Propel Holdings Inc Stock

Good morning, everyone. Welcome to Propel Holdings' Second Quarter 2026 Financial Results Conference Call. As a reminder, this conference call is being recorded on August 6, 2026. [Operator Instructions]

And now I will turn the call over to Devon Ghelani, Propel's Vice President, Capital Markets and Investor Relations. Please go ahead, Devon.

Thank you, Operator. Good morning, everyone, and thank you for joining us today. Propel's second quarter 2026 financial results were released yesterday after market close. The press release, financial statements and MD&A are available on SEDAR+ as well as on the company's website, propelholdings.com.

Before we begin, I would like to remind all participants that our statements and comments today may include forward-looking statements within the meaning of applicable securities laws. The risks and considerations regarding forward-looking statements can be found in our Q2 2026 MD&A and annual information form for the year-end of December 31, 2025, both of which are available on SEDAR+.

Additionally, during the call, we may refer to non-IFRS measures. Participants are advised to review the section entitled Non-IFRS Financial Measures and Industry Metrics in the Company's Q2 2026 MD&A for definitions of our non-IFRS measures and the reconciliation of these measures to the most comparable IFRS measure.

Lastly, all dollar amounts referenced during the call are in U.S. dollars, unless otherwise noted.

I am joined on the call today by Clive Kinross, Founder and Chief Executive Officer; and Sheldon Saidakovsky, Founder and Chief Financial Officer. Clive will provide an overview of our Q2 results and observations on our consumer segment and overall economic environment before Sheldon covers our financials in more detail. Before we open the call to questions, Clive will provide an update on Propel's growth strategy and outlook for the remainder of 2026.

With that, I'll pass the call over to Clive.

Thank you, Devon, and welcome, everyone, to our second quarter conference call. We delivered another record quarter, building on the strong momentum we established at the beginning of the year. Importantly, this quarter demonstrated that the strategic investments we've made over the past several quarters to expand our platform and serve more consumers across the credit spectrum are translating into measurable results. We expanded into new states, launched new products and broadened our distribution channels, enabling us to reach more consumers than ever before.

Supported by strong consumer demand, new customer originations increased by 34% year-over-year. And if including Lending-as-a-Service, new customer originations increased by 43%. The growth contributed to record ending CLAB of $639 million, up 23% from a year ago, and record revenue of $179.6 million, an increase of 26%. Our focus on disciplined execution resulted in a record quarterly adjusted EBITDA of $43.7 million and record quarterly adjusted net income of $24.8 million. Importantly, we achieved this growth while maintaining another quarter of stable credit performance. Provision for loan losses and other liabilities represented 50% of revenue, reflecting both the strength of our AI-powered underwriting platform and the resiliency of the consumers we serve.

Before turning the call over to Sheldon, I'd like to spend a few minutes discussing those consumers and what we're seeing across the broader economy. We often use the term underserved consumer. But today, that group represents a much larger segment of the population than it did just a few years ago. As we've discussed on previous calls, we continue to see a K-shaped economy emerge across our markets with the middle of the credit spectrum shrinking. While many consumers have benefited from rising asset prices and migrated into the super prime category, others, despite remaining employed and maintaining reasonable repayment histories, are finding it increasingly difficult to access traditional sources of credit.

According to TransUnion, since 2022, the share of subprime consumers has increased by approximately 7%, rising from 13.8% to 14.8% of the population. The lending market has changed for them. Many large financial institutions have tightened underwriting standards, leaving a growing number of consumers without access to the credit products they have historically relied upon. At the same time, demand for credit remains elevated as households continue to manage the impact of higher everyday living costs. In fact, the Federal Reserve recently reported that credit rejection rates reached 33% in 2025, the highest level in a decade.

Furthermore, in Q2 2026, the Federal Reserve Bank of New York found that consumer demand for credit reached its highest level since October 2021. And we see this dynamic in our own business with strong demand and stable credit performance. This is why our mission remains so relevant today. We believe our technology and AI-powered underwriting platform can responsibly expand access to credit by helping us better understand consumers who have been overlooked by traditional underwriting models.

At the core of our business is a simple belief. These consumers are often misunderstood. They are resilient, they're employed, they're actively managing their finances, and they're taking practical steps to navigate the macroeconomic environment. Our own data reinforces this. In a recent survey of Propel and our bank partners' customers, the majority of respondents told us they expect to spend more on essentials like gas and groceries this summer. Rather than falling behind, the majority said they plan to reduce spending elsewhere.

Looking more broadly across our markets, we continue to see an economic backdrop that is resilient. In the United States, unemployment remains low at 4.2%, with employment remaining strong across many of the industries where our customers work. Furthermore, our customers continue to benefit from steady wage gains and consumer spending remains strong. In the United Kingdom, inflation has moderated towards the Bank of England's target, while unemployment has remained relatively stable.

Canada, which represents approximately 2% of our business, continues to experience a softer labor market than the United States. However, inflation remains relatively low, and despite ongoing trade uncertainty, the Canadian economy has remained more durable than many had anticipated. Overall, across the markets in which we operate, we continue to see healthy employment, moderating inflation and resilient consumer demand. This is an environment we know well and one in which our AI-powered underwriting platform has consistently performed well.

To serve the increasing number of underserved consumers and strengthen our business, we spent the past several quarters investing in initiatives that expand both our addressable markets and our competitive advantages. These investments are increasingly contributing to our results. Lending-as-a-Service generated record revenue of $11.1 million, an increase of 150% year-over-year.

Propel U.K. continued its strong performance with revenue increasing 53% year-over-year in Q2 2026 to a record $17.3 million. And Propel Bank continued expanding its operational capabilities, supporting lending and servicing activities in the U.S. while enhancing long-term strategic flexibility. Overall, we are both -- we are proud of both our second quarter performance and the momentum we've built through the first half of the year.

Reflecting this continued performance and strong financial position, our Board approved another increase to our quarterly dividend to CAD 1.02 per share on an annualized basis, representing a 6% increase and our 12th consecutive quarterly increase. I will speak more about our growth plans and the outlook for the rest of 2026. But first, I will pass the call over to Sheldon.

Thank you, Clive, and good morning, everyone. We continue to build on the strong momentum established earlier this year. Strong consumer demand, together with the continued expansion of our platform, supported another quarter of record results. Against this backdrop, total originations funded increased by 25% year-over-year to $243.4 million, representing another quarterly record. New customer origination growth was strong, increasing by approximately 34% year-over-year to a record $111 million. And if including Lending-as-a-Service, new customer originations increased by 43% year-over-year.

The MoneyKey Bank Service Program, in particular, continued to experience significant growth during the quarter, with ending CLAB increasing by approximately 79% year-over-year and by 29% sequentially over Q1. New customer originations within this program increased by approximately 56% sequentially from Q1, driven by continued geographic expansion, the ongoing transition from legacy products and the addition of new marketing partners and channels. Lending-as-a-Service also delivered another record quarter with revenue increasing approximately 150% year-over-year to a record $11.1 million.

In the U.K., QuidMarket continued to grow significantly, delivering another quarter of record originations and revenue, with revenue increasing in excess of 50% year-over-year as the business further expanded its market presence. The strong performance across these businesses drove ending CLAB to a record $639.1 million, an increase of 23% year-over-year and supported record quarterly revenue of $179.6 million, an increase of 26% year-over-year.

The annualized revenue yield increased to 117% in Q2 from 114% in the prior year period. The increase primarily reflects the strong growth from new customer originations, the expansion of Lending-as-a-Service and the higher contribution from higher-yielding programs, including QuidMarket and the MoneyKey Bank Service Program. Overall, we are pleased with the continued execution of our growth strategy during the quarter and the expansion of our platform across products, geographies and customer segments.

Turning to provisioning and charge-offs. Credit performance remained stable during the second quarter and was consistent with our expectations. Provision for loan losses and other liabilities represented 50% of revenue in Q2 2026, while net charge-offs as a percentage of average CLAB was 12%, both consistent with the prior year period, reflecting the strength of our AI-powered underwriting platform, disciplined approach, consumer resiliency and continued strong portfolio performance.

Notably, we achieved this performance while delivering overall record originations and growing ending CLAB by 23% year-over-year, demonstrating our ability to successfully balance significant growth with prudent risk management. Overall, credit performance was in line with our expectations and remains in line as we move forward through Q3.

Turning to profitability. Our net income increased by 7% year-over-year to $16.2 million, while our adjusted net income increased 29% year-over-year to a record $24.8 million. Furthermore, diluted EPS increased by 7% to $0.38, while adjusted diluted EPS increased 28% to a record $0.58 per diluted share. Adjusted return on equity improved to 35% on an annualized basis compared to 32% in the prior year period, reflecting another quarter of strong earnings growth and efficient capital deployment.

As discussed earlier, the significant growth of the MoneyKey Bank Service Program over Q1 resulted in a larger noncash adjustment to net income during the quarter. This adjustment was driven by the increase in the bank service program liability relating to the increase in the off-balance sheet receivables associated with this program. In addition, the growth in the other programs and the corresponding increase in the Stage 1 expected credit loss allowance also contributed to the higher adjustment to net income during the quarter.

As a reminder, we believe that these adjustments and consequently, our non-IFRS metrics provide a better representation of the portfolio's performance, particularly in a period of higher growth.

Turning to operating expenses. We continue to invest in a number of strategic initiatives designed to support the company's long-term growth, including the ongoing build-out and expanded operations of Propel Bank, further scaling of our Lending-as-a-Service platform and ongoing investment in AI-powered capabilities, technology infrastructure and customer acquisition initiatives. At the same time, we realized operating leverage across several areas of the business.

Salaries, wages and benefits declined to approximately 8% of revenue from 8.4% in the prior year period, while G&A declined to approximately 2% of revenue from 2.5%, reflecting the scalability of our platform as we continue to grow the business. Acquisition and data expense increased to 14.5% of revenue during the quarter from 13% in the prior year period. Cost per funded origination increased to $0.11 from $0.10, while cost per new customer funded origination increased to $0.24 from $0.22.

As we've noted in the prior quarters, the year-over-year increases reflect the continued investment in expanding and diversifying our customer acquisition platform through approximately 20 new marketing partners, together with broader investment across diversified marketing channels. In addition, the ongoing growth of QuidMarket contributed to the increase as we continue investing to expand its customer base and market position.

Underwriting and data costs per funded loan also contributed to this increase as application volumes grew even more significantly than originations, reflecting the disciplined approach maintained with our bank partners. Effectively, we and our bank partners are evaluating more applications relative to each funded origination. Importantly, both cost per funded origination and cost per new customer funded origination improved sequentially from the first quarter of 2026, reflecting early benefits from our expanding marketing platform and continued optimization of our acquisition strategy. We believe these investments support long-term growth while maintaining disciplined underwriting and stable credit performance.

Processing technology and program servicing expense increased primarily due to the ongoing scaling of our Lending-as-a-Service platform, which as we mentioned, grew by 150% year-over-year. As a reminder, these expenses include customer acquisition and servicing costs associated with our Lending-as-a-Service programs. Notably, Lending-as-a-Service costs declined to 62% of Lending-as-a-Service revenue from 76% in the prior year, demonstrating improving unit economics and operating leverage as the program scales.

Our overall cost of debt also continued to improve, declining to 10.2% from 11.4% in the prior year period, reflecting enhanced credit facility pricing together with lower benchmark interest rates. Lower funding costs further enhanced the earnings power of the business while providing additional flexibility to support future growth initiatives.

Overall, we delivered record adjusted net income and adjusted diluted EPS while continuing to invest in strategic initiatives across the business. Strong profitability was supported by record revenue, stable credit performance and disciplined execution. Our investments are delivering results and will continue delivering attractive long-term revenue and earnings growth and returns on equity.

Turning to Propel's capitalization. We continue to maintain a strong financial position, supporting the ongoing growth of our lending programs and strategic initiatives. At quarter end, we had approximately $97 million of undrawn credit commitment capacity across our credit facilities with a debt-to-equity ratio of 1.2x, providing significant liquidity and financial flexibility. Even though ending CLAB grew by approximately $50 million since year-end, our outstanding debt balance remained essentially unchanged at $332 million. This reflects the strong earnings and cash flow profile of the business, which enabled us to fund meaningful portfolio growth, an increase in quarterly dividend and continued investment in our strategic initiatives without increasing our outstanding debt.

We believe our strong financial position, growing earnings profile, and disciplined capital management position us well to continue funding future growth while delivering attractive long-term returns for shareholders.

I'll now turn the call back to Clive.

Thank you, Sheldon. As we look ahead to the second half of 2026, we continue to see strong momentum across the business. Demand remains strong, credit performance remains in line with our expectations and the investments we've made are translating into measurable results.

In the U.S., we continue to expand our addressable market by introducing new products like Freshline, entering additional states and adding new marketing and distribution partners. As our business grows, our marketing strategy is evolving alongside it. In addition to expanding our partner network, we're investing further up the marketing funnel through connected television, online video and AI-optimized digital content to build awareness, strengthen our brand and support customer acquisition.

We're equally encouraged by the momentum we're seeing in Lending-as-a-Service and expect strong growth going forward, supported by committed long-term capital partners. As the program continues to scale, Lending-as-a-Service is becoming an increasingly meaningful contributor to Propel's revenue and profitability, while expanding our capital-light fee-based business segment, allowing us to serve more consumers and generate attractive recurring revenue. Internationally, almost 2 years since the acquisition of QuidMarket, we continue to grow the business while leveraging Propel's expertise and infrastructure. Growth has been strong, and we expect it to continue.

Supporting many of these initiatives is the continued operationalization of Propel Bank, which provides long-term strategic flexibility as we scale. The banking license expands our capabilities and creates additional options for growth over time. As with every aspect of our business, that flexibility is supported by a strong commitment to regulatory compliance and disciplined risk management.

Finally, I'd like to touch on AI. We've been an early investor in artificial intelligence, developing our AI-powered underwriting platform in 2015, well before AI became central to most business conversations. Today, we're applying the same philosophy across the entire organization. For example, AI supports our customer service representatives during live customer interactions, helping to drive efficiency and enable agents to serve more consumers in a day with loans originated per customer service representative reaching an all-time high this quarter, up roughly 50% year-over-year.

Our technology and engineering teams are also using AI to enhance Propel's proprietary platform more efficiently, with AI contributing to almost 50% of new code written during the quarter. The next phase of our AI strategy is focused on automating core operational, technology and finance processes. This work is already underway. Ultimately, our objective is simple: to ensure every investment we make in AI translates into greater efficiency and stronger execution and support long-term profitable growth. Although these initiatives span different parts of our business, they are all designed to achieve the same objective, expanding our platform, increasing our competitive advantages and creating long-term shareholder value.

In September, Propel will celebrate its 15th anniversary. Reaching that milestone reflects 15 years of disciplined execution, continuous innovation and the ability to successfully navigate the multiple economic cycles where we have grown every year since our inception, including a revenue and adjusted EPS CAGR of 43% and 64%, respectively, since 2019. It's also a testament to the extraordinary team we have built.

The team's dedication, tenacity and relentless focus on execution have transformed Propel from a single product fintech company into the global fintech platform we are today. While the business has evolved significantly, our mission has remained constant, expanding access to credit while delivering sustainable, profitable growth for our shareholders. The opportunities in front of us today are greater than at any point in our history. More consumers than ever are locked out of the credit markets, and we have built the platform to meet that need. With the strength of our platform, the resilience of the consumers we serve and the exceptional team we've built, I believe Propel is exceptionally well positioned for the quarters and years ahead.

With that, Operator, you may now open the line for questions.

[Operator Instructions] And your first question comes from the line of Matthew Lee of Canaccord.

Really nice quarter here. Just a couple of items I want to touch on. Maybe we can start with this geographical expansion that you talked about. Can you expand that opportunity in terms of what states you're going into, the size of the addressable market? And maybe just context it with where was your addressable market last year versus now? And maybe where do you expect it to be in a couple of years as Propel Bank ramps?

Yes. So Matt, first of all, thank you so much for the kind words. We're also very, very pleased with the quarter. I think it was an incredibly strong quarter. And as I mentioned in my prepared remarks, we've really gone from a one-product company in one market to now a global fintech powerhouse, operating in the U.S., in the U.K., and Canada on-balance sheet program, off-balance sheet program, Lending-as-a-Service. So all of that has created lots of different growth drivers, and we're seeing that starting to really accelerate and will continue to accelerate over the course of the year and is also diversifying not only the growth drivers, but also the risk profile across the business.

As you mentioned, the additional geographies are also furthering that growth. We're in states today as a combination of our partnership with Column Bank out of California, with the launch of Propel Bank, it's allowed us to operate in new jurisdictions that even 12 months ago we weren't operating in. And that geographic expansion is also fueling lots of the growth. By the way, expect more states to be added as we continue to roll out the bank service program and as we also continue to expand Propel Global Bank's servicing across the platform.

All of which is to say our addressable market is increasing for 2 reasons. Number one, as I mentioned, subprime segment has increased 7% since 2022. That alone on a macro perspective is increasing the market, but we're expanding into new geographies and new products, which is why you saw roughly 43% new customer growth, including Lending-as-a-Service for the most recent quarter, dramatically outperforming the natural growth in the market. We expect, if anything, growth to accelerate in Q3 and Q4 relative to the first half of the year.

That's really helpful. And then maybe on the cost side, I'm just trying to think about how margins should improve as it continues to grow. So can you just talk about maybe how much of your current costs relate to the ramping of Propel Bank and Lending-as-a-Service versus what you consider to be kind of core operating expenses? Just bring an idea of how we should think about margin as it scales.

Yes. Matt, thanks a lot for the question and for the kind words. As you referenced, obviously, there's a lot of initiatives that we've been rolling out and investing in over the last, I would say, 2, 3 quarters, that are actually paying off quite a lot right now. We started saying back in Q3 last year that we started investing deliberately in expanding our acquisition channels. You started to see the uptick in our acquisition costs in Q4, continued into Q1. And I will note that, as I said in my prepared remarks, that our acquisition cost per new customer dollar funded loan actually ticked down in Q2 from Q1 sequentially.

So we're seeing some of that benefit already, even on the cost side. But most importantly, those investments are generating all this significant growth and the increase in the application volume that's driving the sizable growth that you're seeing, not only in Q1, now in Q2 as well, that's frankly outpacing expectations. So those investments are paying off. As Clive said, there's -- we're making deliberate investments in rolling out Propel Bank, which is right on schedule and it's helping to fuel the geographic expansion across the U.S. and product expansion ultimately as well. The relationship with Column Bank that we invested in is leading to a lot of growth on the Lending-as-a-Service side and then to new states. So all of these investments are starting really to pay off.

I think from a margin -- when you really boil it down from a margin perspective, as you know, we have a seasonal business. So I think expect the margins in the second half of the year to be a little bit lower than what you saw in the first half of the year this year. But with that said, they will be better than what we saw in the second half of last year. As you may recall, we had -- we slowed down growth as a result of several factors last year in Q3. Some additional upticks in delinquency that we saw back then and coupled with starting to make the investments that I just spoke about compressed some margins. So absolutely expect margin expansion in the second half of this year, relative to last year.

Congrats on the quarter. And again, congrats on the 15 years of growth.

And your next question comes from the line of Robert Goff of Ventum.

Let me echo Matt's comments in terms of congratulations on the quarter and the 15 years behind it. Very well done. It's commendable.

Thank you so much. Really appreciate it. Time flies, man. It's amazing it's been 15 years, and I was reflecting yesterday, amazing it's been 5 years, almost 5 years since we've been a public company. I think this is the 20th time we're doing this.

I thought you guys were both teenagers when you started this, right? Sorry, bad joke. More seriously, can you discuss the pacing and the evolution of the MoneyKey direct to bank services? How do you see the states transitioning across the year? And where you have transitioned, what have you seen in terms of the impact on loan growth, yield, COA and quality of credit?

Yes. So it's a great question. And just to take a step back over here, transitioning from the MoneyKey states to the MoneyKey Service Program, the MoneyKey states are the legacy states that we started all the way back, going back to our inception. And to a large degree, those were some of the states where we weren't seeing a lot of growth. They were a smaller part of the business. And frankly, they weren't getting the TLC that they otherwise might have gotten if they'd been a larger share of our business.

And what we consciously decided to do as a result was transition them across to the MoneyKey Service Program where ultimately, we have a lot more distribution channels, marketing partners and where there's a lot more focus from a risk perspective. That has turned out to be obviously a really good move, not only from our perspective, but also from the many, many more consumers that we're able to now serve as a result. The impact has been twofold. First of all, on aggregates, we've grown the volumes in those states close to 2x across the board. Some states are a little bit more than that, some states are a little bit less than that. But in most states, you're seeing significant growth and obviously that's one of the things that's really propelling the growth of the MoneyKey Bank Service Program.

At the same time, because it's getting even more attention by us and our bank partner there as well, it's getting access to what I would call even better enhanced risk models. So the dramatic acceleration you're seeing on the demand side over there is leading to even better relative credit performance than otherwise would have been the case. And as you know, Rob, that's at its early stages of transition. In fact, there's a couple more states still to transition across. So we expect, if anything, that to fuel more growth on a go-forward basis.

At the same time, the other thing fueling the bank service program is the addition of new states that we're in today that we weren't in as recently even as 12 months ago. That's fueling tremendous growth on top of the transition of MoneyKey to the MoneyKey Bank Service Program. And if anything, expect that also to continue to accelerate and new states to be added to that program as well on a go-forward basis. So we feel really good about our ability to continue to grow that program on a go-forward basis. And it's one of the reasons that I'm confident in saying that we expect the growth of the business to accelerate in Q3 and even further in Q4 of this year relative to that.

