PRAA

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 5:00 p.m. ET President and Chief Executive Officer - Martin Sjolund Executive Vice President and Chief Financial Officer - Rakesh Sehgal Vice President, Investor Relations - Najim Mostamand Need a quote from a Motley Fool analyst? Email [email protected] Operator: Good evening, and welcome to PRA Group's Second Quarter 2026 Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the call over to Mr. Najim Mostamand, Vice President, Investor Relations for PRA Group. Please go ahead. Najim Mostamand: Thank you, operator. Good evening, everyone, and thank you for joining us. With me today are Martin Sjolund, President and Chief Executive Officer; and Rakesh Sehgal, Executive Vice President and Chief Financial Officer. We will make forward-looking statements during the call, which are based on management's current beliefs, projections, assumptions and expectations. We assume no obligation to revise or update these statements. We caution listeners that these forward-looking statements are subject to risks, uncertainties, assumptions and other factors that could cause our actual results to differ materially from our expectations. Please refer to our earnings press release issued today and our SEC filings for a detailed discussion of these factors. The earnings release, the slide presentation that we will use during today's call and our SEC filings can all be found in the Investor Relations section of our website at www.pragroup.com. Additionally, a replay of this call will be available shortly after its conclusion, and the replay dial-in information is included in the earnings press release. All comparisons mentioned today will be between Q2 2026 and Q2 2025, unless otherwise noted. During our call, we will discuss certain financial measures on an adjusted basis. Please refer to the appendix of the slide presentation used during this call for a reconciliation of the most directly comparable U.S. GAAP financial measures to non-GAAP financial measures. And with that, I'd now like to turn the call over to Martin. Martin Sjolund: Thank you, Najim, and thank you, everyone, for joining us this evening. I wanted to start by providing a quick overview of our financial results for the quarter. As you can see from this slide, we continue to execute against our PRA 3.0 strategy introduced earlier this year to drive higher returns and long-term shareholder value. Let me start with cash. Cash collections grew 4% year-over-year to $559 million. We continue to generate healthy cash growth across the business, particularly in our U.S. legal and digital channels as well as in Europe. Cash efficiency remained strong at 61% despite the continued investment in future growth initiatives. This demonstrates disciplined cost management. Turning to portfolio purchases. We invested $297 million during the quarter, which was in line with our expectations. As we have discussed previously, we remain focused on net returns, and we continue to deploy capital in a disciplined manner toward opportunities that meet our return requirements. Adjusted EBITDA for the last 12 months increased to $1.4 billion, up 10% year-over-year. The increase helped drive net leverage down to 2.67x at quarter end, reflecting continued cash collections growth and disciplined cost management. Finally, net income attributable to PRA increased to $58 million during the quarter. Our earnings this quarter benefited from a significant increase in our European ERC, reflecting more than 6 years of strong performance. We will discuss this in more detail later on the call. Overall, the second quarter represented another step forward for PRA. We're continuing to drive improved financial performance, strengthen our balance sheet and execute against the strategic priorities we outlined earlier in the year. I'm encouraged by the progress we have made and confident in the direction of the business. As a quick reminder, our strategic plan is called PRA 3.0 and it's organized around 3 important vectors. The first is capital and investing, where we are focused on being disciplined allocators of capital. This includes investing in the highest net return portfolio opportunities globally, maintaining a strong financial profile, improving the predictability of our earnings and deploying capital in ways that create value for shareholders. The second vector is operations, technology and data, where we are focused on building a leaner, more flexible and more technology-enabled business. This includes modernizing our technology infrastructure, leveraging data and AI and continuing to improve efficiency and drive cost savings across the business as we shift to a leaner and more variable cost structure. The third is people and culture, where we are focused on investing in talent, strengthening our performance culture, aligning incentives with shareholder interests and maintaining the strong governance and values that have long been important to PRA. Our team is making rapid progress on the execution of this strategy, and I'm excited to share a number of major milestones we achieved this past quarter. Starting with capital and investing. As we've shared before, our European business has developed a long track record of success, overperforming its cash targets for 26 quarters in a row, including a 9% overperformance in the past 12 months. This sustained overperformance, even with the ongoing portfolio write-ups over time, demonstrates that we have consistently collected more from our portfolios than we underwrote. These results reflect many years of disciplined investing, investments in technology and solid operational execution by our European team. As part of our quarterly portfolio assessment, we performed a comprehensive review of our European portfolios in the second quarter. This review benefited from our extensive track record, deep data set and enhancements we've made to our analytical processes and forecasting capabilities over time. As a result, we increased our European ERC by $349 million. Rakesh will discuss the financial implications in more detail, but I view this as an important milestone that better aligns our European ERC with the long trend of historical overperformance of the European portfolios. We also continue to maintain a disciplined capital allocation framework. We are focused on making portfolio purchases at attractive returns and investments that enhance our operating performance. We also undertake opportunistic share repurchases when we see an opportunity to drive shareholder value. During the quarter, we repurchased $10 million of our shares, bringing our total to approximately $40 million over the past 12 months. Recently, our Board authorized a new share repurchase program for up to $150 million, providing additional flexibility in how we deploy capital and reflecting our commitment to long-term shareholder value. The second vector of our 3.0 strategy is operations, technology and data. We've made some very significant progress this quarter. As I've said before, I'm very focused on cost discipline, which is essential to long-term success. Our European business is already one of the most cost-efficient platforms in that region, and we've been working hard to continue improving our cost structure in our U.S. business as well. During the second quarter, we implemented a second wave of cost reductions to simplify the organization and drive further savings. We eliminated 100 U.S. corporate and overhead roles and 35 offshore roles while also completing other cost reduction initiatives. These actions are expected to generate approximately $20 million of annualized savings on a net basis after factoring in other offsetting costs. Since the start of 2025, which included the first wave of cost reductions taken in Q4 of last year, we have now eliminated more than 215 corporate and overhead roles, a reduction of more than 25%. This is in addition to reducing more than 575 call center roles. We expect the first and second cost reduction waves to generate in aggregate approximately $35 million of annualized savings on a net basis. I would also point out that we have continued to grow our cash collections and adjusted EBITDA throughout these reductions. These changes are never easy, and I want to recognize the staff who have contributed to PRA over many years. However, these actions were necessary to better align our cost structure with the needs of the business and to help us become a faster, more agile organization. During the quarter, we also continued to simplify our call center footprint, closing 2 additional U.S. sites and transitioning those operations to a work-from-home model. We now have 1 remaining U.S. call center versus 7 in 2023, a significant achievement that will drive additional cost savings and simplify our setup. In addition, we consolidated our 2 offshore third-party collection sites to 1 location, which has been performing at our target levels. These actions demonstrate how our offshoring strategy is enabling flexibility and helping to make our cost structure more variable. Technology modernization also remains a key priority, helping us reduce cost and complexity. Last month, we successfully launched our cloud-based omnichannel contact platform in the U.S. This global platform has already been in place in Europe for several years. It allows us to manage customer interactions across voice, digital, chat and e-mail through a single modern platform while providing a more seamless customer experience and better insights for our call center agents. This was an important milestone because it means most of our global markets now operate on a common contact platform, creating greater operational consistency, enhancing our collection capabilities and positioning us for further innovation in the future. AI also remains a significant area of focus. During the quarter, we centralized leadership and oversight of our global AI initiatives through a dedicated team led out of Charlotte. This team is focused on accelerating the deployment of AI-enabled solutions, particularly around automation, analytics and operational efficiency. We continue to focus on practical business applications that can improve productivity, reduce costs and enhance decision-making. Finally, under people and culture, we continue to simplify the organization and reduce management layers, creating a more agile decision-making structure. At the end of the day, the PRA 3.0 strategy is only successful if we have the right people, culture and accountability mechanisms in place. We recently launched a series of people initiatives designed to strengthen our performance culture. I personally spent time this quarter touring offices and speaking with staff. We have a talented and hard-working team, and I continue to be encouraged by the engagement and commitment I see across the organization. We're building momentum across all 3 vectors and executing with pace and rigor. The initiatives we've implemented are beginning to translate into a simpler organization, a more flexible operating model and improved financial results. With that, I'll turn the call over to Rakesh to discuss our second quarter financial results in more detail. Rakesh Sehgal: Thanks, Martin. We purchased $297 million of portfolios during the quarter, which was in line with our expectations. Purchases in Europe totaled $174 million, while purchases in the U.S. were $109 million. Our global diversification and capital allocation framework provide us the flexibility to deploy capital where we see the most attractive returns. Supply remains healthy in both the U.S. and Europe as we focus on portfolios that meet our return thresholds. In the U.S., credit card balances remain elevated and charge-off rates continue to support portfolio supply. In Europe, portfolio supply has seen an uptick, and we benefited from this dynamic in the second quarter. Global purchase price multiples remained steady in the second quarter. Our Europe core purchase price multiple remained stable on a sequential basis at 1.86x, while our U.S. core purchase price multiple increased to 2.17x. ERC at quarter end increased to a record $8.9 billion, up 7% year-over-year. Europe represented 54% of ERC, while the U.S. represented 40%, giving us a highly diversified portfolio across markets and economic cycles. Based on the average purchase price multiples for the first half of 2026, we would need to invest $1 billion over the next 12 months to maintain current ERC levels. Cash collections in the second quarter grew 4% year-over-year to $559 million with the U.S. growing 6% and Europe growing 4%. U.S. cash growth was driven by our legal and digital channels. Legal cash collections grew 26% to $150 million and now represents more than half of all U.S. core cash collections. The increase in legal cash collections reflects investments made in prior periods as accounts move through the legal channel. We continue to see strong performance from those investments and remain on pace for another strong year of legal cash collections. The legal channel remains an important component of our collection strategy, but it is not the channel we lead with or prefer. Before accounts are considered for the legal process, we make extensive outreach efforts over an extended period of time through numerous other channels, providing customers multiple opportunities to voluntarily engage with us. For the subset of customers who do not engage with us voluntarily, but have an ability to pay, we will consider using the legal channel when our models suggest that the investment in upfront court