[10-Q] Encore Capital Group, Inc. Quarterly Earnings Report

Rhea-AI Filing Summary

Encore Capital Group (ECPG) posted strong Q2-25 results. Revenue climbed 24% YoY to $442 M, driven by a 27% increase in debt-purchasing income. Operating income rose 48% to $151 M, expanding the operating margin to 34.1% (vs. 28.7%). Net income reached $58.7 M, up 82%, with diluted EPS of $2.49 (+86%). For 1H-25, revenue grew 22% to $835 M and net income nearly doubled to $105.5 M, boosting diluted EPS to $4.41.

Balance sheet trends. Receivable portfolios advanced 11% to $4.19 B, reflecting $735 M of new portfolio purchases. Total assets increased to $5.19 B, while borrowings expanded by $293 M to $3.97 B; leverage (debt/equity) now approximates 4.4×. Cash fell to $172.9 M as operating cash flow dropped to $54.8 M and portfolio purchases absorbed $725 M.

Capital actions & liquidity. The company repurchased 0.71 M shares for $25.0 M under its $300 M authorization. Global Senior Facility capacity stands at $397 M; a recent upsizing extends maturity to 2029. Weighted-average borrowing costs declined ~130 bp YoY across major facilities.

Comprehensive income improved by $28.1 M in Q2 on favorable FX translation. AOCI loss narrowed to $119.5 M. Effective tax rate was 24.7%.

Key watch-points: rising interest expense (+20% YoY) and negative free cash flow; leverage remains elevated, though hedging limits rate risk and new credit lines extend runway.

Positive

• Revenue up 24% YoY to $442 M, outpacing expense growth and widening margins.
• Diluted EPS jumped 86% to $2.49; six-month EPS up 94% to $4.41.
• Operating margin expanded 540 bp to 34.1%, indicating efficient cost control.
• Equity climbed 17% YTD to $896 M, aided by FX gains and profits.
• Credit facilities upsized and extended, providing $397 M incremental liquidity.

Negative

• Total borrowings increased $293 M to $3.97 B; leverage ~4.4× equity.
• Interest expense rose 21% YoY, pressuring net margin.
• Operating cash flow fell 37% YoY to $54.8 M; free cash flow negative after $725 M portfolio spend.
• Cash balance declined $27 M YTD to $173 M, reducing immediate liquidity headroom.

Insights

Financial Analyst

TL;DR – Earnings beat, margin expansion and EPS surge outweigh higher leverage.

Encore’s top-line acceleration and disciplined cost growth expanded operating margin by 540 bp. EPS of $2.49 far exceeds the $1.34 prior-year comp, reflecting both revenue strength and scale leverage. Receivable purchases signal management’s confidence in portfolio ROIs, while share buy-backs demonstrate capital flexibility. Equity grew 17%, aided by FX gains, even after $25 M of repurchases. Near-term liquidity is adequate: $397 M undrawn on the Global Facility and a freshly upsized U.S. securitisation line. With ROE running above 25% and borrowing costs trending lower, the update is net positive for valuation.

Risk Analyst

TL;DR – Leverage and cash burn temper otherwise strong operating metrics.

Borrowings now cover 76% of assets, and interest expense consumed 17% of revenue, up from 17.3% last year. Operating cash flow covered only 13% of portfolio purchases; free cash flow was negative. While hedges cap rate exposure, the company remains sensitive to funding markets. Any slowdown in collections could stress covenants (LTV ≤0.75; FCCR ≥2.0). The 2025 convertible maturity ($100 M) and rising secured notes add refinancing risk, albeit partially mitigated by extended credit lines. Overall impact is balanced.

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________________________________________________________________

FORM 10-Q

(Mark One)

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025 or

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to__________.

COMMISSION FILE NUMBER: 000-26489

ENCORE CAPITAL GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware			48-1090909
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)

350 Camino De La Reina, Suite 100

San Diego, California 92108

(Address of principal executive offices, including zip code)

(877) 345-3002

(Registrant’s telephone number, including area code)

(Not Applicable)

(Former name, former address and former fiscal year, if changed since last report)

_______________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 Par Value Per Share

ECPG

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class						Outstanding at July 30, 2025
Common Stock, $0.01 par value						23,011,773 shares

Table of Contents

ENCORE CAPITAL GROUP, INC.

INDEX TO FORM 10-Q

 

			Page
PART I – FINANCIAL INFORMATION			3
Item 1— Condensed Consolidated Financial Statements (Unaudited)			3
Condensed Consolidated Statements of Financial Condition			3
Condensed Consolidated Statements of Income			4
Condensed Consolidated Statements of Comprehensive Income			5
Condensed Consolidated Statements of Equity			6
Condensed Consolidated Statements of Cash Flows			8
Notes to Condensed Consolidated Financial Statements			9
Note 1: Ownership, Description of Business, and Summary of Significant Accounting Policies			9
Note 2: Earnings Per Share			10
Note 3: Fair Value Measurements			11
Note 4: Derivatives and Hedging Instruments			12
Note 5: Receivable Portfolios, Net			14
Note 6: Other Assets			17
Note 7: Borrowings			17
Note 8: Variable Interest Entities			20
Note 9: Accumulated Other Comprehensive Loss			20
Note 10: Income Taxes			21
Note 11: Commitments and Contingencies			22
Note 12: Segment and Geographic Information			23
Note 13: Goodwill			25
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations			26
Item 3 – Quantitative and Qualitative Disclosures About Market Risk			49
Item 4 – Controls and Procedures			49
PART II – OTHER INFORMATION			50
Item 1 – Legal Proceedings			50
Item 1A – Risk Factors			50
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds			50
Item 5 – Other Information			50
Item 6 – Exhibits			51
SIGNATURES			52

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1—Condensed Consolidated Financial Statements (Unaudited)

ENCORE CAPITAL GROUP, INC.

Condensed Consolidated Statements of Financial Condition

(In Thousands, Except Par Value Amounts)

(Unaudited)

			June 30, 2025						December 31, 2024
Assets
Cash and cash equivalents			$	172,896					$	199,865
Receivable portfolios, net			4,184,780						3,776,369
Property and equipment, net			84,055						80,597
Other assets			206,743						225,090
Goodwill			542,912						507,808
Total assets			$	5,191,386					$	4,789,729
Liabilities and Equity
Liabilities:
Accounts payable and accrued liabilities			$	214,663					$	233,545
Borrowings			3,965,465						3,672,762
Other liabilities			115,287						116,091
Total liabilities			4,295,415						4,022,398
Commitments and contingencies (Note 11)
Equity:
Convertible preferred stock, $0.01 par value, 5,000 shares authorized, no shares issued and outstanding			—						—
Common stock, $0.01 par value, 75,000 shares authorized, 23,095 and 23,691 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively			231						237
Additional paid-in capital			—						19,297
Accumulated earnings			1,015,221						909,927
Accumulated other comprehensive loss			(119,481)						(162,130)
Total stockholders’ equity			895,971						767,331
Total liabilities and stockholders’ equity			$	5,191,386					$	4,789,729

The following table presents certain assets and liabilities of consolidated variable interest entities (“VIEs”) included in the condensed consolidated statements of financial condition above. Most assets in the table below include those assets that can only be used to settle obligations of consolidated VIEs. The liabilities exclude amounts where creditors or beneficial interest holders have recourse to the general credit of the Company. See “Note 8: Variable Interest Entities” for additional information on the Company’s VIEs.

			June 30, 2025						December 31, 2024
Assets
Cash and cash equivalents			$	36,046					$	23,875
Receivable portfolios, net			942,735						895,704
Other assets			3,682						3,699
Liabilities
Accounts payable and accrued liabilities			2,827						2,946
Borrowings			647,953						599,830
Other liabilities			3,144						887

See accompanying notes to condensed consolidated financial statements

3

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ENCORE CAPITAL GROUP, INC.

Condensed Consolidated Statements of Income

(In Thousands, Except Per Share Amounts)

(Unaudited)

			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						2024
Revenues
Portfolio revenue			$	361,174					$	321,930					$	706,392					$	637,782
Changes in recoveries			55,599						5,754						77,063						(6,655)
Total debt purchasing revenue			416,773						327,684						783,455						631,127
Servicing revenue			22,300						21,107						44,847						41,486
Other revenues			3,049						6,494						6,595						11,058
Total revenues			442,122						355,285						834,897						683,671
Operating expenses
Salaries and employee benefits			117,738						106,608						223,670						210,792
Cost of legal collections			79,649						64,249						147,662						122,970
General and administrative expenses			41,327						36,779						82,345						73,020
Other operating expenses			36,990						30,845						71,242						61,212
Collection agency commissions			8,374						7,504						15,247						14,938
Depreciation and amortization			7,311						7,461						14,655						15,309
Total operating expenses			291,389						253,446						554,821						498,241
Income from operations			150,733						101,839						280,076						185,430
Other expense
Interest expense			(73,943)						(61,376)						(144,473)						(117,141)
Other income			1,226						2,047						2,873						4,713
Total other expense			(72,717)						(59,329)						(141,600)						(112,428)
Income before income taxes			78,016						42,510						138,476						73,002
Provision for income taxes			(19,295)						(10,329)						(32,959)						(17,582)
Net income			$	58,721					$	32,181					$	105,517					$	55,420
Earnings per share:
Basic			$	2.50					$	1.35					$	4.45					$	2.33
Diluted			$	2.49					$	1.34					$	4.41					$	2.28
Weighted average shares outstanding:
Basic			23,507						23,883						23,692						23,834
Diluted			23,578						24,097						23,926						24,282

See accompanying notes to condensed consolidated financial statements

4

Table of Contents

ENCORE CAPITAL GROUP, INC.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited, In Thousands)

			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						2024
Net income			$	58,721					$	32,181					$	105,517					$	55,420
Other comprehensive income (loss), net of tax:
Change in unrealized (loss) gain on derivative instruments:
Unrealized (loss) gain on derivative instruments			(3,775)						(731)						(4,840)						4,744
Income tax effect			922						(1,088)						1,111						(3,773)
Unrealized (loss) gain on derivative instruments, net of tax			(2,853)						(1,819)						(3,729)						971
Change in foreign currency translation:
Unrealized gain (loss) on foreign currency translation			30,855						(1,146)						46,192						(7,292)
Income tax effect			59						443						186						283
Unrealized gain (loss) on foreign currency translation, net of tax			30,914						(703)						46,378						(7,009)
Other comprehensive income (loss), net of tax:			28,061						(2,522)						42,649						(6,038)
Comprehensive income			$	86,782					$	29,659					$	148,166					$	49,382

See accompanying notes to condensed consolidated financial statements

5

Table of Contents

ENCORE CAPITAL GROUP, INC.

Condensed Consolidated Statements of Equity

(Unaudited, In Thousands)

			Three Months Ended June 30, 2025
			Common Stock												Additional Paid-In Capital						Accumulated Earnings						Accumulated Other Comprehensive (Loss) Income												Total Equity
			Shares						Par
Balance as of March 31, 2025			23,510						$	235					$	9,645					$	956,723					$	(147,542)											$	819,061
Net income			—						—						—						58,721						—												58,721
Other comprehensive income, net of tax			—						—						—						—						28,061												28,061
Issuance of share-based awards, net of shares withheld for employee taxes			3						—						56						—						—												56
Repurchase and retirement of common stock			(418)						(4)						(14,984)						(223)						—												(15,211)
Stock-based compensation			—						—						5,283						—						—												5,283
Balance as of June 30, 2025			23,095						$	231					$	—					$	1,015,221					$	(119,481)											$	895,971

			Three Months Ended June 30, 2024
			Common Stock												Additional Paid-In Capital						Accumulated Earnings						Accumulated Other Comprehensive Loss												Total Equity
			Shares						Par
Balance as of March 31, 2024			23,687						$	237					$	8,648					$	1,072,410					$	(127,436)											$	953,859
Net income			—						—						—						32,181						—												32,181
Other comprehensive loss, net of tax			—						—						—						—						(2,522)												(2,522)
Issuance of share-based awards, net of shares withheld for employee taxes			4						—						(28)						—						—												(28)
Stock-based compensation			—						—						4,637						—						—												4,637
Balance as of June 30, 2024			23,691						$	237					$	13,257					$	1,104,591					$	(129,958)											$	988,127

			Six Months Ended June 30, 2025
			Common Stock												Additional Paid-In Capital						Accumulated Earnings						Accumulated Other Comprehensive (Loss) Income												Total Equity
			Shares						Par
Balance as of December 31, 2024			23,691						$	237					$	19,297					$	909,927					$	(162,130)											$	767,331
Net income			—						—						—						105,517						—												105,517
Other comprehensive income, net of tax			—						—						—						—						42,649												42,649
Issuance of share-based awards, net of shares withheld for employee taxes			111						1						(3,019)						—						—												(3,018)
Repurchase and retirement of common stock			(707)						(7)						(24,985)						(223)						—												(25,215)
Stock-based compensation			—						—						8,707						—						—												8,707
Balance as of June 30, 2025			23,095						$	231					$	—					$	1,015,221					$	(119,481)											$	895,971

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			Six Months Ended June 30, 2024
			Common Stock												Additional Paid-In Capital						Accumulated Earnings						Accumulated Other Comprehensive Loss												Total Equity
			Shares						Par
Balance as of December 31, 2023			23,545						$	235					$	11,052					$	1,049,171					$	(123,920)											$	936,538
Net income			—						—						—						55,420						—												55,420
Other comprehensive loss, net of tax			—						—						—						—						(6,038)												(6,038)
Issuance of share-based awards, net of shares withheld for employee taxes			146						2						(5,789)						—						—												(5,787)
Stock-based compensation			—						—						7,994						—						—												7,994
Balance as of June 30, 2024			23,691						$	237					$	13,257					$	1,104,591					$	(129,958)											$	988,127

See accompanying notes to condensed consolidated financial statements

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ENCORE CAPITAL GROUP, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited, In Thousands)

			Six Months Ended June 30,
			2025						2024
Operating activities:
Net income			$	105,517					$	55,420
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			14,655						15,309
Other non-cash interest expense, net			7,211						7,941
Stock-based compensation expense			8,707						7,994
Changes in recoveries			(77,063)						6,655
Other, net			7,045						2,547
Changes in operating assets and liabilities
Other assets			14,897						(25,896)
Accounts payable, accrued liabilities and other liabilities			(26,162)						16,727
Net cash provided by operating activities			54,807						86,697
Investing activities:
Purchases of receivable portfolios, net of put-backs			(725,391)						(566,960)
Collections applied to receivable portfolios			553,400						419,833
Purchases of property and equipment			(13,320)						(14,251)
Other, net			15,659						29,492
Net cash used in investing activities			(169,652)						(131,886)
Financing activities:
Payment of loan and debt refinancing costs			(2,491)						(17,201)
Proceeds from credit facilities			549,605						393,455
Repayment of credit facilities			(418,463)						(1,234,189)
Proceeds from senior secured notes			—						1,000,000
Repayment of senior secured notes			—						(19,540)
Repurchase and retirement of common stock			(25,215)						—
Other, net			(16,206)						16,967
Net cash provided by financing activities			87,230						139,492
Net (decrease) increase in cash and cash equivalents			(27,615)						94,303
Effect of exchange rate changes on cash and cash equivalents			646						(2,046)
Cash and cash equivalents, beginning of period			199,865						158,364
Cash and cash equivalents, end of period			$	172,896					$	250,621
Supplemental disclosures of cash flow information:
Cash paid for interest			$	133,830					$	80,945
Cash paid for income taxes, net of refunds			29,278						42,365
Supplemental schedule of non-cash investing activities:
Receivable portfolios transferred to real estate owned			$	2,011					$	3,098

    

See accompanying notes to condensed consolidated financial statements

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ENCORE CAPITAL GROUP, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1: Ownership, Description of Business, and Summary of Significant Accounting Policies

Encore Capital Group, Inc. (“Encore”), through its subsidiaries (collectively with Encore, the “Company”), is an international specialty finance company providing debt recovery solutions and other related services for consumers across a broad range of financial assets. The Company purchases portfolios of defaulted consumer receivables at deep discounts to face value and manages them by working with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial obligations to credit originators, including banks, credit unions, consumer finance companies and commercial retailers. Defaulted receivables may also include receivables subject to bankruptcy proceedings. The Company also provides debt servicing and other portfolio management services to credit originators for non-performing loans in Europe.