Very good. If I could have a follow-up for Sheldon. You had mentioned the strength in applications. Can you talk to the growth you were seeing in applications or inbounds and where your current screening parameters are?

Yes. Rob, thanks for the question. We're looking at an excess of 100,000 applications every single day right now. And if you follow kind of what we've been saying and reporting, that's been growing quite significantly month over month, quarter over quarter and it's getting to a very high rate over here as we continue to expand the marketing channels, enter new states and just overall enhance our existing programs and new products, et cetera. So we're benefiting a lot from the increases in application volume and the investments are absolutely paying off on the marketing side.

And what that enables us to do, Rob, as we've talked about, right? We're kind of opening up the top of the funnel. We're seeing a lot more applications. And because of that, we can originate more while keeping the same prudent underwriting posture. So if you kind of triangulate that, if we're seeing a lot more application volumes, maintaining kind of the same risk parameters, our acceptance rate, all else being equal, actually comes down a little bit. So if you look at where we are today, our acceptance rate is probably in the 6% to 7% range, which is not too dissimilar from what we saw in Q1, probably ticked down slightly. But week over week, month over month, as we're expanding across these different programs, we're seeing the application volume increase. That's why right now we're not giving the specific number on the application volume and actually saying it's well in excess of 100,000 a day right now.

We spent -- we actually -- let me just layer on to that a bit of time. We actually spent quite a bit of time discussing where we should position that number and ultimately said we're going to go with in excess of 100,000 applications a day. But Rob, if I were to take a step back and say, what's driving such healthy demand? I mentioned it in my prepared remarks, but it's worthwhile mentioning it again because the fundamentals of what's driving this growth in our industry with stable credit performance, I think, are set in for certainly the long -- the medium term over here, if not the long term.

As I mentioned, the subprime segment of the market in this K-shaped economy has grown by about 7% since 2022, which is significant growth in this otherwise stable economy from 13.7% to 14.7%. So that's one of the tailwinds. And we're capitalizing on that even more by adding more products and more geography. So that's number one. Number two is you saw the strongest rejection rates last year in 2025. I think over a decade. That's what the Fed came out with in 2025. And we've been expressing that on calls as well, that there's tightening ahead of us. And I think those 2 data points go hand in hand. They're not inconsistent with one another.

And finally, in Q2 alone, I think we saw the strongest demand from a credit perspective. The New York Fed came up with that data point since Q3 of 2021. All of that is fueling incredibly strong demand across the board with stable credit performance. I think yesterday, Bank of America came out and said, not only do we all know the unemployment rate is really low, but they came out yesterday and said that income levels of what I would call generally lower income consumers has actually risen faster than the general population.

So all of those dynamics are leading to strong demand, stable credit performance. And because there's such strong demand, if anything, we can be really -- we and our bank partners can be really selective with the loans that we originate while fueling tremendous growth as well as stable credit performance. If anything, as we're heading to Q3, which typically has higher delinquencies, say in Q2 and Q1, our and our bank partners' orientation has been to tighten that underwriting more so, let's say, than Q1 and Q2. So the growth that you're seeing heading into Q3 and continuing into Q3 is being achieved because of those variables and from our personal perspective, a tighter underwriting posture.

And your next question comes from the line of Suthan Sukumar of Stifel.

Congrats on a very solid earnings print. For my first question, I want to touch on revenue yield. Obviously, an impressive lift both sequentially year-over-year. Is this reflecting really more near-term benefits, which we should expect to normalize? Or is this more reflective of more of a longer-term structural improvement given the evolving mix of the business?

Yes. Thanks for the question, Suthan. This is something that we've been messaging for the last couple of quarters. It's a result of a number of different factors. Number one, we're doing more new customer originations now than we were doing previously. You're seeing that our new customer proportion of total originations has increased. So when we're originating more new customers, they, generally speaking, have higher yields. Lending-as-a-Service is growing significantly and now becoming quite meaningful. That contributes to the higher revenue yield. Our MoneyKey Bank Service Program serves a higher-yielding segment of consumers. So that's driving the yield up. And QuidMarket also, which is continuing to demonstrate outpaced growth, has higher yield as well. So all of those factors together are driving the yield up.

I think last quarter I said that expect yields to be in excess of 115%. The fact that we hit 117%, frankly, we beat our expectations and that's in large part, obviously, to the growth and all the other factors that I just mentioned. This will continue, Suthan, as these programs continue to show outpaced growth on a go-forward basis. I think Clive mentioned, expect accelerated growth in Lending-as-a-Service going forward and in the coming quarters, accelerated growth on the QuidMarket U.K. side.

And we -- given the way risk is performing right now and the way the portfolio is composed, we continue to expect to generate a higher proportion of new customer originations. So if you put all of that together, I would expect revenue yields to be somewhere between 115% and 120% for the remainder of the year. And I'm probably being a bit conservative on the low end side given we're at 117% right now, I expect that to tick up a little bit as we go forward.

Great. Perfect. My second question, I wanted to touch on debt capacity. What we're seeing here is a sustained pace of strong originations activity. You guys are increasing your dividend consistently. From a balance sheet perspective, do you guys have sufficient funding room to support continued loan book growth?

Yes. The answer to the question is absolutely. I mean, you touched on a couple of really key points over there. I don't think they're lost on the investor community. I think they're actually quite well understood, but let me just repeat that. The debt balance since the end of the year has actually not grown. Notwithstanding the significant growth we've seen in our CLAB, the significant growth we've seen in our revenues and an ever-increasing dividend, we actually haven't increased our debt balance. If anything, our liquidity has improved since then.

We've already mentioned we expect the growth top and bottom line, certainly relative to 2025, to accelerate relative to the impressive growth we've already seen year to date. And we could do all of that and largely maintain the debt balance where it is. So from a liquidity perspective, we have more than enough liquidity, including growing liquidity actually, that might be helpful in the event that there's any M&A opportunities on a go-forward basis.

Obviously, I think we've got just shy of $100 million of liquidity at the moment. So from that perspective, there certainly is a cap if we were to do an acquisition on how large that acquisition could be without needing some form of additional liquidity. But that's the only scenario that we currently contemplate where we would potentially need additional liquidity.

Okay. Great. And if I could just squeeze in one more, guys, on Lending-as-a-Service. Can you speak to kind of the level of demand interest from investors from a forward flow perspective? You're seeing strong growth here, and you guys have telegraphed a 10% target for Lending-as-a-Service revenues this year. But is there room to potentially accelerate that given some of this momentum that you're seeing here?

So, let me start off by saying that, yes, we continue to expect Lending-as-a-Service to be approaching 10% of our revenues by the end of the year. And let me also emphasize that the overall growth of our business is going to accelerate between now and the end of the year. I've made that point a couple of times on this call. So when we say that we expect it to start approaching 10% by the end of the year, that's of a growing business. So the 150% Lending-as-a-Service growth that we saw in Q2, as impressive as that is, we expect that growth to also accelerate on a go-forward basis. I know we've made that point a few times.

And to your question, that's largely being fueled by the blue-chip quality of the institutional investors who are now part of that forward flow purchasing arrangements. And they're coming on board enthusiastically because they're getting the returns that we represented to them, they would get if they did this. As you can appreciate, in the earlier days, and I think we're certainly still in our earlier days in this initiative. But even earlier days, what we were telling investors they could expect over here. They trusted us based on our track record and credibility, but they didn't have the data themselves. They now have the data themselves. They're now seeing what the returns are. And on the back of that, there's really strong demand, not only from our existing cohort of investors, but from new investors as well who'd like to get on board and be part of our forward flow program.

So the constraints which we had previously of onboarding new capital partners is no longer there. We feel like we now have really solid long-term investors from that perspective, which makes it much easier for us to forecast what that growth will be on a go-forward basis. If you said to me, why do we expect the growth to accelerate? It's not necessarily because of new capital partners because we've got more than enough as far as that's concerned. The reason it's going to accelerate is we're opening up new marketing channels, number one.

Number two, we're opening up in additional states. We're opening up in additional -- with additional products as well. And finally, not only are we doing all of that, which will fuel the growth, we're just getting better as a business in terms of optimizing that particular segment of the business. So not only are we doing all of that to fuel the growth of the business, but at the same time, as we've already demonstrated, there has been margin expansion in that business, and we expect there to be even more margin expansion on a go-forward basis.

I could tell you that I looked at the numbers yesterday for Lending-as-a-Service in July, and I was really, really pleased to see the continued growth that we demonstrated in Q2. If anything, as I've already said, accelerating into Q3.

Okay. Great. Congrats, again, on the quarter.

And your next question comes from the line of Stephen Boland of Raymond James.

When I look at QuidMarket, Lending-as-a-Service through your, I guess, more recent product expansions, approaching by the end of the year, maybe 20% of your business, outside of kind of like the core lending businesses that you had. I mean is there a -- I'm not sure if there's a right word here, but a concentration, anything that you're fine with it to go to 20%, to go to 25%, to 30%? Is there a point here? And, Clive, you mentioned a number of things. New investors want to come in, forward flow expansion, more states. Like this seems -- these 2 businesses seem because of their growth and like that they may end up dominating, but becoming a very, very significant part of your businesses over the next 2 years. Is that a fair comment?

I think it's a very fair comment. No, I think it's a... I think it's a very fair comment and it's -- I hadn't thought about some of that the way you framed it up, that on a combined basis, those will be about 20% of our business by the end of the year. I'm trying to do the quick math in my head over here. It might even exceed 20% of our business. But I think 20% is a good way to think about it, and these are businesses that didn't even exist from a Propel perspective a couple of years ago, which goes back to my earlier comments about us building a real global platform over here with more growth drivers for the business on the one hand, and on the other hand, diversification of credit risk as we expand into more markets.

Steve, I'll tell you how we think about it. We have got an exceptional team over here at Propel. 15 years later, the 4 co-founders are all intact. We've got a 20-plus person executive team over here, who I could tell you is more motivated and more focused than ever. And obviously, the support of probably another 650 other incredible team members across Canada, Puerto Rico and the U.K. And what we're doing constantly is trying to maximize the growth, taking into account risk of all of the different business units. We're watering all of them because I've learned what you water will grow. And if you said to me, do we have some kind of artificial line in the sand as to how big we want any of those business units to be? I think the answer to that question is no, we don't. We all want them to be as big and large as they possibly can be and to serve as many consumers as we can.

The great news about where we are is we're still -- as impressive as the growth has been, we're still a tiny portion of the overall market in all of the markets that we operate. So you're right to point out that 2 of our nascent businesses, Lending-as-a-Service as well as Propel U.K., have got even faster growth than other areas of the business. But rest assured, all areas of our business have got significant growth lined up ahead. And you will continue to see that on a go-forward basis.

And I don't want to beat this yield discussion to death because it's very optimistic on the new products like Lending-as-a-Service and QuidMarket. You did mention some graduation. But the 115% to the 120%, again, for 2026, that seems pretty achievable. But again, you have these businesses, the high-margin ones growing, like what stops this from going north of 120% next year or getting to 125%, especially with QuidMarket? I mean, I don't know what the cap on Lending-as-a-Service, I can't remember. But certainly, these 2 businesses may be your highest margin, I'm guessing. But what's stopping the 2027 number from getting well over 120%?

Yes. It could, Steve, at the rate of growth that we're going at and the higher proportion of the overall revenues that these programs are representing and growing into. Just keep in mind also that this quarter, actually, Q2, we did new customer -- our new customer proportion, which carries higher yields was its highest proportion since Q4 of 2024. So we're doing a lot more new customer originations right now. And those ultimately, when they stop -- start at the top, we have a very important component of our portfolio is our graduation. So those consumers will ultimately start graduating and the ones in our existing portfolio will continue to graduate to better and better products.

Ultimately, our goal as we've specified across all of our programs is to provide the right risk-adjusted price product to each and every underserved consumer. That's the ultimate goal to be present across the underserved credit spectrum. So expect additional risk-based pricing. So when you look at risk-based pricing and graduation, that's kind of the counter to all of these higher-yielding pieces. But we're not ready to give guidance yet for 2027, but it certainly can exceed 120%. I'll kind of put it that way. And as we get closer to year-end, we'll put out more concrete guidance on that. But we're very excited. It's a great development and obviously generating both growth and margin expansion as we move forward.

Maybe I can give a quick market update. Steve, if I could just add just something to what Sheldon said. We made a conscious decision that we're going to just let one person speak on our side over here, but only later on when it's an important point. But I do want to just tell you what's going on kind of beneath the surface over here. When we started in this industry, if you were an underbanked or underserved consumer, you qualified for one product, and that was the product that you qualified for. More and more what we've done, and I think we've led the industry in this initiative is we've introduced risk-based pricing with our bank partners for these underbanked and underserved consumers.

What you don't necessarily see and what we don't speak about as much on this call is the expansion of our product set. And I could tell you that once you get into more of the details, the products or the customers that we're serving, the range of APRs is larger than it's ever been. We're expanding the product set, call it, at yields quite a bit below what our average yield is. And that product set of those consumers in that segment of the market has grown a lot, either on the Lending-as-a-Service side or alternatively the stuff that's included in our CLAB. And by the same token, we've also expanded that product set for customers that are north of our average yield.

And I'm not now speaking about the contribution of Lending-as-a-Service nor Propel U.K. I'm speaking about everything else. So there's way more consumers. There's a much wider range, and we're doing much more risk-based pricing. The MoneyKey Bank Service Program, where you saw a significant amount of growth this quarter and in fact, year-to-date for many of the reasons that I've already mentioned, generally speaking, the consumers who qualify for those loans have slightly more bruised credit profiles than, say, the consumers who qualify for CreditFresh. As a result of that, the APRs and the corresponding revenue yields tend to be higher. And as already mentioned, that's a much faster-growing segment of our U.S. business right now, which is also going to contribute to higher revenue yields on a go-forward basis.

And your next question comes from the line of Michael Mccue of TD Securities.

Good to be here for the first time on the call. I was just wondering with the very remarkable LaaS growth quarter-over-quarter, year-on-year, are you able to provide any color on how much of that has come from the Freshline rollout, in particular, versus products that were already existing within the LaaS ecosystem prior to 2026?

Michael, great to have you on and on a go-forward basis, we're really excited to have TD as part of the team over here. It's coming from across the board, Michael. That's the quick explanation. I mean, our existing Lending-as-a-Service programs are scaling significantly. We have adequate capital right now, as Clive outlined, and we're just optimizing across the board, investing in new marketing channels as we've discussed and expanding geographically as we add new states. And you've got Freshline, which, frankly, has gone -- has surpassed our expectations at rollout. So that's -- I mean, again, that's something we just started earlier this year. So it's pretty remarkable how well that's performed.

In the future, we may provide a little bit more color on the difference between the 2, but really, we look at it as one overall Lending-as-a-Service program. And they're both going really, really well. And I'd say Freshline is ahead of expectations for sure.

Okay. Great. And then another -- sort of another growth driver just with QuidMarket, obviously, very solid year-over-year growth as well and strong credit performance. We've previously discussed the sort of fragmented market in the U.K. And just wondering what -- if any constraints on further growth in the U.K., what the competitive landscape looks like and maybe a potential outlook there for the next 1.5 years or so?

Yes. At this stage, there's no real constraints outside of just our self-imposed constraints. I would say the market is very big, and it's growing. The competitive landscape, there hasn't been any major entrants over there. There's no dominant player. We are able to hit these growth rates while maintaining very prudent underwriting.

On balance, as we've talked about before, the risk-adjusted kind of spread over in the U.K. at this point is a little bit better because we're just able to keep really tight underwriting and cherry pick the very best consumers over there. There are shifts in the market overall, and we're growing with them. Very much like North America, we're expanding our acquisition channels and investing on the marketing side. Part of that's being reflected in our higher acquisition costs in the U.K., but that's yielding a lot of benefits.

And I think, year-over-year, certainly in Q3 and Q4, I expect our revenues to accelerate when you're looking at it relative to last year. So if anything, I think the growth in the U.K., given all the infrastructure that we built and invested in, expect the rate of growth to increase. So that's really good. And I think what we also started kicking off over there is our full kind of technology and underwriting analytics and platform integration. And once we get that fully integrated, which is really the last piece of the full integration, the integration so far since acquisition has been just excellent and ahead of schedule. This is the last piece that we've expected to integrate starting in the second half of this year. We're on pace to doing that, and that should fuel a step up in growth next year as well. So we're very excited about the U.K. market and everything's coming together.

Michael, great to have you on the call. I didn't address any of your questions, but I know it's your first time over here and we're delighted to have you guys as part of the research team over here. Thanks so much.

And your next question comes from the line of Jeffrey Fenwick of ATB Cormark.

I'll try to keep it brief here. I know we're late in the call. I wanted to circle back on the commentary around the application growth. I mean, it's obviously a real positive to have that continued growth there that you spoke to. We're certainly seeing the expense associated with that, and I know you're working to optimize it. But just wondering what you're thinking strategically about this year. If you're generating more apps, but your acceptance rate is sort of falling, one perspective might be that that's an inefficient spend. I think the other, maybe the flip side, and Clive, I think you may have spoken to this, is maybe changing your risk-based pricing and taking a bit more risk in the way the products you're offering out to the consumer. How do you think about that balance there versus tweaking the approach to generating those applications versus the opportunity to capture more of them into the business?

Yes. It's all really kind of very insightful questions. I think first and foremost, we speak about profitable growth. We don't just speak about growth. So we always have an eye on profitable growth. And I think -- and I hope if our investor community understands one thing, it's that we won't just grow for the sake of growth. We need to see -- we do need to see the right kind of credit performance. And as I've mentioned a couple of times as we move into the back half of the year, particularly, Q3, the early parts of Q4, there is, generally speaking, a little bit of elevated risk as our consumers are spending more with back to school, summer vacations, all of that kind of stuff. So we wanted to be proactive in tightening our underwriting.

And fortunately, because of the strong demand that we're seeing, we can be more selective as far as that's concerned. Just bear with me for a second over here. I just lost my train of thought in the middle of that conversation. Just bear with me, I'll be here.

And I guess the question was really around are you generating more than you need, right? You're not targeting the right customers maybe with some of the...

Sorry, sorry, sorry. I remember the second part of what I wanted to say. You're right insofar as marketing costs. As a result of that, you're all probably spending a little bit more on underwriting than what otherwise would be the case, save the acceptance rate would remain constant.

That said, if you look at our cost per acquisition on a new customer, it has actually declined quarter-over-quarter, and we expect it to continue to be refined. Part of that is because of exactly what I'm talking about, the refining of the underwriting. The other part of it is we've added 20 new marketing and distribution channels this year. I mean, that's an incredible amount of hard work by the marketing team in onboarding 20 new distribution channels. All of these distribution channels come on board. They need to be optimized, both from a marketing perspective and risk perspective as well. So when you go a level deeper, that's also happening.

So what that will probably translate to, not necessarily this quarter, but over the medium term, what it will probably translate to is higher acceptance rates as we get more familiar with these new marketing channels and even more optimizations and more refinement on the cost per acquisition on a go-forward basis. All of which is to say, I think that we've got lots of choice. And when you have lots of choice, particularly in this industry, you could be more selective, which is critical in driving profitable growth.

And there are no further questions at this time. I will now turn the call over to Clive Kinross for the closing remarks. Please continue.

I think we just broke a record today for our longest earnings call. So I certainly want to thank you all for attending our call this morning. I'd also like to thank our investors and our partners for their continued support of our vision of building a new world of financial opportunity.

And as always, I would like to extend a really, really big thank you to the Propel team in Canada, the U.K., and Puerto Rico for delivering these outstanding record results and achievements.

On that note, have an excellent day, and Operator, you may end the call.

Ladies and gentlemen, this concludes this conference call. Thank you everyone for joining. You may now disconnect.

Good afternoon, everyone. Welcome to the Annual General Meeting of Propel Holdings, Inc. Please note that this meeting is being recorded. I would like to introduce Devon Ghelani, Propel's Vice President of Capital Markets and Investor Relations and the moderator of today's meeting. Devon, please go ahead.

Thank you, Michael Angelo. Good afternoon, everyone. Thank you for joining Propel's Virtual Annual General Meeting of Shareholders. We have made the decision to hold this year's Annual General Meeting in a virtual-only format that is being streamed via live webcast. Our agenda today includes the formal business of the meeting that will be conducted by Sheldon Saidakovsky, our Chief Financial Officer. We will conclude with a question-and-answer period open to registered shareholders and duly appointed proxy holders, at which time Sheldon will be available to respond to questions. Please note that our remarks and responses to questions today may include our expectations, future plans and intentions that may constitute forward-looking statements. We would refer you to our most recently filed management's discussion and analysis and annual information form, which include a summary of the material assumptions as well as certain material risks and factors that could affect our future performance and our ability to deliver on these forward-looking statements. And with that, I would like to turn the meeting over to Sheldon to lead us through the formal business of the meeting.

Good afternoon. Thank you all for coming to Propel's Virtual Annual General Meeting of Shareholders. As Clive is away on business, Mr. Stein and the executive leadership team have asked me to assume the role of Chair for today's meeting and have delegated the authority to do so under the company's bylaws. During the formal business portion of the meeting, please note that only registered shareholders or their duly appointed proxy holders are permitted to vote or otherwise participate and ask questions in the meeting.