costs is economical. Our U.S. digital collections continue to experience healthy growth as we expanded customer engagement through the channel. In fact, nearly half of the new payment plans created during the quarter came from the digital channel. Europe cash growth of 4% in the second quarter was distributed broadly across our markets. Based on the internal and external metrics we continue to monitor, our customer profile remains stable across both the U.S. and Europe. Total cash collections performed 4% above our expectations, with the U.S. performing on target and Europe once again exceeding expectations, overperforming by 9%. Europe has consistently exceeded cash expectations for the past 6 years. Given this sustained cash overperformance and enhancements we have made to our analytical processes and forecasting capabilities, we performed a comprehensive review of our European portfolios as part of our quarterly portfolio assessment. The review covered the majority of vintages across our European markets and resulted in $349 million increase in European ERC. This significant increase in ERC will support higher portfolio income going forward, which is the more predictable component of our revenue. We expect approximately $260 million of additional portfolio income to be recognized over the remaining life of the European cash curves, which extend more than 10 years from the time of purchase. This translates to an average annualized increase in portfolio income of approximately $25 million in the near term. As a result of the increase in ERC, we expect more moderate levels of changes in expected recoveries over the long term. Total revenues increased 29% to $372 million. The increase was primarily driven by higher changes in expected recoveries, largely reflecting the increase in Europe ERC this quarter. Portfolio income grew 7% in the quarter to $268 million. Portfolio income represents the largest component of our revenue stream, and we were pleased to see portfolio income growth exceed cash collections growth again this quarter. Changes in expected recoveries totaled $97 million this quarter. Approximately $23 million or 23% of this amount came from recoveries collected in excess of forecast or cash received above our expectations. The remaining $74 million or 77% came from changes in expected future recoveries or the net present value of changes to our ERC. Total operating expenses were $219 million for the quarter, up $16 million year-over-year. $15 million of this increase was driven by continued investment in the legal channel to support future cash collections growth. Another $5 million was due to onetime costs related to the reorganization of our U.S. operations. Let me start by going over the reorganization expenses. The $5 million of reorganization costs was comprised of $2 million of severance expenses related to the corporate and overhead headcount reduction in the second quarter and $3 million related to site consolidation of our onshore owned and leased call center facilities. Once the impacted owned facilities are sold and leases terminated, we will have realized approximately $4 million of gross annualized reduction in operating expenses. We have reduced our call center footprint to 1 onshore site from 7 sites in 2023. Legal collection costs are expected to increase as more accounts flow through the legal channel and deliver more cash collections. However, we expect the growth rate of our legal collection costs for full year 2026 to be more moderate than the growth rates we experienced over the past couple of years. Compensation and benefits expenses decreased 7%, primarily reflecting the workforce reduction actions implemented over the past year. Communication expenses were down 19% this quarter as we continue to benefit from our shift towards digital engagement strategies and reduce reliance on traditional letter-based communications. Our digital initiatives continue to deliver positive results with digital cash collections growing while also helping to lower costs. Moving below the operating line. Net interest expense was $64 million for the quarter, up $2 million year-over-year, primarily due to a higher debt balance. Our effective tax rate was approximately 33% during the quarter. And for full year 2026, we expect our effective tax rate to be 30%, depending on income mix from various countries and other factors. Net income increased to $58 million during the quarter or $1.51 per diluted share, reflecting strong revenue growth and continued cost discipline across the organization. As shown on the right side of the slide, adjusted net income and adjusted return on average tangible equity have both continued to trend in the right direction. We are starting to see the benefits of the operational initiatives and cost actions we have implemented across the business. In addition to net income, we also focused on adjusted EBITDA, which provides a more cash-oriented view of the business. Adjusted EBITDA for the last 12 months was $1.4 billion, up 10% year-over-year. This increase reflects continued cash collections growth, disciplined cost management and the execution against our PRA 3.0 strategy. Our borrowings have largely been in a narrow range over the past several quarters, while our adjusted EBITDA continues to grow, helping drive lower net leverage. Net leverage at quarter end declined to 2.67x from 2.71x in the first quarter and from a peak of 2.87x in the third quarter of 2024. This is consistent with our objective of continuing to move towards the mid-2x area over time. Turning to funding and capital allocation. We continue to maintain a strong funding profile with ample liquidity and a well-diversified capital structure supported by both bank and bond debt. As of June 30, we had $3.1 billion in total committed capital under our credit facilities with total availability of approximately $1 billion, comprised of $733 million available based on current ERC and $265 million of additional availability that we can draw from subject to borrowing base and debt covenants, including advance rates. During the quarter, we also completed the refinancing of our $730 million European credit facility maintaining the same commitment level and pricing while extending the maturity by an additional 5 years. We want to thank our lending partners who have continued to support us over the years. We have no debt maturities until February 2028, and our debt maturity profile remains well staggered. Our capital allocation priorities remain unchanged. First, we will continue to make disciplined portfolio investments that meet our return requirements. Second, we will continue to invest in initiatives that enhance the operating performance of the business, including legal collections, digital capabilities and technology modernization. Finally, we will continue to view opportunistic share repurchases as part of our overall capital allocation strategy to drive shareholder value. During the second quarter, we repurchased $10 million of shares, bringing total repurchases over the last 12 months to $40 million. As Martin mentioned, our Board also authorized a new share repurchase program for up to $150 million, providing additional flexibility as we evaluate future capital allocation opportunities to enhance value for our shareholders. As a reminder, the amount and timing of share repurchases depend on several factors, including our capital allocation priorities, financial performance, market conditions, valuation, leverage, liquidity and the terms of our existing debt agreements. Overall, we believe our improving financial profile, strong capital structure and disciplined capital allocation strategy provides significant flexibility as we continue executing against PRA 3.0. I'll now turn it back to Martin. Martin Sjolund: Thanks, Rakesh. To summarize, we are executing strongly against our PRA 3.0 strategy, and our teams are moving with pace and rigor. In capital and investing, we completed a comprehensive review of our European portfolios, recognizing the business' long track record of performance. In operations, technology and data, we have significantly reduced costs, further consolidated our call center footprint and successfully launched our new omnichannel contact platform in the U.S. In people and culture, we have continued to simplify the organization, reduce management layers, strengthen our performance culture and further aligned incentives with shareholder interest. If we take a step back and look at the bigger picture, we're seeing the benefits of these actions reflected in our results. ERC is at a record level. Adjusted EBITDA is near an all-time high. Forecasting accuracy has improved. Leverage has continued to decline from its peak in 2024, and we maintain a strong funding profile. Looking ahead, our priorities remain clear. We will continue executing against our PRA 3.0 strategy and believe the actions we are taking today position us to deliver higher returns, stronger financial performance and long-term shareholder value. While markets and operating conditions will evolve, I'm confident that we will continue to see the benefits of our investments and operational improvements flow through to the financial results. Finally, I would like to thank our employees around the world for their hard work and commitment. The progress we have discussed today is a direct result of their efforts and dedication. Thank you, everyone, for your time, support and continued confidence in PRA. And with that, we'll open it up for questions. Operator: [Operator Instructions] Our first question comes from the line of David Scharf from Citizens Capital Markets. Zachary Oster: This is Zach on for David. So obviously, good dynamics coming out of the quarter in the European segment. But I wanted to see if we can get a little bit more color on the competitive environment there and kind of where competitors are moving and kind of what the activity level is that they're seeing from other buyers in the market. Martin Sjolund: Yes, Zach, I can -- overall, I would say the supply environment right now is looking pretty stable, both in the U.S. and Europe. We think that volumes generally look pretty good. In terms of the dynamics there, as I've always said, both for the U.S. and Europe, the markets are competitive. So that's why I think it's so important for us to be disciplined in our buying and to have the global diversification that we've got. So I've said on these calls before, we don't want to grow for growth's sake. We really want to make sure we allocate capital in a disciplined way. And that's what we did this quarter. So if I reflect on the quarter, our -- we basically invested according to our plan. Our multiples ticked up, our leverage ticked down, and that was exactly the plan we laid out. So overall, the supply environment remains pretty good. And -- but both markets, both regions remain competitive, I would say. Zachary Oster: Got it. That's helpful color. I wanted to just squeeze in one more question just on the legal side. Yes, it sounds like legal will be up a little bit moderately year-over-year, but it's still not the primary driver of the business. I guess I wanted to kind of see if there's a natural kind of ceiling or kind of a way to think about the share that legal could represent in the business. Rakesh Sehgal: Zach, it's Rakesh. I'll take that. Look, as we've said, legal is not the channel that we lead with. We make extensive efforts to engage with our customers through other channels such as calling, texting, e-mailing. And we do that over an extended period of time where we make offers to our customers. But in cases where the customers do not engage with us voluntarily, but our models and our data, they all show that the customers have an ability to pay, we will consider an account for the legal channel. Keep in mind that legal costs, they're really driven by the mix of portfolios we buy and also secondly, by the increase in the accounts that our models are determining that accounts are eligible for the legal channel as we continue to improve our legal processes. And that's really important given some of the underinvestment we had made in the channel some years back. So the investments in the legal channel that we've been making recently, they've continued to generate really strong cash collections. And we saw that this quarter. Earlier, I mentioned that U.S. cash collections in the legal channel grew by 26%. And so you're right. As we look ahead, total legal costs are expected to continue to increase as more of these accounts move through the channel. However, what's really important to note is that the growth rate should moderate relative to the prior years. So keep in mind, Zach, in 2024, our growth rate was 40% on legal cost. Last year in '25, that was 30%. And as we look out to 2026, we believe that, that growth rate would moderate and would be lower than what we saw in the last 2 years. Zachary Oster: Got it. And then if I could just squeeze in one last question. Just on the, I guess, kind of a pull forward of the upside in ERC. So obviously, it seems like there should be more moderate European kind of changes in recoveries going forward. Is there kind of a sense of the magnitude of that? Maybe they should be kind of half of what was previously projected. Any kind of, yes, metrics in that sense would be helpful. Martin Sjolund: Yes. So as we talked about earlier, the European business has a long track record of significant overperformance. The core drivers of that are really good operational execution, disciplined investing over time and technology