Propel Q2 Earnings Call Highlights

Key Points

• Propel delivered record Q2 2026 results: Revenue rose 26% year over year to $179.6 million, funded originations increased 25% to $243.4 million, and adjusted EBITDA reached a record $43.7 million.
• Growth was driven by Lending-as-a-Service and international operations: Lending-as-a-Service revenue surged 150% to $11.1 million, while U.K. subsidiary QuidMarket revenue grew 53% to $17.3 million. Management expects growth to accelerate in the second half of the year.
• Credit performance and financial capacity remained stable: Net charge-offs were 12% of average loan balances, debt-to-equity stood at 1.2 times, and Propel had about $97 million in undrawn credit capacity. The board also raised the quarterly dividend 6% to C$1.02 per share, marking the 12th consecutive increase.

Propel TSE: PRL reported record second-quarter results for 2026, with revenue, originations, loan balances and adjusted earnings rising as the fintech company expanded products, geographies and distribution channels.

Founder and Chief Executive Officer Clive Kinross said new customer originations rose 34% from a year earlier, or 43% including Lending-as-a-Service activity. Total funded originations increased 25% year over year to a record $243.4 million, while ending combined loan and advance balances, or CLAB, reached $639.1 million, up 23%.

Revenue increased 26% year over year to a record $179.6 million. Propel recorded adjusted EBITDA of $43.7 million and adjusted net income of $24.8 million, both quarterly records. Reported net income increased 7% to $16.2 million, while adjusted diluted earnings per share rose 28% to $0.58.

Credit performance remains stable amid elevated demand

Management said credit performance remained consistent with expectations despite portfolio growth. Provision for loan losses and other liabilities represented 50% of revenue, unchanged from the prior-year period, while net charge-offs were 12% of average CLAB.

Kinross said the company continues to see strong demand among consumers who have difficulty accessing conventional credit. He cited TransUnion data showing the share of subprime consumers increased by about 7% since 2022, while the Federal Reserve reported that credit rejection rates reached 33% in 2025 and consumer credit demand in the second quarter was at its highest level since October 2021.

Propel said it is receiving more than 100,000 loan applications per day. Chief Financial Officer Sheldon Saidakovsky said the company’s acceptance rate was in the 6% to 7% range, slightly lower than in the first quarter as it maintained underwriting discipline while application volume grew.

Kinross said the company and its bank partners have adopted a tighter underwriting stance heading into the seasonally riskier third quarter, while using greater demand to remain selective in the loans they fund.

Lending-as-a-Service and U.K. operations drive mix shift

Lending-as-a-Service generated record quarterly revenue of $11.1 million, up 150% from a year earlier. Saidakovsky said costs associated with the segment declined to 62% of Lending-as-a-Service revenue from 76% a year earlier, reflecting improved unit economics as the platform scales.

The company’s U.K. business, QuidMarket, also posted record originations and revenue. Revenue at QuidMarket rose 53% year over year to $17.3 million. Management said the business faces no material growth constraints beyond its own underwriting and operating discipline, and expects the pace of U.K. revenue growth to accelerate in the second half relative to last year.

Propel also highlighted growth in the MoneyKey Bank Service Program, where ending CLAB increased about 79% year over year and 29% sequentially. New customer originations in that program increased approximately 56% from the first quarter, aided by state expansion, a transition from legacy products and additional marketing partners.

Kinross said the company has transitioned certain legacy MoneyKey states into the bank service program, where it has more distribution channels and enhanced risk models. Aggregate volumes in those transitioned states have grown close to twofold, he said, with additional states still expected to transition.

The changing business mix lifted Propel’s annualized revenue yield to 117%, from 114% in the year-earlier quarter. Saidakovsky attributed the increase to stronger new-customer activity, Lending-as-a-Service growth, QuidMarket and the higher-yielding MoneyKey Bank Service Program. He said the company expects revenue yield to remain in a range of 115% to 120% through the remainder of 2026.

Expenses, funding costs and capital position

Propel continued investing in customer acquisition, artificial intelligence, technology infrastructure, Lending-as-a-Service and the operational buildout of Propel Bank. Acquisition and data expenses increased to 14.5% of revenue from 13% a year earlier, while cost per funded origination rose to $0.11 from $0.10.

However, management said customer-acquisition costs improved sequentially from the first quarter as the company optimized its growing marketing network. Propel added about 20 new marketing partners, according to Saidakovsky.

Other expense ratios declined as the company gained operating leverage. Salaries, wages and benefits decreased to about 8% of revenue from 8.4%, while general and administrative costs fell to approximately 2% from 2.5%.

Propel’s cost of debt declined to 10.2% from 11.4% a year earlier, reflecting improved credit-facility pricing and lower benchmark rates. At quarter-end, the company had about $97 million in undrawn credit capacity and a debt-to-equity ratio of 1.2 times. Outstanding debt was essentially unchanged at $332 million from year-end despite roughly $50 million of CLAB growth.

Second-half outlook and dividend increase

Management said it expects business growth to accelerate in the third and fourth quarters compared with the first half, supported by additional state expansion, new products including FreshLine, more marketing channels and continued Lending-as-a-Service momentum.

Kinross said Lending-as-a-Service is expected to approach 10% of total revenue by year-end, supported by long-term capital partners in forward-flow arrangements. He added that FreshLine, which launched earlier in 2026, has performed ahead of expectations.

The company also said artificial intelligence is being used across underwriting, customer service and software development. Loans originated per customer service representative reached an all-time high and increased roughly 30% year over year, Kinross said, while AI contributed to nearly 50% of net new code written during the quarter.

Propel’s board approved a 6% increase in its annualized quarterly dividend to C$1.02 per share. The increase marked the company’s 12th consecutive quarterly dividend increase.

About Propel (TSE:PRL)

Propel Holdings Inc is a financial technology company committed to credit inclusion and helping underserved consumers by providing fair, fast, and transparent access to credit. It operates through its two brands: MoneyKey and CreditFresh. The company, through its MoneyKey brand, is a state-licensed direct lender and offers either Installment Loans or Lines of Credit to new customers in several US states. Through its CreditFresh brand, the company operates as a bank servicer that provides marketing, technology, and loan servicing services to unaffiliated, FDIC insured, state-chartered banks in the US (Bank Program).

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