Through Midland Credit Management, Inc. and its domestic affiliates (collectively, “MCM”), the Company is a market leader in portfolio purchasing and recovery in the United States. Through Cabot Credit Management Limited (“CCM”) and its subsidiaries and European affiliates (collectively, “Cabot”), the Company is one of the largest credit management services providers in Europe and the United Kingdom. These are the Company’s primary operations.

The Company also has investments and operations in Latin America and Asia-Pacific, which the Company refers to as “LAAP.”

Financial Statement Preparation and Presentation

The accompanying interim condensed consolidated financial statements have been prepared by the Company, without audit, in accordance with the instructions to the Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the “SEC”) and, therefore, do not include all information and footnotes necessary for a fair presentation of its condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”).

In the opinion of management, the unaudited financial information for the interim periods presented reflects all adjustments, consisting of only normal and recurring adjustments, necessary for a fair statement of the Company’s condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.

The preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in the Company’s condensed financial statements and the accompanying notes. Actual results could materially differ from those estimates.

Basis of Consolidation

The condensed consolidated financial statements have been prepared in conformity with GAAP and reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. The Company also consolidates variable interest entities (“VIEs”) for which it is the primary beneficiary. The primary beneficiary has both (a) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance, and (b) either the obligation to absorb losses or the right to receive benefits. Refer to “Note 8: Variable Interest Entities” for further details. All intercompany transactions and balances have been eliminated in consolidation.

Translation of Foreign Currencies

The condensed financial statements of certain of the Company’s foreign subsidiaries are measured using their local currency as the functional currency. Assets and liabilities of foreign operations are translated into U.S. dollars using period-end exchange rates, and revenues and expenses are translated into U.S. dollars using average exchange rates in effect during each period. The resulting translation adjustments are recorded as a component of other comprehensive income or loss. Equity accounts are translated at historical rates, except for the change in retained earnings during the year which is the result of the income statement translation process. Intercompany transaction gains or losses at each period end arising from subsequent measurement of balances for which settlement is not planned or anticipated in the foreseeable future are included as translation adjustments and recorded within other comprehensive income or loss. Translation gains or losses are the material components of accumulated other comprehensive income or loss and are reclassified to earnings upon the substantial sale or liquidation of investments in foreign operations.

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Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes. The new standard is effective for annual periods beginning after December 15, 2024. This ASU, once adopted, will likely result in additional required disclosures in the Company’s consolidated financial statements for the year ending December 31, 2025.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”) and in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses: Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual periods beginning after December 15, 2026 and interim periods with fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-04, Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The new standard is effective for annual periods beginning after December 15, 2025. The Company is currently evaluating the potential impact, but it does not expect the adoption of this guidance to have a material impact on its consolidated financial statements and related disclosures.

Note 2: Earnings Per Share

Basic earnings per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period.

The number of shares used to calculate the diluted earnings per share is computed by using the basic weighted-average number of common shares outstanding plus any potentially dilutive common shares outstanding during the period, except when their effect is anti-dilutive. Dilutive potential common shares include outstanding stock based awards, and the dilutive effect of the convertible senior notes, if applicable.

As announced in May 2021, the Company’s Board of Directors has approved a $300.0 million share repurchase program. During the three and six months ended June 30, 2025, the Company repurchased 418,499 and 707,924 shares of common stock for approximately $15.0 million and $25.0 million, respectively, under the share repurchase program. The Company did not make any repurchases under the share repurchase program during the three and six months ended June 30, 2024. The Company’s practice is to retire the shares repurchased.

A reconciliation of shares used in calculating earnings per basic and diluted shares follows (in thousands, except per share amounts):

			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						2024
Net income			$	58,721					$	32,181					$	105,517					$	55,420
Shares:
Total weighted-average basic shares outstanding			23,507						23,883						23,692						23,834
Dilutive effect of stock-based awards			71						19						121						109
Dilutive effect of convertible senior notes			—						195						113						339
Total weighted-average dilutive shares outstanding			23,578						24,097						23,926						24,282
Basic earnings per share			$	2.50					$	1.35					$	4.45					$	2.33
Diluted earnings per share			$	2.49					$	1.34					$	4.41					$	2.28

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Note 3: Fair Value Measurements

Fair value is defined as the price that would be received upon sale of an asset or the price paid to transfer a liability, in an orderly transaction between market participants at the measurement date (i.e., the “exit price”). The Company uses a fair value hierarchy that prioritizes the inputs used in valuation techniques to measure fair value into three broad levels. The following is a brief description of each level:

•Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

•Level 3: Unobservable inputs, including inputs that reflect the reporting entity’s own assumptions.

Financial Instruments Required To Be Carried At Fair Value

Financial assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

			Fair Value Measurements as of June 30, 2025
			Level 1						Level 2						Level 3						Total
Assets
Interest rate cap contracts			$	—					$	503					$	—					$	503
Liabilities
Interest rate swap agreements			—						(22,659)						—						(22,659)

			Fair Value Measurements as of December 31, 2024
			Level 1						Level 2						Level 3						Total
Assets
Interest rate cap contracts			$	—					$	252					$	—					$	252
Liabilities
Interest rate swap agreements			—						(18,360)						—						(18,360)

Derivative Contracts:

The Company uses derivative instruments to manage its exposure to fluctuations in interest rates and foreign currency exchange rates. Fair values of these derivative instruments are estimated using models that project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves, foreign currency exchange rates, and forward and spot prices for currencies.

Non-Recurring Fair Value Measurement:

Certain assets are measured at fair value on a nonrecurring basis. Goodwill and property and equipment are adjusted to fair value when an impairment charge is recognized. Such fair values are determined using various valuation techniques under Level 3 fair value hierarchy. REO assets are classified as held for sale at the lower of their carrying value or fair value less cost to sell. The fair value of the assets held for sale and estimated selling expenses were determined at the time of initial recognition and in each reporting period using Level 3 measurements based on appraised values using market comparables. The fair value estimate of the assets held for sale was approximately $30.1 million and $38.1 million as of June 30, 2025 and December 31, 2024, respectively.

Financial Instruments Not Required To Be Carried At Fair Value

The table below summarizes fair value estimates for the Company's financial instruments that are not required to be carried at fair value. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company.

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The carrying amounts in the following table are included in the condensed consolidated statements of financial condition as of June 30, 2025 and December 31, 2024 (in thousands):

									June 30, 2025												December 31, 2024
			Fair Value Level						Carrying Amount						Estimated Fair Value						Carrying Amount						Estimated Fair Value
Financial Assets
Cash and cash equivalents			Level 1						$	172,896					$	172,896					$	199,865					$	199,865
Receivable portfolios, net			Level 3						4,184,780						4,469,118						3,776,369						4,052,645
Other assets(2)			Level 2						115,064						115,064						128,674						128,674
Financial Liabilities
Accounts payable and accrued liabilities			Level 2						214,663						214,663						233,545						233,545
Global senior secured revolving credit facility			Level 2						999,678						999,678						865,365						865,365
Senior secured notes(1)			Level 2						1,947,479						2,012,022						1,843,386						1,893,367
Convertible senior notes due October 2025			Level 2						100,000						104,515						100,000						129,100
Convertible senior notes due March 2029			Level 2						230,000						217,677						230,000						232,611
Cabot securitisation senior facility			Level 2						350,141						350,141						319,137						319,137
U.S. facility			Level 2						300,000						300,000						283,500						283,500
Other borrowings			Level 2						67,710						67,710						64,904						64,904
Other liabilities(2)			Level 2						92,628						92,628						97,731						97,731

_______________________

(1)Carrying amount represents historical cost, adjusted for any related debt discount.

(2)Only includes financial instruments not required to be carried at fair value. Derivative instruments, which are required to be carried at fair value are excluded.

Receivable Portfolios:

The fair value of receivable portfolios is measured by discounting the estimated future cash flows generated by the Company’s proprietary forecasting models. The key inputs include the estimated future gross cash flow, average cost to collect, and discount rate. The determination of such inputs requires significant judgment, including assessing the assumed market participant’s cost structure, its determination of whether to include fixed costs in its valuation, its collection strategies, and determining the appropriate weighted average cost of capital. The Company evaluates the use of these key inputs on an ongoing basis and refines the data as it continues to obtain better information from market participants in the debt recovery and purchasing business.

Borrowings:

The Company’s convertible notes and senior secured notes are carried at historical cost, adjusted for the applicable debt discount. The fair value estimate for the convertible notes incorporates quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. The fair value of the senior secured notes is estimated using borrowing rates with similar terms, maturities, and credit ratings.

The carrying value of the Company’s senior secured revolving credit facility, securitisation senior facility, U.S. facility, and other borrowings approximates fair value due to the use of current market rates that are repriced frequently.

Others:

The Company’s cash and cash equivalents, certain other assets, accounts payable and accrued liabilities, and other liabilities approximate their fair values due to their short-term nature.

Note 4: Derivatives and Hedging Instruments

The Company may periodically enter into derivative financial instruments to manage risks related to interest rates and foreign currency. Certain of the Company’s derivative financial instruments qualify for hedge accounting treatment.

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The following table summarizes the fair value of derivative instruments as recorded in the Company’s condensed consolidated statements of financial condition (in thousands):

June 30, 2025

December 31, 2024

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Interest rate cap contracts

Other assets

$

503

Other assets

$

252

Interest rate swap agreements

Other liabilities

(22,659)

Other liabilities

(18,360)

Derivatives Designated as Hedging Instruments

The Company may periodically enter into interest rate swap agreements and interest rate cap contracts to reduce its exposure to fluctuations in interest rates on variable interest rate debt and their impact on earnings and cash flows. Under the swap agreements, the Company receives floating interest rate payments and makes interest payments based on fixed interest rates. Under the cap contracts, the Company receives floating interest rate payments and makes interest payments based on capped interest rates. The Company designates its interest rate swap and interest rate cap instruments as cash flow hedges at inception.

From time to time, the Company uses cross-currency swap agreements to manage foreign currency exchange risk by converting fixed-rate Euro-denominated borrowings and fixed-rate GBP-denominated borrowings including periodic interest payments and the payment of principal at maturity to fixed-rate USD debt. The Company designates its cross-currency swap agreements as fair value hedges at inception.

The following tables summarize the terms of the derivative instruments designated as hedging instruments as recorded in the Company’s condensed consolidated statements of financial condition:

June 30, 2025

Effective date

Maturity Date

Hedge Designation

Notional Amount

Receive Floating Rate Index

Interest rate cap contracts

2024 Cap

September 2024

September 2026

Cash flow hedge

$350.1 million

SONIA

2025 Cap

September 2026

January 2028

Cash flow hedge

$350.1 million

SONIA

Interest rate swap agreements

2023 Euro IR Swap

October 2023

January 2028

Cash flow hedge

$117.8 million

3-month EURIBOR

2024 Euro IR Swaps

June 2024

January 2028

Cash flow hedge

$488.9 million

3-month EURIBOR

2023 SOFR IR Swaps

November 2023

October 2026

Cash flow hedge

$150.0 million

1-month SOFR CME Term

2025 SOFR IR Swaps - U.S.Facility

January 2025

October 2027

Cash flow hedge

$125.0 million

1-month SOFR CME Term

2025 SOFR IR Swaps - Global Senior Facility

April 2025

April 2027

Cash flow hedge

$150.0 million

1-month SOFR CME Term

December 31, 2024

Effective date

Maturity Date

Hedge Designation

Notional Amount

Receive Floating Rate Index

Interest rate cap contracts

2024 Cap

September 2024

September 2026

Cash flow hedge

$319.1 million

SONIA

Interest rate swap agreements

2023 Euro IR Swap

October 2023

January 2028

Cash flow hedge

$103.5 million

3-month EURIBOR

2024 Euro IR Swaps

June 2024

January 2028

Cash flow hedge

$429.6 million

3-month EURIBOR

2023 SOFR IR Swaps

November 2023

October 2026

Cash flow hedge

$150.0 million

1-month SOFR CME Term

The Company expects to reclassify approximately $10.5 million of net derivative loss from OCI into earnings relating to its cash flow designated derivatives within the next 12 months. This amount will vary due to fluctuations in benchmark interest rates.

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The following tables summarize the effects of derivatives designated as hedging instruments in the Company’s condensed consolidated financial statements (in thousands):

Derivatives Designated as Hedging Instruments						(Loss) Gain Recognized in OCI												Location of Gain (Loss) Reclassified from OCI into Income (Loss)						(Loss) Gain Reclassified from OCI into Income
						Three Months Ended June 30,																		Three Months Ended June 30,
						2025						2024												2025						2024
Interest rate swap agreements						$	(4,609)					$	6,199					Interest expense						$	(1,043)					$	655
Interest rate cap contracts						(623)						(5,777)						Interest expense						(414)						(664)
Cross-currency swap agreements						—						(4,289)						Interest expense						—						(1,757)
																		Other expense						—						(1,370)

Derivatives Designated as Hedging Instruments						(Loss) Gain Recognized in OCI												Location of Gain (Loss) Reclassified from OCI into Income (Loss)						(Loss) Gain Reclassified from OCI into Income
						Six Months Ended June 30,																		Six Months Ended June 30,
						2025						2024												2025						2024
Interest rate swap agreements						$	(5,809)					$	17,273					Interest expense						$	(1,510)					$	1,195
Interest rate cap contracts						(1,319)						(11,828)						Interest expense						(778)						(1,376)
Cross-currency swap agreements						—						(17,299)						Interest expense						—						(3,537)
																		Other expense						—						(12,880)

Derivatives Not Designated as Hedging Instruments

From time to time, the Company enters into currency exchange forward contracts to reduce the effects of currency exchange rate fluctuations. These derivative contracts generally mature within one to six months and are not designated as hedge instruments for accounting purposes. The gains or losses on these unhedged derivative contracts are recognized in other income or expense based on the changes in fair value. The Company did not have any derivatives that were not designated as hedging instruments as of June 30, 2025 and December 31, 2024, respectively.

The following table summarizes the effects of derivatives not designated as hedging instruments on the Company’s condensed consolidated statements of income during the periods presented (in thousands):

Derivatives Not Designated as Hedging Instruments						Location of Gain Recognized in Income on Derivative						Amount of Gain Recognized in Income
												Three Months Ended June 30,												Six Months Ended June 30,
												2025						2024						2025						2024
Interest rate cap contract						Other income						$	—					$	79					$	—					$	274
Foreign currency exchange contract						Other income						—						873						—						873

Note 5: Receivable Portfolios, Net

The Company’s purchased portfolios of loans are grossed-up to their face value with an offsetting allowance and noncredit discount allocated to the individual receivables as the unit of account is at the individual loan level. Since each loan is deeply delinquent and deemed uncollectible at the individual loan level, the Company applies its charge-off policy and fully writes-off the amortized costs (i.e., face value net of noncredit discount) of the individual receivables immediately after purchasing the portfolio. The Company then records a negative allowance that represents the present value of all expected future recoveries for pools of receivables that share similar risk characteristics using a discounted cash flow approach, which ultimately equals the amount paid for a portfolio purchase and presented as “Receivable portfolios, net” in the Company’s condensed consolidated statements of financial condition. The discount rate is an effective interest rate (or “purchase EIR”) based on the purchase price of the portfolio and the expected future cash flows at the time of purchase. The amount of the negative allowance (i.e., receivable portfolios) will not exceed the total amortized cost basis of the loans written-off.