investments that we've made. So we've also improved our underwriting and our analytical capabilities over time as well. So as we came into the quarter, I asked our European underwriting team to leverage these tools and do a deep dive on the portfolio. So that's where we came out with this $349 million ERC increase. And that's going to drive an increase in the portfolio income going forward as well. So I think it's really just reflective of the long track record of performance that we've had. Operator: Our next question is from Mark Hughes from Truist. Mark Hughes: Martin, you had talked about or mentioned an uptick in Europe. I know you -- in the last question, you said continues to be healthy. Didn't elaborate on Europe. But what was driving the uptick? Any particular end markets or different behavior or just a random variation? Martin Sjolund: Well, there's -- I guess, it depends which uptick we're talking about. There are a couple of things here. One was on the multiple, which picked up, but also on the overall supply environment. So Q2, we had a record investment quarter actually for Europe. And I wouldn't pin it down to any particular one-off event. It was just a generally decent supply environment, and we were successful in the bidding that we had there. As you know from prior calls, the European market is more spot driven. So sometimes the investment quantum can go -- can vary a little bit because there are more spot deals there. Mark Hughes: Yes. Does that motivate you to perhaps be a little more conservative in your bidding in the U.S.? We just thinking hope you had it. Martin Sjolund: Overall, we try to take -- sorry, keep going Mark, sorry. Mark Hughes: I was just going to elaborate just to be more clear that having some success in Europe and wanting to have a kind of a budget target in mind, you backed off a little bit on the U.S. I was just curious if that was the trajectory of the quarter. Martin Sjolund: Yes. I mean, we think about capital allocation on a global basis, and we're solving for certain return hurdles that we're trying to achieve. So it really does depend as the quarter progresses, how the bidding is evolving. So we have our return hurdles, I would say. And we don't necessarily set out to say we're going to hit a certain volume in a given market. It depends a little bit on how the bidding plays out. So as I said earlier, we ended up investing what we had planned to invest for the quarter. We met the return hurdles that we had planned for, and we were satisfied with the outcome of the quarter from a buying perspective. Rakesh Sehgal: Yes. And Mark, if I could just add, I think it's the global diversification really works to our benefit. So we put out targets, as you know, that long-term target is to invest between $1 billion to $1.3 billion. And we said that for this year, we would be pretty much in line with what we had achieved last year. But really, what we do is we look at the opportunities and the supply coming to market irrespective of the country, and we will deploy capital. And it's not that there is a certain target that we have within each country, and we got to meet it. And we're not going to just grow for growth's sake. Those portfolios have to meet our return thresholds. Mark Hughes: Yes. Very good. I was going to ask you about the target of $1 billion to $1.3 billion. It sounds like that is unchanged? Rakesh Sehgal: Yes, that's still the range we've laid out. Given we have markets where we have a lot of spot activity, too, we're not going to put an exact number out there, but that's still the range that we're targeting looking forward. Mark Hughes: Yes. When I look at your other operating expenses and personnel expenses, is this a pretty good run rate? I know we run into some seasonality, but I think collections are usually seasonally, I guess, pretty consistent in the back half relative to the front half. But this level of expense, and I'm looking particularly at compensation and employee costs and then other operating expenses, is this a good level when we think about the back half of the year? Martin Sjolund: I'll let Rakesh comment on the outlook there. But what I would mention is just the cost restructuring that we did. We're starting to see now the benefits of the cost restructuring we did back in Q4 of last year. But in Q2, we've done an additional wave of cost reduction, where, as I mentioned, we've reduced 100 corporate roles -- overhead roles here in the U.S. an additional 35 offshore roles. So there's an additional net savings that we're expecting from that. And I mentioned $20 million there. So I would say that over time, you'll start to see these working their way into the number. Rakesh, you can probably give more color on that. Rakesh Sehgal: Yes. What I would say is, first of all, keep in mind, Mark, that this quarter, we had $5 million of onetime expenses in that $219 million number. And so when you look at the back half, we're going to continue to invest in the business, and so for the second half, you should assume that we would have on a quarterly basis, expenses that are pretty much fairly in line with this quarter, excluding those onetime charges. Mark Hughes: Yes. Where did those -- the $5 million, where does that sit in terms of the line items? Rakesh Sehgal: Yes. So as I mentioned, there are 2 big items. One is $2 million related to severance. And so that would be in our compensation and employee services line. And then we have another $3 million that's related to asset impairment. And so that's further in the other OpEx line. Mark Hughes: Okay, which even including those numbers look pretty good, I observe. Okay. Operator: [Operator Instructions] Our next question is from Robert Dodd from Raymond James. Robert Dodd: Obviously, lots of big numbers moving around with the curve adjustments, et cetera. So if I can dig into that a little bit more, and I mean, you kind of addressed it partly in the first question, but -- so Europe outperformed in cash collections by 9%, so whatever. If I look at your total ERC adjustment for primarily Europe, it looks like it was about 8% of last quarter's ERC, right? So can I read into that, the curve adjustments essentially embed all of the outperformance that we've seen out of Europe, i.e., if the curves had been what they are now and the ESC have been what it is now, Europe would have done -- would have performed in line with expectations. Does that make sense? Is that how it shakes out in terms of these adjustments? So you factored everything in rather than left yourself something in the back pocket? Martin Sjolund: Overall, I would say that, as I mentioned before, we had our team sit down and review this. We've gone through market by market and in some cases, vintage and portfolio by portfolio. So this now represents our best estimate going forward on what we expect to see. There's always a little bit of volatility on these things because we're predicting the future. But we feel confident with the projection that we have now looking forward. Rakesh Sehgal: Yes. And Robert, what I would add is keep in mind that 9% this quarter was an overperformance relative to a target that was set back in March. And then the comprehensive review that we did was part of the quarterly assessment at the end of Q2, so as of June. So as we move forward, what you're going to announce -- sorry, go ahead. I think you're going to say something. Robert Dodd: No, no, go ahead. Sorry. Rakesh Sehgal: Yes. Yes. And so what you're now going to see is given this increase in ERC, you're going to see higher portfolio income, which is the more predictable part of our revenue line item as we move forward. And when you look at just 2026, you're going to have a very nominal impact to our net income because on an annualized basis, we're going to see a $25 million uptick in portfolio income. And you can take a run rate for the next 6 months in terms of how much of an uptick we expect from these European portfolio ERC increases in the second half. And so when you look at also just the ERC balance this quarter, remember, it is dependent on purchase cash collected and what those multiples are with respect to the cash that was collected and then also what the write-ups were. So a significant portion of this ERC increase this quarter was because of the ERC uplift from the European ERC review that we did. Robert Dodd: Yes. Understood. Understood. Yes, I think I got -- I got the $25 million a year, $216 million incremental over the life of the adjustment, et cetera. So got that. Understood. On the pricing in the U.S., so I mean, the multiple in the U.S. for '26, I think you said it went up to 2.17 in the second quarter. Obviously, for the first half, it's 2.08, right? So obviously, I can't remember what it was in the first quarter, but it was obviously lower than that, right, with the 2.17. So is there -- I mean, has there been any -- is that just mix and random things? Or has there been an incremental shift in how attractive U.S. pricing is now? Martin Sjolund: Yes. No, Robert, we -- back in Q1, one of the things that we talked about then some of the new segments that we had invested in that came with lower multiples, but also lower cost to collect. And I would say that Q2 is more of a normalization for us of the multiples. As I described to an earlier question, we think globally in terms of how we allocate capital, and we solve for the best returns that we're able to get. So we're trying to be disciplined about that. Having been in this business for 15 years, I think that long-term discipline and focus on return is really important. So what you see -- the way you see our mix shaping out is a result of the diversification that we have. Robert Dodd: Yes, understood. Yes, multiple isn't the whole story from return, obviously. And then just on the -- just lastly on digital, I think you said -- I wrote this down, and I may not have been what you said, but I think you said like you've expanded in the digital channel. This was after the comment about legal. Expanded customer engagement and nearly half of new payment plans were from the digital channel this quarter. To that, I mean, could you give us any more color on like what's changed, if anything, is this a function of like the more implementation of the technology and the AI? Or is it just what exactly has changed to enhance that engagement and now nearly half, and it's obviously a lot lower cost to do digital than it is mail a letter these days. Martin Sjolund: Yes. So that's right. What you just mentioned is right. So we have seen healthy growth in the digital channel. We've been investing in digital, both in Europe and the U.S. in different ways. So we really believe that in the longer term, that there's a shift to the business and digital and in the future, AI tools are going to become more and more important. The results we're seeing reflect that we're able to leverage a more broad range of digital channels in an integrated way. We've got a really good digital team that's testing different campaigns and approaches, and I think customers more and more come from an environment where they like to interact digitally as opposed to speaking on the phone with each other. So I think this is where things are going. I'd also mention that, as I said earlier, we did also implement our new contact platform in the U.S. this quarter. So that's a very big project that also enables -- it integrates calling with other digital channels. So things like SMSing or e-mailing and so on or chat. We now have the possibility of having an integrated contact platform that's omnichannel. So that's a big milestone. We've been using this platform for years in Europe, and now we're rolling it out here in the U.S. as well. So I think that's what's going to continue this push that we're making on modernizing the technology and leveraging digital. Operator: Our next question comes from the line of David Scharf from Citizens Capital Markets. David Scharf: I'm hopping between calls, so I missed the prepared remarks, so I apologize if this has been addressed already. I was wondering, Martin, when I see the presentation on the areas where -- of operations, tech and data, kind of the continued investments, I guess a 2-part question, and I'm referencing sort of the advances in IT modernization, operating efficiencies, expanding AI-enabled solutions. Is the bulk of the kind of investing -- is the bulk of it completed by the end of '26? Is this sort of -- is there more of an annualized kind of expense rate over the next 3 years we should think about? Just trying to get a sense for -- with all the changes and improvements in investing and reconfiguring and offshoring, if maybe there's kind of a report card you can provide us about how far along you would characterize the plan? Martin Sjolund: Yes. So first of all, I mean, on the cost side, as we discussed earlier, we did undertake a significant cost savings exercise this quarter. So that was in addition to what we did back in Q4. So when it comes to that side of it, which is just kind of like overhead cost, I think we've made a big push there. We will always continue to look for efficiencies as we're able to leverage new technologies. To your question on where we are on the road map, this has been going on for some time. And so there's the -- what do we call it, the contact platform, the omnichannel contact platform is a significant milestone this quarter. We also, in Europe, launched a mobile app, which was the milestone. We have other projects though that are continuing on. So we're in the process of migrating into the cloud. We expect to