As this meeting is being held virtually via live audio webcast, we would like to clarify a few procedural matters relating to the conduct of the meeting. First, questions in respect of a motion can be submitted by a registered shareholder or duly appointed proxy holder using the question platform service of TSX Trust labeled Ask A Question. Please note that there will be a slight delay in the publication of the communications received. Number two, when asking a question, please indicate your name, which entity you represent, if any, and confirm that you are a registered shareholder or a duly appointed proxy holder.

Number three, questions will only be addressed during the question period at the end of the meeting, provided that questions regarding procedural matters or directly related to the motions before the meeting may be addressed during the meeting at the discretion of the Chair. Number four, voting on all matters will be conducted by a single electronic ballot. Voting will be open at the beginning of the meeting and available throughout the formal part of this meeting for all registered shareholders and duly appointed proxy holders. The moderator will indicate that polls are open by saying I now declare the polls open. A voting button will appear on the left hand of your screen once voting is open. Voting will close approximately 30 seconds after the conclusion of the formal business of the meeting.

Number five, if you have already voted by proxy, you do not need to vote again during the meeting as your vote has been recorded and will be counted by the scrutineer. Registered shareholders and duly appointed proxy holders who have already submitted a valid proxy and want to vote again by electronic ballot at the meeting will be revoking any previously submitted proxies and only the electronic ballots submitted today at the meeting will be counted. Number six, if we encounter any technical difficulties, please remain logged on, and we will resume as soon as possible. We will now proceed with the formal portion of the meeting. Before I begin, I want to thank our shareholders for their continued support. 2025 was a record year for Propel, with revenue of USD 590 million and adjusted net income of USD 67 million.

We also launched Propel Bank based in Puerto Rico and a new product, FreshLine in partnership with Column Bank. I'm incredibly proud of what the team has accomplished. We have had an incredible strong start to the year, and we are confident that we will meet our financial targets. As we said in our last quarterly financial update, we continue to observe strong consumer demand in the U.S., the U.K. and Canada. There are over 90 million consumers who are underserved by traditional financial institutions in the U.S., Canada and the U.K. At a time when many consumers are living paycheck to paycheck, consumers need access to best-in-market lending products. At Propel, it is our mission to serve these consumers and in doing so, to help them overcome the financial roadblock.

We have shown that we can not only create opportunity for our customers, but also for our team and for you, our shareholders. I'm incredibly proud of what we've accomplished. There is much more to come. Now let's turn back to the business of the Annual General Meeting. I call to order the Annual Meeting of the company's shareholders. With the consent of the meeting, I appoint Jay Vaghela, SVP, General Counsel and Corporate Secretary of the company, to act as Secretary for this meeting. In addition, and with the consent of the meeting, I appoint TSX Trust Company through its representative, [ Michael Angelo Kahn ], to act as scrutineer. The purposes of today's meeting are set out in detail in the management information circular dated April 27, 2026. Copies of the circular were made available to shareholders on or around May 1, 2026, together with the notice of the meeting and the form of proxy. Accordingly, unless there is any objection, I will dispense with the reading of the notice of meeting.

I have received a declaration prepared by our transfer agent, TSX Trust Company, indicating that either a notice of this meeting and the accompanying proxy materials or the notice and access notice as applicable, was duly mailed to shareholders of record as of April 15, 2026. I direct that a copy of the notices and circular and the declaration of mailing be kept by the secretary with the records of the meeting. The scrutineer's report indicates that shareholders holding in the aggregate more than 25% of the voting rights attached to shares entitled to be voted at the meeting are present in person or represented by proxy. As this meets the quorum requirements in the company's bylaws, we may proceed with the meeting.

A copy of the final report on attendance will be filed with the records of the meeting. I now declare that this meeting was properly called and duly constituted for the transaction of business. If you are a registered shareholder or duly appointed proxy holder, the electronic ballot will now be available on your screen. Please register your votes by pressing on the for, withhold or against buttons as applicable next to one, the name of each proposed director; and two, the resolution with respect to the appointment of MNP LLP as the auditors of the company. You will have time to vote throughout the formal part of the meeting.

I now declare the polls open. The first item of business is the presentation of the company's consolidated financial statements for the fiscal year ended December 31, 2025, as well as the auditor's report thereon.

These financial statements and auditor's report were made available on the SEDAR+ website under the company's profile and on the company's website on March 2, 2026. Noting no objection, I will dispense with the reading of the auditor's report. We will entertain any questions with respect to the company's consolidated financial statements in the question period following the formal portion of this meeting. We now move to the next item on today's agenda. The next matter to be acted upon is the election of 7 individuals to the Board of Directors. The term of office of the directors is from today until the end of the next Annual Meeting of Shareholders or until such time as their successors have been duly elected or appointed.

As described in the circular, the company has adopted a majority voting policy pursuant to which any director nominee who receives more votes withheld than or must submit his or her resignation promptly, and such resignation must be accepted by the Board other than in exceptional circumstances. The circular contains information on each of the 7 nominees recommended for election as directors. As outlined in the circular, the following directors have each been nominated to hold office until the close of the next Annual Meeting of the Shareholders or until his or her successors are duly elected or appointed. They are Michael Stein, Clive Kinross, Peter Monaco, Poonam Puri, Geoff Greenwade, Karen Martin and Peter Anderson. Each of the persons nominated has confirmed that he or she is prepared to serve as a director.

Each of them qualifies as a director under the provisions of the Ontario Business Corporations Act. Given that no nominations were received in accordance with the advanced notice provisions contained in the company's bylaws, I declare the nominations to be closed. I move to nominate the directors as set forth in the circular. If there is no discussion, as mentioned at the beginning of this meeting, voting today will be conducted by a single electronic ballot, and the polls are currently open, so you can vote on the election of each director as you see fit. We will now move on to the next item of business.

The next item of business is the appointment of the auditors of the company for the ensuing year and to authorize the directors of the company to fix the remuneration of the auditors. The Audit Committee and the Board have approved, subject to shareholder confirmation, the appointment of MNP LLP as the auditors of the company. I move that MNP LLP be appointed auditors of the company until the end of the next Annual Meeting of Shareholders and that the directors be authorized to fix their remuneration. If you haven't voted already, please do so now. After 30 seconds, voting will be closed and you may no longer be able to submit a vote.

The time is now 1:11 p.m. Eastern Time, and the ballots will close on all resolutions in 30 seconds.

[Voting]

Voting is now closed. I would now like to ask that the scrutineers compile the report regarding the results of voting on all business matters. We will wait a few minutes while the scrutineers compile their report.

While the scrutineers are completing their report, I will ask whether there is other formal business to be brought before the meeting. As there is no other business to be brought before this meeting, I have received the scrutineer's report and declare the following: -- each of the 7 nominees have been elected as directors of the company to serve until the end of the next Annual Meeting of Shareholders or until their successors are elected or appointed; and two, MNP LLP is hereby appointed as auditor of the company for the ensuing year, and the Board of Directors is authorized to fix their remuneration. Final voting numbers will be posted on SEDAR+. If there is no further business to be brought before this meeting, I move that the formal portion of today's meeting be concluded. I declare the formal portion of this meeting closed. We will now move on to the question-and-answer period. I now turn the meeting over to the moderator.

Thank you, Sheldon. As mentioned at the beginning of the meeting, if you have any questions, please use the question feature of the virtual meeting platform and indicate your name, the entity you represent, if any, and confirm you are a registered shareholder or a duly appointed proxy holder. Please limit your questions to topics related to today's subject matter and keep your questions short and the same. We may consolidate questions that are repetitive or overlap in the interest of all those logged on today. We'll now give attendees a brief moment to type in their questions if you have not done -- there being no questions, we are now concluding the question-and-answer portion of this meeting. I will pass the call back to [ Michael Angelo ].

Thank you all again for joining us this afternoon. You may now disconnect.

Good morning, everyone. Welcome to Propel Holdings First Quarter 2026 Financial Results Conference Call. As a reminder, this conference call is being recorded on May 5, 2026. [Operator Instructions].

I will now turn the call over to Devon Ghelani, Propel's Vice President, Capital Markets and Investor Relations. Please go ahead, Devon.

Thank you, operator. Good morning, everyone, and thank you for joining us today. Propel's first quarter 2026 financial results were released yesterday after market close. The press release, financial statements and MD&A are available on SEDAR+ as well as on the company's website, propelholdings.com.

Before we begin, I would like to remind all participants that our statements and comments today may include forward-looking statements within the meaning of applicable securities laws. The risks and considerations regarding forward-looking statements can be found in our Q1 2026 MD&A and annual information form for the year ended December 31, 2025, both of which are available on SEDAR+. Additionally, during the call, we may refer to non-IFRS measures. Participants are advised to review the section non-IFRS financial measures and industry metrics in the company's Q1 2026 MD&A for definitions of our non-IFRS measures and the reconciliation of these measures to the most comparable IFRS measure. Lastly, all dollar amounts referenced during the call are in U.S. dollars unless otherwise noted.

I'm joined on the call today by Clive Kinross, Founder and Chief Executive Officer; and Sheldon Saidakovsky, Founder and Chief Financial Officer. Clive will provide an overview of our Q1 results and observations on the overall economic environment before Sheldon covers our financials in more detail. Before we open the call to questions, Clive will provide an update on Propel's growth strategy for the remainder of 2026.

With that, I'll pass the call over to Clive.

Thank you, Devon, and welcome, everyone, to our Q1 conference call. We've had a very strong start to the year, delivering solid growth alongside stable credit performance. When we last spoke, we said we would deliver a strong quarter of growth and performance. That's exactly what we did. Total originations funded reached a Q1 record of $199 million, up 30% year-over-year, with new customer originations growing by nearly 40% in the quarter. This strong demand drove record ending CLAB of $593 million, an increase of 23% from last year. The growth in CLAB contributed to record revenue of $166 million, up 20% year-over-year and record adjusted EBITDA of $42 million. Adjusted net income was $23 million, representing a modest decrease from last year.

This performance was supported by continued strong demand and the ongoing expansion of our platform, including entering new states, launching new products and further expanding and diversifying our marketing partners and channels. Importantly, this growth was accompanied by stable credit performance. Provisions for loan losses were 45% of revenue, reflecting a significant improvement from Q4 and excellent performance for a first quarter period. The actions we took in the second half of 2025 to refine our underwriting, along with the expansion of marketing partnerships are reflected in our results today, positioning us well to continue to drive profitable growth on a go-forward basis.

Turning to the macroeconomic backdrop and the performance of our regional business units. In the U.S., the consumer remains resilient. Unemployment remains low at 4.3% in March and employment remains strong across the sectors where many of our customers are employed, including health care, leisure and hospitality, warehousing and transportation. At the same time, inflation in essential categories is somewhat elevated, partially driven by rising energy prices and access to credit continues to tighten. In this environment, we are seeing a continued shift in consumer behavior.

More consumers are migrating into non-prime segments of the credit spectrum as prime and near-prime lenders continue to tighten their underwriting and more consumers are seeking credit, especially personal loans. These dynamics continue to support demand for our products, leading to the almost 40% year-over-year growth in new customer originations this quarter while reinforcing the importance of maintaining a disciplined approach to underwriting. Looking at the performance of the core U.S. business, which represents a significant majority of our revenue, the strong growth and stable performance we are seeing is a function of a resilient consumer, combined with our AI-driven underwriting platform and the continued expansion of our products, geographies and marketing channels.

Turning to Lending as a Service. The program continues to scale meaningfully, supported by strong demand from capital partners and an increased addressable market. In the U.K., stable employment and real wage growth are underpinning strong demand and credit performance. We continue to be very pleased with the performance of all aspects of the U.K. business this quarter, including record originations and expect that growth to accelerate even further as the year progresses. Canada presents a somewhat different macroeconomic backdrop with modest economic growth and higher unemployment than the U.S. Even in this environment, our Canadian business grew by 34% year-over-year and delivered strong credit performance, including the lowest first quarter delinquency levels we have observed, reflecting the impact of our disciplined underwriting approach.

That said, we seem to be compared to another Canadian nonprime lender, and I want to take a moment to clarify the role Canada plays in our business and the many ways we are different. While we are proudly headquartered in Canada and listed on the Toronto Stock Exchange, Canada represents approximately 2% of our overall revenue with the U.S. and the U.K. accounting for the remaining 98%. This geographic diversification is a core strength of our model. As a result of this diversification, our growth profile, customer base and credit performance are driven by substantially different dynamics than lenders concentrated solely in the Canadian market.

Even within Canada, our model is fundamentally different. First, we operate as a fully digital AI-driven platform without a branch-based model. Second, to be focused exclusively on unsecured lending and do not participate in secured or point-of-sale financing. And lastly, we have a highly experienced and aligned leadership team with our co-founders continuing to lead the business and maintaining significant share ownership. This combination of discipline, technology and experience has enabled us to scale across multiple markets, launch new products, expand our partnerships, build the bank and deliver consistent profitable growth over time.

These dynamics have driven revenue growth at a 43% CAGR and adjusted EPS growth at a 64% CAGR since 2019, while consistently paying a dividend, including 11 consecutive quarterly increases since Q4 2023. Reflecting this continued performance and strong financial position, our Board has approved another increase to our quarterly dividend to CAD 0.96 per share on an annualized basis, representing a 7% increase. I will speak more about our growth plans and the outlook for the rest of 2026.

But first, I will pass the call over to Sheldon.

Thank you, Clive, and good morning, everyone. We entered 2026 with strong momentum across the business, building on the acceleration we saw in the latter part of Q4. As is typical, Q1 benefited from a robust U.S. tax season, which supported strong customer repayment behavior. At the same time, we and our bank partners continue to observe strong and sustained consumer demand across our operating brands. Against this backdrop, total originations funded increased by 30% year-over-year to $199.3 million, representing a record for a Q1 period. This growth was driven by both new and returning customers.

Notably, new customer originations increased by approximately 37% year-over-year and represented a higher proportion of total originations compared to recent periods. This reflects strong demand and continued expansion of our acquisition channels and further geographic reach. Growth was further supported by strong contributions from both QuidMarket in the U.K. and our Lending-as-a-Service program in the U.S. Lending-as-a-Service revenue increased by approximately 114% year-over-year to a record $5.9 million, reflecting continued expansion across existing bank partners, increasing origination volumes and expansion into additional states.

In addition, the MoneyKey Bank Service Program continued to experience significant growth, reflecting the ongoing transition from legacy products, further geographic expansion and the addition of new marketing partners and channels. The strong originations during the quarter drove ending CLAB to a record $592.7 million, an increase of 23% year-over-year and supported revenue growth of 20% to a record $166.1 million. The annualized revenue yield was 112% in Q1 compared to 115% in the prior year period. The year-over-year decrease primarily reflects the impact of tightening underwriting actions taken in the preceding quarters leading into Q1, which reduced new customer volume and shifted originations towards lower-yielding and higher credit quality customer segments. These dynamics were not present to the same extent in the period leading into Q1 2025.

On a sequential basis, the revenue yield increased from the low point of 109% in Q4, reflecting the normalization of yield following the timing impact of originations in Q4 as well as the growing contribution from higher-yielding programs, including QuidMarket, the MoneyKey Bank Service Program and the revenue from our Lending-as-a-Service program. Going forward, these same factors, combined with our anticipated new customer growth are expected to further increase our overall revenue yield. Overall, we're pleased with the growth achieved in the quarter and the continued expansion of our platform across products, geographies and customer segments.

Turning to provisioning and charge-offs. As we outlined when we reported our Q4 earnings, credit performance improved meaningfully in Q1, reflecting the impact of our disciplined underwriting as well as the strong U.S. tax season experienced during the quarter. Supported by our AI-powered underwriting, provision for loan losses was 45% of revenue in Q1 2026, a significant decrease from 56% in Q4 2025. This level reflects healthy credit performance in the portfolio is consistent with seasonal trends and is in line with our expectations for a first quarter period. Additionally, performance across our non-U.S. businesses remained strong. Both QuidMarket in the U.K. and Fora in Canada continued to contribute positively to overall portfolio performance during the quarter.

Net charge-offs as a percentage of average CLAB was 12.6% for the quarter. This reflects strong credit performance is well within management's targeted range and is consistent with our expectations for the portfolio. Overall, credit performance in the quarter was strong and aligned with our expectations. One month into Q2, credit performance remains strong, and the portfolio continues to be well positioned as we move through 2026.

Turning to profitability. Adjusted net income for the quarter was $23 million or $0.54 per diluted share. This represents a modest decline compared to Q1 2025, reflecting ongoing investment to scale the business and continued significant new customer growth momentum from the end of Q4. Adjusted return on equity was 34% for the quarter, demonstrating strong returns to our investors and our ability to efficiently utilize shareholders' capital. The quarter reflects the combination of normalized credit performance, increased marketing investment to support strong new customer growth and continued investment in scaling the platform.

Credit performance in Q1 2026 returned to more typical levels and is strong and in line with expectations. At the same time, we continue to invest in key growth initiatives that position the business for continued expansion. These include the ongoing operationalization of Propel Bank, operationalization of Propel Bank, my apologies, the continued scaling of our Lending-as-a-Service program, the rollout of Freshline in partnership with Column and ongoing investment in expanding our marketing platform and AI-driven capabilities.

Turning to acquisition and data expenses. These increased by approximately 50% year-over-year, driven by strong origination volumes for a Q1 period and in particular, the growth in new customer originations. Cost per funded origination was approximately $0.12 per dollar funded and cost per new customer funded origination was approximately $0.27 per dollar funded, both increasing during the quarter. This reflects several deliberate actions to support long-term growth.

First, we continue to increase investment in organic and direct marketing channels, including paid search, SEO and direct mail, which require higher upfront spend, but historically deliver stronger credit performance and higher unit lifetime value. Second, we expanded our marketing footprint through the addition of new partners and channels, including initiatives launched in the back half of 2025. These require a period of testing and optimization for reaching target efficiency levels. Over time, as these channels mature and scale, we expect acquisition efficiency to improve and cost per funded origination to decline. Third, we maintained higher underwriting and data costs to support higher credit quality originations and expansion across a broader range of customer segments. Lastly, the continued growth of QuidMarket also contributed to the overall increase.

As a reminder, this program carries a higher cost per funded origination but benefits from lower loss rates on balance. Although higher than last year, the current level of acquisition and data costs support strong unit economics and drive significant growth both over the near and longer term. With respect to other operating expenses, these increased modestly as a percentage of revenue to approximately 17% in Q1 from approximately 16% in Q1 last year. This reflects increased processing, technology and program servicing costs to support higher volumes, particularly within our Lending-as-a-Service program, along with the continued build-out of infrastructure to support the rollout of recent initiatives across the platform.

Over time, we expect this percentage to decrease as the business scales and benefits from operating leverage. Our profitability benefited from a lower overall cost of debt, which declined to 10.1% in Q1 from 12.2% in the prior year period, supported by improved credit facility terms and a more favorable interest rate environment. Overall, the quarter reflects a combination of meaningful growth across our existing and new programs, normalized and strong credit performance and the continued investment in scaling our programs.

Turning to Propel's capitalization. We continue to maintain a strong financial position, supporting the continued expansion of our programs and growth initiatives. At quarter end, we had approximately $108 million of undrawn capacity across our credit facilities with a debt-to-equity ratio of 1.2x, reflecting a well-capitalized balance sheet and significant financial flexibility. Following the quarter, we upsized our Fora Credit facility to CAD 40 million and reduced the cost of capital on the facility by approximately 200 basis points. further enhancing our funding flexibility and lowering our overall cost of capital. This facility is supported by a top-tier Canadian chartered bank and is a testament to the strength of our platform and Propel overall. We believe our strong balance sheet, disciplined capital management and growing earnings profile position us well to continue investing in growth while delivering increasing returns to shareholders.

I'll now turn the call back to Clive.

Thank you, Sheldon. We continue to see strong momentum across the business with record ending CLAB ending the quarter and now well into Q2, credit performance remains stable and in line with seasonal expectations alongside continued robust consumer demand. We remain focused on delivering disciplined profitable growth in Q2 and beyond. As we look ahead, scaling our growth initiatives remains a key priority. In the U.S., we launched Freshline in March in partnership with Column and have already expanded into several states with further expansion planned in the coming months. This product extends our reach into a new segment of the credit spectrum and meaningfully increases our addressable market.

To support this growth, we secured $210 million in new forward flow commitments from 2 leading North American financial institutions during the quarter. These commitments reflect continued confidence from our capital partners and support our ability to scale originations in a disciplined manner. Our CreditFresh Lending as a Service program also continues to grow, driven by strong performance and returns for our capital partners, which is resulting in increased commitments and expanding origination capacity across the platform. We are also continuing to expand our core U.S. business, entering new states and adding marketing and distribution partners to broaden our reach across the credit spectrum.

Internationally, our U.K. business is executing against an ambitious growth strategy by expanding its product set, diversifying distribution channels and building new partnerships. We expect growth in the U.K. to accelerate in the quarters ahead. Supporting many of these initiatives is the continued development of Propel Bank, which is already supporting our U.S. operations and providing a long-term strategic flexibility as we scale. Banking license expands our capabilities and creates additional options for growth over time. We will share more as we continue to build out the bank.

Lastly, AI continues to be a core driver of our performance and a key differentiator for Propel. We're already seeing the benefits of our investments with meaningful efficiency gains across our operations and the ability to scale originations ultimately without a corresponding increase in costs. This is not theoretical. This is happening today across the business. We have further accelerated the next phase of our AI operations strategy with the rollout of AI voice agents. These agents are designed to handle the majority of our customer interactions, resolving routine inquiries and allowing our teams to focus on more complex, higher-value engagements. With over a decade of proprietary data, a purpose-built platform and a track record of operating an AI-driven business, we believe we are not only well positioned but leading in the application of AI across credit and financial services.