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Receivable portfolio purchases are aggregated into pools based on similar risk characteristics. Examples of risk characteristics include financial asset type, collateral type, size, interest rate, date of origination, term, and geographic location. The Company’s static pools are typically grouped into credit card, purchased consumer bankruptcy, and mortgage portfolios. The Company further groups these static pools by geographic location. Once a pool is established, the portfolios will remain in the designated pool unless the underlying risk characteristics change. The purchase EIR of a pool will not change over the life of the pool even if expected future cash flows change.

Revenue is recognized for each static pool over the economic life of the pool. Debt purchasing revenue includes two components:

(1)     Portfolio revenue, which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the EIR) and also includes all revenue from zero basis portfolio (“ZBA”) collections, and

(2)     Changes in recoveries, which includes

(a)     Recoveries above or below forecast, which is the difference between (i) actual cash collected/recovered during the current period and (ii) expected cash recoveries for the current period, which generally represents over or under performance for the period; and

(b)     Changes in expected future recoveries, which is the present value change of expected future recoveries, where such change generally results from (i) collections “pulled forward from” or “pushed out to” future periods (i.e. amounts either collected early or expected to be collected later) and (ii) magnitude and timing changes to estimates of expected future collections (which can be increases or decreases).

The Company measures expected future recoveries based on historical experience, current conditions, reasonable and supportable forecasts, and other quantitative and qualitative factors. Factors that may change the expected future recoveries may include both internal as well as external factors. Internal factors include operational performance, such as capacity and the productivity of the Company’s collection staff. External factors that may have an impact on the Company’s collections include new laws or regulations, new interpretations of existing laws or regulations, and macroeconomic conditions.

Receivable portfolios, net consists of the following as of the dates presented (in thousands):

			June 30, 2025						December 31, 2024
Amortized cost			$	—					$	—
Negative allowance for expected recoveries			4,184,780						3,776,369
Balance, end of period			$	4,184,780					$	3,776,369

The following table summarizes the changes in the balance of receivable portfolios, net during the periods presented (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						2024
Balance, beginning of period			$	3,952,531					$	3,531,387					$	3,776,369					$	3,468,432
Negative allowance for expected recoveries - portfolio purchases (1)			367,099						278,692						734,950						574,406
Collections applied to receivable portfolios, net (2)			(293,811)						(224,798)						(553,400)						(419,833)
Changes in recoveries (3)			55,599						5,754						77,063						(6,655)
Put-backs and recalls			(4,420)						(3,099)						(9,559)						(7,446)
Disposals and transfers to real estate owned			(971)						(1,053)						(2,011)						(3,098)
Foreign currency translation adjustments			108,753						(3,561)						161,368						(22,484)
Balance, end of period			$	4,184,780					$	3,583,322					$	4,184,780					$	3,583,322

_______________________

(1)The table below provides the detail on the establishment of negative allowance for expected recoveries of portfolios purchased during the periods presented:

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			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						2024
Purchase price			$	367,099					$	278,692					$	734,950					$	574,406
Allowance for credit losses			1,125,478						649,642						2,080,137						1,294,156
Amortized cost			1,492,577						928,334						2,815,087						1,868,562
Noncredit discount			1,942,657						1,211,961						3,601,923						2,467,754
Face value			3,435,234						2,140,295						6,417,010						4,336,316
Write-off of amortized cost			(1,492,577)						(928,334)						(2,815,087)						(1,868,562)
Write-off of noncredit discount			(1,942,657)						(1,211,961)						(3,601,923)						(2,467,754)
Negative allowance			367,099						278,692						734,950						574,406
Negative allowance for expected recoveries - portfolio purchases			$	367,099					$	278,692					$	734,950					$	574,406

(2)Collections applied to receivable portfolios, net, is calculated as follows during the periods presented:

			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						2024
Cash Collections			$	654,985					$	546,728					$	1,259,792					$	1,057,615
Less - amounts classified to portfolio revenue			(361,174)						(321,930)						(706,392)						(637,782)
Collections applied to receivable portfolios, net			$	293,811					$	224,798					$	553,400					$	419,833

(3)Changes in recoveries is calculated as follows during the periods presented, where recoveries include cash collections, put-backs and recalls, and other cash-based adjustments:

			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						2024
Recoveries above forecast			$	52,263					$	27,443					$	79,215					$	28,296
Changes in expected future recoveries			3,336						(21,689)						(2,152)						(34,951)
Changes in recoveries			$	55,599					$	5,754					$	77,063					$	(6,655)

Recoveries above or below forecast represent over and under-performance in the reporting period, respectively. Collections during the three and six months ended June 30, 2025, over-performed the forecasted collections by approximately $52.3 million and $79.2 million, respectively. Collections during the three and six months ended June 30, 2024, over-performed the forecasted collections by approximately $27.4 million and $28.3 million, respectively.

When reassessing the forecasts of expected lifetime recoveries during the three months ended June 30, 2025, management considered, among other factors, historical and current collection performance, changes in consumer behavior, and the macroeconomic environment. The updated forecast resulted in changes in the timing and amount of total estimated remaining collections which in turn, when discounted to present value, resulted in a net positive change in expected future recoveries of approximately $3.3 million during the three months ended June 30, 2025. This net positive change, combined with the net negative change recorded in the first quarter, resulted in a net negative change in expected future recoveries of approximately $2.2 million during the six months ended June 30, 2025. During the three and six months ended June 30, 2024, the Company recorded approximately $21.7 million and $35.0 million in net negative change in expected future recoveries, respectively.

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Note 6: Other Assets

Other assets consist of the following (in thousands):

			June 30, 2025						December 31, 2024
Operating lease right-of-use assets			$	61,054					$	58,089
Prepaid expenses			34,874						35,564
Real estate owned			30,122						38,075
Other financial receivables			18,455						18,952
Service fee receivables			13,408						10,914
Income tax deposits			8,396						10,438
Deferred tax assets			6,349						8,418
Other			34,085						44,640
Total			$	206,743					$	225,090

Note 7: Borrowings

The Company is in compliance in all material respects with all covenants under its financing arrangements as of June 30, 2025. The components of the Company’s consolidated borrowings were as follows (in thousands):

			June 30, 2025						December 31, 2024
Global senior secured revolving credit facility			$	999,678					$	865,365
Senior secured notes			1,950,022						1,846,047
Convertible senior notes			330,000						330,000
Cabot securitisation senior facility			350,141						319,137
U.S. facility			300,000						283,500
Other			67,710						64,904
Finance lease liabilities			996						1,065
			3,998,547						3,710,018
Less: debt discount and issuance costs, net of amortization			(33,082)						(37,256)
Total			$	3,965,465					$	3,672,762

Encore is the parent of the restricted group for the Global Senior Facility and the Senior Secured Notes, both of which are guaranteed by the same group of material Encore subsidiaries and secured by the same collateral, which represents substantially all of the assets of those subsidiaries.

Global Senior Secured Revolving Credit Facility

In September 2020, the Company entered into a multi-currency senior secured revolving credit facility agreement (as amended and restated, the “Global Senior Facility”). On May 22, 2025, the Company issued an additional commitment increase notice and entered into an amendment letter that amended and supplemented the Global Senior Facility to, among other things, (1) reflect a $190.0 million upsize of the facility from $1,295.0 million to $1,485.0 million, and (2) extend the termination date of the facility from September 2028 to September 2029 except for a $69.5 million tranche that terminates in September 2028. The amendment was accounted for as a debt modification. As of June 30, 2025, the Global Senior Facility included the following key provisions:

•Interest at Term SOFR (or EURIBOR for any loan drawn in Euro or a rate based on SONIA for any loan drawn in British Pound), with a Term SOFR (or EURIBOR or SONIA) floor of 0.00%, plus a margin of 2.25%, plus in the case of Term SOFR borrowings, a credit adjustment spread of 0.10%;

•An unused commitment fee of 0.40% per annum, payable quarterly in arrears;

•A restrictive covenant that limits the LTV Ratio (defined in the Global Senior Facility) to 0.75 in the event that the Global Senior Facility is more than 20% utilized;

•A restrictive covenant that limits the SSRCF LTV Ratio (defined in the Global Senior Facility) to 0.275;

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•A restrictive covenant that requires the Company to maintain a Fixed Charge Coverage Ratio (as defined in the Global Senior Facility) of at least 2.0;

•Additional restrictions and covenants which limit, among other things, the payment of dividends and the incurrence of additional indebtedness and liens; and

•Standard events of default which, upon occurrence, may permit the lenders to terminate the Global Senior Facility and declare all amounts outstanding to be immediately due and payable.

The Global Senior Facility is secured by substantially all of the assets of the Company and the guarantors. Pursuant to the terms of an intercreditor agreement entered into with respect to the relative positions of (1) the Global Senior Facility and any super priority hedging liabilities (collectively, “Super Senior Liabilities”) and (2) the Senior Secured Notes, Super Senior Liabilities that are secured by assets that also secure the Senior Secured Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets.

As of June 30, 2025, the outstanding borrowings under the Global Senior Facility were $999.7 million. The weighted average interest rate of the Global Senior Facility was 6.49% and 7.85% for the three months ended June 30, 2025 and 2024, respectively, and 6.52% and 7.88% for the six months ended June 30, 2025 and 2024, respectively. Available capacity under the Global Senior Facility, after taking into account applicable debt covenants, was approximately $397.2 million as of June 30, 2025.

Senior Secured Notes

The following table provides a summary of the Company’s senior secured notes (the “Senior Secured Notes”) ($ in thousands):

			June 30, 2025						December 31, 2024						Issue Currency						Maturity Date						Interest Payment Dates						Interest Rate
Encore 2028 Notes			$	343,276					$	312,880					GBP						Jun 1, 2028						Jun 1, Dec 1						4.250		%
Encore 2028 Floating Rate Notes			606,746						533,167						EUR						Jan 15, 2028						Jan 15, Apr 15, Jul 15, Oct 15						EURIBOR +4.250%(1)
Encore 2029 Notes			500,000						500,000						USD						Apr 1, 2029						Apr 1, Oct 1						9.250		%
Encore 2030 Notes			500,000						500,000						USD						May 15, 2030						May 15, Nov 15						8.500		%
			$	1,950,022					$	1,846,047

_______________________

(1)Interest rate is based on three-month EURIBOR (subject to a 0% floor) plus 4.250% per annum, resets quarterly.

The Senior Secured Notes are secured by the same collateral as the Global Senior Facility. The guarantees provided in respect of the Senior Secured Notes are pari passu with the guarantee given in respect of the Global Senior Facility. Subject to the intercreditor agreement described above under the section “Global Senior Secured Revolving Credit Facility,” Super Senior Liabilities that are secured by assets that also secure the Senior Secured Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets.

The 2028 Floating Rate Notes had a weighted average interest rate of 6.61% and 8.16% for the three months ended June 30, 2025 and 2024, respectively, and 6.85% and 8.18% for the six months ended June 30, 2025 and 2024, respectively.

Convertible Notes

The following table provides a summary of the principal balance, maturity date and interest rate for the Company’s convertible senior notes (the “Convertible Notes”) ($ in thousands):

			June 30, 2025						December 31, 2024						Maturity Date						Interest Payment Dates						Interest Rate
2025 Convertible Notes			$	100,000					$	100,000					Oct 1, 2025						Apr 1, Oct 1						3.250		%
2029 Convertible Notes			230,000						230,000						Mar 15, 2029						Mar 15, Sep 15						4.000		%
			$	330,000					$	330,000

In order to reduce the risk related to the potential dilution and/or the potential cash payments the Company may be required to make in the event that the market price of the Company’s common stock becomes greater than the conversion prices of the Convertible Notes, the Company may enter into hedge programs that increase the effective conversion price for the Convertible Notes. In connection with the issuance of the 2029 Convertible Notes, the Company entered into privately

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negotiated capped call transactions that effectively raised the conversion price of the 2029 Convertible Notes from $65.89 to $82.69. These hedging instruments have been determined to be indexed to the Company’s own stock and meet the criteria for equity classification. The Company recorded the cost of the hedge instruments as a reduction in additional paid-in capital, and does not recognize subsequent changes in fair value of these financial instruments in its condensed consolidated financial statements. The Company did not hedge the 2025 Convertible Notes.

Certain key terms related to the convertible features as of June 30, 2025 are listed below ($ in thousands, except conversion price):

			2025 Convertible Notes						2029 Convertible Notes
Initial conversion price			$	40.00					$	65.89
Closing stock price at date of issuance			$	32.00					$	51.68
Closing stock price date			Sep 4, 2019						Feb 28, 2023
Initial conversion rate (shares per $1,000 principal amount)			25.0000						15.1763
Adjusted conversion rate (shares per $1,000 principal amount)(1)			25.1310						15.1763
Adjusted conversion price(1)			$	39.79					$	65.89
Adjusted effective conversion price(2)			$	39.79					$	82.69
Excess of if-converted value compared to principal(3)			$	—					$	—
Conversion date			Jul 1, 2025						Dec 15, 2028

_______________________

(1)Pursuant to the indenture for the Company’s 2025 Convertible Notes, the conversion rate for the 2025 Convertible Notes was adjusted upon the completion of the Company’s tender offer in December 2021.

(2)As discussed above, the Company maintains a hedge program that increases the effective conversion price for the 2029 Convertible Notes to $82.69.

(3)Represents the premium the Company would have to pay assuming the Convertible Notes were converted on June 30, 2025 using a hypothetical share price based on the closing stock price on June 30, 2025.

Prior to the close of business on the business day immediately preceding their respective free conversion dates (listed above), holders may convert their Convertible Notes only under certain circumstances set forth in the applicable indentures. On or after their respective free conversion dates until the close of business on the second scheduled trading day immediately preceding their respective maturity dates, holders may convert their notes at any time.

In the event of conversion, the Convertible Notes are convertible into cash up to the aggregate principal amount of the notes and the excess conversion premium, if any, may be settled in cash or shares of the Company’s common stock at the Company’s election and subject to certain restrictions contained in each of the indentures governing the Convertible Notes.

The Company’s convertible notes are carried as a single liability, which reflects the principal amount of the convertible notes. Interest expense related to the Convertible Notes was $3.1 million for both the three months ended June 30, 2025 and the three months ended June 30, 2024, and $6.2 million for both the six months ended June 30, 2025 and the six months ended June 30, 2024.

In June 2025, in accordance with the indenture for the 2025 Convertible Notes, the Company irrevocably elected “combination settlement” with a specified dollar amount equal to $1,750 per $1,000 principal amount of the 2025 Convertible Notes for all conversions of the 2025 Convertible Notes that occur on or after July 1, 2025, the free conversion date. None of the 2025 Convertible Notes have been converted.

Cabot Securitisation Senior Facility

Cabot Securitisation UK Ltd (“Cabot Securitisation”), an indirect subsidiary of Encore, has a senior facility for a committed amount of £255.0 million (the “Cabot Securitisation Senior Facility”). Funds drawn under the Cabot Securitisation Senior Facility bear interest at a rate per annum equal to SONIA plus a margin of 3.20% plus, for periods after January 18, 2028, a step up margin ranging from zero to 1.00%. The Cabot Securitisation Senior Facility matures in January 2030.