have that done by the end of the year. And then we have other important technology projects that are going to span multiple years as we continue to modernize the technology. On the cost side, though, these aren't -- I don't think they're massive investments. I mean the technology investments are in the low tens of millions spread across several years. So it's not hugely material if I compare to the legal investments that we're making and so on. So what you're going to see going forward is a reduction in the compensation line as we become more efficient and more lean there. Rakesh talked earlier about our legal investments, but those are obviously direct investments and activities that we expect to generate cash going forward. And then the technology road map is really continuing on in the background where we've achieved a couple of big milestones this first half of the year. We expect some more by the end of the year. And then there's a couple of projects that continue beyond that. So that's how I would think about it. David Scharf: Got it. No, that's helpful. And maybe just one follow-up, kind of same topic. A few years ago, there was obviously a lot of discussion about more offshoring, whether it was certain outsourced processes or just seats. As you think about the increase in the digital channel as well as this omnichannel platform that you brought to the U.S., is this an industry that 5 years from now or 3 years from now is going to be less -- the cost structure is going to be less determined by location, where the seats are? Is it going to be less of a labor-intensive business? Just trying to get a sense for what some of the other factors are that can increase cash efficiency or reduce collection costs. Martin Sjolund: Yes, that's a good question. And I think it's really interesting to think about the long-term trend in the industry. I mean having been here for 15 years myself, it used to be an industry where you had call centers in the cheapest location you could find and you called as much as you could and you sent a lot of letters. I think things have moved on from there. I see it as a technology-enabled data and analytics industry where capital allocation and so on is extremely important. So if you look at what PRA has been through, we've gone from 7 U.S. call centers down to 1. We've further rationalized even the offshore to one location now. We're seeing digital continue to grow. And we're only really scratching the surface of the AI tools that are out there, where I think there's a lot of opportunity to enhance productivity, in particular, of back-office functions and things like that. And in the future, I think we can provide greater customer support as well using those tools. So I do think that this trend will continue. And the investments that we're making on the technology side are all geared at enabling us to do this in the future. So I think there will always be an important role for calling and customer contact. People have complex situations and so on. And we deal with customers who -- some of whom are in financially challenging situations and there are calls that you're always going to want to have a person take those calls. And we have very skilled and experienced agents, too, I should say. So I think there will always be a role there. But I do think that over time, you'll see more and more productivity coming -- being enabled by these technology investments. Operator: There are no more questions at this time. I would now like to turn the conference back to Martin. Martin Sjolund: Yes. Thank you. Well, thanks, everyone, for listening. Just to sum up, I think we're really executing on the strategy that we've laid out. If we take a step back, we are starting to see the benefits of this in our results. So our ERC is at a record level. Adjusted EBITDA is near an all-time high. Our forecasting accuracy has improved. Our leverage has continued to decline, and we maintain a really strong funding profile. So I think we're making really good progress, and I think we're in good shape. So thank you for listening. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. Before you buy stock in PRA Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and PRA Group wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $400,209!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,375,393!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 13, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. PRA Group (PRAA) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

PRA Group, Inc. PRAA delivered second-quarter 2026 earnings per share of $1.51, topping the Zacks Consensus Estimate of 52 cents. The bottom line increased 39.8% year over year. Total revenues were $372.2 million, beating the consensus mark of $313 million and rising 29.4% year over year. The strong quarterly results benefited from stronger cash generation across geographies, aided by continued strength in the U.S. legal and digital collections channel and solid performance in Europe. Strong portfolio income also contributed to the upside, partly offset by an elevated expense level. PRA Group, Inc. price-consensus-eps-surprise-chart | PRA Group, Inc. Quote PRAA’s net income of $58.9 million increased 28.9% year over year. Other revenues came in at $7.5 million, which soared 115.2% year over year. PRAA’s cash collections increased to $558.5 million, up 14% from the prior-year quarter, supported by continued momentum in U.S. legal and digital collections as well as strength in Europe. The metric came in lower than the Zacks Consensus Estimate of $561.9 million. The cash efficiency ratio was 61%. By region, U.S. Core cash collections totaled $269.7 million, while Europe Core collections were $200.4 million. The company also generated $49.4 million of collections from other markets, reflecting its diversified footprint. PRA Group’s portfolio income increased 7% year over year to $267.8 million, which management attributed to strong recent purchases at improved returns. Changes in expected recoveries contributed meaningfully as well, totaling $96.9 million in the quarter. Total portfolio revenues rose to $364.7 million compared with $284.2 million a year ago. PRAA’s operating expenses rose $16.3 million year over year to $218.9 million. The largest driver was a rise in legal collection costs, which management tied to investments intended to support future cash collections growth. Offsetting some pressure, compensation and benefits declined $5 million, driven by reductions in workforce and implementation of other cost actions. Communication expense also decreased $2 million as the company used more cost-efficient collection strategies. PRA Group purchased $296.6 million of nonperforming loan portfolios in the quarter, down 14.4% year over year, with purchases spanning the United States, Europe and other markets. Management emphasized an approach focused on higher net returns while balancing investments and leverage. Estimated remaining collections were $8.9 billion at quarter-end, up 7% year over year. The company also disclosed forward flow commitments of $219 million over the next 12 months, led by Europe and the United States. PRA Group exited the second quarter with cash and cash equivalents of $132.4 million, which rose 26.8% from the figure at 2025-end. Total assets of $5.2 billion increased 2.7% from the 2025-end level. Borrowings were $3.8 billion, up 1.7% from the figure as of Dec. 31, 2025. Total equity of $1.1 billion grew 7% from the figure at the end of 2025. PRAA ended the quarter with total availability under its credit facilities of $998 million, including $733 million tied to current ERC (and subject to covenants) plus $265 million of additional availability subject to borrowing base and debt covenants. Management reiterated its intent to keep investing with discipline while targeting net leverage in the mid-2x EBITDA range over the next few years. The company also repurchased $10 million of shares during the quarter as part of its capital allocation toolkit. PRAA currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Here are some stocks from the broader finance space that have also reported their quarterly results: Synchrony Financial SYF, Virtu Financial, Inc. VIRT and American Express Company AXP. Here's how they have performed: Synchrony reported second-quarter 2026 adjusted earnings per share (EPS) of $2.59, which surpassed the Zacks Consensus Estimate by 24.5%. The bottom line increased 3.6% year over year. Net interest income increased 1.9% year over year to $4.6 billion. SYF’s quarterly results were driven by record purchase volume, accelerated growth in ending loan receivables despite elevated payment behavior, continued credit strength and an expansion in net interest margin. However, higher operating expenses and an increase in the provision for credit losses partly offset these positives. Virtu Financial reported second-quarter adjusted earnings per share (EPS) of $1.82, which beat the Zacks Consensus Estimate by 8.3%. The bottom line increased 19% year over year. Adjusted Net Trading Income rose 26.4% year over year to $717.9 million. VIRT’s quarterly results were driven by higher commissions and technology services revenues, increased interest and dividend income, and solid Market Making performance. However, higher operating expenses partially offset these gains. American Express reported second-quarter 2026 earnings per share (EPS) of $4.53, which surpassed the Zacks Consensus Estimate by 2.7%. The bottom line advanced 11% year over year. Total revenues, net of interest expense, improved 10% year over year to $19.6 billion. AXP’s quarterly results were driven by increased Card Member spending, higher net interest income and improved card fee growth. However, the upside was partly offset by elevated operating expenses. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PRA Group, Inc. (PRAA) : Free Stock Analysis Report American Express Company (AXP) : Free Stock Analysis Report Synchrony Financial (SYF) : Free Stock Analysis Report Virtu Financial, Inc. (VIRT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was anchored by a comprehensive review of European portfolios, resulting in a $349 million ERC increase to align with 26 consecutive quarters of cash overperformance. Management is aggressively pivoting to a leaner, variable cost structure, having reduced U.S. corporate and overhead headcount by over 25% since the start of 2025. Operational efficiency is being driven by a radical consolidation of the physical footprint, moving from seven U.S. call centers in 2023 to just one remaining site. The U.S. business successfully launched a cloud-based omnichannel contact platform, a critical milestone in standardizing global technology infrastructure and enhancing customer engagement. Capital allocation remains focused on high-return opportunities, with management prioritizing net returns over volume growth in a competitive global supply environment. The digital channel is becoming a primary driver of customer engagement, accounting for nearly half of all new payment plans created during the second quarter. Legal collections growth of 26% in the U.S. reflects the maturation of prior-period investments, though management maintains this is a secondary channel used only when voluntary engagement fails. The European ERC upward adjustment is expected to generate approximately $25 million in additional annualized portfolio income in the near term. Management expects the two waves of cost reductions implemented since late 2024 to deliver an aggregate of $35 million in annualized net savings. The company targets annual portfolio investments between $1 billion and $1.3 billion, with 2026 expected to be roughly in line with 2025 levels. Legal collection costs are projected to grow at a more moderate pace in 2026 compared to the 30-40% growth rates seen in the previous two years. The financial strategy aims to continue reducing net leverage toward the mid-2x range, supported by growing adjusted EBITDA and disciplined capital deployment. Recognized $5 million in one-time reorganization costs, including $2 million for severance and $3 million related to call center site consolidations. The Board authorized a new $150 million share repurchase program, providing additional capital allocation flexibility alongside existing debt covenants. Successfully refinanced a $730 million European credit facility, extending the maturity by five years, with no debt maturities until February 2028. Management flagged that while European ERC was written up, this will likely lead to more moderate levels of 'changes in expected recoveries' in that region over the long term. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management clarified that the $349 million increase represents a 'best estimate' based on a deep dive into historical data and improved analytical tools. The adjustment shifts revenue from volatile 'changes in expected recoveries' to more predictable 'portfolio income' over a 10-year curve. The U.S. core multiple increased to 2.17x, which management characterized as a 'normalization' following a Q1 that featured lower-multiple, lower-cost segments. Management emphasized they solve for return hurdles globally rather than chasing specific volume targets in any single market. CEO Martin Sjolund envisions the industry shifting from labor-intensive call centers to a technology-enabled data and analytics model. While human agents remain necessary for complex situations, AI and digital tools are expected to significantly enhance back-office productivity and customer support.