Over the past several years, we've seen meaningful shifts from the pandemic to rising inflation to global trade tensions and more recently, rising energy prices. At the same time, we are seeing a continued shift in the consumer landscape. TransUnion released data last week that showed a continued bifurcation of the credit markets with consumers moving out of prime and into super prime or nonprime segments. At the same time, many lenders are focused on extending credit to the highest credit quality consumers, only furthering the credit access divide. This is a so-called K-shaped economy. We see this clearly not just in economic data, but in our own data and through our customers every day. We do not believe this is a short-term dynamic, but a structural shift that is expanding the population of underserved consumers across our markets.

We are not planning just for the next quarter, but for years to come. That is why we are meeting this demand head on by expanding into new geographies, adding new distribution partners and launching new products designed to serve a broader segment of the credit spectrum. At the same time, our platform is built to thrive in this economy. With nearly 15 years of experience operating through cycles and with AI-powered underwriting and operations, we are able to respond quickly to changes in the environment while maintaining disciplined credit performance and delivering consistent top and bottom line growth.

And it's not just our technology, it's our team. I'm incredibly proud of how they performed. The commitment, energy and focus they've shown has been inspiring, and it's this character that underpins our company. That focus and discipline has enabled them to consistently deliver record results, reflecting the culture we've built over the past 15 years. and our efforts have not gone unnoticed.

Propel has been named to the Financial Times America's fastest-growing Companies 2026 list, and we received recognition as Personal Finance Company of the Year at the 2026 FinTech Breakthrough Awards. Propel U.K. has also been named a finalist at the 2026 Credit and Collections Industry Awards by Credit Connect. These honors reflect the hard work and innovation happening across our organization. With our strong foundation and the momentum we are seeing across the platform, we are confident in our ability to continue delivering profitable growth and long-term value for our customers, partners and shareholders.

With that, operator, you may now open the line for questions.

[Operator Instructions] And your first question comes from Matthew Lee with Canaccord Genuity.

When we look at the cost profile you have over the last couple of quarters, it feels like there's been a bit of margin tightening that I presume is related to the emerging growth initiatives. If we strip that out, is it fair to assume the core business margins are improving as your business scales?

Matt, thanks for the question. The quick answer to that is, yes, on the core business. The margin kind of decrease that you're referring to is related primarily to a lot of the new initiatives that we're investing in. First of all, we're building out our operational infrastructure to support Propel Bank, where we now have, I believe, 16 employees now in Puerto Rico operating on the ground over there, and that's a significant initiative that's going to drive long-term growth for the company for many, many years to come.

In addition, our Column Bank partnership, that's been obviously a very big initiative for us as well. As we've spoken about, it's taken a lot of -- some infrastructure to build that out as well. And we're investing in Propel in the U.K. The growth that we're seeing over there has been significant. We're doing double the amount of -- more than double the amount of originations today than we were doing about a year ago, and we're positioning ourselves for even more accelerated growth as we continue through 2026.

We're also investing a lot in AI, which is starting to yield significant benefits and efficiencies and productivity across the organization. Our auto decisioning of applications is up and at record highs. Loans per agent productivity is increasing, whereas Clive mentioned, agents are now specifically handling more complex interactions and leaving the rest to -- effectively to AI. We've launched virtual voice agents that are handling more and more interactions. And there's agent assistance that's helping agents in real time as they're dealing with all kinds of matters across all consumers that are contacting the company. So these are big investments into the business that we've been doing over the past quarters. And as I've said in prior calls, there will be an inflection point sometime later this year where we're going to start seeing the efficiencies and cost reductions really kick in and start outpacing any additional investments that we're making.

The other thing that I would note is Lending-as-a-Service. It's obviously growing significantly by in excess of triple digits. And that growth is only going to accelerate for the remainder of the year. Lending-as-a-Service is currently tracking their margins, if you look at the MD&A at about 30%. The margin profile of Lending-as-a-Service as it gets to scale is going to be in about the 40% to 50% range. So we're going to get significant operating leverage from that standpoint.

And finally, I will mention the acquisition costs, which we've talked about for the past couple of quarters. We made deliberate investments in expanding the top of the funnel so that we can remain prudent from an underwriting perspective, but see a lot more applications as we support the growth across the U.S. and growth across all of our programs, existing and new. So that's a deliberate investment that we're making. We've increased our acquisition cost, but that's generating an outpaced amount of new originations. We hit a very high new customer origination percentage this quarter, higher than we have done for many, many quarters now. So we're excited about that.

And the acquisition -- the increased acquisition spend is paying off not only right now, but will set us up very, very well for the quarters ahead and beyond 2026. So to really kind of back to your initial question, we are seeing the leverage on the core business. A lot of the increased spend is on the new initiatives and setting us up for the future. But you will start seeing operating leverage and margin expansion as we head through the back part of 2026 and significant expansion in 2027 and beyond.

That's super helpful. And then maybe I think you gave some items earlier in the call that are benefiting yield. In your view, have we kind of hit an inflection point here? And then maybe talk a little bit about how you guys are balancing credit quality versus yield.

Yes. Revenue yield has picked up from Q4. Let me just start with that. And if you track kind of what happened over the course of 2025, you saw the revenue yield start kind of coming down quarter-over-quarter and specifically in Q3 when we started tightening our underwriting. Now what happens when we tighten our underwriting, as you know, and we've spoken about, we decreased the volume of new customer originations, which brings down our yield. And also, we focus our originations to higher credit quality and lower-yielding consumers. So that, in addition, lowers our yield. And then we had a timing impact in Q4 as well. So you saw the yield come down to lower levels in the back part of last year.

What we did once we started ramping up originations towards the end of Q4 and over the course of Q1, you see the uptick in yield to better levels and more expected levels, especially given the expansion of new customer originations. What's really driving the increased yield and the fact that it will increase even further in future quarters is, first of all, again, new customer origination expansion, given all of our investments across the marketing channels and partnerships, will continue driving a high rate of new customer acquisitions, boosting our yield.

You may have also noticed our MoneyKey Bank Program has significantly increased both in Q4 and in Q1 as well. And what's happening over there is we're migrating our legacy MoneyKey Program states over to the MoneyKey Bank Service Program. And what that's enabling us to do is increase our addressable market significantly by unifying a lot of our acquisition strategies, our underwriting, having a more optimal product, entering new states and applying marketing channels that we hadn't had access to before, for example, direct mail and organic. So I will say in Q4 and Q1, our MoneyKey Bank Service Program on an equivalent basis has seen about a 50% increase in volumes relative to the MoneyKey Legacy Program. And the MoneyKey Program in general has higher-yielding products than CreditFresh. So that's going to boost yield as well.

Then we've got Lending-as-a-Service that's going to ramp up. And as I said, it's going to continue accelerating beyond Q1 for the for the remainder of the year. And we've got QuidMarket too, that's a higher-yielding product. So previously, I would have said yield should be between 110% and 115% on a steady-state basis. I would expect in Q2 and beyond, all of these initiatives are going to drive yield above 115%, which is great for the business. It's going to create additional margin and position us very well in terms of addressing a much larger market and additional states as well.

Your next question comes from Jeff Fenwick with ATB Cormark.

I wanted to start off just asking you about CreditFresh. Obviously, it's still the largest business. I know there's a largest segment here for you. It's obviously a lot of other things growing in the background now. But CreditFresh, for the reasons you've described, it didn't grow a lot over the last couple of quarters. But what's the outlook for that particular product? Do you feel like that's maybe reaching a point of maturity and the emphasis really is on these other new growth opportunities? Or how do we think about that particular product going forward?

Yes, Jeff. Nice to hear you this morning. And I think all areas of our business are really firing on all cylinders. It's fantastic, especially after a couple of challenging quarters last year. We really buckled down and we really focused in and are back to growth, high-growth mode with an environment that's supporting very stable credit performance. And we're seeing that across the board, including with, as you mentioned, the core CreditFresh portfolio. As I mentioned in my prepared remarks, new customer originations grew by almost 40% in the quarter, and that doesn't even include Lending-as-a-Service, where we grew by triple-digit growth. If you include those originations, your year-over-year new customer volume growth is probably closer to 50%.

So we saw a lot of that growth on the CreditFresh side as well. We took deliberate actions to add new marketing channels and marketing partners towards the end of last year and into Q1 of this year. We've added 8 discrete partners. We don't announce all of them one by one, but 8 discrete partners over that period. Many of those partners are driving a lot of the growth that we're seeing on the CreditFresh side. Bear in mind as well, and I think I've already mentioned this as part of my prepared remarks as well, we are seeing a lot of those prime and new prime customers being pushed out of that market and downstream towards the Propel products, which is supporting both CreditFresh and as Sheldon just elaborated on now, even more so the MoneyKey Bank Service Program. But we're certainly seeing growth on the CreditFresh side. And the good news about the growth that we're seeing over there -- it's from customers who typically have a better credit profile than the customers that we've served historically.

So first payment default rates on these consumers is very, very strong. All the while our existing book, and this isn't only referring to the CreditFresh portfolio. It's actually referring to all the portfolios. Existing customer credit performance has also been right in line with expectations, if not slightly better than expectations. That's being driven by consumers tightening their belts. We're seeing it in our data where credit utilization on lines is lower than what otherwise may be the case as these consumers are thinking harder about where to spend. We're seeing lower drawdowns by these consumers, higher paybacks by these consumers, all the kind of behavior that we'd like to see, while at the same time, the growth is also being fueled by higher quality new customers, both in CreditFresh, MoneyKey Bank Service and right across.

And maybe we could step back a little and because you have so many of these different growth opportunities in front of the firm, like if you were to sort of bucket them in terms of what do you think is going to be the most impactful in the next 12 months versus maybe 24 months out and maybe something like the Propel Bank is going to take longer to gestate, like what could be the most impactful in the next 12 months from your perspective versus some of the things that you're gestating for a little further out on the horizon?

Look, I think Sheldon did an excellent job really honing in and double-clicking on what's going on with the MoneyKey Bank Service Program. We've really expanded the marketing and distribution channels to that initiative. The legacy MoneyKey state license states have transitioned across to the MoneyKey Bank Service Program. And that's going to fuel a lot of growth because those channels -- those states historically didn't have all of the marketing channels pointed to them. They're now getting access to all of the legacy marketing channels and marketing partners. In addition to that, there's organic growth initiatives that were just not going to those states historically. So they're now benefiting from all of that incremental marketing spend. In addition to that, there's a host of new states that we've added to the MoneyKey Bank Service Program.

So I expect that growth to be quite outstanding this year. And not only is it going to be outstanding growth, but it's also, as Sheldon articulated well, is also going to lead to increases in the average revenue yield. In addition to that, it's coming off of a much lower base. You saw triple-digit growth on the Lending-as-a-Service side, which is obviously outstanding. Still, Lending-as-a-Service is a small part of our business. I think it comprised roughly 4% of our revenues in Q1 and if anything, we've said that we expect that to be approaching 10% by the end of the year of a business that's already in fast growth mode. So as you could expect, that's going to also continue to accelerate its growth trajectory.

And the other area that we said we're going to see accelerated growth is in our U.K. business. It's performing exceptionally well and expect that to grow tremendously as well. All of which is to say there's a lot of growth drivers in the business. We're really, really pleased really with all aspects of the business. And hopefully, Jeff, I highlighted over there some of the areas where we will see outsized growth for the remainder of the year.

That's very helpful. And then I mean just one last question to put it together is, I think, Sheldon, you were saying for the back half of the year, things should begin to accelerate on maybe a bottom line basis? Like are you guys confident you can drive some EPS growth this year? Or is this something as we look forward more so into '27 that this begins to come together to really begin to accelerate the earnings trajectory of the business?

Yes, we're absolutely confident that the earnings growth will accelerate through the year. And we've put a lot of the pieces in place, Jeff, as we spoke to and particularly in the back half of last year that we benefited from tremendously here in Q1. We've invested in our marketing platform and that's generating a significant increase in new customer originations. I mean, as we said in Q1, our new customer originations grew by almost 40% year-over-year, more than our total originations funded as a whole. So those investments are certainly paying off.

I think the second part is the increased revenue yield will create additional margin expansion for the business in general. I think the provision for loan losses, as we said on our call in early March when we reported our year-end earnings, we brought that right back in line. If anything, we performed even better in Q1 than we anticipated, slightly better. And I would say that we're 1 month now into Q2 and credit performance is going very well and right on track. So we've made the investments. We've recalibrated parts of our portfolio, which gives us a lot of confidence and the data that we're seeing today that's going to lead to continued earnings expansion.

I just want to layer on a little bit. And Sheldon, you did a great job of articulating the excellent credit performance we're seeing quarter-to-date. But the growth also continues. Last Thursday and Friday were our highest volume origination days of the year with the exception of January 2, when we were deep in the middle of the high season. The weekend that we've just come out of was our highest originations growth over the year. And yesterday was a phenomenal day as well from an originations perspective. I think our third highest day following January 2. So we're seeing really strong growth, coupled with stable performance in line, if not slightly better than expectations.

But the other thing I'd like to just layer on as well, Jeff, is that if you recall, our guidance contemplates roughly 50% growth in our bottom line relative to 2025. And as Sheldon mentioned in his comments, Q1 was slightly better than our expectations. So if anything, we're tracking ahead of that. We're really pleased with what we're seeing in the overall market. And what you will start to see as the year continues to unfold is more and more separation in 2026 compared to 2025 from quarter-to quarter-to-quarter. So you'll see the separation in Q2. And obviously, it will be way more pronounced in Q3 and Q4, respectively, all of which we expect to deliver very robust top and bottom line growth, including very robust growth in our earnings per share.

Your next question comes from Andrew Scutt with ROTH Capital Partners.

Congrats on the strong results. One kind of just high-level question for me. So over the last couple of years, you guys have added a bunch of programs between Fora, QuidMarket, all these Lending-as-a-Service programs and have reached new geographies, different customers through all these initiatives. Can you kind of help us frame over the last maybe 12 to 36 months, how much really your addressable market has grown? And then maybe how much more runway you think you have to access more additional customers, maybe if you can talk to both in the U.S. and then abroad?

Yes. Let me take that a few ways, Andrew. Interestingly enough, TransUnion came out with an excellent report last week, which highlighted a few things. First of all, personal loan applications hit the highest level in Q4 of last year relative -- I think the last time they were there was around Q2 of 2022. So personal loan applications, just as a rule are growing tremendously. In addition to that, and I mentioned as well in my prepared remarks, you've seen this bifurcation between super prime and subprime. The segments of the market where you've seen declining originations are in your near prime and prime segments of the market. And all of those consumers who might otherwise have gotten a loan ahead of us are being pushed into our segment of the market, all of which is to say the overall addressable market at a macro level is growing in a really meaningful way. That's not discrete to Propel, that's to everybody who operates in our segment of the market. And obviously, being a leader will capitalize on those trends.

So that's the first important thing, and we're certainly seeing the same thing in our own data. We're seeing record numbers of applications. And while I speak about the excellent growth that we're seeing on the new customer side. Bear in mind, we're doing that with a tight underwriting posture as well, meaning the growth could even be more if we and our bank partners decided to open up a little bit, but that's not our posture at the moment. So that's number one. Number two, we were historically in about 31, 32 states in the U.S. What we're doing today is through our Lending-as-a-Service programs, through our recently performed -- recently launched Propel International Bank, we're creating a pathway to develop a real 50-state strategy. And many of the states that we haven't been in historically are some of the biggest, most underserved states in the U.S. So you could think of that as driving lots of incremental growth as well and expanding our geographic reach.

The third thing that I would mention is we're launching more and more products, for example, the Column Bank to serve different segments in the underserved market, which also expands our overall market share. And finally, there was a -- I just remember what the final one was. There's lots of marketing and distribution partners that we're adding to the mix as well. I said that we've already added 8 year-to-date, which is really increasing the volume at the top of the funnel. I could tell you we're in advanced discussions with additional new marketing channels and marketing partners who we believe can continue to really move the needle at scale. So you put all of those elements in, if anything, we expect the growth to accelerate on a go-forward basis for the remainder of the year and continue to grow in a very meaningful way in 2027 and beyond.

Yes. Sorry, I would just add one more element to that is it's in some ways, a similar story in the U.K. as well. We're -- I was actually in the U.K. a couple of weeks ago, and we met with a number of potential marketing partners and our bureaus that we work with. We're accessing new data and products to help with our analytics. We're expanding our distribution channels over there, and we're working on product enhancements and working on rolling out additional products. So in the U.K., as we're doing in the U.S., also, we're expanding our addressable market significantly. And what you're going to start seeing in the U.K. is accelerated growth as well as we head further through 2026.

Great. Well, I appreciate the color. Congrats on a tremendous first quarter, and you guys have a lot of exciting opportunities ahead.

Really appreciate it. Thank you, Andrew.

Your next question comes from Suthan Sukumar with Stifel.

Congrats on a very strong quarter here. For my first question, I want to touch on Lending-as-a-Service. So you guys now have north of $200 million in capital committed. How should we think about the rollout of the Freshline, Column partnership this year? And do you anticipate additional capital commitments this year? Or is the focus really on -- it's executing on what's in hand first?

Thanks for a great question over there. And just going back to the Lending-as-a-Service or the forward flow programs in 2025. I think one of the constant messages that we delivered last year was that the overall demand for these loans far exceeds our ability to fund them because we didn't have the committed capital last year. And that wasn't a complete surprise to us. There were new programs and new initiatives, and we were out there onboarding new purchases. And that, as you can imagine, is a relatively long sales cycle or onboarding cycle from our perspective. As we turn the calendar on the CreditFresh side, we mentioned on our last call, that demand from capital partners for the CreditFresh forward flow certainly exceeded finally the demand for the loans.

So capital part, we have more than enough capital partners. In fact, it's been a very challenging exercise turning several capital partners away over there. Why are there so many of them that all of a sudden want to come on board because the returns have been excellent. As with everything we do at Propel, we told these investors the types of returns that we thought they would get. And if anything, we've just exceeded those, which have led to lots of capital on that side.

And then turning to the Freshline side, $210 million in commitments is more than enough capital to drive the growth of that program for the next 2 to 3 years. All of which is to say the capital is committed on the forward flow side. Now what we need to do is we need to make sure we're growing that business in line with expectations. I've said a few times that we expect those revenues to be approaching 10% of our overall revenues by Q4. And you could just look at our model and see that by Q4, we expect to deliver well in excess of $200 million in revenue. So you could calculate approximately what we expect that total to be by the end of the year.

But speaking specifically on the Freshline or on the Column side, it's a new product for us. It's a new market that we're tackling. And in light of the fact that it's a new market, we obviously like to go a little bit slower at the beginning and have added additional states because there are discrete differences from one state to the next. But I could tell you that our growth over there, we've just come out of April. Our April volume numbers were certainly ahead of plan for what we thought we would do over there. And obviously, that plan underpins the overall annual budget or annual guidance that we provided and with 3 or 4 days into May, and we're certainly ahead of column from that perspective as well. But again, it is a gradual rollout. You could hear from my comments how focused I am or the team is on the day-to-day over there. It's not only with the column buildout, it's right across the business. There's a focus and commitment across the board at Propel that's leading to driving these outstanding results.

Great. That's excellent color. The second question for me is on the U.K. market and market specifically. Just it looks like very impressive execution in that market and the color provided earlier in the call suggests visibility on continued momentum appears solid here. What is the opportunity to expand your business there inorganically? Or is organic still the best strategy to increase your market share?

Yes. Thanks for the question, Suthan. We're -- our focus post acquisition was to build the infrastructure over there organically and make some key investments. And as I was saying, initially, it was to expand our marketing partnerships invest into the tech platform and start benefiting from some of the automation and efficiencies that we realize here on this side of the pond and also just look employ capital. The business prior to us acquiring them was constrained from a balance sheet perspective. So obviously, our ability to come in and encourage the team to grow volumes and grow the platform in general has been a huge benefit. What we haven't done yet fully is integrate our tech platform and our AI machine learning capabilities over there in the U.K.

So I would say that, that's really the next key focus in addition to continuing to expand the top of the funnel leveraging our kind of scale and our relationships here at Propel Global to open new relationships for the U.K. team. So if you look at the current strategy, it's to integrate technology further, expand marketing partnerships and continue getting more and more efficiencies and applying our data analytics capabilities. And finally, expanding our product suite. So we're looking to launch a couple of product enhancements and new products under the QuidMarket brand into the U.K. hopefully, by later this year.

There are more opportunities in the U.K. I mean it's an outstanding market, as I've spoke about before. It's vastly, vastly underserved. And that's part of the reason we're able to get such incredible unit economics over there. We're still -- even though we're growing volumes at more than 2x of what we were doing last year, we're still really picking the cream of the crop and funding incredibly high-quality consumers. So our provision for loan losses in the U.K. is on balance lower than it is in the U.S. market. So there's huge opportunity to expand from that perspective and serve that a larger addressable market.

There are other opportunities in the U.K. to potentially do something inorganic. And more interestingly also is just outside of the U.K., there are other operators that are very interesting across Europe and across the globe, frankly, that we constantly look at and they pop up from time to time. But we're very disciplined, not only with our business organically, but how we look at any potential acquisitions. They have to hit our 3 criteria that we've always said, we need to really like the market. It has to be financially accretive and the culture of the business has to fit perfectly with ours. So when we find another opportunity like that, there will be more acquisitions for the business on a go-forward basis in the future.