As of June 30, 2025, the outstanding borrowings under the Cabot Securitisation Senior Facility were £255.0 million (approximately $350.1 million based on an exchange rate of $1.00 to £0.73, the exchange rate as of June 30, 2025). The obligations of Cabot Securitisation under the Cabot Securitisation Senior Facility are secured by first ranking security interests over all of Cabot Securitisation’s property, assets and rights (including receivables purchased from Cabot Financial UK from time to time), the book value of which was approximately £295.8 million (approximately $406.2 million based on an exchange rate of $1.00 to £0.73, the exchange rate as of June 30, 2025) as of June 30, 2025. The weighted average interest rate of the

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Cabot Securitisation Senior Facility was 7.54% and 8.41% for the three months ended June 30, 2025 and 2024, respectively, and 7.66% and 8.41% for the six months ended June 30, 2025 and 2024, respectively.

Cabot Securitisation is a securitized financing vehicle and is a VIE for consolidation purposes. Refer to “Note 8: Variable Interest Entities” for further details.

U.S. Facility

As of June 30, 2025, an indirect subsidiary of Encore (“U.S. Financing Subsidiary”) had a facility for a committed amount of $300.0 million (as amended, the “U.S. Facility”) that was set to mature in October 2027. Funds drawn under the U.S. Facility bear interest at a rate per annum equal to Term SOFR plus a margin of 3.50%. On July 3, 2025, the U.S. Facility was amended to extend the maturity date from October 2027 to October 2028 and to increase the committed amount from $300.0 million to $450.0 million.

As of June 30, 2025, the outstanding borrowings under the U.S. Facility were $300.0 million. The obligations under the U.S. Facility are secured by first ranking security interests over all of U.S. Financing Subsidiary’s assets and rights. As of June 30, 2025, this included receivables acquired from MCM, the book value of which was approximately $531.6 million. The weighted average interest rate of the U.S. Facility was 7.82% and 8.82% for the three months ended June 30, 2025 and 2024, respectively, and 7.82% and 8.83% for the six months ended June 30, 2025 and 2024, respectively.

The U.S. Facility is a securitized financing vehicle and is a VIE for consolidation purposes. Refer to “Note 8: Variable Interest Entities” for further details.

Note 8: Variable Interest Entities

A VIE is defined as a legal entity whose equity owners do not have sufficient equity at risk, or, as a group, the holders of the equity investment at risk lack any of the following three characteristics: decision-making rights, the obligation to absorb expected losses, or the right to receive expected residual returns of the entity. The primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and the obligation to absorb expected losses or the right to receive residual returns from the entity that could potentially be significant to the VIE. The Company consolidates VIEs when it is the primary beneficiary.

As of June 30, 2025, the Company’s VIEs include certain securitized financing vehicles and other immaterial special purpose entities that were created to purchase receivable portfolios in certain geographies. The Company is the primary beneficiary of these VIEs. The Company has the power to direct the activities of the VIEs including the ability to exercise discretion in the servicing of the financial assets and has the right to receive residual returns that could potentially be significant to the VIEs. The Company evaluates its relationships with its VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary.

Most assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets. Conversely, liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets; rather, they represent claims against the specific assets of the VIE.

Note 9: Accumulated Other Comprehensive Loss

A summary of the Company’s changes in accumulated other comprehensive loss by component is presented below (in thousands):

			Three Months Ended June 30, 2025
			Derivatives						Currency Translation Adjustments						Accumulated Other Comprehensive Loss
Balance at beginning of period			$	(17,244)					$	(130,298)					$	(147,542)
Other comprehensive (loss) income before reclassification			(5,232)						30,855						25,623
Reclassification			1,457						—						1,457
Tax effect			922						59						981
Balance at end of period			$	(20,097)					$	(99,384)					$	(119,481)

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			Three Months Ended June 30, 2024
			Derivatives						Currency Translation Adjustments						Accumulated Other Comprehensive Loss
Balance at beginning of period			$	(303)					$	(127,133)					$	(127,436)
Other comprehensive loss before reclassification			(3,867)						(1,146)						(5,013)
Reclassification			3,136						—						3,136
Tax effect			(1,088)						443						(645)
Balance at end of period			$	(2,122)					$	(127,836)					$	(129,958)

			Six Months Ended June 30, 2025
			Derivatives						Currency Translation Adjustments						Accumulated Other Comprehensive Loss
Balance at beginning of period			$	(16,368)					$	(145,762)					$	(162,130)
Other comprehensive (loss) income before reclassification			(7,128)						46,192						39,064
Reclassification			2,288						—						2,288
Tax effect			1,111						186						1,297
Balance at end of period			$	(20,097)					$	(99,384)					$	(119,481)

			Six Months Ended June 30, 2024
			Derivatives						Currency Translation Adjustments						Accumulated Other Comprehensive Loss
Balance at beginning of period			$	(3,093)					$	(120,827)					$	(123,920)
Other comprehensive loss before reclassification			(11,854)						(7,292)						(19,146)
Reclassification			16,598						—						16,598
Tax effect			(3,773)						283						(3,490)
Balance at end of period			$	(2,122)					$	(127,836)					$	(129,958)

Note 10: Income Taxes

The Company’s effective tax rate for the three and six months ended June 30, 2025 was 24.7% and 23.8%, respectively. For the three and six months ended June 30, 2024, the Company’s effective tax rate was 24.3% and 24.1%, respectively. For the three and six months ended June 30, 2025, the differences between the effective tax rate and the federal statutory rate were primarily due to state income taxes offset by other foreign adjustments. For the three and six months ended June 30, 2024, the differences between our effective tax rate and the federal statutory rate were primarily due to state income taxes.

Each interim period is considered an integral part of the annual period and tax expense or benefit is measured using an estimated annual effective income tax rate. The estimated annual effective tax rate for the full year is applied to the respective interim period, taking into account year-to-date amounts and projected amounts for the year. Since the Company operates in foreign countries with varying tax rates, the Company’s quarterly effective tax rate is dependent on the level of income or loss from international operations in the reporting period.

The Company’s subsidiary in Costa Rica is operating under a 100% tax holiday through August 13, 2026. The exemption under this tax holiday will decrease to 50% through August 13, 2030, and then 0% thereafter. The impact of the tax holiday in Costa Rica for the three and six months ended June 30, 2025 and 2024, was immaterial.

The Company is subject to income taxes in the U.S. and foreign jurisdictions. Significant judgment is required in evaluating uncertain tax positions and determining the provision for income taxes.

In December 2021, the Organization for Economic Cooperation and Development (“OECD”) enacted model rules for a new global minimum tax framework (“Pillar Two”). Under the Pillar Two rules, a company is required to determine a combined effective tax rate for each jurisdiction. If the jurisdictional effective tax rate determined under the Pillar Two rules is less than 15%, a top-up tax will be due to bring the jurisdictional effective tax rate up to 15%. In December 2022, European Union Member States adopted a directive implementing the Pillar Two rules requiring Member States to enact the directive into their national laws and these began to go into effect from January 1, 2024. The Company has estimated the applicable top-up tax and recorded this in tax expense for the three and six months ended June 30, 2025. The estimated impact of top-up tax for the period was immaterial.

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On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (“OBBBA”), which includes a broad range of tax reform provisions affecting businesses. The legislation features permanent extension, with modifications, of key 2017 Tax Cuts and Jobs Act provisions that were set to change at the end of 2025. The effects of the OBBBA will be recorded in the third quarter of 2025, as a change in tax law is accounted for in the period of enactment. The Company is currently evaluating the impact for future periods but expects it to be immaterial.

Note 11: Commitments and Contingencies

Litigation and Regulatory

The Company is involved in disputes, legal actions, regulatory investigations, inquiries, and other actions from time to time in the ordinary course of business. The Company, along with others in its industry, is routinely subject to legal actions asserting various claims, including those based on the Fair Debt Collection Practices Act (“FDCPA”), the Fair Credit Reporting Act (“FCRA”), the Telephone Consumer Protection Act (“TCPA”), comparable state statutes, state and federal unfair competition statutes, and common law causes of action. The violations of law investigated or alleged in these actions often include claims that the Company lacks specified licenses to conduct its business, attempts to collect debts on which the statute of limitations has run, has made inaccurate or unsupported assertions of fact in support of its collection actions and/or has acted improperly in connection with its efforts to contact consumers. Such litigation and regulatory actions could involve potential compensatory or punitive damage claims, fines, sanctions, injunctive relief, or changes in business practices. Many continue on for some length of time and involve substantial investigation, litigation, negotiation, and other expense and effort before a result is achieved, and during the process the Company often cannot determine the substance or timing of any eventual outcome.

As of June 30, 2025, there were no material developments in any of the legal proceedings disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 or any new material legal proceedings during the three and six months ended June 30, 2025.

In certain legal proceedings, the Company may have recourse to insurance or third-party contractual indemnities to cover all or portions of its litigation expenses, judgments, or settlements. The Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. Where a range of loss can be reasonably estimated with no best estimate in the range, the Company records the minimum estimated liability. The Company continuously assesses the potential liability related to its pending litigation and regulatory matters and revises its estimates when additional information becomes available. The Company’s legal costs are recorded to expense as incurred. As of June 30, 2025, the Company has no material reserves for legal matters.

Purchase Commitments

In the normal course of business, the Company enters into forward flow purchase agreements. A forward flow purchase agreement is a commitment to purchase receivables over a duration that is typically three to twelve months, but can be longer, generally with a specifically defined volume range, frequency, and pricing. Typically, these forward flow contracts have provisions that allow for early termination or price re-negotiation should the underlying quality of the portfolio deteriorate over time or if any particular month’s delivery is materially different than the original portfolio used to price the forward flow contract. Certain of these forward flow purchase agreements may also have termination clauses, whereby the agreements can be canceled by either party upon providing a certain specified amount of notice.

As of June 30, 2025, the Company had entered into forward flow purchase agreements for the purchase of nonperforming loans with an estimated minimum aggregate purchase price of approximately $411.1 million. The Company expects actual purchases under these forward flow purchase agreements to be significantly greater than the estimated minimum aggregate purchase price.

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Note 12: Segment and Geographic Information

The Company conducts business through several operating segments. The accounting policies applied to the segments are the same as those described in the summary of significant accounting policies. The Company determined its operating segments meet the aggregation criteria, and therefore, it has one reportable segment, debt purchasing and recovery segment, based on similarities among the operating units including economic characteristics, the nature of the services, the nature of the production process, customer types for their services, the methods used to provide their services and the nature of the regulatory environment. The Company’s Chief Operating Decision Maker, which is the Company’s chief executive officer, relies on internal management reporting processes that provide segment revenues, segment total operating expenses, segment operating income, and segment asset information in order to make financial decisions. The measure of segment performance is segment operating income. The Company’s Chief Operating Decision Maker assesses the segment’s performance and makes decisions about the allocation of capital resources to each segment accordingly. Corporate and other unallocated represents corporate overhead and other items not allocated to any of the Company’s operating segments. Segment assets are presented in the Company’s Consolidated Statements of Financial Position as total assets.

The following tables present the results of operations of the Company’s reportable segment for the periods presented (in thousands):

			Three Months Ended June 30, 2025
			Debt purchasing and recovery segment						Corporate and other unallocated						Consolidated
Total revenues			$	442,122					$	—					$	442,122
Total operating expenses(1)			(274,307)						(17,082)						(291,389)
Operating income			167,815												150,733
Other segment items(2)									1,226						1,226
Interest expense(3)									(73,943)						(73,943)
Provision for income taxes									(19,295)						(19,295)
Net income															$	58,721

(1)Certain corporate activities that are not allocated to the debt purchasing and recovery segment are recorded under corporate and other unallocated. During the three months ended June 30, 2025, such non-allocated operating expenses primarily consisted of salaries and employee benefits of approximately $12.2 million for corporate employees and general and administrative expenses of approximately $4.4 million.

(2)The other segment items category includes other income.

(3)The Company manages its available capital resources at the corporate level. Interest expense is not allocated to operating segments.

			Three Months Ended June 30, 2024
			Debt purchasing and recovery segment						Corporate and other unallocated						Consolidated
Total revenues			$	355,285					$	—					$	355,285
Total operating expenses(1)			(238,540)						(14,906)						(253,446)
Operating income			116,745												101,839
Other segment items(2)									2,047						2,047
Interest expense(3)									(61,376)						(61,376)
Provision for income taxes									(10,329)						(10,329)
Net income															$	32,181

(1)Certain corporate activities that are not allocated to the debt purchasing and recovery segment are recorded under corporate and other unallocated. During the three months ended June 30, 2024, such non-allocated operating expenses primarily consisted of salaries and employee benefits of approximately $10.4 million for corporate employees and general and administrative expenses of approximately $4.3 million.

(2)The other segment items category includes other income.

(3)The Company manages its available capital resources at the corporate level. Interest expense is not allocated to operating segments.

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			Six Months Ended June 30, 2025
			Debt purchasing and recovery segment						Corporate and other unallocated						Consolidated
Total revenues			$	834,897					$	—					$	834,897
Total operating expenses(1)			(523,816)						(31,005)						(554,821)
Operating income			311,081												280,076
Other segment items(2)									2,873						2,873
Interest expense(3)									(144,473)						(144,473)
Provision for income taxes									(32,959)						(32,959)
Net income															$	105,517

_______________________ 

(1)Certain corporate activities that are not allocated to the debt purchasing and recovery segment are recorded under corporate and other unallocated. During the six months ended June 30, 2025 , such non-allocated operating expenses primarily consisted of salaries and employee benefits of approximately $20.3 million for corporate employees and general and administrative expenses of approximately $9.8 million.

(2)The other segment items category includes other income.

(3)The Company manages its available capital resources at the corporate level. Interest expense is not allocated to operating segments.

			Six Months Ended June 30, 2024
			Debt purchasing and recovery segment						Corporate and other unallocated						Consolidated
Total revenues			$	683,671					$	—					$	683,671
Total operating expenses(1)			(469,326)						(28,915)						(498,241)
Operating income			214,345												185,430
Other segment items(2)									4,713						4,713
Interest expense(3)									(117,141)						(117,141)
Provision for income taxes									(17,582)						(17,582)
Net income															$	55,420

_______________________ 

(1)Certain corporate activities that are not allocated to the debt purchasing and recovery segment are recorded under corporate and other unallocated. During the six months ended June 30, 2024, such non-allocated operating expenses primarily consisted of salaries and employee benefits of approximately $18.9 million for corporate employees and general and administrative expenses of approximately $9.6 million.

(2)The other segment items category includes other income.

(3)The Company manages its available capital resources at the corporate level. Interest expense is not allocated to operating segments.

The following table presents information about geographic areas in which the Company operates (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						2024
Total revenues:
United States			$	312,590					$	239,750					$	582,176					$	458,886
Europe
United Kingdom			91,009						76,725						175,477						149,152
Other European countries(1)			37,129						38,188						74,122						74,292
Total Europe			128,138						114,913						249,599						223,444
Other geographies(1)			1,394						622						3,122						1,341
Total			$	442,122					$	355,285					$	834,897					$	683,671

________________________

(1)None of these countries comprise greater than 10% of the Company's consolidated revenues.

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Note 13: Goodwill

The Company’s goodwill is tested for impairment at the reporting unit level annually and in interim periods if certain events occur that indicate that the fair value of a reporting unit may be below its carrying value. Determining the number of reporting units and the fair value of a reporting unit requires the Company to make judgments and involves the use of significant estimates and assumptions.

There have been no events or circumstances during the three and six months ended June 30, 2025 that have required the Company to perform an interim assessment of goodwill carried at these reporting units. Management continues to evaluate and monitor all key factors impacting the carrying value of the Company’s recorded goodwill. Adverse changes in the Company’s actual or expected operating results, market capitalization, business climate, economic factors or other negative events that may be outside the control of management could result in a material non-cash impairment charge in the future.