This article first appeared on GuruFocus. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Cash collections grew 4% year over year to $559 million, with strong growth in US legal and digital channels and Europe. European ERC increased by $349 million following a comprehensive review, reflecting over 6 years of sustained overperformance and supporting higher future portfolio income. Adjusted EBITDA for the last 12 months rose 10% to $1.4 billion, helping reduce net leverage to 2.67 times from a peak of 2.87 times in Q3 2024. Cost reduction initiatives, including eliminating over 215 corporate roles and consolidating call centers, are expected to generate approximately $35 million in annualized savings. The successful launch of a cloud-based omnichannel contact platform in the US and continued digital growth (nearly half of new payment plans from digital) enhance operational efficiency and customer engagement. A new $150 million share repurchase program was authorized, reflecting commitment to shareholder value and capital allocation flexibility. Total operating expenses increased $16 million year over year, driven by continued investment in the legal channel and one-time reorganization costs. Legal collection costs are expected to continue rising as more accounts flow through the legal channel, though at a moderating growth rate. The $349 million European ERC increase may lead to more moderate changes in expected recoveries in the future, potentially reducing the potential for positive surprises. Net interest expense rose $2 million year over year due to a higher debt balance, despite overall leverage reduction. The effective tax rate was 33% during the quarter, higher than the expected 30%, which could pressure net income if sustained. Portfolio purchase price multiples increased in the US to 2.17 times, indicating a more competitive environment that could pressure future returns. Warning! GuruFocus has detected 3 Warning Signs with PRAA. Is PRAA fairly valued? Test your thesis with our free DCF calculator. Q: Can you provide more color on the competitive environment in Europe and the activity level from other buyers in the market? A: (Martin, President and CEO) The supply environment is looking pretty stable in both the US and Europe, with volumes looking generally good. Both markets remain competitive, which is why discipline in buying and global diversification are so important. We don't want to grow for growth's sake; we want to allocate capital in a disciplined way. In Q2, we invested according to plan, multiples ticked up, and leverage ticked down, which was exactly the plan we laid out. Q: Is there a natural ceiling or a way to think about the share that the legal channel could represent in the business? A: (Rakesh, CFO) Legal is not the channel we lead with; we make extensive outreach efforts through other channels first. We only consider the legal channel for customers who don't engage voluntarily but have the ability to pay. Legal costs are driven by portfolio mix and the increase in accounts eligible for the channel. While total legal costs are expected to continue increasing as more accounts move through, the growth rate should moderate. In 2024, the growth rate was 40%, in 2025 it was 30%, and for 2026, we expect it to be lower than the last two years. Q: Given the significant increase in European ERC, should we expect more moderate changes in expected recoveries going forward? A: (Rakesh, CFO) The European business has a long track record of significant overperformance driven by operational execution, disciplined investing, and technology investments. We asked our European underwriting team to do a deep dive on the portfolio, which resulted in the $349 million ERC increase. This will drive an increase in portfolio income going forward, reflecting the long track record of performance. We expect approximately $260 million of additional portfolio income to be recognized over the remaining life of the European cash flows, translating to an average annualized increase of about $25 million in the near term. Q: What was driving the uptick in Europe, and did that motivate you to be more conservative in your bidding in the US? A: (Martin, President and CEO) The uptick in Europe was due to a generally decent supply environment and success in bidding, not any one-off event. The European market is more spot-driven, so investment quantum can vary. We think about capital allocation on a global basis, solving for return hurdles rather than hitting a certain volume in a given market. We ended up investing what we had planned for the quarter and met our return hurdles. (Rakesh, CFO) The global diversification works to our benefit; we look at opportunities and supply coming to market irrespective of country, and we won't grow for growth's sakeportfolios must meet our return thresholds. Q: Is the current level of operating expenses a good run rate for the back half of the year? A: (Rakesh, CFO) The $219 million in operating expenses included $5 million of one-time expenses related to reorganization. For the second half, you should assume quarterly expenses fairly in line with this quarter, excluding those one-time charges. The $5 million was comprised of $2 million in severance (in compensation and employee services) and $3 million related to site consolidation (in other OpEx). Q: Does the ERC adjustment essentially embed all the outperformance seen in Europe, or have you left something in the back pocket? A: (Martin, President and CEO) We had our team review this market by market and, in some cases, vintage and portfolio by portfolio. This now represents our best estimate going forward. There's always a little volatility because we're predicting the future, but we feel confident with the projection. (Rakesh, CFO) The 9% overperformance this quarter was relative to a target set in March. The comprehensive review was part of the quarterly assessment as of June. Going forward, you'll see higher portfolio income, which is the more predictable part of our revenue line item. Q: Has there been an incremental shift in how attractive US pricing is now, given the multiple increased to 2.17 times in Q2? A: (Martin, President and CEO) In Q1, we invested in some new segments that came with lower multiples but also lower cost to collect. Q2 is more of a normalization for us. We think globally in terms of capital allocation and solve for the best returns we're able to get. Having been in this business for 15 years, long-term discipline and focus on return is really important. The mix you see is a result of the diversification we have. Q: Can you give more color on the digital channel growth, where nearly half of new payment plans came from? A: (Martin, President and CEO) We've seen healthy growth in the digital channel and have been investing in digital both in Europe and the US. We believe there's a long-term shift toward digital and AI tools becoming more important. We're able to leverage a broader range of digital channels in an integrated way. Customers increasingly prefer digital interaction over phone calls. We also implemented our new omnichannel contact platform in the US this quarter, which integrates calling with digital channels like SMS, email, and chat. This platform has been used in Europe for years and is a big milestone for us. Q: Is the bulk of the IT modernization and AI investment completed by the end of 2026, or should we think about an annualized expense rate over the next three years? A: (Martin, President and CEO) On the cost side, we've made a big push with significant cost savings exercises. The omnichannel contact platform was a significant milestone this quarter, and we launched a mobile app in Europe. We're in the process of migrating to the cloud, expected to be done by the end of the year. Other technology projects will span multiple years. However, these aren't massive investmentstechnology investments are in the low tens of millions spread across several years. You'll see a reduction in the compensation line as we become more efficient, while legal investments are direct investments expected to generate cash going forward. Q: Is this industry going to be less labor-intensive and less determined by location in the future? A: (Martin, President and CEO) The industry has evolved from call centers in the cheapest locations to a technology-enabled, data and analytics industry where capital allocation is extremely important. We've gone from 7 US call centers down to 1 and rational For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in PRA Group, Inc.? Here are five stocks we like better. Strong second-quarter results: Cash collections rose 4% year over year to $559 million, revenue increased 29% to $372 million, and net income reached $58 million, or $1.51 per diluted share. European portfolio reassessment boosted outlook: PRA Group increased estimated remaining collections in Europe by $349 million after sustained outperformance, lifting total ERC to a record $8.9 billion and expected to generate about $260 million in additional portfolio income. Strategy emphasizes efficiency and financial flexibility: Cost reductions are expected to deliver roughly $35 million in annualized savings, while net leverage fell to 2.67x. The company also authorized a new $150 million share-repurchase program and said it had no debt maturities until February 2028. PRA Group (NASDAQ:PRAA) reported higher second-quarter cash collections, revenue and net income as the debt purchaser continued executing its “PRA 3.0” strategy, including cost reductions, technology modernization and disciplined portfolio buying. Cash collections rose 4% year over year to $559 million, with U.S. collections increasing 6% and European collections growing 4%. Net income attributable to PRA Group increased to $58 million, or $1.51 per diluted share, while total revenue rose 29% to $372 million. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth President and Chief Executive Officer Martin Sjolund said the quarter reflected continued progress in the company’s strategic plan, which centers on capital allocation, operational and technology improvements, and organizational culture. A key contributor to the quarter was PRA Group’s comprehensive review of its European portfolios. The company increased its estimated remaining collections, or ERC, in Europe by $349 million after citing a multiyear history of collections exceeding forecasts. