities and Exchange Commission and include, but are not limited to, bank partners, merchant partners, consumers, loan demand, the capital markets, labor availability, supply chains and the economy in general; the Company's ability to retain existing, and attract new, merchant partners and funding sources; changes in market interest rates; increases in loan delinquencies; its ability to operate successfully in a highly regulated industry; the outcome of litigation and regulatory matters; the effect of management changes; cyberattacks and security vulnerabilities in its products and services; and the Company's ability to compete successfully in highly competitive markets. The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, the Company disclaims any obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In light of these risks and uncertainties, there is no assurance that the events or results suggested by the forward-looking statements will in fact occur, and you should not place undue reliance on these forward-looking statements. Contact:Investor Relations(770) 828-2000investors@atlanticus.com Atlanticus Holdings Corporation and SubsidiariesCondensed Consolidated Balance Sheets (Unaudited)(Dollars in thousands) March 31, December 31, 2025 2024 Assets Unrestricted cash and cash equivalents (including $164.3 million and $140.2 million associated with variable interest entities at March 31, 2025 and December 31, 2024, respectively) $350,390 $375,416 Restricted cash and cash equivalents (including $86.9 million and $98.8 million associated with variable interest entities at March 31, 2025 and December 31, 2024, respectively) 111,059 124,220 Loans at fair value (including $2,622.4 million and $2,542.9 million associated with variable interest entities at March 31, 2025 and December 31, 2024, respectively) 2,668,503 2,630,274 Loans at amortized cost, net (including $4.8 million and $4.9 million of allowance for credit losses at March 31, 2025 and December 31, 2024, respectively; and $20.1 million and $19.8 million of deferred revenue at March 31, 2025 and December 31, 2024, respectively) 81,238 84,332 Property at cost, net of depreciation 12,401 10,519 Operating lease right-of-use assets 13,844 13,878 Prepaid expenses and other assets 34,730 32,068 Total assets $3,272,165 $3,270,707 Liabilities Accounts payable and accrued expenses $81,108 $72,088 Operating lease liabilities 24,145 24,188 Notes payable, net (including $2,137.6 million and $2,128.0 million associated with variable interest entities at March 31, 2025 and December 31, 2024, respectively) 2,174,632 2,199,448 Senior notes, net 299,656 281,552 Income tax liability 123,775 114,068 Total liabilities 2,703,316 2,691,344 Commitments and contingencies Preferred stock, no par value, 10,000,000 shares authorized: Series A preferred stock, 400,000 shares issued and outstanding (liquidation preference - $40.0 million) at March 31, 2025 and December 31, 2024(1) 40,000 40,000 Class B preferred units issued to noncontrolling interests – 50,000 Shareholders' Equity Series B preferred stock, no par value, 3,314,840 shares issued and outstanding at March 31, 2025 (liquidation preference - $82.9 million); 3,301,179 shares issued and outstanding at December 31, 2024 (liquidation preference - $82.5 million) (1) – – Common stock, no par value, 150,000,000 shares authorized: 15,097,243 and 14,904,192 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively – – Paid-in capital 110,138 98,278 Retained earnings 422,574 394,628 Total shareholders’ equity attributable to Atlanticus Holdings Corporation 532,712 492,906 Noncontrolling interests (3,863) (3,543) Total equity 528,849 489,363 Total liabilities, shareholders' equity and temporary equity $3,272,165 $3,270,707 (1) Both the Series A preferred stock and the Series B preferred stock have no par value and are part of the same aggregate 10,000,000 shares authorized. Atlanticus Holdings Corporation and SubsidiariesCondensed Consolidated Statements of Income (Unaudited)(Dollars in thousands, except per share data) For the Three Months EndedMarch 31, 2025 2024 Revenue and other income: Consumer loans, including past due fees $247,655 $230,374 Fees and related income on earning assets 78,341 47,905 Other revenue 18,877 11,895 Total operating revenue and other income 344,873 290,174 Other non-operating income 293 532 Total revenue and other income 345,166 290,706 Interest expense (47,530) (35,063) Provision for credit losses (1,068) (2,944) Changes in fair value of loans (178,345) (159,171) Net margin 118,223 93,528 Operating expenses: Salaries and benefits (15,503) (13,312) Card and loan servicing (32,152) (26,822) Marketing and solicitation (20,334) (10,428) Depreciation (797) (654) Other (8,569) (9,491) Total operating expenses (77,355) (60,707) Income before income taxes 40,868 32,821 Income tax expense (9,746) (7,002) Net income 31,122 25,819 Net loss attributable to noncontrolling interests 398 351 Net income attributable to controlling interests 31,520 26,170 Preferred stock and preferred unit dividends and discount accretion (3,574) (6,292) Net income attributable to common shareholders $27,946 $19,878 Net income attributable to common shareholders per common share—basic$1.85 $1.35 Net income attributable to common shareholders per common share—diluted$1.49 $1.09 Additional Information Additional trends and data with respect to our private label credit and general purpose credit card