The challenge right now, if I could just layer on to it and well done, Sheldon for framing up the 3 criteria. The big challenge right now is the accretive challenge. Our multiple is at a level right now where any acquisition target, it could be a company that's growing by 1/2, 1/3, 10% of our growth rate and the multiple expectations are higher than where we are trading at the moment. And we're not going to do anything like that. So the first thing that we need to do is we need to get -- we need to turn our share price around so that we could start looking at acquisitions from that perspective. That's number one.

And the other thing I want to say, just in support of that, I'm surprised actually, guys haven't gotten the question about what's going on with the private credit markets. I could tell you that from what we've seen and what we've experienced firsthand with the private credit markets, there's any challenge or any challenges in the private credit markets for those lenders that have funded for the most part, software acquisitions, number one, and a lot of them also facing redemptions because they have a big population of retail investors. None of our lenders have those criteria.

If anything, all of them fund consumer receivables and their backing comes from institutional investors, all of which is to say they're incredibly strong. And there's not a week that goes by. It seems to be at an even accelerated rate now where we're getting inbound calls from big institutions who want to fund Propel. They know we're a very unique company. They know that our performance, our geographic footprint is incredibly unique, and they want to fund us. We're getting lots of inbound calls about how they could lower our cost of capital, how they could increase our advance rate. And I mentioned that a Propel of your comment about potential acquisitions, just to say that should we find something, there's lots of ways, a, of being able to fund those types of deals in the first place. And in the second place, just to say that there's a big market opportunity out there. And I think with good markets, we're proving out that we're very good at spotting best-in-class and integrating them into the overall Propel infrastructure.

Your next question comes from Steve Boland with Raymond James.

I'll be very quick here. Just Sheldon, thanks for the update on QuidMarket and mentioning that the tech is not integrated. But are you comfortable with the infrastructure in terms of people that are trained, office space, things of that sort. So more of an operational infrastructure question, and we can follow up offline if we need to.

Yes. Thanks, Steve. I mean the quick answer is we couldn't be happier. The team in the U.K. is just absolutely outstanding. They are operated very efficiently, productively and working through their -- through automation as well just in their platform, too. So this is just going to be net positive as we continue integrating our technology and capabilities. And the same thing I will say around the Puerto Rican team. They've been excellent.

Again, anything that we do, it has to fit seamlessly with our culture and the way we do things over here at Propel. We're very protective of the culture that we've built over all of these years. As we always say, the founders are still together after all these years. We have a very long tenure from the rest of the executive team, and we have an absolutely outstanding culture and way of doing things. So that's how we set up all of our additional operations from ensuring productivity and excellent execution and the technology integration that's going to come with time will only enhance everything that they're doing across the board in all additional offices.

Your next question comes from Emma Fang with Ventum Financial.

Congratulations on the quarter. Could you talk about the credit rating profiles of your customer base in Q1 compared to last year and whether they're moving higher given the focus on higher quality customer mix and growth in near-prime customers?

Thanks for an excellent question. And for sure, the quality of our customers on a risk-adjusted basis is just improving. And the reason for it is twofold. Number one is we're maintaining our bank partners are maintaining a tight underwriting posture, which, by definition, makes sure that the quality is only improving.

But in addition to that, as I've mentioned a few times, you are seeing this bifurcation in the market and more and more consumers who previously would have been prime or even near prime are being turned down from mainstream banks and financial institutions and being driven into our segment of the market, which is leading to significant increases in application volumes for the most part from customers who have better credit profiles than the customers that we're used to serving historically, all of which is translating into not only excellent growth in the new customer size, that we mentioned around 40% new customer growth in Q1. But in addition to that, very strong first payment default rate performance, which translates to them not only having better credit profiles, but so far, those credit profiles are also translating into very strong credit performance.

[Operator Instructions] Your next question comes from Alex Howell with Stephens.

I'll make this quick. Regarding Canada specifically, you discussed opportunities in the macro environment in the U.S. and the U.K. But can you discuss some of the puts and takes of what you're seeing given recent competitor struggles in Canada? And how do you view the competitive landscape and opportunities to take share and further scale that segment of the company?

Yes, really appreciate that. We're so different to the competitor that you're referring to. And I do think it's worthwhile pointing out the competitor that you're referring to was the best-performing financial services stock on the TSX for many, many years, leading up to their challenges, all of which just points to the incredible compounding nature of this business when it's well run and well executed in a very, very disciplined way. And if you look at a few differences between us and then, first of all, Canada comprises 2% of our overall business. That's 2%. And even though it's growing by roughly 34% in line with our overall growth this year, that means it will still comprise roughly 2% at the end of the year. That's number one.

Number two is we only do unsecured lending. And I'm sure when you look at the competitor that you're referring to and you break their business down between unsecured lending and other elements of their business, you'll see that the unsecured lending part of their business is performing quite well. What's got them into some challenging situations is other elements of their business model. And those are elements that we don't think have made financial sense nor are we experts in them, which is why we haven't been there in the first place. So I want to say that, too.

And the other thing like any business is it comes down to the outstanding group of people that ultimately run the business at the end of the day. And that's not to knock the leadership at the company that you're comparing us to. It's just to say that the leadership has been like a revolving door over there, and it's incredibly difficult to run a business when you have different leadership all the time. We don't have those challenges at Propel, just the opposite. So all of which is to say credit performance in Canada in Q1 was better than it's been since our inception, our best Q1 on record as well.

Number two is we're in discussions with many partners who used to partner with the competitor that you're referring to and are now coming to us and speaking to us about how we could partner with them to grow our business and in turn their business on the Canadian side. And we're doing exceptionally well in Canada, albeit with a more challenging macroeconomic backdrop. And as a result of that, we need to proceed cautiously in this environment.

The other thing I will say is we've just closed the credit facility. We upsized that credit facility to $40 million. We lowered our cost of capital by 200 bps. And the combination of those things not only expands our margins in Canada, but in addition to that, does provide us with the leverage that we need to expand our addressable market even more as well. So from our perspective, it's a very healthy business for us, but we don't expect it to exceed 2% of our revenues for 2026.

There are no further questions at this time. I will now turn the call over to Clive for closing remarks.

Thank you again, everybody, for attending our call this morning. I would also like to thank our investors and partners for their continued support and our vision of building a new world of financial opportunity. And as always, and perhaps most importantly, I would like to extend a really big thank you to the Propel team in Canada, in the U.K. and in Puerto Rico. You guys have all been absolutely outstanding and have delivered these outstanding record results and achievements, and we all know that the best is yet to come. On that note, have an excellent day. And operator, you may end the call.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Good morning, everyone. Welcome to the Propel Holdings Fourth Quarter and Year-End 2025 Financial Results Conference Call. As a reminder, this conference call is being recorded on March 3, 2026. [Operator Instructions] I will now turn the call over to Devon Ghelani, Propel's Vice President, Capital Markets and Investor Relations. Please go ahead, Devon.

Thank you, operator. Good morning, everyone, and thank you for joining us today. Propel's fourth quarter and year-end 2025 financial results were released yesterday after market close. The press release, financial statements and MD&A are available on SEDAR+ as well as on the company's website, propelholdings.com.

Before we begin, I would like to remind all participants that our statements and comments today may include forward-looking statements within the meaning of applicable securities laws. The risks and considerations regarding forward-looking statements can be found in our Q4 2025 MD&A and annual information form for the year ended December 31, 2025, both of which are available on SEDAR+. Additionally, during the call, we may refer to non-IFRS measures. Participants are advised to review the section entitled Non-IFRS Financial Measures and Industry Metrics in the company's Q4 2025 MD&A for definitions of our non-IFRS measures and the reconciliation of these measures to the most comparable IFRS measure. Lastly, all dollar amounts referenced during the call are in U.S. dollars unless otherwise noted.

I am joined on the call today by Clive Kinross, Chief Executive Officer; Sheldon Saidakovsky, Founder and Chief Financial Officer; and Noah Buchman, Founder, President and Chief Revenue Officer. Clive will provide an overview of our Q4 fiscal year 2025 results and observations on the overall economic environment before Sheldon covers our financials in more detail. Before we open the call up to questions, Clive will provide an overview of Propel's strategy and growth initiatives for the year and discuss our 2026 operating and financial targets. With that, I will pass the call over to Clive.

Thank you, Devon, and welcome, everybody, to our Q4 and year-end conference call. 2025 was another year of strong disciplined growth for Propel as we continue to expand access to credit for underserved consumers while continuing to enhance our AI-powered platform. Turning specifically to the fourth quarter. We entered Q4 with a tightened underwriting posture following the credit pressure experienced in Q3. That discipline allowed us to navigate through external volatility, including the longest U.S. shutdown, government shutdown in history. As performance trends strengthened during the quarter, we accelerated originations in December, driving approximately $30 million of CLAB growth in that month alone, representing nearly all of the $32 million of sequential growth in Q4 and our strongest month of CLAB growth to date. However, that growth required upfront provisioning and incremental acquisition spend, while the associated revenue will be recognized over subsequent periods. As a result, profitability was pressured, but these investments position the portfolio for strong growth in 2026. Credit metrics have turned, and we exited the year with record ending CLAB and strengthened credit performance, and we are seeing that improvement carry forward into 2026. Even with the challenging macroeconomic conditions, our business showed significant resilience as we continue to maintain profitable growth.

Turning to our full 2025 results. In 2025, we achieved record total originations funded of $774 million, up 32% year-over-year, record revenue of $590 million, up 31% and record ending CLAB of $590 million, an increase of 23% from 2024. For the full year, net income increased by 28% to $59.5 million in 2025 and adjusted net income increased by 7% to $66.7 million, both representing record performance.

Turning to the macroeconomic backdrop and the performance of our regional business units. In the U.S., 2025 was characterized by a dynamic economic environment. While overall inflation has declined, inflation for essential spending remains elevated and real wage growth for many lower-income households has moderated. These dynamics contributed to credit softness that emerged in Q3 and extended into early Q4. However, as the quarter progressed, we observed improving credit performance. The government shutdown ended, employment remained stable across sectors where many of our customers are employed and access to credit remains constrained. These factors supported the improvements we observed exiting the quarter, and we continue to experience the same trends 2/3 into Q1, and we expect that trajectory to continue throughout 2026.

Turning to Lending-as-a-Service. The program achieved record revenue of $5.8 million in Q4, representing 97% growth year-over-year and was approximately $18 million for fiscal 2025, up 191% from 2024. Towards the end of Q4, Propel received increased commitments from existing purchases, supporting higher origination capacity and continued growth heading into 2026. In Canada, macroeconomic conditions remain softer relative to the U.S. with slower GDP growth and higher unemployment levels. Despite this backdrop, the Canadian business grew by 49% in 2025 from 2024, though the market still represents approximately 2% of total revenue. Credit performance was strong and reflects previous refinements to our risk model. Lastly, in the U.K., inflation remains somewhat elevated, but unemployment levels remain historically low with wage growth slightly outpacing inflation, supporting strong credit demand and stable credit performance.

Against this backdrop, our U.K. business continued to exceed expectations, delivering record revenue and strong annual growth for 2025 that exceeded 50%. The strength of our U.K. results reflects the scalability of our platform, disciplined underwriting and the successful integration of QuidMarket into Propel's platform. Since the acquisition, we have incorporated our underwriting, marketing, technological and operational best practices. Importantly, performance in the U.K. remained strong in 2025 throughout the more dynamic economic conditions in North America, providing geographic diversification across the business. I will speak more about our recently announced business development initiatives, growth plans and our guidance for 2026. But first, I will pass the call over to Sheldon.

Thank you, Clive, and good morning, everyone. We exited 2025 with strong growth momentum following a period of tighter underwriting in Q3 and through mid-Q4. As credit performance stabilized, originations accelerated meaningfully in the back half of the quarter, especially in December. Consumer demand across our operating brands remained strong. And together with our bank partners, we achieved record originations from both new and existing customers during the quarter. This resulted in record total originations funded of $221 million, an increase of 26% from Q4 of last year. This growth drove ending CLAB to a record $590 million, up 23% year-over-year. Consistent with our disciplined approach, we and our bank partners prioritized a higher proportion of volume from return and existing customers in the U.S. to reinforce portfolio quality. In the U.K., where credit performance remains strong, we emphasized new customer originations. Overall for Propel, new customers represented 43% of total originations funded in Q4, consistent with prior quarters and reflecting our balanced and deliberate approach to growth across all of our markets.

Our record ending CLAB drove record revenues of $155.8 million in Q4, representing a 21% increase over Q4 last year. The annualized revenue yield of 109% in Q4 compared to 113% last year primarily reflects the timing impact of stronger originations late in the quarter, particularly in December, which increased ending CLAB with a modest contribution to revenue during the quarter. The majority of revenue from those originations will be earned in subsequent periods.

Turning to provisioning and charge-offs. Provision for loan losses and other liabilities was 56% of revenue and net charge-offs was 14% of average CLAB in Q4. These levels reflect the credit dynamics that emerged in Q3 and extended into the early part of the fourth quarter. During the quarter, we observed softness within certain segments of the U.S. portfolio, including lower cure rates and variability in collections performance, partially influenced by macroeconomic factors, including the government shutdown, which affected specific customer cohorts. These factors also had an effect on Q3 vintages, particularly those originated prior to the tightening -- tightened underwriting adjustments. All of this contributed to the higher provisioning and charge-offs in Q4. These trends started to reverse later into the quarter, enabling us to drive higher originations.

To further clarify, the charge-offs are primarily related to earlier vintages, particularly from Q3 as they are a lagging indicator of credit performance. As those earlier vintage cohorts have largely worked through the portfolio and with underwriting adjustments implemented in late Q3 and early Q4, credit performance strengthened meaningfully into the back half of Q4. Based on current trends, we believe Q4 is likely to represent the peak in provisioning. Early 2026 indicators continue to be strong, and we're observing credit metrics in line with our expectations.

It is also important to highlight the impact of origination timing. Under IFRS accounting, the significant originations funded in December required upfront provisioning, while the associated revenue will be earned over future periods. This timing dynamic further increased the provision rate in Q4 when measured as a percentage of revenue as those originations contributed only modestly to quarterly revenue.

Over our 15-year history, we have successfully navigated similar credit cycles before. In Q2 2022, provision expense reached approximately 58% of revenue during a period of macroeconomic disruption driven by accelerating inflation and interest rates. Following underwriting adjustments taken by us and our bank partners, portfolio performance improved and provision rates declined meaningfully in the subsequent quarters. The recovery occurred quickly due to the resiliency of our customer segment and our ability to recalibrate underwriting in real time through our AI-driven feedback loop.

Geographic diversification continues to support overall performance. The U.K. delivered strong credit results alongside record originations and Canada's credit performance remained strong following underwriting optimization earlier in the year. With credit performance aligned with expectations at year-end, we're very well positioned to continue accelerating growth in 2026.

Turning to profitability. Adjusted net income was $8 million in Q4 or $0.19 per diluted share. For fiscal year 2025, adjusted net income increased to $66.7 million and diluted EPS -- diluted adjusted EPS was $1.58. Fourth quarter profitability was impacted by several dynamics related to origination timing and upfront spend and expenses. As mentioned, the late quarter origination growth, particularly in December, required upfront provisioning under IFRS accounting, while the associated revenue will be recognized over future periods. In addition, acquisition and marketing spend increased in the back half of the quarter to support the higher origination volumes with expenses recognized immediately while revenue will be earned over the life of the loan.

We also incurred incremental start-up and infrastructure costs related to the build and launch of Propel Bank and the Column partnership, positioning the company for additional expansion in 2026 and beyond. On a return on equity basis, annualized adjusted ROE was 12% in Q4 and 27% for the full year. While quarterly returns were impacted by the timing and upfront costs discussed, full year results continue to demonstrate strong returns. Given the stabilized credit trends, the record ending balances at year-end and the investments made in 2025, we expect our adjusted ROE to expand on a go-forward basis.

Acquisition and data expenses increased by 48% to $23.2 million in Q4, reflecting the record total originations funded and an increase in cost per funded origination. Cost per funded origination increased to $0.105 per dollar funded in Q4 2025, while cost per new customer funded origination increased to $0.245 per dollar funded. Although higher year-over-year, these levels remain aligned within our targeted profitability parameters and reflect deliberate strategic decisions made during the quarter.

First, we allocated a higher proportion of marketing dollars to organic and direct marketing investment, particularly in December as credit performance stabilized. These channels require more upfront spend, but historically deliver stronger credit performance and higher lifetime value. Second, we diversified our marketing partnerships and channels, adding new strategic partners and expanding across key digital and direct channels. These investments enhance acquisition resiliency and long-term scalability.

Third, we incurred higher underwriting and data costs per dollar -- per funded loan as a result of our tighter underwriting. These incremental costs support portfolio quality and long-term loss performance. And fourth, we continue to experience strong growth from the U.K., which carries higher acquisition cost per loan, but is offset by higher yields and strong credit performance. Overall, the increase reflects intentional investment to support credit quality and scalable profitable growth.

Other operating expenses represented 16% of revenue in Q4, consistent with approximately 16% in Q4 last year when excluding onetime transaction costs related to the QuidMarket acquisition. Our operating leverage gains were largely offset by infrastructure investments to support Propel Bank and our partnership with Column, which we expect to contribute meaningfully as they scale. In addition, we've made several investments in AI that will lead to increased productivity and additional operating leverage in the long term, but contributed to additional overhead in the short term. Our profitability benefited from a lower overall cost of debt, which declined to 10.6% in Q4 from 12.7% in the prior year, supported by improved credit facility terms and lower interest. On a go-forward basis, we expect our margins on an IFRS and adjusted basis to expand given the meaningful investments we've outlined, the stabilized credit performance and the operating leverage of the business model.

Turning to Propel's capitalization. At the end of Q4, we had approximately $103 million of undrawn capacity across our various credit facilities, and our debt-to-equity ratio was approximately 1.3x, reflecting a well-capitalized balance sheet and continued financial flexibility. In Q4, we increased our quarterly dividend by 8% to $0.21 per share and subsequently increased it an additional 7% to $0.225 per share for the current quarter. This marks our 10th consecutive dividend increase, underscoring the durability of our cash flows and our confidence in the long-term outlook of the business. We believe our strong balance sheet, disciplined capital management and recurring earnings profile position us well to continue investing for growth while delivering increasing returns to shareholders. I'll now turn the call back over to Clive.

Thank you, Sheldon. 2025 was a year of disciplined execution after intentionally moderating growth and taking a tightened underwriting posture to stabilize credit performance through much of Q3 and Q4, credit performance has turned, and we look forward to robust profitable growth in 2026. Well into Q1, we continue to observe strong credit performance and healthy demand. As we look ahead, two key initiatives announced in Q4 will help us drive growth through the remainder of 2026 and for years to come. These initiatives are spearheaded by my colleague, Co-Founder, President and Chief Revenue Officer, Noah Buchman, who has joined us on this call to speak to these initiatives during our Q&A.

First, our partnership with Column, which supports the launch of Freshline in the U.S. and expands our addressable market by serving a new consumer segment and entering additional states. We expect Freshline to become a driver of growth going forward. To support this partnership, we recently announced a forward flow commitment of $60 million for the Freshline product from Mesirow, one of North America's leading private credit investors. The success of our Lending-as-a-Service program has demonstrated our ability to launch, operationalize and scale these types of programs profitably. That execution capability gives us the confidence as we introduce Freshline and continue expanding our U.S. footprint. We expect to add additional commitments in the months ahead.

Second, the launch of Propel Bank, an ambitious initiative several years in the making. While we remain a fintech holding company, a banking license gives us immense optionality for the medium and long term as the world embraces digital-first banking. The bank is now officially operational, and we expect it to provide new avenues for growth and expansion in the years to come. Propel Bank enhances our platform by providing potential product and service diversification and optionality and expanding access to both new and existing markets. We have built a fantastic and growing team in Puerto Rico. And together, we are building new opportunities for Propel and for consumers.

Supported by these initiatives, our 2026 growth strategy is anchored on four pillars: First, scaling and expanding our core North America business. With approximately 70 million underserved consumers in the U.S. and Canada, we have only served a small fraction of the addressable market. In 2026, we're expanding into additional states, increasing penetration in existing markets and building new marketing and distribution channels to broaden our reach across the credit spectrum.

Second, accelerating growth in the U.K. We finished 2025 with over 50% revenue growth in the U.K., reflecting strong demand, disciplined underwriting and successful integration. We expect the U.K. to continue delivering accelerated growth in 2026 supported by new product introductions, expanded distribution channels and further automation across the platform. There is tremendous opportunity in the U.K. that we have only just begun to realize.

Third, expanding and optimizing our Lending-as-a-Service program. Following the strong momentum from our existing Lending-as-a-Service program, where we grew by 191% year-over-year. Towards the end of Q4, we saw increased commitments from existing capital partners and demand from new capital partners to participate, including Mesirow. With the launch of Propel Bank and Freshline as well as additional capital commitments to our existing Lending-as-a-Service programs, we expect robust growth for this program in 2026. These initiatives allow us to enter new geographies, serve additional customer segments in the underserved markets and generate high-margin fee-based revenue.