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High European portfolios have outperformed cash expectations for 26 consecutive quarters, including 9% overperformance during the past 12 months, Sjolund said. Chief Financial Officer Rakesh Sehgal said the review covered most vintages across the company’s European markets and was supported by enhancements to analytical and forecasting processes. Total ERC reached a record $8.9 billion at quarter-end, up 7% from a year earlier. Europe accounted for 54% of ERC and the U.S. represented 40%. → Ulta's Growth Is Real, But So Are the Risks Sehgal said the ERC revision is expected to produce about $260 million of additional portfolio income over the remaining life of the European cash curves, which extend more than 10 years from purchase. The company expects an average annualized portfolio-income increase of roughly $25 million in the near term. Changes in expected recoveries totaled $97 million during the quarter. Of that amount, $23 million came from cash collections above forecast, while $74 million reflected changes in expected future recoveries and the net present value of the ERC increase. Portfolio income, the company’s largest revenue component, grew 7% to $268 million. Sehgal said portfolio income growth exceeded cash collections growth for the second consecutive quarter. PRA Group invested $297 million in portfolio purchases during the quarter, including $174 million in Europe and $109 million in the U.S. The company said supply remained healthy in both regions and that it continued to direct capital toward opportunities meeting its return thresholds. In Europe, the company described the second quarter as a record investment period for the region, citing a generally favorable supply environment and success in bidding on opportunities. Sjolund noted that European portfolio purchases can vary because the market has more spot transactions. Core purchase price multiples were largely steady globally. Europe’s core purchase price multiple remained sequentially stable at 1.865x, while the U.S. core purchase price multiple increased to 2.17x. Management said the U.S. increase represented a normalization from first-quarter investments in segments with lower multiples and lower collection costs. The company said it would need to invest about $1 billion over the next 12 months, based on average purchase price multiples in the first half of 2026, to maintain its current ERC level. In the U.S., legal cash collections increased 26% to $150 million and represented more than half of U.S. core cash collections. PRA Group said the increase reflected prior investments as accounts moved through the legal channel. Management emphasized that legal collections are not the company’s first-choice contact method, saying it first uses calls, texts, emails and other voluntary engagement methods before considering legal action for customers deemed able to pay. Nearly half of new payment plans created during the quarter came through digital channels, according to the company. Management cited digital engagement as a source of both collections growth and lower communications costs. PRA Group implemented a second wave of cost reductions during the quarter, eliminating 100 U.S. corporate and overhead roles and 35 offshore roles. The company expects those actions to generate approximately $20 million in annualized net savings. Including a first wave of reductions begun in the fourth quarter of 2025, PRA Group has eliminated more than 215 corporate and overhead roles, or more than 25% of those positions, as well as more than 575 call center roles. Together, the two rounds of actions are expected to generate about $35 million in annualized net savings. The company also closed two additional U.S. call center sites and moved their operations to a work-from-home model. PRA Group now has one remaining U.S. call center, down from seven in 2023, and has consolidated two offshore third-party collection sites into one location. Operating expenses totaled $219 million, up $16 million from a year earlier. Sehgal attributed $15 million of the increase to legal-channel investments and $5 million to one-time U.S. reorganization costs, including severance and site-consolidation expenses. Compensation and benefits expenses declined 7%, while communication expenses fell 19% as the company shifted toward digital engagement. The company launched a cloud-based omnichannel contact platform in the U.S. during the quarter, integrating voice, digital, chat and email interactions. It also centralized global oversight of artificial intelligence initiatives through a dedicated team in Charlotte focused on automation, analytics and operational efficiency. Last-12-month adjusted EBITDA increased 10% year over year to $1.4 billion. Net leverage declined to 2.67x at quarter-end, from 2.71x in the first quarter and a peak of 2.87x in the third quarter of 2024. As of June 30, PRA Group had $3.1 billion of total committed capital under its credit facilities and approximately $1 billion of availability. During the quarter, it refinanced its $730 million European credit facility, preserving the commitment level and pricing while extending the maturity by five years. The company said it has no debt maturities until February 2028. PRA Group repurchased $10 million of shares in the second quarter, bringing its trailing 12-month total to about $40 million. Its board also authorized a new share repurchase program of up to $150 million. Management reaffirmed a long-term target range of $1 billion to $1.3 billion in portfolio investments, while stressing that actual purchases will depend on available opportunities and return requirements rather than country-specific volume targets. PRA Group, Inc is a global specialty finance company focused on the acquisition and management of nonperforming loans. Founded in 1996 as Portfolio Recovery Associates, the company purchases defaulted consumer and commercial receivables at discounted rates from financial institutions, utilities and other creditors. By combining rigorous analytics with a consumer-centric ethos, PRA Group seeks to maximize recoveries while maintaining respectful and compliant interactions with debtors. The company's core activities include first-party and third-party collections across a range of asset classes such as credit cards, auto loans and utility receivables. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "PRA Group Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

PRA Group (PRAA) came out with quarterly earnings of $1.51 per share, beating the Zacks Consensus Estimate of $0.52 per share. This compares to earnings of $1.08 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +190.39%. A quarter ago, it was expected that this debt collector would post earnings of $0.51 per share when it actually produced earnings of $0.73, delivering a surprise of +43.14%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. PRA Group, which belongs to the Zacks Financial - Miscellaneous Services industry, posted revenues of $372.17 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 18.88%. This compares to year-ago revenues of $287.69 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. PRA Group shares have lost about 2.8% since the beginning of the year versus the S&P 500's gain of 12.8%. While PRA Group has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for PRA Group was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.67 on $319.77 million in revenues for the coming quarter and $2.52 on $1.27 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Financial - Miscellaneous Services is currently in the bottom 37% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, HIVE Digital Technologies (HIVE), is yet to report results for the quarter ended June 2026. This crypto currency mining company is expected to post quarterly loss of $0.21 per share in its upcoming report, which represents a year-over-year change of -250%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. HIVE Digital Technologies' revenues are expected to be $80.06 million, up 75.5% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PRA Group, Inc. (PRAA) : Free Stock Analysis Report HIVE Digital Technologies Ltd. (HIVE) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

$58 Million Net Income Driven by $349 Million Increase in Europe ERC Following Comprehensive European Portfolio Review and Strong Long-Term Performance Continued to Deliver on Significant Execution Milestones Under PRA 3.0 Strategy, Including Additional Cost Reductions, Call Center Footprint Consolidation and Technology Modernization Repurchased $10 Million of Shares During the Quarter; Board of Directors Authorized New Share Repurchase Program for up to $150 Million NORFOLK, Va., Aug. 6, 2026 /PRNewswire/ -- PRA Group, Inc. (Nasdaq: PRAA) (the "Company"), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the second quarter of 2026 ("Q2 2026"). Q2 2026 Highlights (vs. Q2 2025) Total cash collections of $559 million, up 4%. Net income attributable to PRA Group, Inc. of $58 million, or diluted earnings per share of $1.51. Estimated remaining collections (ERC)1 of $8.9 billion, up 7%. Adjusted EBITDA2 of $1.4 billion, up 10%. Cash efficiency ratio3 of 61%. Total portfolio purchases of $297 million, in line with expectations. "We continued to execute against our PRA 3.0 strategy during the second quarter to drive higher returns and long-term shareholder value," said Martin Sjolund, president and chief executive officer. "We generated continued growth in cash collections, maintained strong cash efficiency, invested nearly $300 million in portfolio purchases, and delivered higher earnings. We also performed a comprehensive review of our European portfolios as part of our quarterly portfolio assessment. This review resulted in an approximately $349 million increase in European ERC, reflecting more than six years of sustained cash overperformance in Europe, as well as enhancements to our analytical processes and forecasting capabilities. We believe this is an important milestone that better aligns our European ERC with the long trend of historical overperformance of the European portfolios. As a result of this change, we expect higher levels of portfolio income going forward and more moderate levels of changes in expected recoveries over the long-term." "We also achieved a number of important execution milestones during the quarter. We continued reducing costs and simplifying the organization, further consolidated our U.S. call center footprint, expanded our AI capabilities, and maintained a disciplined approach to capital allocation. Our teams are moving with pace and rigor across all three vectors of our PRA 3.0 strategy, and we are beginning to see the benefits of these actions reflected in our financial results through record ERC levels, growing adjusted EBITDA, and a strong funding profile. We remain focused on improving financial performance, further strengthening the balance sheet, and delivering long-term value for shareholders." Cash Collections and RevenuesThe following table presents cash collections by quarter and by source, as reported and on a constant currency-adjusted basis: Total cash collections in Q2 2026 increased 4% to $559 million, compared to $536 million in the second quarter of 2025 ("Q2 2025"), driven by continued strength in the U.S. legal and digital collections channels and in our European business. Portfolio income in Q2 2026 increased 7% to $268 million, compared to $251 million in Q2 2025, driven by strong recent purchases at attractive returns. Changes in expected recoveries in Q2 2026 increased to $97 million, compared to $33 million in Q2 2025. The increase was primarily driven by the approximately $349 million increase in European ERC following a comprehensive review as part of the Company's quarterly portfolio assessment. The comprehensive review reflected more than six years of sustained cash overperformance across the Company's European business. Total portfolio revenue in Q2 2026 increased 28% to $365 million, compared to $284 million in Q2 2025. Expenses Operating expenses