receivables can be found in our latest Form 10-Q filing with the Securities and Exchange Commission under Management's Discussion and Analysis of Financial Condition and Results of Operations. Calculation of Non-GAAP Financial Measures This press release presents information about managed receivables, which is a non-GAAP financial measure provided as a supplement to the results provided in accordance with accounting principles generally accepted in the United States of America (GAAP). In addition to financial measures presented in accordance with GAAP, we present managed receivables, total managed yield, combined principal net charge-offs, and fair value to total managed receivables ratio, all of which are non-GAAP financial measures. These non-GAAP financial measures aid in the evaluation of the performance of our credit portfolios, including our risk management, servicing and collection activities and our valuation of purchased receivables. The credit performance of our managed receivables provides information concerning the quality of loan originations and the related credit risks inherent with the portfolios. Management relies heavily upon financial data and results prepared on the managed basis in order to manage our business, make planning decisions, evaluate our performance and allocate resources. These non-GAAP financial measures are presented for supplemental informational purposes only. These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or as a substitute for, GAAP financial measures. These non-GAAP financial measures may differ from the non-GAAP financial measures used by other companies. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures or the calculation of the non-GAAP financial measures are provided below for each of the fiscal periods indicated. These non-GAAP financial measures include only the performance of those receivables underlying consolidated subsidiaries (for receivables carried at amortized cost basis and fair value) and exclude the performance of receivables held by our former equity method investee. As the receivables underlying our former equity method investee reflect a small and diminishing portion of our overall receivables base, we do not believe their inclusion or exclusion in the overall results is material. Additionally, we calculate average managed receivables based on the quarter-end balances. The comparison of non-GAAP managed receivables to our GAAP financial statements requires an understanding that managed receivables reflect the face value of loans, interest and fees receivable without any consideration for potential loan losses or other adjustments to reflect fair value. A reconciliation of Loans at fair value to Total managed receivables is as follows: At or for the Three Months Ended 2025 2024 2023 (in Millions) Mar. 31Dec. 31Sep. 30Jun. 30Mar. 31Dec. 31Sep. 30Jun. 30 Loans at fair value $2,668.5 $2,630.3 $2,511.6 $2,277.4 $2,150.6 $2,173.8 $2,050.0 $1,916.1 Fair value mark against receivable (1) 37.8 94.5 142.5 137.7 167.5 237.5 265.2 257.9 Total managed receivables (2) $2,706.3 $2,724.8 $2,654.1 $2,415.1 $2,318.1 $2,411.3 $2,315.2 $2,174.0 Fair value to Total managed receivables ratio (3) 98.6% 96.5% 94.6% 94.3% 92.8% 90.2% 88.5% 88.1% (1) The Fair value mark against receivables reflects the difference between the face value of a receivable and the net present value of the expected cash flows associated with that receivable.(2) Total managed receivables are equal to the aggregate unpaid gross balance of loans carried at fair value.(3) The Fair value to Total managed receivables ratio is calculated using Loans at fair value as the numerator, and Total managed receivables as the denominator. A reconciliation of our operating revenues, net of finance and fee charge-offs, to comparable amounts used in our calculation of Total managed yield is as follows: At or for the Three Months Ended 2025 2024 2023 (in Millions) Mar. 31Dec. 31Sep. 30Jun. 30Mar. 31Dec. 31Sep. 30Jun. 30Consumer loans, including past due fees $238.5 $242.1 $245.3 $232.1 $220.0 $214.6 $214.6 $210.3 Fees and related income on earning assets 78.3 83.8 78.5 59.5 47.9 71.7 59.8 62.9 Other revenue 18.7 17.5 16.8 13.6 11.7 12.0 10.2 7.6 Total operating revenue and other income - CaaS Segment 335.5 343.4 340.6 305.2 279.6 298.3 284.6 280.8 Adjustments due to acceleration of merchant fee discount amortization under fair value accounting 0.1 0.7 (15.1) (12.6) 4.0 6.5 (6.8) (10.6) Adjustments due to acceleration of annual fees recognition under fair value accounting (4.2) (10.5) (8.0) 1.1 10.1 (12.6) (3.1) (9.8) Removal of finance charge-offs (70.0) (64.9) (60.6) (62.9) (63.7) (59.5) (47.1) (54.2) Total managed yield $261.4 $268.7 $256.9 $230.8 $230.0 $232.7 $227.6 $206.2 The calculation of Combined principal net charge-offs is as follows: At or for the Three Months Ended 2025 2024 2023 (in Millions) Mar. 31Dec. 31Sep. 30Jun. 30Mar. 31Dec. 31Sep. 30Jun. 30Charge-offs on loans at fair value $233.5 $213.1 $201.5 $217.0 $231.7 $215.2 $173.5 $180.0 Finance charge-offs (1) (70.0) (64.9) (60.6) (62.9) (63.7) (59.5) (47.1) (54.2) Combined principal net charge-offs $163.5 $148.2 $140.9 $154.1 $168.0 $155.7 $126.4 $125.8 (1) Finance charge-offs are included as a component of our Changes in fair value of loans in the condensed consolidated statements of income.

Atlanticus Reports First Quarter 2025 Financial Results

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