Fourth, deepening AI integration across the organization. Our focus is on driving productivity, improving decision accuracy and enhancing the customer experience. We are already observing measurable gains in customer operations, where in December, we supported 42% more loan originations than the previous year with the same number of agents. We have had our highest three consecutive quarters of auto approval applications supported by AI. And in the year ahead, we expect to see these efficiencies expand across the company, including in technology and engineering. As an AI-first company with over a decade of proprietary data that has trained our models, best-in-class team and experience in running an AI platform, we believe Propel is uniquely positioned to lead, not follow in this next phase of AI-driven financial services innovation.

Against this backdrop, we are introducing our 2026 operational and financial targets. We are targeting ending CLAB growth of 18% to 24%. Furthermore, we are targeting revenue of $725 million to $775 million and adjusted EBITDA of $152.5 million to $177.5 million. The net income target range of $70 million to $90 million and the adjusted net income target range of $80 million to $100 million represent growth rates of 34% and 35%, respectively, over 2025 based on the midpoint. We are also targeting a return on equity of 24% plus and adjusted return on equity of 28% plus, representing strong returns on shareholders' equity. Lastly, we continue to actively pursue exciting organic and inorganic growth initiatives. These are not included in the operating and financial targets, but form part of our long-term growth strategy.

As part of our strategy, I want to spend a moment on capital allocation. Our capital allocation framework remains very consistent with what we've communicated since going public. We expect the dividend to continue growing annually, supported by earnings growth. Importantly, when we went public, we indicated an intention to distribute roughly 50% of adjusted earnings over time. In practice, we've operated well below that level, approximately 32% in 2025, which provides meaningful flexibility. This allows us to simultaneously first, reinvest significant capital into organic growth.

Second, maintain balance sheet strength and strategic flexibility so that we can invest through cycles, pursue acquisitions where appropriate and operate from a position of resilience rather than reliance on external capital. And third, deliver a predictable and growing return to shareholders. And fourth, retain excess capital that can be deployed opportunistically, including share repurchases. We believe that combination, disciplined reinvestment, a growing dividend and opportunistic buybacks is the most effective way to compound long-term shareholder value. Our capital allocation framework remains very consistent with what we've communicated since going public.

As we move through 2026, our focus remains clear, serving the more than 90 million underserved consumers across our markets who continue to need responsible access to credit. We do that through disciplined growth, credit performance and long-term value creation. Since 2020, we have grown revenue and adjusted net income, both by a CAGR of approximately 50%. That consistency reflects the durability of our platform and the discipline of our execution. Into 2026, the team is aligned and as focused as ever to deliver a strong year of profitable growth.

We have made investments in AI that will ensure we continue to drive efficiencies and optimizations across the business. We have large and growing commitments from Lending-as-a-Service purchases and strong consumer demand to power the program's growth in 2026. We are now operational in Puerto Rico, where we are building a banking arm of our business to create more options for the future. We are close to launching Freshline to serve even more U.S. consumers. With 15 years of experience operating through cycles, we believe our AI-powered platform is well positioned for its next phase of profitable growth. As always, we remain committed to building opportunities for our team, consumers, our partners and our shareholders. With that, operator, you may now open the line for questions.

[Operator Instructions] Your first question comes from Matthew Lee with Canaccord Genuity.

Maybe we can start on credit. Obviously, a tough quarter with the government shutdown. Just maybe -- what gives you confidence that you get back to the 50% level that your guidance sort of suggests? And what sort of early indicators are you seeing that suggests that credit is improving?

Yes. So Matt, and thanks for joining us this morning. We've certainly seen a significant rebound in credit performance. As you know, our products tend to be short term in nature. And when there is a spike in credit performance, we're able to adjust very quickly. We adjust our underwriting. And invariably, if we're experiencing challenges, it means all of the lenders ahead of us in the credit supply chain, if you will, are doing the same thing. So there was more and more tightening ahead of us that was absolutely evident in Q4 2024, I think the tightest since 2019, which meant there was more high-quality volume dropping into our segment of the market, even while we tightened our underwriting standards and also tightened other terms around the loans that we provided. That's the kind of stuff that we're able to do in the short term given our AI underwriting platform. And as a result of that, the other thing that happens in our market is we have competition that's not as well capitalized as us. And when there is increases in delinquencies, invariably, there's less competition as well. So we see more volume into our segment of the market. Competition tends to get eroded. And because of the short-term nature of our products, the customers that are going to go delinquent go delinquent pretty rapidly, and we're able to turn it around with net new vintages.

Obviously, in Q4, the first half of Q4, in particular, there was a prolonged level of delinquency, about as long as we've seen roughly over a 4-month period, driven largely because of the longest U.S. shutdown in history, but not long after that ending, given the underwriting changes that we saw, we saw significant increases in credit performance. Those increases have obviously driven further momentum into 2026. We're now 2/3 of the way through the quarter. We're seeing credit -- very strong credit performance, very much in line with our expectations, also very much in line with the largest tax refunds that consumers have received in many, many years. And the nice cherry on top over and above the strong credit performance is demand has been very robust given some of these developments. That's partially because of the tightening ahead of us and what's discrete to Propel is we really did use that opportunity in Q4 to expand our marketing and distribution relationships, and those are certainly yielding lots of fruits, particularly on the demand side now that we're 2/3 of the way through Q1.

Yes. I just wanted to just add a couple of additional data points to what Clive is saying, and we mentioned this in the remarks. We've seen this before many times. We referenced Q2 2022, where the provision was 58%, so higher than it was over here in Q4. The very next quarter, it dropped to 54% and then dropped towards 50% where we targeted. So as Clive said, it happens relatively quickly. We tightened underwriting appropriately. And just to reemphasize, a lot of the higher provision was related to charge-offs coming from the prior vintages that were originated prior to us tightening. So we're very confident that, that's in the past, those have flushed through. And as Clive said, early this year, we've had very strong credit performance.

Right. So maybe just on early indicators, I mean, like your customer base, employment rates, the payment rates, the credit scores, are those all kind of trending upwards as you look into Q1?

Yes. The simple answer to that, Matt, is absolutely. Now bear in mind, from a seasonal perspective, we expect there to be stronger credit performance in Q1. So let me start off by saying that. So to really provide context and answer your question, I need to speak about what that credit performance looks like relative to what we expect will be improving credit performance in any event. And we are really, really pleased with what we're seeing. Not only our first payment default rates and weighted average default rates lower than our expectations, but we're actually seeing excellent collections data as well. Obviously, when some customers do miss payments, we need to rehabilitate them and cure them so that they can continue to draw down on their facilities. And we're seeing very strong performance from our Payment Solutions team as well.

So again, 2/3 of the way through the first quarter of the year, we're very pleased with credit performance. We're very pleased with collections. And the other thing that we're very pleased with, obviously, is strong demand, which doesn't always go hand-in-hand with those dynamics. We're also now -- now that we've entered March, we're entering really the biggest month of the year in terms of customer refunds. So if anything, we expect the trajectory that we're seeing on the credit side to continue through the remainder of the quarter.

Okay. That's super helpful. And then maybe just to add one to sneak one in here. Can you quantify Column and Propel Bank? I think you guys talked about an expanding product suite. But we shouldn't be expecting you guys to be taking deposits and like offering GICs or anything, right? Like what kind of products are you envisioning from Propel Bank? And when might we start seeing them?

Yes. I've asked Noah to join us on the call over here. So I'm going to hand the call over to him. He's just done -- him and his team have just done the most stellar job on these initiatives. So with that, Noah, it's over to you.

Thank you, Matt, for that question. A few things. We have to look at this in stages, kind of call it, short, medium and long term. So out of the gate, as we operationalize Propel Bank and as you heard in the opening remarks, we're thrilled that it's live now. It will continue to provide the services that we've listed in the press release to our existing bank partners and then to call them as that program launches on a go-forward basis. We will then expand our current line of business in existing and new geographies throughout the United States. It gives us the optionality globally, which is why it's called Propel Global Bank. And then to your nuance part of the question, we will move into the business of banking. And as we move further into the business of banking, we will have additional revenue streams over and above those core services that we provide to other banks with regulatory approval from our regulator, it gives us those options. So in the future, in longer term, you will see us be able to expand into more traditional banking products over and above the core fintech-related services we will be providing in the short and medium term.

Let me also add a couple of things over there, Matt, if you don't mind. I mean, really, really delighted to have Mesirow come on last week and commit $60 million. Mesirow or the fund that acquired Bastion, and I think you guys know that we've been with Bastion since 2013. These are folks who are very, very familiar with Propel. They've worked with us for many different credit cycles, and we were delighted to have them as the first forward flow purchaser to commit $60 million. I will tell you that the opportunity, the market opportunity with Freshline and that segment of the market that we're serving is probably larger than any other opportunity that we serve today. On the back of that, you could absolutely expect to see more commitments and more announcements from top-tier institutions, which are going to accelerate the growth of our Lending-as-a-Service program for many, many years to come. We're delighted with how testing is going in that environment. The folks at Column have also been absolutely exceptional and an absolute joy to work with, and we expect to stand that program up this month, launching, obviously, with Mesirow purchasing the initial loans over there with additional announcements to come in the not-too-distant future, and that, again, will continue to accelerate the growth of that program for years to come.

Your next question comes from Stephen Boland with Raymond James.

Sheldon, I don't know if you can quantify this or maybe you have quantified it. The 56% PCL rate, obviously, you mentioned credit issues and the growth. I'm wondering if it's possible to break that down roughly. You know what I mean, like you've always kind of reported a low 50 PCL rate. Like is it really the growth that drove that up a few basis points or a few percent in the quarter?

Steve, thanks for that. So it's a mix of things. I think, first of all, as we talked about, we had -- last quarter, we had an increase in delinquencies that over the course of Q3. Subsequent to that, we started tightening our underwriting. And -- but however, a lot of those Q3 vintages then ended up flushing through in Q4 through charge-offs. And the reason for that, obviously, those were worse vintages sort of in the rearview. But in addition to that, the government shutdown exacerbated some of the macroeconomic dynamics we were dealing with in Q4. So I would say that there was certainly several million dollars in the PCL that was relating to kind of the Q3 vintages that ended up flushing through in Q4.

In addition to that, obviously, as we've mentioned over here, $30 million of our $32 million growth in CLAB all came in December. As you know, we have to provision upfront as soon as we originate. So a lot of that was related to the growth in December. To put it into perspective, you probably also saw that the revenue yield was 109%. That's not the -- that's not really reflective of what the yield is in the portfolio. In reality, it's between the 110% and 115% that we've been reporting on regularly. When you have the back-ended growth in your book, you don't have time to earn the revenues. So just to put it into perspective, if we were to proportionately originate the same amount per month in Q4 rather than originate the vast majority in December, that would have led to probably post about $3 million in additional revenue for the quarter alone. That would boost the yield, that would reduce the PCL percentage just because you're increasing the denominator. So there's a lot of dynamics certainly relating to the growth as well as the credit performance primarily from the Q3 vintages before we tightened all exacerbated by the government shutdown as well in Q4.

And Steve, maybe let me just jump in as well and just respond to what I'm hearing is the question behind the question. Obviously, you're reacting to an increase in the provisions. You're reacting to a compression of earnings last quarter, and just the delinquency headlines. And there's a question about how long is this going to go on for? I think that's the underlying question over there. We've been doing this for a long time. And here's the irony of the whole thing.

The weakest borrowers when you go through something like this, exit the system very, very rapidly. That's the nature of short-term unsecured lending. Pricing improves quickly, largely because of the changes we've made. I've already mentioned competitors pull back in that environment and those ahead of us tighten their underwriting and future vintages strengthen almost immediately. So you're not going to see a protracted period of higher delinquencies over here. That's in the rearview mirror. And as I've stated a couple of times on this call already, expect us to return to normalcy with very profitable growth from the get-go in 2026.

And Steve, one other thing I would add also, just to put it into context as well. Obviously, you're asking about a 56% PCL, a lot of that relating to the kind of back-ended growth in the quarter. This is not completely uncharacteristic of a Q4. Obviously, Q4 and '24 was very strong. If you look at Q4s in prior years going all the way from 2021 to 2023, we probably have a PCL in Q4 close to about 54%. So it's not completely uncharacteristic that in Q4, you do have higher PCL just because it's such a high-growth quarter. But again, I would think about it as 2/3 of that relative increase in the PCL rate is relating to prior vintages prior to tightening.

Okay. Okay. Great. Second question is on QuidMarket. So when I look at the stages, the book was $29 million at the end, $10 million roughly, I guess, of underperforming and then just under $2 million of nonperforming. So it seems like a very good -- I'm trying to understand the borrower profile or is it the collections that are really not allowing those loans to go into nonperforming. Is there -- again, is it the borrower or it's the -- if people over there just forget for 5 days or 10 days and you make the phone call and they pay the loan off. I'm trying to understand how that Stage 2 to Stage 3 improved so much.

Yes. And this is something we've been saying for a while since the get-go, the credit performance that's being delivered by the team in the U.K. is just outstanding. I think it's a combination of factors, Steve. First of all, we've got excellent operators, very experienced operations team over there that's doing an exceptional job once consumers miss payments and delinquency. So not stopping them from going to Stage 3 and then ultimately to charge-off.

The other thing is just the market dynamics in the U.K. There's so much -- such a big market over there that's so vastly underserved that QuidMarket historically is able to cherry pick the very best consumers. on the one hand and secondly, grow in excess of our forecast. We just grew in excess of 50% year-over-year, even though we told the market after acquisition, we'd grow by 40%. So we exceeded those growth expectations, all while maintaining an exceptional default rate. So it's a combination of just our superior or excellent operations as well as just there being a vast market and our ability to cherry pick the best volume.

So what this is going to lead to is there's huge runway from a growth perspective. So expect even faster growth in 2026 for QuidMarket. We're very well positioned to do that, and we'll continue growing at probably similar credit metrics that you've seen. Now we do have the opportunity to take on a little bit of a higher PCL in QuidMarket as we grow and still be very profitable. The other side of it is because of the construct of the P&L, the PCL is lower in QuidMarket -- just for comparison purposes, we're able to spend more on the acquisition side, and that's also one of the factors that increased our acquisition costs year-over-year. So the QuidMarket is driving exceptional credit performance, but we're able to increase acquisition costs to acquire more customers over there as a result.

Your next question comes from Rob Goff with Ventum.

My first question would be on the guidance. Is that something that we should look at as back half weighted? Or is it relatively balanced across the quarters?

Yes. So Rob, it's a great question. And I think you know that our business is cyclical in nature. Q1 tends to be slower growth. And then as you move through the rest of the year, the growth tends to accelerate with Q4 being the high point of the year. And our model absolutely reflects that. I think when we look back at 2025, particularly at Q3 and Q4, where we saw heightened delinquencies, we slowed our growth down in reaction to that. And consequently, the growth in Q3 and Q4, in particular, was lower than we otherwise would have liked it to have been. We obviously ended Q4 with significant growth in our CLAB that wasn't reflected in our revenues because lots of that growth happened in December. But in essence, all of that revenue will now be earned over the course of 2026, all of which is to say you will see a growing revenue from quarter-to-quarter, number one.

And number two, the biggest deltas relative to 2025, you'll see in Q3 and Q4, respectively, because of a couple of reasons. First of all, comparing to what happened in 2025. And second of all, that's when we expect some of the new initiatives like Lending-as-a-Service to really start contributing in a more meaningful way. And by the way, I say that about Lending-as-a-Service, which is already starting to move the needle following almost 200% year-over-year growth in 2025. But just wait until you see what 2026 has in store, particularly the back half of the year.

In terms of the visibility, clearly, the provisions is a key point. Am I crazy if I look at your provisions in Q1 being down order of magnitude, 8 to 10 points Q-on-Q, given you have visibility into the quarter?

Yes. Rob, thanks for that. We absolutely have visibility into the quarter. We're 2 months in. As Clive mentioned, credit performance is right in line with expectations. If you look traditionally, just the way the seasonality of our business works, you should probably expect a PCL percentage somewhere in the mid-40% range. That is what we target, and that's certainly what we would expect in the Q1 period. And we've just kind of said that things are running in line with expectations. So if you're doing the math on that, I think that's a reasonable expectation, Rob.

And can I ask you for a bit more color and perspective with respect to your views on capital allocation and the NCIB, given where your current share price is?

Yes. I try to get ahead of that in the prepared remarks for whatever reason, Rob, this discussion between share buybacks and dividends and reinvestments in other parts of the portfolio seems to be something of increased discussion and people have very strong views on it and different views on it. There's lots of people, lots of folks that like the steady growing discipline of the increasing dividends and the guardrails that, that provides as well. And there's lots of other folks think at attractive levels, we should be considering buybacks more. And I will tell you, we've got a very open mind to these things.

First and foremost, we're going to support the organic growth of the business. I've spoken about it a few times on this call between Column Bank and between Propel International Bank. These are new initiatives that have a very high return on equity. So first things first, we need to make sure that there's capital that's allocated to those programs and other initiatives where the ROE, we expect to be quite well north of the guidance that we provided even on this call.

We'd also obviously like to keep contingencies, first of all, for a rainy day, but second of all, to be opportunistic. And in this context, I'm talking about acquisitions and other organic opportunities where we constantly are looking for new opportunities and seeing some really interesting ones at the moment as well. Third of all, as I said, we will be increasing the dividend. And that obviously is a function of growing earnings, which we have a tremendous amount of confidence in. So I'm quite comfortable setting that expectation. And then obviously, we will look at share buybacks opportunistically.

Your next question comes from Jeff Fenwick with ATB Cormark.

I wanted to start my questions off with respect to acquisition costs. It looks like those climbed up pretty meaningfully in the quarter. Obviously, you were very active on originations. Just wondering if you could speak to some of the dynamics there. What are the expectations? Is there inflation and things like SEO costs and I think the mix of your originations changing around? Like how should we think about that going forward?

Jeff, yes, thanks for that. Maybe -- first of all, just to kind of step back for a second. I mean, we're -- we've done some incredible things on the business development side and the new initiative side for the business. We've put in a number of programs that will grow the business in the U.S. dramatically for many years to come. That includes Propel Bank, Column, all of the other stuff that we're doing, for example, you haven't seen it yet, but on the MoneyKey program, in particular, we've done some work over there that will drive significant growth on a go-forward basis.

So in order to support that growth, we need to make investments on the marketing side. And we've deliberately stepped into that. And what that includes is expanding our spend on various organic channels. And we've talked about increasing our spend on organic for several quarters coming into this one. But that's a deliberate step. And I think that, that's kind of what we'll continue doing certainly over the course of 2026, and that includes branded digital marketing, direct mail, et cetera, all these things that are building Propel and its operating subsidiaries brands. So that requires upfront spend, but that also drives exceptional credit quality and opens up additional volume right at the top of the funnel.

Secondly, we're -- in order, again, to support all of what we want to do is expanding marketing partnerships and additional channels. So we've started investing into, for example, online videos and social media ads and that sort of stuff that we hadn't done before and standing up additional partnerships, as I mentioned. And all of that, again, requires upfront spend. You don't see the originations flowing from it directly just yet, and you have a higher cost per acquisition on those sources to start with. But certainly, that builds our foundation to enable scalable growth to support all of these new initiatives across the U.S.

And then thirdly, as I mentioned in a comment before, is QuidMarket. Again, that -- the cost per acquisition over there just relatively speaking, is higher than what we incur in the U.S., but that's offset by a lower provision. There's no cost of debt in the U.K. as an example, just yet. So we're comfortable increasing the acquisition costs over there to grow at the rates that we're growing. So all of this is deliberate. It's intentional. It's building us for the long term. We're not just managing for a quarter-to-quarter over here. We're building Propel and its operating brands for many years into the future.

So what does that mean in 2026? I think the best way to think about it is our cost per acquisition will probably remain in line with where you're seeing it recently and in Q4. And then you'll certainly see a lot of the leverage coming from these investments probably towards the back part of 2026 and certainly into 2027 and beyond.

That's helpful. And yes, you're sort of speaking to the overall operating leverage in the business. I know you're carrying a lot of investments in new businesses. So I guess just to clarify though, like some of the spend is already flowing through as I guess you're standing up these new things in that specific acquisition bucket of expense as well.

Yes, Jeff, that's right. And maybe if I can, I wouldn't mind just taking a step back to say a few things. And I'll tie some of it back to your question and some of it -- maybe we'll touch on some of the other questions that we've gone on the call. I could tell you not me nor any of the team are pleased with Q3 and Q4. Obviously, that was driven largely by external variables, but it shouldn't be lost on anybody that the 5-year CAGR revenue and profitability of this business is in excess of 50%. And when I look at 2025 compared to 2023, we more than doubled revenues and profits over a 2-year period.

And if you said to me, what's the driving force behind that growth at the end of the day, first and foremost, it's our people. And I don't say that lightly. When I look at some of the data around that, the four co-founders 15 years later, we are still together at the business, more motivated, more ambitious than we've ever been. We have a 21-person executive team here at Propel that's got an average tenure of about 9 years, which is pretty outrageous for a company that's 15 years old and have not lost a single executive.

In addition to that, if you look at some of the insider selling, there's very, very little. Everybody over here is in it for the long term, and that's certainly not me suggesting to anybody nor to the executives that if they want to sell or for whatever reason, want some liquidity, they shouldn't do it. They're absolutely free to do that, but they're not doing that. And one of the reasons they're not doing that is because they're getting access to a steady growing dividend, and they've got lots of incentive amongst other things to continue to grow that dividend. I don't think that, that element should be lost and the impact that it has on developing and building a world-class team that's executing on this business.