The Company’s goodwill is attributable to reporting units included in its portfolio purchasing and recovery segment. The following table summarizes the activity in the Company’s goodwill balance (in thousands):

			Total Company
Balance as of December 31, 2024			$	507,808
Effect of foreign currency translation			11,602
Balance as of March 31, 2025			519,410
Effect of foreign currency translation			23,502
Balance as of June 30, 2025			$	542,912

As of June 30, 2025 and December 31, 2024, the Company’s accumulated goodwill impairment loss was $338.8 million, attributable to its Cabot reporting unit.

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Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains “forward-looking statements” relating to Encore Capital Group, Inc. (“Encore”) and its subsidiaries (which we may collectively refer to as the “Company,” “we,” “our” or “us”) within the meaning of the securities laws. The words “believe,” “expect,” “anticipate,” “estimate,” “project,” “intend,” “plan,” “will,” “may,” and similar expressions often characterize forward-looking statements. These statements may include, but are not limited to, projections of collections, revenues, income or loss, estimates of capital expenditures, plans for future operations, products or services, and financing needs or plans, as well as assumptions relating to these matters. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we caution that these expectations or predictions may not prove to be correct or we may not achieve the financial results, savings, or other benefits anticipated in the forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties, some of which may be beyond our control or cannot be predicted or quantified, that could cause actual results to differ materially from those suggested by the forward-looking statements. Many factors including, but not limited to, those set forth in our Annual Report on Form 10-K under “Part I, Item 1A—Risk Factors” could cause our actual results, performance, achievements, or industry results to be very different from the results, performance, achievements or industry results expressed or implied by these forward-looking statements. Our business, financial condition, or results of operations could also be materially and adversely affected by other factors besides those listed. Forward-looking statements speak only as of the date the statements were made. We do not undertake any obligation to update or revise any forward-looking statements to reflect new information or future events, or for any other reason, even if experience or future events make it clear that any expected results expressed or implied by these forward-looking statements will not be realized. In addition, it is generally our policy not to make any specific projections as to future earnings, and we do not endorse projections regarding future performance that may be made by third parties.

Our Business

We are an international specialty finance company providing debt recovery solutions and other related services for consumers across a broad range of financial assets. We primarily purchase portfolios of defaulted consumer receivables at deep discounts to face value and manage them by working with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial obligations to credit originators, including banks, credit unions, consumer finance companies and commercial retailers. Defaulted receivables may also include receivables subject to bankruptcy proceedings. We also provide debt servicing and other portfolio management services to credit originators for non-performing loans in Europe.

Encore Capital Group, Inc. (“Encore”) has three business units: MCM, which consists of Midland Credit Management, Inc. and its domestic affiliates; Cabot, which consists of Cabot Credit Management Limited (“CCM”) and its subsidiaries and European affiliates, and LAAP, which is comprised of our investments and operations in Latin America and Asia-Pacific.

MCM (United States)

Through MCM, we are a market leader in portfolio purchasing and recovery in the United States.

Cabot (Europe)

Through Cabot, we are one of the largest credit management services providers in Europe and the United Kingdom. Cabot, in addition to its primary business of portfolio purchasing and recovery, also provides a range of debt servicing offerings such as early stage collections, business process outsourcing (“BPO”), and contingent collections, including through Wescot Credit Services Limited (“Wescot”).

LAAP (Latin America and Asia-Pacific)

We have purchased non-performing loans in Mexico. Additionally, we have a subsidiary Encore Asset Reconstruction Company (“EARC”) in India.

To date, operating results from LAAP have not been significant to our total consolidated operating results. Our long-term growth strategy is focused on continuing to invest in our core portfolio purchasing and recovery business in the United States and United Kingdom and strengthening and developing our business in France and Spain.

Government Regulation

MCM (United States)

As discussed in more detail under “Part I - Item 1 - Business - Government Regulation” contained in our Annual Report on Form 10-K, our operations in the United States are subject to federal, state and municipal statutes, rules, regulations and

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ordinances that establish specific guidelines and procedures that debt purchasers and collectors must follow when collecting consumer accounts, including among others, specific guidelines and procedures for communicating with consumers and prohibitions on unfair, deceptive or abusive debt collection practices.

Cabot (Europe)

As discussed in more detail under “Part I - Item 1 - Business - Government Regulation” contained in our Annual Report on Form 10-K, our operations in Europe are affected by foreign statutes, rules and regulations regarding debt collection and debt purchase activities. These statutes, rules, regulations, ordinances, guidelines and procedures are modified from time to time by the relevant authorities charged with their administration, which could affect the way we conduct our business.

Portfolio Purchasing and Recovery

MCM (United States)

In the United States, the defaulted consumer receivable portfolios we purchase are primarily charged-off credit card debt portfolios. A small percentage of our capital deployment in the United States is comprised of receivable portfolios subject to Chapter 13 and Chapter 7 bankruptcy proceedings.

We purchase receivables based on robust, account-level valuation methods and employ proprietary statistical and behavioral models across our U.S. operations. These methods and models generally allow us to value portfolios accurately (limiting the risk of overpaying), avoid buying portfolios that are incompatible with our methods or strategies and align the accounts we purchase with our business channels to maximize future collections. As a result, we have generally been able to realize significant returns from the receivables we acquire. We maintain strong relationships with many of the largest financial service providers in the United States.

Cabot (Europe)

In Europe, our purchased defaulted debt portfolios primarily consist of credit card and consumer loan accounts. We purchase receivable portfolios using a proprietary pricing model that utilizes account-level statistical and behavioral data. This model generally allows us to value portfolios accurately and quantify portfolio performance in order to maximize future collections. As a result, we have generally been able to realize significant returns from the assets we have acquired. We maintain strong relationships with many of the largest financial services providers in the United Kingdom and Europe.

Purchases and Collections

Portfolio Pricing, Supply and Demand

MCM (United States)

With lending reaching record levels and the highest U.S. charge-off rate in ten years, supply remains elevated at a record level. Issuers have continued to sell predominantly fresh portfolios. Fresh portfolios are portfolios that are generally sold within six months of the consumer’s account being charged-off by the financial institution. Pricing in the second quarter remained at favorable levels as a result of elevated market supply. Issuers continue to sell their volume in mostly forward flow arrangements that are often committed early in the calendar year. We believe steadying lending and delinquency rates will result in stable market supply.

We believe that smaller competitors continue to face difficulties in the portfolio purchasing market because of the high cost to operate due to regulatory pressure and increasing cost of capital. We believe this favors larger participants, like MCM, because the larger market participants are better able to adapt to these pressures and commit to larger forward flow agreements and fluctuating volumes.

Cabot (Europe)

The UK market for charged-off portfolios generally provides a relatively consistent pipeline of opportunities, despite a historically low level of charge-off rates, as creditors have embedded debt sales as an integral part of their business models. The percentage of volume that is sold in multi-year forward flow arrangements is increasing.

France and Spain continue to be two of the largest markets in Europe with significant portfolio sales. Financial institutions continue to look to dispose of non-performing loans in these markets.

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While sales activity across all of our European markets remains stable, underlying default rates are generally low by historic levels, and consumer lending volumes have stagnated. Sales levels are expected to fluctuate from quarter to quarter. In general, portfolio pricing remains competitive across our European footprint, constraining the amount of capital we elect to deploy in Europe.

Purchases by Geographic Location

The following table summarizes purchases of receivable portfolios by geographic location during the periods presented (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						2024
MCM (United States)			$	317,264					$	236,826					$	633,630					$	473,335
Cabot (Europe)			49,835						41,866						101,320						101,071
Total purchases of receivable portfolios			$	367,099					$	278,692					$	734,950					$	574,406

In the United States, capital deployments increased during the three and six months ended June 30, 2025, as compared to the corresponding periods in the prior year. The majority of our deployments in the U.S. come from forward flow agreements, and the timing, contract duration, and volumes for each contract can fluctuate leading to variation when comparing to prior periods. Portfolio purchases in the U.S. were robust as supply increased and pricing remained at favorable levels.

In Europe, capital deployment increased during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. The increase was primarily driven by favorable foreign currency translation effect resulting from the weakening of the U.S. dollar against the British Pound during the comparable periods. Capital deployment remained relatively consistent during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. Pricing continues to remain competitive in Europe.

Collections from Purchased Receivables by Channel and Geographic Location

We utilize three channels for the collection of our purchased receivables: call center and digital collections; legal collections; and collection agencies. The call center and digital collections channel consists of collections that result from our call centers, direct mail program and online collections. The legal collections channel consists of collections that result from our internal legal channel or from our network of retained law firms. The collection agencies channel consists of collections from third-party collections agencies to whom we pay a fee or commission. We utilize this channel to supplement capacity in our internal call centers, to service accounts in regions where we do not have collections operations or for accounts purchased where we maintain the collection agency servicing relationship.

The following table summarizes the total collections by collection channel and geographic area during the periods presented (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						2024
MCM (United States):
Call center and digital collections			$	320,152					$	247,074					$	618,374					$	482,165
Legal collections			166,811						144,249						318,486						273,152
Collection agencies			3,389						5,306						7,517						10,790
Subtotal			490,352						396,629						944,377						766,107
Cabot (Europe):
Call center and digital collections			66,495						60,298						128,765						116,945
Legal collections			59,033						52,496						112,806						101,190
Collection agencies			38,439						36,430						72,372						71,786
Subtotal			163,967						149,224						313,943						289,921
Other geographies:			666						875						1,472						1,587
Total collections from purchased receivables			$	654,985					$	546,728					$	1,259,792					$	1,057,615

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Gross collections from purchased receivables increased by $108.3 million, or 19.8%, to $655.0 million during the three months ended June 30, 2025, as compared to $546.7 million during the three months ended June 30, 2024. Gross collections from purchased receivables increased by $202.2 million, or 19.1%, to $1,259.8 million during the six months ended June 30, 2025, as compared to $1,057.6 million during the six months ended June 30, 2024. The increases in collections in the United States were primarily a result of consistent increases in capital deployments in the United States in recent periods. The increases in collections from purchased receivables in Europe were primarily driven by a combination of increases in capital deployments and acquisitions of portfolios with higher returns in recent periods. Additionally, collections in Europe were favorably impacted by foreign currency translation by approximately $8.8 million and $6.7 million during the three and six months ended June 30, 2025, respectively, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 5.5% and 2.4% for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024, respectively.

Results of Operations

Results of operations, in dollars and as a percentage of total revenues, were as follows for the periods presented (in thousands, except percentages):

			Three Months Ended June 30,
			2025												2024
Revenues
Portfolio revenue			$	361,174					81.7		%				$	321,930					90.6		%
Changes in recoveries			55,599						12.6		%				5,754						1.7		%
Total debt purchasing revenue			416,773						94.3		%				327,684						92.3		%
Servicing revenue			22,300						5.0		%				21,107						5.9		%
Other revenues			3,049						0.7		%				6,494						1.8		%
Total revenues			442,122						100.0		%				355,285						100.0		%
Operating expenses
Salaries and employee benefits			117,738						26.6		%				106,608						30.0		%
Cost of legal collections			79,649						18.0		%				64,249						18.1		%
General and administrative expenses			41,327						9.3		%				36,779						10.4		%
Other operating expenses			36,990						8.4		%				30,845						8.6		%
Collection agency commissions			8,374						1.9		%				7,504						2.1		%
Depreciation and amortization			7,311						1.7		%				7,461						2.1		%
Total operating expenses			291,389						65.9		%				253,446						71.3		%
Income from operations			150,733						34.1		%				101,839						28.7		%
Other expense
Interest expense			(73,943)						(16.7)		%				(61,376)						(17.3)		%
Other income			1,226						0.3		%				2,047						0.6		%
Total other expense			(72,717)						(16.4)		%				(59,329)						(16.7)		%
Income before income taxes			78,016						17.7		%				42,510						12.0		%
Provision for income taxes			(19,295)						(4.4)		%				(10,329)						(2.9)		%
Net income			$	58,721					13.3		%				$	32,181					9.1		%

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			Six Months Ended June 30,
			2025												2024
Revenues
Portfolio revenue			$	706,392					84.6		%				$	637,782					93.3		%
Changes in recoveries			77,063						9.2		%				(6,655)						(1.0)		%
Total debt purchasing revenue			783,455						93.8		%				631,127						92.3		%
Servicing revenue			44,847						5.4		%				41,486						6.1		%
Other revenues			6,595						0.8		%				11,058						1.6		%
Total revenues			834,897						100.0		%				683,671						100.0		%
Operating expenses
Salaries and employee benefits			223,670						26.8		%				210,792						30.8		%
Cost of legal collections			147,662						17.7		%				122,970						18.0		%
General and administrative expenses			82,345						10.0		%				73,020						10.7		%
Other operating expenses			71,242						8.5		%				61,212						9.0		%
Collection agency commissions			15,247						1.8		%				14,938						2.2		%
Depreciation and amortization			14,655						1.8		%				15,309						2.2		%
Total operating expenses			554,821						66.6		%				498,241						72.9		%
Income from operations			280,076						33.4		%				185,430						27.1		%
Other expense
Interest expense			(144,473)						(17.3)		%				(117,141)						(17.1)		%
Other income			2,873						0.3		%				4,713						0.7		%
Total other expense			(141,600)						(17.0)		%				(112,428)						(16.4)		%
Income before income taxes			138,476						16.4		%				73,002						10.7		%
Provision for income taxes			(32,959)						(3.9)		%				(17,582)						(2.6)		%
Net income			$	105,517					12.5		%				$	55,420					8.1		%

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Comparison of Results of Operations

Revenues

Our revenues primarily include debt purchasing revenue, which is revenue recognized from engaging in debt purchasing and recovery activities. We apply our charge-off policy and fully write-off the amortized costs (i.e., face value net of noncredit discount) of the individual receivables we acquire immediately after purchasing the portfolio. We then record a negative allowance that represents the present value of all expected future recoveries for pools of receivables that share similar risk characteristics using a discounted cash flow approach, which is presented as “Receivable portfolios, net” in our condensed consolidated statements of financial condition. The discount rate is an effective interest rate (or “purchase EIR”) established based on the purchase price of the portfolio and the expected future cash flows at the time of purchase.

Debt purchasing revenue includes two components:

(1)     Portfolio revenue, which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the EIR), and

(2)     Changes in recoveries, which includes

(a)     Recoveries above (below) forecast, which is the difference between (i) actual cash collected/recovered during the current period and (ii) expected cash recoveries for the current period, which generally represents over or under performance for the period; and

(b)     Changes in expected future recoveries, which is the present value change of expected future recoveries, where such change generally results from (i) collections “pulled forward from” or “pushed out to” future periods (i.e. amounts either collected early or expected to be collected later) and (ii) magnitude and timing changes to estimates of expected future collections (which can be increases or decreases).

Certain pools already fully recovered their cost basis and became zero basis portfolios (“ZBA”) prior to our adoption of the accounting standard for Financial Instruments - Credit Losses (“CECL”) in January 2020. We did not establish a negative allowance for these pools as we elected the Transition Resource Group for Credit Losses’ practical expedient to retain the integrity of these legacy pools. Similar to how we treated ZBA collections prior to the adoption of CECL, all subsequent collections to the ZBA pools are recognized as ZBA revenue, which is included in portfolio revenue in our condensed consolidated statements of income. We expect our ZBA revenue to continue to decline as we collect on these legacy pools. We do not expect to have new ZBA pools in the future.

Servicing revenue consists primarily of fee-based income earned on accounts collected on behalf of others, primarily credit originators. We earn fee-based income by providing debt servicing (such as early stage collections, BPO, contingent collections, trace services and litigation activities) to credit originators for non-performing loans in Europe.

Other revenues primarily include revenues recognized from the sale of real estate assets that are acquired as a result of our investments in non-performing secured residential mortgage portfolios and real estate assets in Europe and LAAP.

