goeasy Q1 Earnings Call Highlights

Key Points

• goeasy posted an adjusted Q1 loss as elevated credit losses in its merchant-originated LendCare business continued to pressure results, with adjusted diluted loss per share at CAD 1.90. Management said it remains focused on a six-point plan to tighten credit, reduce weaker originations, cut costs and protect liquidity.
• LendCare remains the main risk point, though goeasy has sharply pulled back originations there by more than 80% and reduced its portfolio mix to 41.3% of loans receivable. LendCare charge-offs improved from Q4 but were still high at 26.4%, while direct-to-consumer lending performed better.
• Liquidity and balance-sheet management are front and center as the company reduced originations, suspended dividends and buybacks, and maintained CAD 1.1 billion of quarter-end liquidity. Management expects gross loans receivable to decline in Q2 before potentially resuming growth in the second half of 2026, with net charge-offs improving over the year.

goeasy TSE: GSY reported a first-quarter adjusted loss as elevated credit losses in its merchant-originated lending business continued to weigh on results, while management said the company remains on track with a plan to reduce exposure to weaker-performing loans and refocus growth on its core direct-to-consumer easyfinancial franchise.

On the company’s Q1 2026 earnings call, Chief Executive Officer Patrick Ens said goeasy has continued to execute on a six-point action plan outlined after its fourth-quarter results. The plan includes reducing originations in underperforming merchant channels, tightening credit, cutting costs and carefully managing liquidity.

“In the short time since we last spoke with you, we have continued to execute our six-point action plan,” Ens said. “We have an energized team, supportive stakeholders, and a clear focus.”

The lender’s adjusted diluted loss per share was CAD 1.90 for the quarter. Ens said the result reflected elevated charge-offs in the LendCare merchant-originated portfolio, even as the company generated CAD 560 million in cash provided by operations before net principal written.

Loan Book Contracts as Originations Slow

goeasy ended the quarter with gross consumer loans receivable of CAD 5.36 billion, up about 12% from CAD 4.8 billion a year earlier, but down CAD 150 million, or 2.7%, from the prior quarter. Management attributed the sequential decline to lower originations and elevated net charge-offs.

Ens said the company deliberately pulled back on originations late in the quarter, calling origination volumes “the largest use of cash” in the business and an important tool for managing liquidity.

The company’s Q1 results were in line with the outlook it had provided previously. Ending gross consumer loans receivable landed in the middle of the CAD 5.3 billion to CAD 5.4 billion range, total yield on consumer loans came in at 27.9%, and net charge-offs were 17.8%, just below the midpoint of the company’s expected range.

For the second quarter, goeasy expects:

• Ending gross loans receivable between CAD 4.9 billion and CAD 5.1 billion;
• Consumer loan yield between 27% and 28.5%;
• Net charge-offs between 16% and 17.5%.

For the full year, Ens said the company continues to expect gross loans receivable to decline before resuming growth in the second half of 2026. He said yield should improve as interest charge-offs decline, while net charge-offs are expected to average in the mid-teens for the year.

LendCare Remains the Key Credit Pressure Point

goeasy operates easyfinancial, its direct-to-consumer lending business, and easyhome, its lease-to-own business. Within consumer lending, the company also operates LendCare, a merchant-originated financing platform acquired in 2021.

LendCare represented 41.3% of the total portfolio at the end of Q1, down from 43.4% in Q4 2025 and 45% a year earlier. Ens said goeasy has reduced its presence in weaker-performing merchant segments while maintaining relationships in areas where performance has been stronger.

Net charge-offs in the LendCare portfolio were 26.4% in Q1, down from 40.6% in Q4, but still significantly elevated. By comparison, annualized net charge-offs for direct-to-consumer unsecured loans were 13.8%, up from 12.7% in Q1 2025.

During the question-and-answer session, Ens said the company has pulled back “north of 80%” on originations within LendCare and is focusing on its longest-standing merchant partners with the strongest performance. He described the remaining LendCare business as providing “option value” in addition to the company’s direct-to-consumer opportunity.

Chief Risk Officer Jason Appel said LendCare delinquencies and charge-offs are largely tied to 2024 originations and some early 2025 cohorts. He said secured loan portfolios typically begin showing performance stress around nine to 15 months after origination, with charge-offs materializing more significantly toward the end of the first year and into the second year.

Allowance Builds as Macro Outlook Weighs

Delinquencies were 12.3% of total loans at quarter-end, up 30 basis points from a year earlier. Management said balances more than 30 days past due improved, declining 70 basis points sequentially to 5.9%, while early-stage delinquencies increased.

Chief Financial Officer Felix Wu said the increase in 1- to 30-day past-due balances was driven by elevated credit risk in merchant-originated auto and powersports loans, a greater focus on cash collections in the unsecured portfolio and a persistently weak macroeconomic environment.

The company’s allowance for credit losses rose to CAD 541.2 million from CAD 382.8 million a year earlier. The allowance rate increased to 10.09% from 9.57% in Q4 2025, which Wu said was driven primarily by unfavorable changes in macroeconomic outlook data used in the company’s IFRS 9 allowance model.

Ens said management would not forecast the direction of macroeconomic indicators, but said the company would focus on managing credit performance. Wu added that total allowance levels are affected by both the allowance rate and the size of the loan receivable book.

Revenue Rises Modestly, Expenses Reflect Restructuring

Quarterly revenue rose 2% year-over-year to CAD 413 million, supported by organic portfolio growth but partly offset by lower total yield. Wu said consumer loan yield was down 330 basis points from Q1 2025, reflecting the higher allowance for expected credit losses on interest receivable, the lower maximum allowable interest rate on unsecured lending products and a larger proportion of lower-yielding, higher-dollar loans.

Other operating expenses were CAD 96.8 million, up 1.5% from a year earlier. The increase included CAD 4.8 million of non-recurring restructuring charges, along with higher legal, professional services and collections costs. These were partly offset by lower marketing spending and compensation costs.

goeasy previously announced a workforce reduction affecting about 9% of employees, which management said is expected to contribute CAD 30 million in annualized savings.

Liquidity Remains a Focus

Wu said goeasy repaid a CAD 64.6 million unsecured note maturity using existing cash resources and had no other near-term note maturities. Quarter-end liquidity, defined as cash on hand plus unused contractual borrowing capacity, was CAD 1.1 billion, though CAD 743 million was not currently available.

The company expects to regain incremental borrowing capacity under its revolving credit facility on July 1. Access to additional capacity under one securitization warehouse facility depends on two conditions: completion of a facility-level audit and replacement of the backup servicer. Wu said both processes are progressing.

goeasy has suspended its dividend and share repurchases indefinitely. Ens closed the call by saying the company’s execution against its plan remains on track, adding that management continues to expect improvements in net charge-offs over the remainder of the year.

About goeasy TSE: GSY

goeasy Ltd provides financial services to own furniture, electronics, computers, and appliances. It offers merchandise leasing of household furnishings, appliances, and home electronic products to consumers under weekly or monthly leasing agreements. The company also offers unsecured installment loans to consumers. Its reportable business segments include easyhome and easyfinancial, of which it derives maximum revenue from easyfinancial segment.

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