In 2025, notwithstanding some of those challenges, we stood up probably the two biggest organic initiatives since we've been around from 2011. Between Propel Bank and the Column partnership, I don't exaggerate when I say they're probably the two biggest organic initiatives notwithstanding some of the headwinds last year. And you will see the impact that those have on the business on a go-forward basis.

The other thing -- and that was during some headwinds, some macro headwinds that we continue to land and build those relationships. And at the same time, what was incredibly inspiring when we had some of the challenges in 2025 was to see that team rally, to see that team go out and establish new marketing partnerships, new distribution channels that not only drove the growth in 2026, in particular, from the back half of November and into December and certainly has been following through into 2026. But those initiatives are driving profitable growth. And even though you may be seeing a little bit of an uptick in cost per acquisition, I can assure you that the delinquencies that we're seeing from these channels more than offset any increases that we're seeing on a cost per funded basis. I don't think it's prudent to assume that the cost per funded is going to come down in these channels. But I could tell you that myself and the team will be working really, really hard to drive those efficiencies at the same time.

I appreciate that color. And maybe just on a different topic here. A lot of the investments are revolving around the Lending-as-a-Service area of the business. I'm just trying to get a sense of how that plays out from here. It was a little under $6 million in revenue in the quarter. Clearly, you're gearing towards being much bigger than that. But what's a realistic expectation for how that plays out this year? Is that a line that can see revenue double or be bigger this year? Or how should we be thinking about that realistically from just sort of the ramp-up of these things that you've been speaking to here?

Yes, it's really starting to get going now. And obviously, I mentioned on the call that several Lending-as-a-Service purchases increased their commitments towards the end of 2025. We've just announced the commitment from Mesirow for $60 million. And I think I said a few times on the call that there's more to come. So you could see there's lots of capital coming into this program, and the reason that's happening is because we're absolutely delivering for the purchases.

As it relates to Propel, we're absolutely comfortable saying that we will be -- there will be triple-digit growth in our Lending-as-a-Service in 2026. And we expect the trajectory as we get closer towards the end of the year, Q4 of 2026, we expect the Lending-as-a-Service component to start moving towards 10% of Propel's overall revenue. And bear in mind, that's moving towards 10% of a revenue number that's growing over the course of 2026. And then we'll obviously be well positioned for exponential growth in 2027 and beyond as well.

That's very helpful. And then maybe just one last one that's related here. I mean there's certainly a lot of commentary about concerns about private credit investors and what's happening in that market. You obviously had success with Mesirow, which is great to see. What's your read on what's happening in the space there and the demand for the type of loan assets that you're generating for partners like that?

I think it's really important, Rob (sic) [Jeff], to look at where these credit funds are investing. I think that Blue Owl, which is obviously a top-tier fund, but a lot of their investments that are leading to some of the perceived challenges are not because of their investments in consumer credit. They have funded a lot of LBOs, a lot of management buyouts of big software companies that are under pressure right now. Rightly or wrongly, they are under pressure right now. And obviously, that puts into question the underlying debt that's used to fund those deals.

We're absolutely not seeing that in our segment on the market. I don't think there have been any funds that have come out so far and supported that consumer credit and suggested they are under any pressure. So I would encourage anybody who is seeing any pressure from these private credit funds to really take a look at where they're invested and where the credit is coming from.

If anything, and I'm not exaggerating, we all have more and more of these funds contacting us regularly to speak to us about two opportunities. First of all, they'd love to get access to our main credit facilities. And second of all, what we're doing on the forward-flow side is certainly starting to have positive impacts in the broader environment and lots of these funds, not dissimilar to Mesirow are reaching out to us with a view to buying those receivables as well.

Your next question comes from Suthan Sukumar with Stifel.

I'll leave with one question here just on Propel Bank. What does this mean from a go-to-market perspective for you guys in the near term in terms of -- where are you guys able to put fuel on the fire? Is this more of a U.S. expansion lever here? Or could we see more entry into new global markets?

Yes, it's Noah here, and I appreciate the question. The best way to look at that, at least short term, is this is about growth and new additional revenue streams and opportunity. The initial focus is significant expansion within the U.S. market. We heard Clive on the previous question comment on a lot of growth initiatives within and the vast expansion within the U.S. This is one of the future areas that will underpin that.

It provides us a lot of opportunities for additional states, new geographies, customer segments, especially as we onboard current bank lending partners and new bank lending partners, and it will fuel customer expansion and geographic expansion in both the short and medium term. To tie it back to the earlier question that I was asked around more traditional business of banking. The third piece will then be layering on top additional revenue streams over and above what we're able to provide today with our services. So this will be a good, solid, high-margin revenue business for us, both short, medium and long term.

[Operator Instructions] Your next question comes from Andrew Scutt with ROTH Capital.

I'll keep it short with one quick question. But in Q1 and Q2, you guys usually see a benefit from a tax refund season. We're still in early days here. But can you guys kind of talk about what you're seeing so far?

Yes. I think that's what we're seeing and then there's the information that we have access to in terms of what's going on in the broader marketplace. So certainly, what we're seeing is we're seeing strong repayment behavior. We're seeing strong delinquency performance. And that's largely a function of being in the middle of tax season. Andrew, the offset to that or in addition to that, and this is the good part, we're seeing robust demand as well. Those two things don't normally go hand in hand.

With that said, we believe that the biggest tax refund days, and consequently, the days that we expect delinquency performance to be the strongest, probably line next week, so -- sorry, this week, the first and the second week of March is where we expect the refunds to really start coming back. So if anything, the incredibly strong results we've seen so far, hopefully, will get even stronger as the quarter continues. From what we know, the refund amounts this year are about 10% higher than they've been in years past. In addition to that, the child care tax refund is only going to start going out in the middle of March. So overall refunds by volumes are actually down a little bit from prior years. The amount of refunds is up a little bit from prior years. That's quarter-to-date, but any shortfalls on the volumes will be made up in Q3.

So overall, that's driving obviously very strong delinquency performance. And as I've said a few times, coupled with robust demand, and if you said to me, where is the robust demand coming from in that environment, I think it's coming from two different areas. Number one, there has been continued tightening across the credit spectrum. So we have high-quality volumes that are moving to our segment of the market. And I think some of the challenges, credit challenges in Q3 and Q4 really cleansed the market of some of the competitors that were in the space. So there's been a little bit of a cleansing over there, albeit with the smaller, less well-capitalized lenders and that volume is also now being absorbed by bigger players like ourselves.

There are no further questions at this time. I will now turn the call over to management for closing remarks.

Thank you, and thank you, everybody, again for attending the call this morning. I'd also like to thank our investors and partners for their continued support and our vision of building a new world of financial opportunity. And as always, I would like to extend a really big thank you to the Propel team in Canada, the U.K. and now Puerto Rico for delivering these outstanding record results and achievements. On that note, have an excellent day. And operator, you may end the call.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

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" ROTH Capital Partners, LLC, Research Division

" Cormark Securities Inc., Research Division

" Canaccord Genuity Corp., Research Division

" Ventum Financial Corp., Research Division

" Raymond James Ltd., Research Division

Good morning, everyone. Welcome to Propel Holdings Third Quarter 2025 Financial Results Conference Call. As a reminder, this conference call is being recorded on November 5,2025. [Operator Instructions] I will now turn the call over to Devon Ghelani, Propel's Vice President of Capital Markets and Investor Relations. Please go ahead, Devin.

Thank you, operator. Good morning, everyone, and thank you for joining us today. Propel's third quarter 2025 financial results were released yesterday after market close. The press release, financial statements and MD&A are available on SEDAR+ as well as on the company's website, propelholdings.com.

Before we begin, I would like to remind all participants that our statements and comments today may include forward-looking statements within the meaning of applicable securities laws. The risks and considerations regarding forward-looking statements can be found in our Q3 2025 MD&A and annual information form for the year ended December 31, 2024, both of which are available on SEDAR+. Additionally, during the call, we may refer to non-IFRS measures. Participants are advised to review the section entitled Non-IFRS Financial Measures and Industry Metrics in the company's Q3 2025 MD&A for definitions of our non-IFRS measures and the reconciliation of these measures to the most comparable IFRS measure. Lastly, all dollar amounts referenced during the call are in U.S. dollars unless otherwise noted.

I am joined on the call today by Clive Kinross, Founder and Chief Executive Officer; and Sheldon Saidakovsky, Founder and Chief Financial Officer, will provide an overview of our Q3 2025 results and observations on the overall economic environment before covers the financials in more detail. Before we open the call up to questions, Clive will provide an update of our strategy and growth initiatives for the remainder of 2025 and into 2026. With that, I'll pass the call over to Clive.

Thank you, Devin, and welcome, everyone, to our Q3 conference call. Building on a strong first half, we are proud to deliver another quarter of record results. Amid a dynamic macroeconomic environment, our AI-powered platform and disciplined risk management drove stable credit performance while delivering profitable growth. Before speaking about what we're observing in the broader economy and our consumer segment, I'd like to highlight our record third quarter results.

We delivered another quarter of strong growth with record quarterly revenue total originations funded and ending forward momentum from the first half of the year, we experienced healthy consumer demand and stable credit performance through Q3. At the same time, given evolving macroeconomic conditions and a modest uptick in delinquencies during the quarter, we and our bank partners maintained a tight underwriting posture, particularly in the U.S., making targeted adjustments to preserve credit quality in line with seasonal expectations. Even with these prudent measures, we achieved record total originations funded of $205 million, up 37% year-over-year and record revenue of $152.1 million, an increase of 30% from Q3 2024.

On the bottom line, net income rose by 43% to $15 million and adjusted net income increased by 16% to $16.2 million compared to the prior year. to what we observed in the macro environment and with our consumer segments. In the U.S., growth remains steady. However, inflation in essential spending categories such as food, shelter and health care remains elevated with each increasing more than 3% year-over-year, weighing more heavily on the consumers we serve spend a greater proportion of their income on these essentials. Furthermore, according to the Federal Reserve Bank of Atlanta, median nominal wage growth for lower income workers was 3.6% in August 2025. As a result, real wage growth for our consumers, while still moderately positive, has moderated in 2025.

In addition, the resumption of student loan collections in Q2 has put additional pressure on some of our consumers. these pressures on our U.S. consumers during the quarter, we and our bank partners made proactive underwriting adjustments to ensure our credit performance was in line with seasonal expectations. This is the benefit of our AI-powered platform and the resiliency of our business model. We benefit from the quick feedback loop where slight changes to the macro environment and consumer behavior are detected immediately and we are able to adjust our underwriting instantly. Notwithstanding some of the pressures we are observing in the U.S. employment remains healthy and continued job growth across key sectors where many of our customers are employed. The resiliency of our consumers cannot be understated. The are jobs demand and often interchangeable and consequently are able to replace lost income. Overall, the U.S. consumer remains resilient. However, we are taking a deliberately cautious stance in the U.S. market to prioritize strong credit performance and profitable growth.

In Canada, revenue grew by 41% year-over-year to a record level in Q3, though the market still represents approximately 2% of total revenue as we continue to scale forward. Credit performance was particularly strong and is reflective of previous refinements to our risk model, further demonstrating our ability to adjust to macroeconomic conditions quickly and the resiliency of our operating model. This performance is even more encouraging considering the backdrop of the broader Canadian economy, which has softened due to U.S. trade tariffs and with relatively higher unemployment of 7.1% the Bank of Canada cut rates by cumulative 275 bps since mid-2024 to a policy rate of 2.25%. We continue to monitor the impact of recent trade measures and are encouraged by the federal budget stronger focus on driving investments in Canada, including much needed reforms to stray.

I had the opportunity to meet recently with Minister Solomon, Canada's Minister of AI. I was encouraged by the government's commitment to be a global AI leader and hope the AI strategy set the table later this year will include specific support for public companies like Propel who choose to build innovative businesses here in Canada.

Turning to Lending as a Service. We achieved record revenue, which exceeded $5 million in Q3, representing growth of more than 4x from last year and sequential growth of approximately 13% we launched in additional states, further broadening our geographic footprint. This expansion in addition to strong returns has led to increased commitments from our partners, which will fuel further growth.

In the U.K., we delivered record originations and revenue in Q3 while maintaining strong credit performance. Prior to Propel's acquisition of Market, the U.K.'s record monthly loan originations was approximately 7,600 has grown consistently month by 78%, totaling roughly 13,500 originations in September, demonstrating the market opportunity and our ability to successfully scale in new geographies. Our performance in the U.K. was supported by a resilient economy. The U.K. has seen inflation trending towards the Bank of England target. Unemployment remains low at 4.7% and wage growth is outpacing inflation, supporting spending and credit demand.

Lastly, reflecting our continued strong results and solid financial position, our Board of Directors has approved another increase to our dividend from $0.78 to $0.84 per share annually in Cans. 8% increase represents our ninth consecutive dividend, underscoring our strong financial performance and ongoing commitment to delivering shareholder returns. I will speak more about our outlook and business development pipeline for the remainder of 2025 and into 2026. But first, I'll turn the call over to Shell.

Thank you, Clive, and good morning, everyone. We're proud to deliver another quarter of record results and of achieving strong profitable growth while maintaining our disciplined approach to credit.

Given the uncertain economic environment and the uptick in delinquencies observed during the quarter, we and our bank partners operated with a more measured underwriting posture in Q3, particularly in North America. Notwithstanding this dynamic, consumer demand across our operating brands remained healthy. And together with our bank partners, we achieved record originations from both new and existing customers during the quarter. This resulted in record originations funded of $205 million, an increase of 37% from Q3 of last year. This growth drove ending CLAB to a record $558 million, up 29% year-over-year. Consistent with our disciplined underwriting posture, we and our bank partners prioritized a higher proportion of volume from return and existing customers to strengthen credit quality in North America. In addition, within our U.S. portfolios, we and our bank partners focused originations more on higher credit quality consumer segments that carry a lower cost of credit. In contrast, in the U.K., where credit performance remained very strong, we emphasized new customer originations.

Overall for Propel, new customers represented 44% of total originations in Q3, consistent with prior quarters and reflecting our balanced and deliberate approach to growth across all markets. Our record loans and advances receivable balance and ending CLAB drove record revenues of $152.1 million in Q3, representing a 30% increase over Q3 last year. Our annualized revenue yield in Q3 was 113%, a modest decrease from 114% last year. This decline primarily reflects the shift toward returning and existing customers, the emphasis on higher credit quality new customer originations at lower fee tiers the continued aging of the portfolio, including graduation and the ongoing expansion of Fora. These factors were partially offset by the higher-yielding quid market portfolio and our last revenue.

Turning to provisioning and charge-offs. Our provision for loan losses and other liabilities as a percentage of revenue was 52% in Q3 2025, consistent with Q3 of last year and within our targeted range. As noted earlier, we experienced a modest uptick in delinquencies within the U.S. portfolios, reflecting normal seasonal trends and the broader macro pressures on our consumer segment discussed earlier. In response, we and our bank partners implemented underwriting adjustments and moderated new customer originations to maintain credit quality and deliver strong results within our established loss rate targets.

In the U.K., while delivering record originations, Quid Market continued to deliver strong credit performance. Furthermore, in Canada, where we've been operating with optimized underwriting and a tighter posture for several quarters, we experienced our strongest ever quarterly credit performance in Q3. Taken together, credit performance for Propel as a whole remained well within our targeted range, reflecting the diversification benefits of our multi-market platform and the strength of our disciplined underwriting capabilities.

Credit performance also continues to be supported by, firstly, the effectiveness of our AI-powered platform and disciplined underwriting by Propel and our bank partners; and secondly, the continued scale and maturation of the loan portfolio with a higher proportion of originations from return and existing customers who historically demonstrate lower default rates than new customers. Net charge-offs as a percentage of CLAB was 12% in Q3, also within our target range and consistent with seasonal trends. Overall, both the 52% provision and 12% net charge-off ratios remain firmly within expectations and continue to support strong unit economics and sustainable profitable growth.

Turning to profitability. Adjusted net income increased to $16.2 million in Q3 2025, up 16% from last year. On an EPS basis, diluted adjusted EPS grew to $0.38 for the quarter. For the 9-month period, adjusted net income increased to $58.7 million and diluted adjusted EPS grew to $1.39, both representing 9-month period records. As a reminder, all figures are expressed in U.S. dollars. The year-over-year increase in earnings reflects the company's strong top line growth, stable credit performance and disciplined expense management.

I would note that our IFRS net income increased by 43% year-over-year, which is a larger increase relative to the adjusted measure. This is a result of two main factors. Firstly, a lower quarter-over-quarter CLAB increase in Q3 2025 relative to last year resulted in a relatively lower Stage 1 add-back this quarter. And secondly, transaction costs relating to the QuidMarket acquisition were expensed in Q3 last year, thereby reducing our Q3 2024 IFRS net income.

On a return on equity basis, our annualized adjusted ROE for Q3 declined to 25% from 45% last year. For the year-to-date period, annualized adjusted ROE was 33% versus 52% last year. The declines were driven primarily by the CAD 115 million equity offering completed in Q4 2024 to finance the QuidMarket acquisition. We believe these metrics demonstrate strong returns to our investors as well as our ability to efficiently utilize shareholders' capital.

Acquisition and data expenses increased by 41% to $18.3 million in Q3 2025, driven primarily by strong total originations funded growth and an increase in the cost per funded origination. Cost per funded origination increased to $0.089 per dollar in Q3 from $0.087 per dollar last year, while cost per new customer funded increased to $0.204 per dollar from $0.193 per dollar funded last year. Overall, these costs remain well within our acceptable range to achieve targeted profitability during a period of significant growth. Other operating expenses represented 15% of revenue in Q3 compared with 16% in Q3 last year. This reduction reflects several factors, investments in AI, driving operating efficiencies and the inherent operating leverage in our model.

At the same time, these have been somewhat offset by the increased operating expenses this year due to our investments in our infrastructure to support forthcoming business development initiatives. These initiatives, several of which are nearing launch are expected to meaningfully contribute to growth and profitability as they scale. Lastly, operating expenses were impacted last year by onetime transaction costs relating to the Quip Market acquisition. Our profitability also benefited from a lower overall cost of debt, driven by recent interest rate reductions and improved credit facility terms. Combined, these factors decreased our cost of debt to 11% in Q3 from 13.4% in the prior year. Any further reductions in interest rates as we experienced in the U.S. and Canada last week will further benefit profitability.

Overall, our adjusted net income margin was 11% in Q3 compared to 12% last year. The modest year-over-year decline in margin percentage primarily reflects a lower Stage 1 provision add-back and the strategic investments being made to support our growth initiatives. These initiatives are expected to drive growth and margin expansion over the long term.

Turning to Propel's capitalization. At the end of Q3, we had approximately $125 million of undrawn capacity across our various credit facilities, and our debt-to-equity ratio was approximately 1.2x, reflecting a well-capitalized balance sheet and continued financial flexibility. We believe that our strong balance sheet, debt capacity and cash flow generation position us well to support the continued expansion of our existing programs, new growth initiatives and the recently increased dividend.

Lastly, I want to provide an update on the integration of our U.K. business, which, as Clive mentioned, has achieved significant growth ahead of expectations. We successfully completed the integration of financial, corporate and IT systems ahead of schedule, including the identifying of enhanced acquisition, risk and analytics capabilities. We're now focused on accelerating growth through ongoing product enhancements, opening new customer acquisition channels, product expansion and the continued refinement of our underwriting and analytics strategies, all of which are helping us capture a greater share of the addressable market.

Recently, Noah Buckman, our President and Chief Revenue Officer, joined me in the U.K. to meet with senior U.K. leadership and discuss new business development initiatives. These included potential strategic partnerships, marketing channels and innovative opportunities to further expand our U.K. footprint. The market remains full of potential, and we're confident the U.K. will continue to be a meaningful and growing contributor to Propel's success in 2026 and beyond. I'll now turn the call over to Clive.

Thanks, Sheldon. We're now more than a month into our fourth quarter, and we and our bank partners continue to operate with a deliberate and disciplined underwriting stance. Operating in a dynamic macroeconomic environment and having observed a slight uptick in delinquencies in Q3, we proactively adjusted our underwriting to prioritize credit performance. Macroeconomic backdrop remains uncertain, particularly in the U.S. where persistent inflation in essential spending categories and moderating wage growth continue to pressure lower income consumers.

The recent federal government shutdown has also temporarily impacted some consumers further tightening household budgets. When we provided our initial 2025 guidance in March, the economic backdrop look materially different. Since then, new U.S. trade tariffs, sustained inflationary pressure and slower real wage growth created a more cautious operating -- given the evolving dynamics and consistent with our long-standing commitment to profitable growth, we are maintaining a cautious risk posture. As prudent operators, we have always prioritized disciplined risk management over short-term expansion. This deliberate approach ensures we protect credit quality, sustain profitability and position the business for long-term success.

Importantly, we're continuing to see the benefits of these actions with continued stability in portfolio performance despite an uncertain macroeconomic backdrop. Reflecting this disciplined stance and the resulting slower pace of NCA growth, we are modestly revising our 2025 guidance. We now expect NCAB growth to come in moderately below the low end of our previously communicated range with the adjusted margin and adjusted return on equity metrics following a similar trend. Important we continue to expect to be in line with our full year targets for revenue, net income margin and return on equity. While growth has moderated this measured approach is deliberate so that we can remain well positioned for continued profitable growth heading into 2026.