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The following tables summarize revenues for the periods presented (in thousands, except percentages):

			Three Months Ended June 30,
			2025						2024						$ Change						% Change
Revenue recognized from portfolio basis			$	354,747					$	315,668					$	39,079					12.4		%
ZBA revenue			6,427						6,262						165						2.6		%
Portfolio revenue			361,174						321,930						39,244						12.2		%
Recoveries above forecast			52,263						27,443						24,820
Changes in expected future recoveries			3,336						(21,689)						25,025
Changes in recoveries			55,599						5,754						49,845						866.3		%
Debt purchasing revenue			416,773						327,684						89,089						27.2		%
Servicing revenue			22,300						21,107						1,193						5.7		%
Other revenues			3,049						6,494						(3,445)						(53.0)		%
Total revenues			$	442,122					$	355,285					$	86,837					24.4		%

			Six Months Ended June 30,
			2025						2024						$ Change						% Change
Revenue recognized from portfolio basis			$	694,503					$	625,416					$	69,087					11.0		%
ZBA revenue			11,889						12,366						(477)						(3.9)		%
Portfolio revenue			706,392						637,782						68,610						10.8		%
Recoveries above forecast			79,215						28,296						50,919
Changes in expected future recoveries			(2,152)						(34,951)						32,799
Changes in recoveries			77,063						(6,655)						83,718						(1258.0)		%
Debt purchasing revenue			783,455						631,127						152,328						24.1		%
Servicing revenue			44,847						41,486						3,361						8.1		%
Other revenues			6,595						11,058						(4,463)						(40.4)		%
Total revenues			$	834,897					$	683,671					$	151,226					22.1		%

Our operating results are impacted by foreign currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency. The strengthening of the U.S. dollar relative to other foreign currencies has an unfavorable impact on our international revenues, and the weakening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international revenues. Our revenues were favorably impacted by foreign currency translation by approximately $6.9 million and $5.0 million during the three and six months ended June 30, 2025, respectively, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 5.5% and 2.4% for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024, respectively.

The increases in revenue recognized from portfolio basis during the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, were primarily due to a higher portfolio basis (i.e. a higher receivable portfolios balance) in the U.S. driven by a consistent higher volume of purchases in recent periods.

Recoveries above or below forecast represent over and under-performance in the reporting period, respectively, and are expected to vary from period to period. Collections during the three and six months ended June 30, 2025, over-performed the forecasted collections by approximately $52.3 million and $79.2 million, respectively, primarily driven by collections over-performance in the U.S. resulting from enhanced collections strategies. Collections during the three and six months ended June 30, 2024, over-performed the forecasted collections by approximately $27.4 million and $28.3 million, respectively.

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When reassessing the forecasts of expected lifetime recoveries during the three months ended June 30, 2025, management considered, among other factors, historical and current collection performance, changes in consumer behavior, and the macroeconomic environment. The updated forecast resulted in changes in timing and amount of total estimated remaining collections which in turn, when discounted to present value, resulted in a net positive change in expected future recoveries of approximately $3.3 million during the three months ended June 30, 2025. This net positive change, combined with the net negative change recorded in the first quarter, resulted in a net negative change in expected future recoveries of $2.2 million during the six months ended June 30, 2025. During the three and six months ended June 30, 2024, we recorded approximately $21.7 million and $35.0 million in net negative change in expected future recoveries, respectively.

The following tables summarize collections from purchased receivables, portfolio revenue, end of period receivable portfolios balance and other related supplemental data, by year of purchase (in thousands, except percentages):

			Three Months Ended June 30, 2025																		As of June 30, 2025
			Collections						Portfolio Revenue						Changes in Recoveries						Receivable Portfolios						Monthly EIR
United States:
ZBA			$	6,426					$	6,426					$	—					$	—					—		%
<2016			17,466						11,718						3,497						28,463						13.0		%
2016			5,504						2,670						848						20,304						4.2		%
2017			7,790						4,411						926						25,018						5.6		%
2018			11,308						6,086						497						47,437						4.0		%
2019			21,160						10,739						1,156						87,985						3.8		%
2020			23,437						12,225						561						103,255						3.7		%
2021			22,961						12,247						(42)						96,971						3.9		%
2022			48,616						20,824						4,575						210,943						3.1		%
2023			110,961						51,408						3,406						491,813						3.3		%
2024			161,522						88,596						25,953						856,320						3.3		%
2025			53,201						40,434						3,429						627,098						3.2		%
Subtotal			490,352						267,784						44,806						2,595,607						3.4		%
Europe:
ZBA			1						1						—						—						—		%
<2016			34,005						23,212						2,666						263,489						3.0		%
2016			6,625						4,810						(259)						59,373						2.7		%
2017			9,552						5,325						671						96,164						1.9		%
2018			8,940						5,177						412						111,527						1.6		%
2019			10,467						5,761						169						101,940						1.9		%
2020			6,620						3,578						225						53,021						2.2		%
2021			11,365						6,731						705						121,998						1.9		%
2022			13,761						6,678						652						144,793						1.5		%
2023			20,602						8,197						5,048						188,506						1.5		%
2024			33,525						18,778						(689)						327,476						1.9		%
2025			8,504						5,142						803						104,967						2.2		%
Subtotal			163,967						93,390						10,403						1,573,254						2.0		%
Other geographies:(1)
All vintages			666						—						390						15,919						—		%
Subtotal			666						—						390						15,919						—		%
Total			$	654,985					$	361,174					$	55,599					$	4,184,780					2.9		%

_______________________

(1)All portfolios are on non-accrual basis. Annual pool groups for other geographies have been aggregated for disclosure purposes.

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			Three Months Ended June 30, 2024																		As of June 30, 2024
			Collections						Portfolio Revenue						Changes in Recoveries						Receivable Portfolios						Monthly EIR
United States:
ZBA			$	6,261					$	6,261					$	—					$	—					—		%
<2016			21,196						16,045						1,964						37,880						13.4		%
2016			7,595						3,775						667						28,150						4.2		%
2017			10,629						6,284						546						35,164						5.5		%
2018			16,935						8,872						1,141						69,006						4.0		%
2019			29,680						16,107						(596)						131,559						3.8		%
2020			33,931						18,148						(630)						152,393						3.7		%
2021			35,565						17,929						4,172						144,167						3.9		%
2022			67,121						32,055						(4,470)						320,275						3.1		%
2023			124,551						71,689						5,867						699,893						3.3		%
2024			43,165						33,214						711						462,940						3.6		%
Subtotal			396,629						230,379						9,372						2,081,427						3.7		%
Europe:
ZBA			1						1						—						—						—		%
<2016			35,606						28,069						(3,630)						310,402						2.9		%
2016(1)			7,785						5,679						319						71,414						2.8		%
2017			10,727						6,363						(275)						109,673						1.9		%
2018			11,086						6,806						(2,815)						140,202						1.6		%
2019			12,066						6,986						(2)						121,170						1.9		%
2020			8,078						5,200						203						76,681						2.2		%
2021			13,381						8,862						(604)						153,377						1.9		%
2022			16,673						8,657						(586)						178,896						1.6		%
2023			23,327						10,121						2,151						222,685						1.5		%
2024			10,494						4,807						952						94,950						2.2		%
Subtotal			149,224						91,551						(4,287)						1,479,450						2.0		%
Other geographies:(2)
All vintages			875						—						669						22,445						—		%
Subtotal			875						—						669						22,445						—		%
Total			$	546,728					$	321,930					$	5,754					$	3,583,322					3.0		%

_______________________

(1)Portfolio balance includes non-accrual pool groups. The EIR presented is only for pool groups that accrete portfolio revenue.

(2)All portfolios are on non-accrual basis. Annual pool groups for other geographies have been aggregated for disclosure purposes.

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			Six Months Ended June 30, 2025																		As of June 30, 2025
			Collections						Portfolio Revenue						Changes in Recoveries						Receivable Portfolios						Monthly EIR
United States:
ZBA			$	11,887					$	11,887					$	—					$	—					—		%
<2016			34,803						24,863						3,990						28,463						13.0		%
2016			11,112						5,687						672						20,304						4.2		%
2017			16,003						9,333						1,144						25,018						5.6		%
2018			23,436						12,835						329						47,437						4.0		%
2019			43,396						22,725						439						87,985						3.8		%
2020			48,815						25,792						263						103,255						3.7		%
2021			48,183						25,894						(409)						96,971						3.9		%
2022			101,566						44,223						6,053						210,943						3.1		%
2023			227,183						109,141						(41)						491,813						3.3		%
2024			315,016						182,598						37,323						856,320						3.3		%
2025			62,977						50,506						6,929						627,098						3.2		%
Subtotal			944,377						525,484						56,692						2,595,607						3.4		%
Europe:
ZBA			2						2						—						—						—		%
<2016			66,483						45,546						7,100						263,489						3.0		%
2016			13,102						9,440						(95)						59,373						2.7		%
2017			18,270						10,488						1,219						96,164						1.9		%
2018			17,504						10,204						248						111,527						1.6		%
2019			19,844						11,387						(131)						101,940						1.9		%
2020			12,911						7,139						21						53,021						2.2		%
2021			21,833						13,243						763						121,998						1.9		%
2022			27,697						13,253						1,542						144,793						1.5		%
2023			41,392						16,362						7,172						188,506						1.5		%
2024			63,920						37,166						391						327,476						1.9		%
2025			10,985						6,678						1,273						104,967						2.2		%
Subtotal			313,943						180,908						19,503						1,573,254						2.0		%
Other geographies:(1)
All vintages			1,472						—						868						15,919						—		%
Subtotal			1,472						—						868						15,919						—		%
Total			$	1,259,792					$	706,392					$	77,063					$	4,184,780					2.9		%

_______________________

(1)All portfolios are on non-accrual basis. Annual pool groups for other geographies have been aggregated for disclosure purposes.

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			Six Months Ended June 30, 2024																		As of June 30, 2024
			Collections						Portfolio Revenue						Changes in Recoveries						Receivable Portfolios						Monthly EIR
United States:
ZBA			$	12,364					$	12,364					$	—					$	—					—		%
<2016			41,957						33,578						1,866						37,880						13.4		%
2016			14,667						7,816						1,499						28,150						4.2		%
2017			21,143						13,199						320						35,164						5.5		%
2018			34,722						18,684						1,277						69,006						4.0		%
2019			60,921						33,948						(2,262)						131,559						3.8		%
2020			70,656						38,325						(2,409)						152,393						3.7		%
2021			73,744						37,964						4,307						144,167						3.9		%
2022			138,437						67,738						(7,198)						320,275						3.1		%
2023			245,264						148,228						6,903						699,893						3.3		%
2024			52,232						42,133						606						462,940						3.6		%
Subtotal			766,107						453,977						4,909						2,081,427						3.7		%
Europe:
ZBA			2						2						—						—						—		%
<2016			69,827						57,164						(7,904)						310,402						2.9		%
2016(1)			15,837						11,594						(40)						71,414						2.8		%
2017			20,810						13,043						(1,506)						109,673						1.9		%
2018			22,491						14,017						(6,498)						140,202						1.6		%
2019			24,247						14,324						(631)						121,170						1.9		%
2020			16,330						10,642						(100)						76,681						2.2		%
2021			27,279						18,039						(645)						153,377						1.9		%
2022			33,586						17,769						(703)						178,896						1.6		%
2023			45,751						20,846						3,419						222,685						1.5		%
2024			13,761						6,365						1,693						94,950						2.2		%
Subtotal			289,921						183,805						(12,915)						1,479,450						2.0		%
Other geographies:(2)
All vintages			1,587						—						1,351						22,445						—		%
Subtotal			1,587						—						1,351						22,445						—		%
Total			$	1,057,615					$	637,782					$	(6,655)					$	3,583,322					3.0		%

______________________

(1)Portfolio balance includes non-accrual pool groups. The EIR presented is only for pool groups that accrete portfolio revenue.

(2)All portfolios are on non-accrual basis. Annual pool groups for other geographies have been aggregated for disclosure purposes.

The increase in servicing revenues during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 was primarily attributable to favorable foreign currency translation, which was primarily the result of the weakening of the U.S. dollar against the British Pound. The increase in servicing revenues during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 was primarily attributable to increased demand from BPO clients.

Other revenues decreased during the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, primarily driven by a decrease in gains recognized on the sale of real estate assets.

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Operating Expenses

The following tables summarize operating expenses during the periods presented (in thousands, except percentages):

			Three Months Ended June 30,
			2025						2024						$ Change						% Change
Salaries and employee benefits			$	117,738					$	106,608					$	11,130					10.4		%
Cost of legal collections			79,649						64,249						15,400						24.0		%
General and administrative expenses			41,327						36,779						4,548						12.4		%
Other operating expenses			36,990						30,845						6,145						19.9		%
Collection agency commissions			8,374						7,504						870						11.6		%
Depreciation and amortization			7,311						7,461						(150)						(2.0)		%
Total operating expenses			$	291,389					$	253,446					$	37,943					15.0		%

			Six Months Ended June 30,
			2025						2024						$ Change						% Change
Salaries and employee benefits			$	223,670					$	210,792					$	12,878					6.1		%
Cost of legal collections			147,662						122,970						24,692						20.1		%
General and administrative expenses			82,345						73,020						9,325						12.8		%
Other operating expenses			71,242						61,212						10,030						16.4		%
Collection agency commissions			15,247						14,938						309						2.1		%
Depreciation and amortization			14,655						15,309						(654)						(4.3)		%
Total operating expenses			$	554,821					$	498,241					$	56,580					11.4		%

Our operating results are impacted by foreign currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency. The strengthening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international operating expenses, and the weakening of the U.S. dollar relative to other foreign currencies has an unfavorable impact on our international operating expenses. Our operating expenses were unfavorably impacted by foreign currency translation by approximately $5.0 million and $3.6 million, during the three and six months ended June 30, 2025, respectively, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 5.5% and 2.4% for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024, respectively.

Operating expenses are explained in more detail as follows:

Salaries and Employee Benefits

The increase in salaries and employee benefits during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, was primarily due to the following reasons:

•An increase in salaries and bonus of approximately $8.8 million primarily due to an increase in overall headcount; and

•An increase in employee benefits and payroll taxes of approximately $1.7 million.

The increase in salaries and employee benefits during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, was primarily due to the following reasons:

•An increase in salaries and bonus of approximately $10.2 million primarily due to an increase in overall headcount; and

•An increase in employee benefits and payroll taxes of approximately $1.9 million.

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Table of Contents

Cost of Legal Collections

Cost of legal collections primarily includes contingent fees paid to our external network of attorneys and the cost of litigation. We pursue legal collections using a network of attorneys that specialize in collection matters and through our internal legal channel. Under the agreements with our contracted attorneys, we advance certain out-of-pocket court costs. Cost of legal collections does not include internal legal channel employee costs, which are included in salaries and employee benefits in our condensed consolidated statements of income.

The following tables summarize our cost of legal collections during the periods presented (in thousands, except percentages):

			Three Months Ended June 30,
			2025						2024						$ Change						% Change
Court costs			$	54,050					$	41,881					$	12,169					29.1		%
Legal collection fees			25,599						22,368						3,231						14.4		%
Total cost of legal collections			$	79,649					$	64,249					$	15,400					24.0		%

			Six Months Ended June 30,
			2025						2024						$ Change						% Change
Court costs			$	98,864					$	79,968					$	18,896					23.6		%
Legal collection fees			48,798						43,002						5,796						13.5		%
Total cost of legal collections			$	147,662					$	122,970					$	24,692					20.1		%

The increases of cost of legal collections during the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, were primarily due to increased legal placements in this channel in the United States.

General and Administrative Expenses

The increase in general and administrative expense during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, was primarily due to the following reasons:

•An increase in information technology expenses of approximately $1.9 million; and

•An increase in consulting fees of approximately $1.9 million.