in Q2 2026 increased $16 million to $219 million, compared to $203 million in Q2 2025, driven primarily by a $15 million increase in legal collection costs to support future cash collections growth. Interest expense, net in Q2 2026 increased to $64 million, compared to $62 million in Q2 2025, primarily reflecting an increase in debt balances. The effective tax rate for the quarter was 33%. Portfolio Purchases The Company purchased $297 million in portfolios of nonperforming loans in Q2 2026, as it continues to be disciplined with its investments and return thresholds. At the end of Q2 2026, the Company had in place estimated forward flow commitments2 of $219 million over the next 12 months, comprised of $117 million in Europe, $86 million in the U.S., and $15 million in other markets. Credit Availability Total availability under the Company's credit facilities as of June 30, 2026 was $998 million, comprised of $733 million based on current ERC and subject to debt covenants, and $265 million of additional availability subject to borrowing base and debt covenants, including advance rates. Share Repurchases During Q2 2026, the Company repurchased $10 million of its outstanding common stock. On August 3, 2026, the Company's board of directors authorized a new $150 million program. The new share repurchase program has no stated expiration date and repurchases may be made through open market purchases or other available means at the Company's discretion, subject to applicable regulatory requirements. The amount and timing of share repurchases depend on several factors, including the Company's capital allocation priorities, financial performance, market conditions, valuation, leverage, liquidity, and the terms of its existing debt agreements. The new share repurchase program remains subject to the discretion of the Company's board of directors. "We continue to maintain a disciplined capital allocation framework that prioritizes portfolio purchases at attractive returns and investments that enhance our operating performance, while also undertaking opportunistic share repurchases when we see an opportunity to drive value for our shareholders," said Rakesh Sehgal, executive vice president and chief financial officer. "This new share repurchase program provides additional flexibility in how we deploy capital and reflects our commitment to long-term shareholder value." Conference Call InformationPRA Group, Inc. will hold a conference call today at 5:00 p.m. ET to discuss its financial and operational results. To listen to a webcast of the call and view the accompanying slides, visit https://ir.pragroup.com/events-and-presentations. To listen by phone, call 646-357-8785 in the U.S. or 1-800-836-8184 outside the U.S. and ask for the PRA Group conference call. To listen to a replay of the call, either visit the same website until August 6, 2027, or call 646-517-4150 in the U.S. or 1-888-660-6345 outside the U.S. and use access code 53963# until August 13, 2026. About PRA Group, Inc.As a global industry leader with more than 30 years of experience, PRA Group, Inc. (Nasdaq: PRAA) specializes in acquiring and collecting nonperforming loans. PRA Group purchases portfolios from banks and other creditors and, through its subsidiaries, collaborates with customers to help them resolve their debt. Headquartered in Norfolk, Virginia, PRA Group has operations in the U.S., Europe, and other markets. For more information, please visit www.pragroup.com. About Forward Looking StatementsStatements made herein that are not historical in nature, including PRA Group, Inc.'s or its management's intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements in this press release are based upon management's current beliefs, estimates, assumptions and expectations of PRA Group, Inc.'s future operations and financial and economic performance, taking into account currently available information. These statements are not statements of historical fact or guarantees of future performance, and there can be no assurance that anticipated events will transpire or that the Company's expectations will prove to be correct. Forward-looking statements involve risks and uncertainties, some of which are not currently known to PRA Group, Inc. Actual events or results may differ materially from those expressed or implied in any such forward-looking statements as a result of various factors, including the risk factors and other risks that are described from time to time in PRA Group, Inc.'s filings with the Securities and Exchange Commission, including PRA Group, Inc.'s annual reports on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form 8-K, which are available through PRA Group, Inc.'s website and contain a detailed discussion of PRA Group, Inc.'s business, including risks and uncertainties that may affect future results. Due to such uncertainties and risks, you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of today. Information in this press release may be superseded by more recent information or statements, which may be disclosed in later press releases, subsequent filings with the Securities and Exchange Commission or otherwise. Except as required by law, PRA Group, Inc. assumes no obligation to publicly update or revise its forward-looking statements contained herein to reflect any change in PRA Group, Inc.'s expectations with regard thereto or to reflect any change in events, conditions or circumstances on which any such forward-looking statements are based, in whole or in part. Total stockholders' equity - PRA Group, Inc.1,045,469979,851Noncontrolling interests67,42860,114Total equity1,112,8971,039,965Total liabilities and equity$ 5,238,767$ 5,103,322 Use of Non-GAAP Financial Measures The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management uses certain non-GAAP financial measures, including the non-GAAP financial measures referred to below, internally to evaluate the Company's performance and to set performance goals. Management believes these non-GAAP financial measures are useful to investors in evaluating the Company's performance and operational effectiveness and provide for greater comparability. These non-GAAP financial measures should not be considered as an alternative to the most directly comparable financial measure determined in accordance with GAAP and may not be comparable to the calculation of similarly titled financial measures reported by other companies. Included below are reconciliations of the non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP. Adjusted EBITDA The Company presents Adjusted EBITDA because the Company considers it an important supplemental measure of its operational and financial performance. Adjusted EBITDA is calculated as Net loss attributable to PRA Group, Inc. plus Income tax expense; less Foreign exchange gain; plus Interest expense, net; plus Other expense; plus Depreciation and amortization; plus Impairment of real estate; plus Goodwill impairment; plus Net income attributable to noncontrolling interests; less Gain on sale of equity method investment; and plus Recoveries collected and applied to Finance receivables, net less Changes in expected recoveries. Management believes Adjusted EBITDA helps provide enhanced period-to-period comparability of the Company's operational and financial performance as it excludes certain items whose fluctuations from period-to-period do not necessarily correspond to changes in the operations of the Company's business and is useful to investors as other companies in the industry report similar financial measures. The following table provides a reconciliation of Net loss attributable to PRA Group, Inc. to Adjusted EBITDA for the last twelve months (LTM) ended June 30, 2026 and for the year ended December 31, 2025. Adjusted net income attributable to PRA, ROATE and Adjusted ROATE The Company uses Net income attributable to PRA Group, Inc. excluding the impact of certain transactions that are unusual or infrequent in nature and not reflective of our ongoing operations ("Adjusted net income attributable to PRA") to monitor and evaluate our operating performance and allow for better comparability. Management believes Adjusted net income attributable to PRA is a useful financial measure for investors in evaluating our operating results. Adjusted net income attributable to PRA is calculated as Net income attributable to PRA Group, Inc. excluding the impact of certain transactions that are unusual or infrequent in nature and not reflective of our ongoing operations. In addition, the Company uses return on average tangible equity ("ROATE") to monitor and evaluate operating performance relative to the Company's equity. Management believes ROATE is a useful financial measure for investors in evaluating the effective use of equity, and is an important component of its long-term shareholder return. ROATE is calculated by dividing annualized Net income attributable to PRA Group, Inc. by average Total stockholders' equity - PRA Group, Inc. less average goodwill and average other intangible assets ("Average tangible equity"). ROATE may include certain items that are not indicative of the ongoing operating results of the Company's business. Accordingly, the Company also uses Adjusted ROATE to monitor and evaluate operating performance relative to the Company's equity. Management believes that Adjusted ROATE is a useful financial measure for investors because it is based on Adjusted net income attributable to PRA. Adjusted ROATE is calculated by dividing annualized Adjusted net income attributable to PRA by average tangible equity. Return on equity ("ROE") is calculated by dividing Net income attributable to PRA Group, Inc. by average Total stockholders' equity - PRA Group, Inc. The following table provides a reconciliation of Total stockholders' equity - PRA Group, Inc. as reported in accordance with GAAP to Average tangible equity, a reconciliation of Net income attributable to PRA Group, Inc. to Adjusted net income attributable to PRA Group, Inc., and provides our ROE, ROATE and Adjusted ROATE for the periods indicated (in thousands, except for ratio data): Investor Contact:Najim Mostamand, CFAVice President, Investor [email protected] View original content to download multimedia:https://www.prnewswire.com/news-releases/pra-group-reports-second-quarter-2026-results-302845380.html