Looking ahead, our business development pipeline is robust, and we are well positioned heading into 2026 with several strategic initiatives underway. Starting in the U.S., which remains our largest market, we continue to see significant untapped potential. In the weeks and months to come, we expect to announce strategic initiatives designed to expand our addressable market by introducing new products, expanding into new geographies and building new partnerships.

In Canada, while the impact of U.S. trade tariffs and a higher unemployment rate are weighing on consumers, the market remains sign government of Canada recently noted there is a clear need for greater competition in financial services. We're actively pursuing partnerships across Canada's fintech ecosystem to deliver modern forward credit solutions and expand access to credit for Canadian consumers.

In the U.K., strong originations and credit performance continue to exceed expectations. We now expect top line growth of more than 50% in 2025, our first full year since acquiring Markets. The business is well positioned to accelerate this momentum into 2026 and beyond as we further expand our product set, deep partnerships and further leverage our technology and analytics cap. Just over a year since joining Propel, the U.K. team has exceeded all of our expectations, demonstrating the passion, discipline, expertise and focus on profitable growth that position us to succeed in this market.

A key pillar to our growth strategy is geographic expansion and through the recent performance of the U.K. and Canada, we are already seeing the benefits of that diversification strategy. AI is also central to our growth strategy and has been integral to our success. As you know, for the past decade, AI has been a differentiator to underwrite underserved consumers at scale. But with the advancements in generative AI, we go even further to embed AI into every -- over the past several quarters we've made significant investments in partnerships to enhance productivity and decision-making across the organization from improving customer service and satisfaction to streamlining marketing to accelerating software development. While these investments weigh on profitability in 2025, we are already seeing efficiencies materialize. For example, we set records for percentage of customers in Q3 this year at approximately 60%, up from 50% in the prior year.

When we look at other gains made year-over-year, loans originated per agent in Q3 2025 were 53% higher in Q3 2024. The gains are in our origins Use of AI generative tools and software engineering has doubled unit test, meaning that one developer is able to produce more accurate and stable code, which in the longer term saves developer resources. We expect to see these initiatives accelerate into 2026 as we improve service levels whilst also driving increasing bottom line margins. Ultimately, while technology and AI at our foundation, it's our people that have made Propel a success. The passion and focus of our teams across North America and the U.K. turn innovation into performance and ambition into results. Our voluntary turnover is around 3%.

And looking at our senior leadership team where the average tenure is more than 7 years, the turnover is even lower. People who come to Propel stay at Propel and in doing so, strengthen our company. Powered by investments in AI by our people, Propel continues to be recognized for exceptional growth and performance. In the past quarter alone, we were named to the Global [indiscernible] companies, Deloitte Technology Fast 50 and the TSX 30, where we ranked as the sixth best performing stock over the past 3 years. These achievements reflect what our shareholders already know. We've built a powerhouse that delivers quarter after quarter.

It's now been 4 years since our IPO. And over that time, we've delivered consistent compounding growth, including 16 consecutive quarters of year-over-year revenue growth of at least 30% figin6000ans and serving hundreds of thousands of consumers across North America and the U.K. 50% CAGR in LTM revenues and 55% in LTM adjusted net income and dividend increases, resulting in a cumulative increase of more than 120% and we're just getting started. That concludes our prepared remarks. Operator, you may now open the line for questions.

[Operator Instructions] And your first question comes from Matthew Lee with Canaccord Genuity.

I want to start with the guidance. If I've done the math correctly, it sounds like a pretty big step down in origination activity for Q4, even with credit remaining pretty steady. I understand you try to protect quality, but how quickly do you think you could turn that growth machine back on? And then when we look at 2026, should we be 20% to be the growth rate we're expecting on?

Thanks so much, Matt. And maybe before I answer the question, let's just take a step back to see what's going on right now in the economy. I think a lot of people describe this economy as a K-shaped economy where kind of the rich are getting richer and those that are struggling, there's more and more of them that are struggling. I was actually on a call recently with TransUnion with the top economists over there, and they were just speaking about the bifurcation in the credit market. There's a real polarization with the super prime segment of the market growing and the other big growth is happening in the subprime segment of the market in terms of applications. Everything between the two is shifting to the two poles. And it's important to think about why that's happening. The unemployment rate in the U.S. has started to trickle up a little bit -- we don't know exactly what it is in this government shutdown, but the ADP data suggested that it's gone up in the last couple of months.

I recently actually earlier this morning saw that they actually said there was job growth in October. So that's encouraging. But at the same time, given this backdrop, wages are also starting to have softened a little bit or wage growth particularly for our consumer, all of which translates to lower real wage growth. So that's different to what we've been experiencing in the last few years. On top of it, we're right in the midst of a big U.S. government shutdown, the longest U.S. government shutdown in history. And the easy thing for us to understand in that context is employees being furloughed, many of whom are not customers of ours in and around Washington, D.C., Virginia places like that. So we're not really impacted by that. government shutdown has impacted other areas of the economy. SNAP benefits go out to about 40 million consumers. Some of those consumers overlap with our customer segments. You also have the Affordable Care Act where prices are set to go up currently, even though it hasn't impact consumer spending yet, those two developments are certainly impacting consumer sentiment, which in turn is driving slower spending, particularly by our consumers and slowing growth down a little bit. So that's the broader market.

And until the government shutdown is over, and I suspect now that these recent elections are behind us, the government shutdown will come to an end sooner rather than later. But until they are, we need to be prudent in the face of some of these risks. And as a result of that, as you say, we're prioritizing credit quality ahead of anything else we are growing at the pace that we continue to perform in line with our credit quality standards. Notwithstanding these comments, let me provide a little bit of additional color.

The steps that we've taken in further tightening our underwriting has led to declining delinquencies. So we're already seeing the improvement in delinquencies in our partly in the U.S. market, which is where the majority of the adjustments were made. But bear in mind, we moved quickly to fine-tune or to tighten our underwriting and we move a lot slower to open it up as we start to see green shoots and positive signs in the economy. So we've already started to gradually open up from where we were and I absolutely suspect that by the end of the year, our approval rate will be where we thought it would be. But that said, it's going to take a little bit of time to grow into that.

Just a little bit of additional color every day when I look at our management reporting systems, which are contrasting the volume of applications relative to the initial budget that we set at the beginning of the year, I can tell you I see green on the screen every single day, meaning the number of applications that we're seeing is significant and higher than our initial expectations, which really dovetails and is consistent with my comments about the polarizing economy that we're seeing right now. There's zero issue with the number of applications we're seeing. If anything, that's growing. And I do know in every single crisis that we've seen over the last few years, the global financial crisis of '08, the oil price collapse of 2014, COVID-19, the spike of 2023, our segment of the market has grown. So we absolutely expect that at the end of the day, with the pullback in risk, our segment of the market will grow significantly. And if anything, that we absolutely expect to return to the growth metrics in 2025. Now you meant 2026, sorry.

Now part of your question was speaking about CLAB growth. Bear in mind more and more of the growth in our business is also going to be reflected in CLAB. We mentioned at the Canaccord conference earlier this year that we expect as a Service program, which is the CLAB to grow at around 10% in 2026. We don't -- we still have that position. And by the same token, as brilliantly as the U.K. is doing, we expect that to accelerate as well and continue to believe that, that will produce 100% growth in 2026, even though the impact on the CLAB is not that material.

The final thing I'd like to say is we have several business development initiatives that we hope to be announcing in the coming days and weeks that if anything, will accelerate the growth beyond what I just spoke to.

Matt, maybe -- I just wanted to add one data point over here just on top of what Clive provided a lot of good context. We've seen this before. the beauty of our operating model is that we can adapt and shift very quickly, tighten and then once we like what's going on, we can, as Clive said, gradually open again. We saw this earlier in 2022. In Q4, just that as a data point, in Q4 2023, we had tightened relatively speaking, where we saw CLAB growth by about 36% in that quarter. And 2 quarters later, we were growing CLAB by 44%. So just to put into context a couple of data points, how we can shift things around. We've seen this in Q4 recently. And 1 quarter later, we were right back kind of with almost 10% absolute higher growth.

That's helpful. So maybe just as a follow-up on that, if we have the government shutdown stopping today, for example, and credit quality starts looking better, could you be back to kind of steady state or historical growth by December? Like is that the speed at which you guys can move that machine? Or is there other things that need to kind of come into place before we reach that kind of level?

Yes, certainly. So just to be clear and just to explain in a little bit broader terms the government shutdown and if we're seeing anything, even though SNAP benefits supposedly stopped this month, the states in the U.S. have different coverage for the SNAP benefits. Some of the southern states have a higher percentage of their consumers who are eligible for SNAP benefits. And for sure, you're seeing the impact of that in those states where they have relatively higher delinquencies than we've seen in other parts of the country. All of which is to say once the government shut down once the government opens up again, I absolutely expect to see those turning around relatively quickly, which again is what we've seen in the past. One of the benefits of doing this for 14 years is that there's nothing new under the sum we've seen this before and we know when we know when to put our foot on the gas.

So from a new origination standpoint, we can absolutely be at the absolute number of new originations towards the back half of December as would have been the case. But what we cannot make up, we cannot make up a slightly lower at the end of and slightly slower growth in October relative to what we thought we would be, which means we can't make up the full difference heading into the end of the year. So where we thought that the CLAB in was going to be 25%, it's going to be less than that as you can see with our revised guidance, but we expect to end the year give or take the same number of new loan originations that otherwise would have been the case, and that will serve us well heading into 2026 over and above the new initiatives that we'll be announcing soon that will further fuel that growth.

That's helpful. And then I just want to sneak one last one in here. Philosophically, your shares are trading at a place that's probably too low. Would you consider a buyback to be honest.

Yes, philosophic, we think that we agree with you. And when I say we, I'm really referring more to our Board and our Board discussion as recently as last night where that became a much more serious consideration given where the share prices are, given where the shares trading, notwithstanding a company that's consistently demonstrated 30% quarter-over-quarter growth since being a public company, including the most recent quarter as well as 50% bottom line growth. So that's certainly a more serious consideration. We're thinking hard about it, Matt. We need to weigh that up against some of the big investments that we've got coming down the pipe to really launch some of these big initiatives which I think [indiscernible].

Your next question comes from Andrew Scott with ROTH Capital Partners.

[Technical Difficulty] So first one for me, something in the prepared remarks as you guys are talking about potentially expanding your footprint with the market. So could you kind of remind us of the competitive environment in the U.K., the market faces and your kind of belief and ability to capture market share there?

Yes. Andrew, thanks for the question. Yes, I mean, the U.K. market is very exciting. Obviously, it was our -- we really liked it to start with, and that was one of the key criteria in our acquisition strategy. We needed to really, really like and be bullish on the jurisdiction. Just to remind you and everyone just around kind of the thesis over there, there were a lot of regulatory changes in the U.K. from the Financial Conduct Authority a number of years ago. And that the regulator kind of acknowledged that they overcorrected. It led to a lot of kind of a huge growth in illicit lending or legal lending in the U.K. and an exit of a significant amount of credit supply. A lot of big players, actually a couple of

U.S. big players used to operate in the U.K. and they exited after those significant regulatory changes. Quid market actually sort of survived through that as did a couple of other strong operators. But effectively, on the other side, that led to a vast sort of undersupply of credit relative to the demand in the market. There just weren't any dominant players like, for example, a goeasy that you see in Canada or some of our competitors in the U.S. There was nothing like -- there's nothing like that in the U.K. today, although demand is growing significantly. So that's kind of the competitive aspect over there, which allows QuidMarket to have grown by the percentages that they've grown by 30% to 40% before we acquired them, really by cherry taking good quality volume in the market.

Now with us on board, applying our sophisticated underwriting and technology capabilities and having their systems ultimately integrate with ours us being able to open a number of marketing partnerships and channels that they haven't had before and applying our expertise in terms of profitability modeling and product expansion and finally, having the balance sheet to finance them will enable QuidMarket to really hit its stride and start growing in the U.K. So without having integrated all of this optimization that I'm speaking about, we're sort of on a path to do so, we're still pushing the growth in excess of 50% this year. But starting next year, we're expecting to accelerate that growth much faster as we really start to put our foot on the growth side and start integrating a lot of those -- a lot of our expertise and capabilities.

Really appreciate the color. And second for me, you guys have talked a lot about preemptively tightening the underwriting. But on the flip side, I was wondering, are there any initiatives you guys can put in place on the servicing side to kind of support your customers as they're going through the stress now?

Yes. Look, to the extent that customers call us and ask us for concessions, obviously, we like to accommodate those where need be. There's certainly been a slight uptick in those requests, as you would imagine. And if you said to me what's the #1 reason for it, the #1 reason for it and what we keep hearing from consumers, which is one of the benefits of our [indiscernible] and government shutdown. So to the extent that they do that where possible, we try and accommodate those concessions to keep these consumers in good standing so that it doesn't impact their credit profile. From our perspective, it's obviously a little bit detrimental for a tiny portion of our consumers in so far as oftentimes, we'll waive the next payment. But once again, it's a tiny percentage of consumers, albeit has grown a little bit in this government shutdown. Hopefully, and based on experience, that will come to a halt as soon as things open up again.

Your next question comes from Rob Goff with Ventum.

You talked about the new product developments in the last 2 quarters. Can you talk a bit further in terms of how significant you see the geographic expansion? How impactful are the new services? Are they more fine-tuning or new introductions...

Yes. Yes, it's a great question. Let me think carefully, Rob, about how to frame it up because we're getting closer and closer to be able to provide more detail. I think what I we're always very, very concerned about our credibility and we're very concerned always about doing what we say we're going to do. So everybody on this call and most people have been long-standing investors know that about us. And sorry that I'm a little bit over here. And I also know that we've always said we prioritize credit quality over everything else and profitable growth over everything else. So I know a bit over there.

But these are initiatives that are going to provide geographic expansion in our biggest market, that's the U.S. market and also going to facilitate the addition of new products also for underserved consumers but different segments of underserved consumers so they will expand our geographic reach as well as expand our consumer reach by offering products to products themselves and the underwriting and risk and marketing associated with those customers is not that different to what we currently have in place, which is why we feel highly confident that when we do launch these, we'll be able to hit the ground running and they will be incremental in a fairly sizable way early on of the launch.

I appreciate the sit. And perhaps more for Sheldon. It's encouraging to read the discussion with respect to quid market and talks about 100% growth next year. Can you talk about the significance of partnerships there and new services?

Yes. Rob, yes, the market is, as I mentioned, it's wide open over there. And I think that right now, markets acquisition strategy and acquisition, I would say, the channels through which they acquire customers look a lot like what ours looked, call it, probably 4, 5 years ago. Now over the last number of years, as our profile has grown, our capabilities have grown, we've been able to open up new channels and spend money on initiatives and marketing distribution channels that we never had before. We've gotten to scale in a number of them in the U.S. in the U.S. market. And with that, we'll be able to bring those capabilities and open up those channels in the U.K.

So notwithstanding that, the company is still growing well in excess of 50% just given their marketing channels available to them right now. The way we're going to get well beyond the 50%, I mean, you mentioned 100% that is an official guidance, but we have spoken about that before. That's certainly possible, and we'll be able to achieve that by expanding some of their origination channels and entering into some key partnerships. So that's certainly part of our immediate strategy.

Your next question comes from Jeff Fenwick with Cormark Securities.

I wanted to focus in on the relationship you have with your bank partners. You referred to that making changes in conjunction with them. I was hoping you could just give us a bit of color in terms of just the balance of decision-making. Is there ever disagreement there? Who's really sort of driving the decisions in terms of adjustments to the credit box or the volume of originations that you're doing? And I think it's probably different between your sort of traditional model that you have with CreditFresh versus the lending as a Service programs that you're structuring now. But could you just maybe offer us a little bit of commentary around that? And are you in agreement or what happens if you disagree?

Yes. No, it's a great question, and it's certainly a very collaborative approach. As you can imagine, we have an exceptionally close relationship across the board with our bank partners. Several key executives and employees at Propel are in contact with our bank partners on a regular basis. So they understand exactly what's going on with the business. They're tracking daily activities of originations, delinquencies, things like that. And more often than not, they're the ones leaning in and they're the ones suggesting that we tighten up and ask us for additional data to support those decisions. And more often than not, we're on the exact same page -- that's the way it's been since day 1. And the collaborative approach ultimately with them taking the initial initiative has worked exceptionally well and continues to work well in this environment.

We're getting -- we're now getting more calls from them suggesting that with the demand -- the strong demand that we're seeing in the market and delinquencies coming back in line with where we expect them to, can we open things up a little bit more. And as recently as earlier this week – was it earlier this week? Yes, earlier this week, we already started to put some of those initiatives in place.

And I guess within the Lending as a Service program, I mean that's one where I would imagine you've got partners both on the front and the back end on the funding side of things, like there's going to be something maybe a bit more of a dynamic the way that you work with those players are in a situation where they can say let's just stop when you want to go or help us understand how that relationship works.

Yes. So yes, you're right in the sense that it's a 3-way relationship. And in that sense, those loans ultimately don't go on our balance sheet, they go on somebody else's balance sheet and not dissimilar to our bank partners, the purchasers who purchase those receivables are taking the activity each and every day, loan originations, the delinquency performance. And one of the reasons that they're increasing their commitments is because they're seeing the returns that we represent that they would see. But that said, similar to what's happened in our sponsorship business. We've had to maintain a tight underwriting posture for them too, meaning the way they've continued to those returns in Q3 was through a tighter underwriting posture, meaning the 4x-over-year growth that we saw would have been even higher had we maintained the same underwriting posture.

We're now in a position, again, with our bank partners and with their support where we could start to open up a little bit. And as we do, we'll continue to drive more growth over there. The good thing is because they've gotten those returns, they all -- the majority of them last their -- so we're very well positioned to continue to expand and grow that program going forward. One of the things that I've been saying on the call leading up to this point is at the early stages of this program, it really has been an exercise of bringing on the capital at the same time as we expand our geographic reach over there and our distribution partnerships. And if anything, where we were playing catch up all the time was bringing the capital to the table. Where we are right now is that's almost balanced in the sense that there's almost enough capital to drive the growth to support the market demand.

And then maybe just last one because we are in a bit of a dynamic environment here, is that maybe what's causing a little bit of delay in terms of the expansion of lending as a service. You did say you were making progress there, which is good to hear, but is it sort of that sort of dynamic that might be slowing down the process...

Just say it again, if you don't mind, I'm not sure that...

Sure. There was commentary that you're expanding lending as a service. But I'm just wondering, we haven't seen new announcements yet on that. Is there just some concerns maybe or maybe some hesitancy on those partners given the volatility we're seeing in the U.S. market to sign on the bottom line and move forward? Or what's the dynamic there?

Yes. It's one of the interesting things about running a public company is the emphasis on quarter-to-quarter. And I would say that at a high level, and what's the impact from the slowdown for the long-term growth of the company, and I'll get to your question in a minute. I think that the fundamentals of providing credit to underbanked and underserved consumers have never been stronger. The market opportunity ahead of us is going to grow at the back of this. I was watching the election results coming out of the U.S. last night. And to me, the biggest element on the elections last night was affordability. That speaks to our customers. More and more of them are the underserved market is growing, the need for this type of credit is going to grow on a go-forward basis.

Given the long-term trajectory, I would say that the growth is probably going to slow us down by maybe a quarter, maybe we'll get to where we're ultimately going to get to 1 quarter later. That's kind of how I would view it in light of these developments and I the same thing as it relates to as a service. One day, we're going to look at it and think back to the early days of some of the gyrations quarter-to-quarter, which ultimately will smoothen out over time, all of which is to say watch this space, you're going to see a lot of really interesting developments in the lending service arena that will, if anything, speak to accelerated growth there on a go-forward basis.

Your next question comes from Stephen Boland with Raymond James.

Yes. Just one question. Sheldon, in the past, you talked about diversifying your funding sources. I know with maybe slower growth, that's not a big requirement. You did talk about term debt in the past. I'm just wondering if there's any update in terms of funding sources going forward.

Yes. Steve, yes, we're constantly looking at ways to, number one, lower our cost of debt; and number two, sort of size up our capital requirement on a go-forward basis. Firstly, I mean, our cost of debt has come down quite a lot year-over-year to 11% from close to 13.5%. And that's as a result of our renegotiated credit fresh facility earlier in the year and the reduction in the rates, in the government rates generally. So any further reductions are going to be a tailwind for us. It will reduce our cost of debt further. And also, I would say that from an overall capacity standpoint, we're pretty well situated right now. I mean our debt-to-equity ratio is lower than 1.2:1 going into Q4. So we don't have an immediate need to upsize. And hopefully, we expect further reductions in our cost of debt just given future rate changes.

With all of that said, we are looking specifically at increasing our capacity on the Canadian side, in particular. Clive mentioned earlier in the call that our credit performance in Canada, in particular, just this past Q3 was our best ever. So we're feeling better and more bullish on growing the Canadian side. And with that said, we'll look to optimize the capital structure over there, reduce the debt and increase capacity. And then also the term debt or high-yield bonds -- they're always out there for us, and we're always sort of examining them on when is the right time to go in and what the best use of proceeds will be. But that will, I would say, will eventually come. We just don't have any specific guidance right now.

There are no further questions at this time. I'd like to turn the call back over to Clive.

Yes. Thank you again, everybody, for attending our call this morning. I would also like to thank our investors and partners for their continued support and our vision of building a new world of financial opportunity. And as always, I would like to extend a big thank you to the Propel teams in Canada and the U.K. for delivering these outstanding record results and achievements. On that note, have an excellent day. And operator, you may end the call.

Thank you so much for your participation. You may now disconnect.