The increase in general and administrative expense during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, was primarily due to the following reasons:

•An increase in information technology expenses of approximately $3.8 million; and

•An increase in consulting fees of approximately $3.5 million.

Other Operating Expenses

The increase in other operating expenses during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, was primarily due to the following reasons:

•An increase in postage and printing expenses of approximately $3.5 million; and

•An increase in collections bank charges and trace agencies fees of approximately $1.8 million.

The increase in other operating expenses during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, was primarily due to the following reasons:

•An increase in postage and printing expenses of approximately $5.4 million; and

•An increase in collections bank charges and trace agencies fees of approximately $3.9 million.

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Collection Agency Commissions

Collection agency commissions are commissions paid to third-party collection agencies. Collections through the collections agencies channel are predominately in Europe and vary from period to period depending on, among other things, the number of accounts placed with an agency versus accounts collected internally. Commission rates vary depending on, among other things, the amount of time that has passed since the charge-off of the accounts placed with an agency, the asset class, and the geographic location of the receivables. Generally, freshly charged-off accounts have a lower commission rate than accounts that have been charged off for a longer period of time, and commission rates for purchased bankruptcy portfolios are lower than the commission rates for charged-off credit card accounts. Collection agency commissions remained relatively consistent during the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024.

Depreciation and Amortization

Depreciation and amortization expenses remained relatively consistent during the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024.

Interest Expense

The following tables summarize our interest expense for the periods presented (in thousands, except percentages):

			Three Months Ended June 30,
			2025						2024						$ Change						% Change
Stated interest on debt obligations			$	70,276					$	57,163					$	13,113					22.9		%
Amortization of debt issuance costs			3,428						3,780						(352)						(9.3)		%
Amortization of debt discount			239						433						(194)						(44.8)		%
Total interest expense			$	73,943					$	61,376					$	12,567					20.5		%

			Six Months Ended June 30,
			2025						2024						$ Change						% Change
Stated interest on debt obligations			$	137,262					$	109,201					$	28,061					25.7		%
Amortization of debt issuance costs			6,757						7,080						(323)						(4.6)		%
Amortization of debt discount			454						860						(406)						(47.2)		%
Total interest expense			$	144,473					$	117,141					$	27,332					23.3		%

The increase in interest expense during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, was primarily due to the following reasons:

•The effect resulting from increased average debt balance of approximately $10.4 million;

•The effect resulting from rising interest rates of approximately $1.0 million; and

•The effect resulting from an unfavorable impact of foreign currency translation of approximately $1.2 million driven by the weakening of the U.S. dollar against the British Pound.

The increase in interest expense during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, was primarily due to the following reasons:

•The effect resulting from increased average debt balance of approximately $17.1 million;

•The effect resulting from rising interest rates of approximately $9.4 million; and

•The effect resulting from an unfavorable impact of foreign currency translation of approximately $0.8 million driven by the weakening of the U.S. dollar against the British Pound.

Other Income, net of Other Expense

Other income or expense consists primarily of foreign currency exchange gains or losses, interest income, and gains or losses recognized on certain transactions outside of our normal course of business. Other income, net, was $1.2 million and $2.9 million during the three and six months ended June 30, 2025, respectively. Other income, net, was $2.0 million and $4.7 million during the three and six months ended June 30, 2024, respectively. Interest income included in other income, net of other expense, was approximately $1.4 million and $2.9 million during the three and six months ended June 30, 2025, respectively, and $1.8 million and $3.1 million for the three and six months ended June 30, 2024, respectively.

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Provision for Income Taxes

Provision for income taxes and effective tax rate are as follows for the periods presented ($ in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						2024
Provision for income taxes			$	19,295					$	10,329					$	32,959					$	17,582
Effective tax rate			24.7%						24.3%						23.8%						24.1%

For the three and six months ended June 30, 2025, the differences between our effective tax rate and the federal statutory rate were primarily due to state income taxes offset by other foreign adjustments. For the three and six months ended June 30, 2024, the differences between our effective tax rate and the federal statutory rate were primarily due to state income taxes.

Non-GAAP Disclosure

In addition to the financial information prepared in conformity with Generally Accepted Accounting Principles (“GAAP”), we provide historical non-GAAP financial information. Management believes that the presentation of such non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of our operations. Management believes that these non-GAAP financial measures reflect an additional way of viewing aspects of our business that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business.

Management believes that the presentation of these measures provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments, and amortization methods, which provide a more complete understanding of our financial performance, competitive position, and prospects for the future. Readers should consider the information in addition to, but not instead of, our financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of these measures for comparative purposes.

Adjusted EBITDA. Management utilizes adjusted EBITDA (defined as net income before interest income and expense, taxes, depreciation and amortization, stock-based compensation expenses, acquisition, integration and restructuring related expenses, and other charges or gains that are not indicative of ongoing operations), in the evaluation of our operating performance. Adjusted EBITDA for the periods presented is as follows (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						2024
GAAP net income, as reported			$	58,721					$	32,181					$	105,517					$	55,420
Adjustments:
Interest expense			73,943						61,376						144,473						117,141
Interest income			(1,362)						(1,760)						(2,908)						(3,128)
Provision for income taxes			19,295						10,329						32,959						17,582
Depreciation and amortization			7,311						7,461						14,655						15,309
Stock-based compensation expense			5,283						4,637						8,707						7,994
Net gain on derivative instruments(1)			—						(78)						—						(273)
Acquisition, integration and restructuring related expenses(2)			1,042						1,883						1,290						4,202
Adjusted EBITDA			$	164,233					$	116,029					$	304,693					$	214,247
Collections applied to principal balance(3)			$	244,677					$	228,923					$	488,977					$	443,474

_______________________

(1)Amount represents gain or loss recognized on derivative instruments that are not designated as hedging instruments or gain or loss recognized on derivative instruments upon dedesignation of hedge relationships. We adjust for this amount because we believe the gain or loss on derivative contracts is not indicative of ongoing operations.

(2)Amount represents acquisition, integration and restructuring related expenses. We adjust for this amount because we believe these expenses are not indicative of ongoing operations; therefore, adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results.

(3)Collections applied to principal balance is calculated in the table below:

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			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						2024
Collections applied to receivable portfolios, net			$	293,811					$	224,798					$	553,400					$	419,833
Changes in recoveries			(55,599)						(5,754)						(77,063)						6,655
Other proceeds applied to basis			6,465						9,879						12,640						16,986
Collections applied to principal balance			$	244,677					$	228,923					$	488,977					$	443,474

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Supplemental Performance Data

The tables included in this supplemental performance data section include detail for purchases, collections and ERC by year of purchase.

Our collection expectations are based on account characteristics and economic variables. Additional adjustments are made to account for qualitative factors that may affect the payment behavior of our consumers and servicing related adjustments to ensure our collection expectations are aligned with our operations. We continue to refine our process of forecasting collections both domestically and internationally with a focus on operational enhancements. Our collection expectations vary between types of portfolio and geographic location. As a result, past performance of pools in certain geographic locations or of certain types of portfolio are not necessarily a suitable indicator of future results in other locations or for other types of portfolio.

The supplemental performance data presented in this section is impacted by foreign currency translation, which represents the effect of translating financial results where the functional currency of our foreign subsidiary is different than our U.S. dollar reporting currency. Generally, international purchases reflect the exchange rates at the time of purchase and international cumulative collections are aggregated each month based on respective month-end exchange rates. For example, the strengthening of the U.S. dollar relative to other foreign currencies has an unfavorable reporting impact on our international purchases, collections, and ERC, and the weakening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international purchases, collections, and ERC.

We utilize proprietary forecasting models to continuously evaluate the economic life of each pool.

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Cumulative Collections Money Multiple - Cumulative Collections from Purchased Receivables to Purchase Price Multiple

The following table summarizes our receivable purchases, related gross collections, and cumulative collections money multiples (in thousands, except multiples):

Year of Purchase						Purchase Price(1)						Cumulative Collections through June 30, 2025
												<2016						2016						2017						2018						2019						2020						2021						2022						2023						2024						2025						Total(2)						CCMM(3)
United States:
<2016						$	4,261,075					$	8,440,701					$	970,845					$	706,004					$	498,378					$	375,393					$	281,095					$	229,701					$	166,469					$	131,698					$	102,710					$	46,690					$	11,949,684					2.8
2016						552,969						—						110,875						283,035						234,690						159,279						116,452						87,717						51,650						35,130						27,972						11,112						1,117,912						2.0
2017						527,441						—						—						111,902						315,853						255,048						193,328						144,243						85,348						57,985						40,123						16,003						1,219,833						2.3
2018						629,170						—						—						—						175,042						351,696						308,302						228,919						144,566						89,548						64,231						23,436						1,385,740						2.2
2019						675,051						—						—						—						—						174,693						416,315						400,250						256,444						164,106						112,391						43,396						1,567,595						2.3
2020						537,648						—						—						—						—						—						213,450						430,514						311,573						194,522						127,555						48,815						1,326,429						2.5
2021						403,614						—						—						—						—						—						—						120,354						240,605						188,895						131,870						48,183						729,907						1.8
2022						549,097						—						—						—						—						—						—						—						98,277						268,516						254,329						101,566						722,688						1.3
2023						806,410						—						—						—						—						—						—						—						—						184,182						471,838						227,183						883,203						1.1
2024						992,300						—						—						—						—						—						—						—						—						—						238,635						315,016						553,651						0.6
2025						632,645						—						—						—						—						—						—						—						—						—						—						62,977						62,977						0.1
Subtotal						10,567,420						8,440,701						1,081,720						1,100,941						1,223,963						1,316,109						1,528,942						1,641,698						1,354,932						1,314,582						1,571,654						944,377						21,519,619						2.0
Europe:
<2016						1,662,149						995,241						449,359						388,622						349,761						290,842						232,719						235,893						176,754						148,533						138,569						66,485						3,472,778						2.1
2016						249,584						—						44,641						97,587						83,107						63,198						51,609						51,017						40,214						35,278						30,143						13,102						509,896						2.0
2017						461,571						—						—						68,111						152,926						118,794						87,549						86,107						61,762						48,763						41,211						18,270						683,493						1.5
2018						427,030						—						—						—						49,383						118,266						78,846						80,629						61,691						49,675						42,379						17,504						498,373						1.2
2019						272,905						—						—						—						—						44,118						80,502						88,448						63,607						54,544						47,174						19,844						398,237						1.5
2020						104,940						—						—						—						—						—						22,721						59,803						45,757						37,363						31,454						12,911						210,009						2.0
2021						242,825						—						—						—						—						—						—						43,082						66,529						58,515						52,278						21,833						242,237						1.0
2022						231,869						—						—						—						—						—						—						—						36,957						70,385						64,555						27,697						199,594						0.9
2023						259,255						—						—						—						—						—						—						—						—						40,975						89,799						41,392						172,166						0.7
2024						353,182						—						—						—						—						—						—						—						—						—						50,469						63,920						114,389						0.3
2025						101,320						—						—						—						—						—						—						—						—						—						—						10,985						10,985						0.1
Subtotal						4,366,630						995,241						494,000						554,320						635,177						635,218						553,946						644,979						553,271						544,031						588,031						313,943						6,512,157						1.5
Other geographies(4):
All vintages						340,283						82,958						109,884						112,383						108,480						75,601						28,960						20,682						3,334						3,954						2,793						1,472						550,501						1.6
Subtotal						340,283						82,958						109,884						112,383						108,480						75,601						28,960						20,682						3,334						3,954						2,793						1,472						550,501						1.6
Total						$	15,274,333					$	9,518,900					$	1,685,604					$	1,767,644					$	1,967,620					$	2,026,928					$	2,111,848					$	2,307,359					$	1,911,537					$	1,862,567					$	2,162,478					$	1,259,792					$	28,582,277					1.9

________________________

(1)Adjusted for Put-Backs and Recalls. Put-Backs (“Put-Backs”) and recalls (“Recalls”) represent ineligible accounts that are returned by us or recalled by the seller pursuant to specific guidelines as set forth in the respective purchase agreement.

(2)Cumulative collections from inception through June 30, 2025, excluding collections on behalf of others.

(3)Cumulative Collections Money Multiple (“CCMM”) through June 30, 2025 refers to cumulative collections as a multiple of purchase price.

(4)Annual pool groups for other geographies have been aggregated for disclosure purposes.

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Purchase Price Multiple - Total Estimated Collections from Purchased Receivables to Purchase Price Multiple

The following table summarizes our purchases, resulting historical gross collections, estimated remaining gross collections from purchased receivables, and purchase price multiple (in thousands, except multiples):

			Purchase Price(1)						Historical Collections(2)						Estimated Remaining Collections						Total Estimated Gross Collections						Purchase Price Multiple(3)
United States:
<2016			$	4,261,075					$	11,949,684					$	168,954					$	12,118,638					2.8
2016			552,969						1,117,912						44,533						1,162,445						2.1
2017			527,441						1,219,833						67,966						1,287,799						2.4
2018			629,170						1,385,740						108,840						1,494,580						2.4
2019			675,051						1,567,595						194,103						1,761,698						2.6
2020			537,648						1,326,429						226,128						1,552,557						2.9
2021			403,614						729,907						221,440						951,347						2.4
2022			549,097						722,688						421,429						1,144,117						2.1
2023			806,410						883,203						1,006,647						1,889,850						2.3
2024			992,300						553,651						1,811,709						2,365,360						2.4
2025			632,645						62,977						1,384,581						1,447,558						2.3
Subtotal			10,567,420						21,519,619						5,656,330						27,175,949						2.6
Europe:
<2016			1,662,149						3,472,778						879,935						4,352,713						2.6
2016			249,584						509,896						169,043						678,939						2.7
2017			461,571						683,493						210,078						893,571						1.9
2018			427,030						498,373						229,746						728,119						1.7
2019			272,905						398,237						220,369						618,606						2.3
2020			104,940						210,009						120,294						330,303						3.1
2021			242,825						242,237						262,539						504,776						2.1
2022			231,869						199,594						266,673						466,267						2.0
2023			259,255						172,166						337,275						509,441						2.0
2024			353,182						114,389						702,487						816,876						2.3
2025			101,320						10,985						236,016						247,001						2.4
Subtotal			4,366,630						6,512,157						3,634,455						10,146,612						2.3
Other geographies(4):
All vintages			340,283						550,501						24,786						575,287						1.7
Subtotal			340,283						550,501						24,786						575,287						1.7
Total			$	15,274,333					$	28,582,277					$	9,315,571					$	37,897,848					2.5

________________________

(1)Purchase price refers to the cash paid to a seller to acquire a portfolio less Put-backs, Recalls, and other adjustments. Put-Backs and Recalls represent ineligible accounts that are returned by us or recalled by the seller pursuant to specific guidelines as set forth in the respective purchase agreement.

(2)Cumulative collections from inception through June 30, 2025, excluding collections on behalf of others.

(3)Purchase Price Multiple represents total estimated gross collections divided by the purchase price.

(4)Annual pool groups for other geographies have been aggregated for disclosure purposes.