Encore Capital Group ECPG is no longer a turnaround story waiting for proof. Shares have climbed 56.2% in the past six months and 120.4% over the trailing 12-month period. The valuation question is now harder. Investors must decide whether low earnings multiples and higher profit forecasts still leave room for upside, or whether leverage and cost risks should cap the rerating. ECPG trades at 6.4X forward 12-month earnings, while its current fiscal-year price-to-earnings ratio is 6.6. That remains below 7.88X for the Zacks sub-industry, 16.29X for the Zacks Finance sector and 21.32X for the S&P 500 index.The stock is also trading at its five-year median forward multiple of 6.4X, despite a stronger operating setup than it had during weaker collection periods. Its five-year range of 4.14X to 12.84X leaves room for a higher multiple if earnings quality continues to improve. Image Source: Zacks Investment Research PRA Group, Inc. PRAA is the closest public comparison because it also acquires and collects nonperforming loan portfolios. That makes portfolio supply, funding access and recovery efficiency central issues for both companies. On the other hand, FirstCash Holdings, Inc. FCFS offers a different way to view consumer-finance exposure. Its pawn-focused model depends less on charged-off receivable purchases, making it a useful contrast to ECPG’s debt-purchasing cycle.At present, PRA Group and FirstCash Holdings are trading at a premium to ECPG. Encore’s latest quarter helped reset the earnings base. First-quarter 2026 earnings of $3.86 per share beat the Zacks Consensus Estimate by 18.4%, while revenues of $475 million rose 21% year over year.The operating support was clear. Global collections increased 19% to a record $718.4 million, and the U.S. MCM business generated record collections of $556 million, up 23% from the prior-year quarter. Encore Capital Group Inc price-consensus-eps-surprise-chart | Encore Capital Group Inc Quote Management raised its 2026 earnings outlook to $13 per share from $12, implying 19% year-over-year growth. The consensus estimate shows earnings rising from $10.91 in 2025 to $13.01 in 2026 and $13.86 in 2027. Image Source: Zacks Investment Research The $99 price target reflects 7.38X forward earnings. That is not an aggressive multiple relative to the broader market, but it does imply some rerating from the current 6.40X forward 12-month level.A modest multiple expansion could be supported if collection outperformance keeps flowing into results. Collections exceeded expectations in the first quarter, and positive changes in expected future recoveries suggest estimated remaining collection curves are beginning to move higher.As those curves adjust, management expects more of the benefit to shift from cash overperformance into portfolio revenues. Stronger reported portfolio revenue can make earnings visibility more durable. ECPG’s low multiple comes with balance-sheet risk. Borrowings totaled $4.03 billion at the end of the first quarter, and the company depends on debt funding to purchase receivable portfolios.Interest expense and other income are projected to total about $300 million in 2026. If borrowing costs remain elevated or portfolio returns normalize, the earnings benefit from higher collections could face pressure. Legal collection costs are another margin risk. Rising legal activity can support recoveries, but it can also create fixed and semi-variable cost pressure if collections growth slows.The business mix adds a limitation. The U.S. business is driving most of the momentum, while Cabot in Europe continues to face subdued lending, low delinquencies and strong competition. The bottom line is that ECPG still looks inexpensive, but not risk-free. The earnings reset, low forward multiple and $99 price target support the undervaluation argument, while leverage, legal costs and geographic concentration keep the case selective.ECPG currently sports a Zacks Rank #1 (Strong Buy), which supports the view that estimate trends remain favorable in the near term. Its Value Score of B also strengthens the bargain case for investors focused on valuation. You can see the complete list of today’s Zacks #1 Rank stocks here.The rest of the style profile is less supportive. ECPG has a VGM Score of C, Growth Score of D and Momentum Score of F. That mix suggests the stock is better viewed as a selective value opportunity backed by earnings revisions, rather than an all-clear momentum play after a major rally. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PRA Group, Inc. (PRAA) : Free Stock Analysis Report FirstCash Holdings, Inc. (FCFS) : Free Stock Analysis Report Encore Capital Group Inc (ECPG) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

PRA Group, Inc. PRAA delivered first-quarter 2026 earnings per share of 73 cents, topping the Zacks Consensus Estimate of 51 cents by 43.1%. The bottom line increased more than eightfold year over year. Total revenues were $315 million, beating the consensus mark of $298 million by 5.4% and rising 16.7% year over year. Results reflected stronger cash generation across geographies, aided by continued momentum in the U.S. legal collections channel and solid performance in Europe. Strong portfolio income also contributed to the upside, partly offset by an elevated expense level. PRAA’s net income of $31.8 million increased nearly fourfold year over year. Other revenues came in at $1.1 million, which soared 44.5% year over year. PRA Group, Inc. price-consensus-eps-surprise-chart | PRA Group, Inc. Quote PRAA’s cash collections increased to $551.9 million, up 11% from the prior-year quarter, supported by higher collections in both the United States and Europe. Management highlighted that investments in the U.S. legal collections channel continued to generate meaningful collections growth. The metric came higher than the Zacks Consensus Estimate of $537 million. The cash efficiency ratio was 61.8%. By region, U.S. Core cash collections totaled $268.4 million, while Europe Core collections were $192 million. The company also generated $50.8 million of collections from other markets, reflecting its diversified footprint. PRA Group’s portfolio income increased 11.9% year over year to $269.6 million, which management attributed to strong recent purchases at improved returns. Changes in expected recoveries contributed meaningfully as well, totaling $43.9 million in the quarter. Total portfolio revenues rose 16.6% to $313.5 million compared with $268.9 million a year ago. PRAA’s operating expenses increased $16.2 million year over year to $211.3 million. The largest driver was a $15.1 million rise in legal collection costs, which management tied to investments intended to support future cash collections growth. Offsetting some pressure, compensation and benefits declined $2.6 million, reflecting actions to right-size agent headcount, lean more on external collections resources and reduce corporate roles. Communication expense also decreased $1.5 million as the company used more cost-efficient collection strategies. PRA Group purchased $220.9 million of nonperforming loan portfolios in the quarter, with purchases spanning the US, Europe and other markets. Management emphasized an approach focused on higher net returns while balancing investments and leverage. Estimated remaining collections were $8.5 billion at quarter-end, up 9.5% year over year, underscoring the scale of future projected cash collections embedded in the portfolio. The company also disclosed forward flow commitments of $321.8 million over the next 12 months, led by Europe and the US. PRA Group exited the first quarter with cash and cash equivalents of $124.8 million, which rose 19.5% from the figure at 2025-end. Total assets of $5.2 billion increased 2% from the 2025-end level. Borrowings were $3.8 billion, up 2.2% from the figure as of Dec. 31, 2025. Total equity of $1.1 billion grew 2.7% from the figure at the end of 2025. PRAA ended the quarter with total availability under its credit facilities of $996 million, including $714.3 million tied to current ERC (and subject to covenants) plus $281.7 million of additional availability subject to borrowing base and debt covenants. Management reiterated its intent to keep investing with discipline while targeting net leverage trending toward the mid-2x area over the next few years, supported by growing adjusted EBITDA. The company also repurchased $10 million of shares during the quarter as part of its capital allocation toolkit. PRA Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Of the other Finance sector players that have reported first-quarter results so far, the bottom-line results of Virtu Financial, Inc. VIRT, Bread Financial Holdings, Inc. BFH and Evercore Inc. EVR beat the respective Zacks Consensus Estimate. Virtu Financial reported first-quarter adjusted earnings per share (EPS) of $2.24, which beat the Zacks Consensus Estimate by 34.9%. The bottom line increased 72.3% year over year. Adjusted Net Trading Income rose 58.2% year over year to $786.5 million, surpassing the consensus estimate by 37.5%. Revenues from commissions, net and technology services rose 23.3% year over year to $186.6 million. Interest and dividend income of $127.5 million increased 16.9% year over year. Adjusted EBITDA increased 62.7% year over year to $520.6 million. Adjusted EBITDA margin improved year over year to 66.2% from 64.4% a year ago. In the Market Making segment, adjusted net trading income totaled $637.1 million in the first quarter, climbing 66.8% year over year. The unit’s revenues increased 32.5% year over year to $915.7 million. The Execution Services unit recorded adjusted net trading income of $149.5 million in the quarter under review, representing an increase of 29.8% year over year. The unit’s total revenues rose 32.7% year over year to $187.1 million. Bread Financial’s first-quarter 2026 operating income of $4.18 per share outperformed the Zacks Consensus Estimate by 39.3%. The bottom line rose 49% year over year. Revenues increased 5% from the prior-year level to $1 billion, exceeding the consensus estimate by 1.1%. Credit sales of $6.5 billion increased 7% year over year. Average loan increased 1% to $18.3 billion, and end-of-period loans rose 2% to $18.1 billion. Total interest income increased 2% to $1.2 billion. The net interest margin improved 120 basis points to 19.3%. Total non-interest expenses decreased 1% to $472 million. The delinquency rate of 5.6% improved from 5.9% year over year. The net loss rate of 7.3% improved 83 basis points year over year. Pre-tax pre-provision earnings increased 11% year over year to $546 million. Adjusted PPNR, a non-GAAP financial measure that excludes gains on portfolio sales and the impact of debt repurchases, increased 11% year over year to $546 million. Evercore reported first-quarter 2026 adjusted EPS of $7.53, surpassing the Zacks Consensus Estimate of $5.57. Also, the bottom line compared favorably with the prior-year quarter’s $3.49. Net income attributable to common shareholders (GAAP basis) was $301.2 million, up from $146.2 million in the year-ago quarter. In the first quarter of 2026, the company reported record net revenues (adjusted) of $1.40 billion, beating the Zacks Consensus Estimate by 14.2%. The top line increased from $699.9 million in the year-ago quarter. The adjusted compensation ratio was 64%, down from 65.7% in the prior-year quarter. The adjusted operating margin was 25.3%, up from 16.6% in the prior-year quarter. In the Investment Banking & Equities segment, net revenues increased 102.9% year over year to $1.37 billion. Also, operating income surged from $106.7 million in the year-ago quarter to $326.9 million. Investment Management unit’s net revenues were $22.8 million, up 12.5% from the prior-year quarter. Operating income was $3.8 million, down 15% year over year. AUM was $15.1 billion as of March 31, 2026, up 10% year over year. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PRA Group, Inc. (PRAA) : Free Stock Analysis Report Evercore Inc (EVR) : Free Stock Analysis Report Virtu Financial, Inc. (VIRT) : Free Stock Analysis Report Bread Financial Holdings, Inc. (BFH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research