Credit Acceptance (CACC) Q2 2025 earnings summary

Executive summary

• Net income for Q2 2025 was $87.4M ($7.42/diluted share), rebounding from a net loss of $47.1M in Q2 2024, driven by lower provision for credit losses and higher finance charges, despite higher taxes and operating expenses.

• Loan portfolio average balance grew 6.8% year-over-year to $8.0B in Q2 2025, the highest ever, with the adjusted portfolio reaching $9.1B.

• Consumer Loan assignment unit and dollar volumes declined 14.6% and 18.8% year-over-year in Q2 2025.

• Over 85,000 contracts financed, $1.4 billion collected, and $63 million paid in dealer holdback.

• Approximately 530,000 shares (4.5% of shares outstanding at quarter start) were repurchased in Q2 2025.

Financial highlights

• Q2 2025 total revenue was $583.8M, up 8.5% year-over-year; finance charges rose 8.6% to $540.7M.

• Adjusted return on capital was 8.5%, with a cost of capital at 7.4%, resulting in a 110 basis point spread.

• Q2 2025 provision for credit losses fell 46.2% to $172.6M, but operating expenses increased 25% to $155.5M, mainly due to a $23.4M contingent legal loss and higher compensation.

• Interest expense rose 13% to $118.1M, driven by higher average debt balances.

• Economic profit per diluted share was $2.07, down 54.8% year-over-year.

Outlook and guidance

• Management expects continued pressure on Consumer Loan assignment volumes due to lower demand and capital constraints.

• Loans originated post-Q3 2024 scorecard change are performing as expected, with no signs of underperformance.

• Initial forecasted collection rates for 2025 remain above 65%, reflecting a different business mix and ongoing adjustments.

• Forecasted collection rates for 2022–2024 Consumer Loans were reduced due to underperformance, with further adjustments possible if trends persist.

• Anticipates easier year-over-year comparables after Q3 due to last year’s record volume and scorecard changes.