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Estimated Remaining Gross Collections by Year of Purchase

The following table summarizes our estimated remaining gross collections from purchased receivable portfolios and estimated future cash flows from real estate-owned assets (in thousands):

			Estimated Remaining Gross Collections by Year of Purchase(1)
			2025(3)						2026						2027						2028						2029						2030						2031						2032						2033						>2033						Total(2)
United States:
<2016			$	33,874					$	48,757					$	30,870					$	21,002					$	13,964					$	9,059					$	5,621					$	3,350					$	1,676					$	781					$	168,954
2016			9,193						12,088						7,097						4,990						3,515						2,481						1,754						1,244						885						1,286						44,533
2017			12,531						17,966						11,461						7,886						5,560						3,930						2,786						1,980						1,413						2,453						67,966
2018			18,877						28,403						19,501						12,869						8,860						6,255						4,429						3,146						2,242						4,258						108,840
2019			34,395						50,839						34,584						23,530						15,622						10,805						7,611						5,375						3,804						7,538						194,103
2020			39,050						58,730						40,788						27,821						18,927						12,644						8,799						6,206						4,388						8,775						226,128
2021			37,167						57,862						39,528						26,912						18,603						12,845						8,783						6,114						4,306						9,320						221,440
2022			72,946						109,169						75,135						49,788						34,372						24,460						17,364						12,089						8,374						17,732						421,429
2023			177,988						259,315						172,612						121,829						84,676						59,692						41,700						29,199						20,028						39,608						1,006,647
2024			262,628						511,437						322,406						214,981						151,775						106,720						75,768						53,087						37,067						75,840						1,811,709
2025			157,653						341,934						286,287						180,802						124,464						89,583						63,186						44,671						31,113						64,888						1,384,581
Subtotal			856,302						1,496,500						1,040,269						692,410						480,338						338,474						237,801						166,461						115,296						232,479						5,656,330
Europe:
<2016			61,938						111,742						98,983						86,438						76,322						66,671						58,586						52,834						47,430						218,991						879,935
2016			13,432						24,247						21,744						18,796						15,870						13,309						11,422						9,594						8,162						32,467						169,043
2017			18,108						31,205						27,823						23,065						19,659						16,419						13,730						11,606						9,934						38,529						210,078
2018			17,964						32,279						28,828						23,779						20,846						18,079						15,804						13,910						12,056						46,201						229,746
2019			20,340						34,288						28,986						24,747						20,157						16,746						13,963						11,899						10,096						39,147						220,369
2020			12,811						20,559						16,393						13,037						10,539						8,629						7,143						6,012						5,086						20,085						120,294
2021			22,375						40,094						35,001						29,504						25,088						21,259						17,939						15,146						12,717						43,416						262,539
2022			26,711						46,534						38,188						30,749						25,027						20,342						16,798						13,879						11,182						37,263						266,673
2023			33,635						58,370						48,512						40,626						32,740						26,126						21,214						17,318						14,174						44,560						337,275
2024			61,908						113,318						93,414						77,535						63,649						52,021						43,017						36,346						31,505						129,774						702,487
2025			19,208						40,815						36,213						28,744						22,912						18,019						14,227						11,422						9,663						34,793						236,016
Subtotal			308,430						553,451						474,085						397,020						332,809						277,620						233,843						199,966						172,005						685,226						3,634,455
Other geographies(4):
All vintages			3,375						5,140						3,836						2,900						2,289						1,845						1,450						1,144						892						1,915						24,786
Subtotal			3,375						5,140						3,836						2,900						2,289						1,845						1,450						1,144						892						1,915						24,786
Portfolio ERC			1,168,107						2,055,091						1,518,190						1,092,330						815,436						617,939						473,094						367,571						288,193						919,620						9,315,571
REO ERC(5)			17,230						21,884						6,362						1,353						—						—						—						—						—						—						46,829
Total ERC			$	1,185,337					$	2,076,975					$	1,524,552					$	1,093,683					$	815,436					$	617,939					$	473,094					$	367,571					$	288,193					$	919,620					$	9,362,400

________________________

(1)As of June 30, 2025, ERC for Zero Basis Portfolios include approximately $31.5 million for purchased consumer and bankruptcy receivables in the United States. ERC for Zero Basis Portfolios in Europe and other geographies was immaterial. ERC also includes approximately $24.8 million from non-accrual portfolios, primarily in other geographies.

(2)Represents the expected remaining gross cash collections over a 180-month period. As of June 30, 2025, ERC for 84-month was:

			84-Month ERC
United States			$	5,232,803
Europe			2,681,275
Other geographies			21,424
Portfolio ERC			7,935,502
REO ERC			46,829
Total ERC			$	7,982,331

(3)Amount for 2025 consists of six months data from July 1, 2025 to December 31, 2025.

(4)Annual pool groups for other geographies have been aggregated for disclosure purposes.

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(5)Real estate-owned assets (“REO”) ERC includes approximately $46.3 million and $0.5 million of estimated future cash flows for Europe and Other Geographies, respectively.

Estimated Future Collections Applied to Receivable Portfolios

As of June 30, 2025, we had $4.2 billion in receivable portfolios. The estimated future collections applied to the receivable portfolios net balance is as follows (in thousands):

Years Ending December 31,			United States						Europe						Other Geographies						Total Amortization
2025(1)			$	343,390					$	123,571					$	2,743					$	469,704
2026			696,367						226,024						4,179						926,570
2027			497,511						197,583						3,129						698,223
2028			318,687						164,335						2,374						485,396
2029			218,833						136,612						1,865						357,310
2030			155,048						111,656						1,492						268,196
2031			109,983						92,441						137						202,561
2032			77,890						79,208						—						157,098
2033			54,436						69,142						—						123,578
2034			38,221						61,599						—						99,820
2035			27,654						58,164						—						85,818
2036			20,835						55,584						—						76,419
2037			15,874						54,205						—						70,079
2038			12,132						56,721						—						68,853
2039			7,238						59,001						—						66,239
2040			1,508						27,408						—						28,916
Total			$	2,595,607					$	1,573,254					$	15,919					$	4,184,780

________________________

(1)Amount for 2025 consists of six months data from July 1, 2025 to December 31, 2025.

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Liquidity and Capital Resources

Liquidity

The following table summarizes our cash flow activities for the periods presented (in thousands):

			Six Months Ended June 30,
			2025						2024
			(Unaudited)
Net cash provided by operating activities			$	54,807					$	86,697
Net cash used in investing activities			(169,652)						(131,886)
Net cash provided by financing activities			87,230						139,492

Operating Cash Flows

Cash flows from operating activities represent the cash receipts and disbursements related to all of our activities other than investing and financing activities.

Net cash provided by operating activities was $54.8 million and $86.7 million during the six months ended June 30, 2025 and 2024, respectively. Operating cash flows are derived by adjusting net income for non-cash operating items such as depreciation and amortization, changes in recoveries, stock-based compensation charges, deferred income tax, and changes in operating assets and liabilities which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in results of operations. Adjusting for the changes in recoveries resulted in a decrease in operating cash flows by $77.1 million during the six months ended June 30, 2025 and an increase in operating cash flows by $6.7 million during the six months ended June 30, 2024. Refer to “Note 5: Receivable Portfolios, Net” in the notes to our condensed consolidated financial statements for discussion relating to changes in recoveries.

Investing Cash Flows

Net cash used in investing activities was $169.7 million and $131.9 million during the six months ended June 30, 2025 and 2024, respectively. Cash provided by or used in investing activities is primarily affected by receivable portfolio purchases offset by collection proceeds applied to the principal of our receivable portfolios. Receivable portfolio purchases, net of put-backs, were $725.4 million and $567.0 million during the six months ended June 30, 2025 and 2024, respectively. Collection proceeds applied to receivable portfolios were $553.4 million and $419.8 million during the six months ended June 30, 2025 and 2024, respectively. Refer to Purchases and Collections within “Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations” for discussion relating to purchases and collections.

Financing Cash Flows

Net cash provided by financing activities was $87.2 million and $139.5 million during the six months ended June 30, 2025 and 2024, respectively. Financing cash flows are generally affected by borrowings under our credit facilities and proceeds from various debt offerings, offset by repayments of amounts outstanding under our credit facilities and repayments of various notes. Borrowings under our credit facilities were $549.6 million and $393.5 million during the six months ended June 30, 2025 and 2024, respectively. Repayments of amounts outstanding under our credit facilities were $418.5 million and $1,234.2 million during the six months ended June 30, 2025 and 2024, respectively. During the six months ended June 30, 2024, we issued two $500.0 million senior secured notes that mature in 2029 and 2030, respectively. We used a portion of the proceeds from the senior secured notes issuance to repay drawings under our Global Senior Facility.

Capital Resources

Our primary sources of capital are cash collections from our receivable portfolios, bank borrowings, debt offerings, and equity offerings. Depending on the capital markets, we consider additional financings to fund our operations and any potential acquisitions. From time to time, we may repurchase outstanding debt or equity and/or restructure or refinance debt obligations. Our primary cash requirements include funding the purchase of receivable portfolios, operating expenses, the payment of interest and principal on borrowings, the payment of income taxes, funding any entity acquisitions and share repurchases.

We are in material compliance with all covenants under our financing arrangements. See “Note 7: Borrowings” in the notes to our condensed consolidated financial statements for a further discussion of our debt. Available capacity under our Global Senior Facility, was $397.2 million as of June 30, 2025.

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Our Board of Directors has approved a $300.0 million share repurchase program. Repurchases under this program are expected to be made from cash on hand and/or a drawing from our Global Senior Facility and may be made from time to time, subject to market conditions and other factors, in the open market, through private transactions, block transactions, or other methods as determined by our management and Board of Directors, and in accordance with market conditions, other corporate considerations, and applicable regulatory requirements. The program does not obligate us to acquire any particular amount of common stock, and it may be modified or suspended at our discretion. During the three and six months ended June 30, 2025, we repurchased 418,499 and 707,924 shares of our common stock for approximately $15.0 million and $25.0 million, respectively, under the shares repurchase program. We did not make any repurchases under the share repurchase program during the three and six months ended June 30, 2024. Our practice is to retire the shares repurchased. As of June 30, 2025, authorization for $66.9 million of share repurchases remained under the share repurchase program.

Our cash and cash equivalents as of June 30, 2025, consisted of $63.8 million held by U.S.-based entities and $109.1 million held by foreign entities. Most of our cash and cash equivalents held by foreign entities is indefinitely reinvested and may be subject to material tax effects if repatriated. However, we believe that our sources of cash and liquidity are sufficient to meet our business needs in the United States and do not expect that we will need to repatriate the funds.

Included in cash and cash equivalents is cash that was collected on behalf of, and remains payable to, third-party clients. The balance of cash held for clients was $23.4 million as of June 30, 2025.

Cash from operations could also be affected by various risks and uncertainties, including, but not limited to, timing of cash collections from our consumers, and other risks detailed in our Risk Factors. However, we believe that we have sufficient liquidity to fund our operations for at least the next twelve months, given our expectation of continued positive cash flows from operations, our cash and cash equivalents, our access to capital markets, and availability under our credit facilities. Our future cash needs will depend on our acquisitions of portfolios and businesses.

Critical Accounting Estimates

Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions based on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Our actual results could differ from these estimates under different assumptions or conditions. Refer to “Critical Accounting Estimates” contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, for a complete discussion of our critical accounting estimates. Other than the ongoing reassessment of expected future recoveries of our receivable portfolios during each reporting period under our CECL accounting policy as discussed in “Note 5: Receivable Portfolios, Net” to our condensed consolidated financial statements, there have been no material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year ended December 31, 2024.

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Item 3 – Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Rates. As of June 30, 2025, there had not been a material change in any of the foreign currency risk information disclosed in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Interest Rates. As of June 30, 2025, there had not been a material change in the interest rate risk information disclosed in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Item 4 – Controls and Procedures

Attached as exhibits to this Form 10-Q are the certifications required by Rule 13a-14 of the Securities Exchange Act of 1934, as amended. This section includes information concerning the controls and controls evaluation referred to in the certifications.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”) and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and accordingly, management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on their most recent evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, are effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1 – Legal Proceedings

Information with respect to this item may be found in “Note 11: Commitments and Contingencies,” to the condensed consolidated financial statements.

Item 1A – Risk Factors

There is no material change in the information reported under “Part I-Item 1A-Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Repurchases of Equity Securities

As announced in on May 5, 2021, the Company’s Board of Directors has approved a $300.0 million share repurchase program. Repurchases under this program are expected to be made from cash on hand and/or a drawing from its Global Senior Facility, and may be made from time to time, subject to market conditions and other factors, in the open market, through private transactions, block transactions, or other methods as determined by management and its Board of Directors, and in accordance with market conditions, other corporate considerations, and applicable regulatory requirements. During the three months ended June 30, 2025, the Company repurchased 418,499 shares of our common stock for approximately $15.0 million. The following table presents information with respect to purchases of common stock of the Company during the three months ended June 30, 2025, by the Company or an “affiliated purchaser” of the Company, as defined in Rule 10b-18(a)(3) under the Exchange Act:

Period			Total Number of Shares Purchased						Average Price Paid Per Share						Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)						Approximate Dollar Value of Shares That May Yet Be Purchased Under the Publicly Announced Plans or Programs
April 1, 2025 to April 30, 2025			160,311						$	31.70					160,311						$	76,841,002
May 1, 2025 to May 31, 2025			132,713						$	38.29					132,713						$	71,759,347
June 1, 2025 to June 30, 2025			125,475						$	38.57					125,475						$	66,919,622
Total			418,499						$	35.85					418,499						$	66,919,622

________________________

(1)This column discloses the number of shares purchased pursuant to the program during the indicated time periods.

Item 5 - Other Information

On May 16, 2025, John Yung, President International and Cabot Credit Management, adopted a trading plan intended to satisfy the affirmative defense of Rule 10b5-1(c) to sell up to 6,000 shares of Encore Capital Group, Inc. common stock between August 15, 2025, and June 9, 2026, subject to certain conditions.

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Item 6 – Exhibits

Number						Description
3.1.1						Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Amendment No. 2 to the Company’s Registration Statement on Form S-1/A filed on June 14, 1999, File No. 333-77483)
3.1.2						Certificate of Amendment to the Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 4, 2002, File No. 000-26489)
3.1.3						Second Certificate of Amendment to the Certificate of Incorporation (incorporated by reference to Exhibit 3.1.3 to the Company’s Quarterly Report on Form 10-Q filed on August 7, 2019)
3.2						Amended and Restated Bylaws, as amended through December 13, 2022 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on December 16, 2022)
10.1						Amendment Letter, dated May 22, 2025, to the Amended and Restated Senior Facilities Agreement, dated October 17, 2024, by and among Encore Capital Group, Inc., the several guarantors, banks and other financial institutions and lenders from time to time party thereto and Truist Bank as Agent and Security Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 23, 2025)
31.1						Certification of the Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2						Certification of the Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1						Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
101.INS						Inline XBRL Instance Document - The instance document does not appear in the interactive data file because XBRL tags are embedded within the inline XBRL document. (filed herewith)
101.SCH						Inline XBRL Taxonomy Extension Schema Document (filed herewith)
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith)
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith)
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101

In accordance with Item 601(b)(4)(iii)(A) of Regulation S-K, copies of certain instruments defining the rights of holders of long-term debt of the company are not filed herewith. Pursuant to this regulation, we hereby agree to furnish a copy of any such instrument to the SEC upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

			ENCORE CAPITAL GROUP, INC.
			By:						/s/ Tomas Hernanz
									Tomas Hernanz
									Executive Vice President,
									Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

Date: August 6, 2025

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FAQ

How did ECPG’s Q2 2025 revenue compare year-over-year?

Revenue rose 24% to $442 million versus $355 million in Q2 2024.

What were Encore Capital’s Q2 2025 earnings per share?

Diluted EPS were $2.49, up from $1.34 in the prior-year quarter.

How much debt does ECPG carry as of June 30 2025?

Total borrowings are $3.97 billion, up $293 million since year-end 2024.

How large were portfolio purchases in the first half of 2025?

Encore purchased portfolios totaling $734.9 million through June 30 2025.

What is the remaining capacity on the Global Senior Facility?

Available capacity is about $397 million after considering covenant limits.

Did the company repurchase shares during the quarter?

Yes, Encore repurchased 418,499 shares in Q2 2025 for roughly $15 million.