goeasy (GSY) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 results with loan originations of CAD 827 million, up 24% year-over-year, and loan portfolio reaching CAD 4.14 billion, up 29% year-over-year.

• Revenue grew 25% to CAD 378 million, with net income up 18% to CAD 65.4 million and adjusted net income up 27% to CAD 71.3 million; adjusted diluted EPS rose 25% to CAD 4.10.

• Efficiency ratio improved to 26.9%, reflecting strong operating leverage.

• Application volume rose 34% year-over-year, generating 48,200 new customers, up 15%, with total customers exceeding 1.4 million.

• CEO transition announced, with a formal search underway; outgoing CEO to remain on the board.

Financial highlights

• Loan originations reached a record CAD 827 million, up 24% year-over-year; loan portfolio ended at CAD 4.14 billion, up 29% year-over-year.

• Total revenue was a record CAD 378 million, up 25% from Q2 2023; operating income was CAD 147 million, up 33%.

• Adjusted operating income was CAD 153 million (+34%), adjusted net income CAD 71.3 million (+27%), and adjusted EPS CAD 4.10 (+25%).

• Annualized net charge-off rate was 9.3%, within the 8–10% target range; loan loss provision rate decreased to 7.31%.

• Free cash flow from operations for the last twelve months was CAD 389 million, up from CAD 320 million a year ago.

Outlook and guidance

• Revised 3-year forecast: loan receivables expected to reach CAD 4.55–4.65 billion in 2024, CAD 5.30–5.60 billion in 2025, and CAD 6–6.4 billion by 2026.

• 2024 revenue expected at CAD 1.50–1.60 billion, growing to CAD 1.75–1.95 billion by 2026.

• Q3 loan portfolio growth expected between CAD 235–265 million; annualized net charge-off rate forecasted at 8.75–9.75%.

• Yield and loss ratio for 2025 increased by 25 bps due to deferral of rate cap implementation.

• Net charge-offs expected to remain within 7.5–10% range; return on equity targeted above 21%.