Atlanticus (ATLC) Q1 2026 Earnings Transcript

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Thursday, May 7, 2026 at 5 p.m. ET

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​Image source: The Motley Fool.Thursday, May 7, 2026 at 5 p.m. ETNeed a quote from a Motley Fool analyst? Email pr@fool.comContinue reading 

Image source: The Motley Fool.

Thursday, May 7, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• President & Chief Executive Officer — Jeffrey A. Howard
• Chief Financial Officer — William R. McCamey
• Chief Administrative Officer — Dan Mock

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TAKEAWAYS

• Net Income Attributable to Common Shareholders — $41.9 million, reflecting a 50% year-over-year increase and a 27% sequential rise.
• Diluted Earnings Per Share — $2.23, up 50% year over year and 27% sequentially.
• Return on Average Equity — 26.8% for the quarter.
• Total Operating Revenue and Other Income — $680 million, a 97% year-over-year increase, including $224 million contributed by the Mercury portfolio.
• Managed Receivables Growth (Excluding Mercury) — 35% year over year.
• Net Margin — $190 million, increasing more than 60% year over year, partly offset by higher funding costs and fair value impacts from portfolio growth.
• Changes in Fair Value of Loans — Negative $366 million, an increase of 105% year over year, attributed to the larger receivables base and corresponding charge-offs, only partially offset by improved assumptions and customer cohort performance.
• Favorable Impact from Mercury Acquisition Contingent Consideration — $13 million recorded as a benefit in the fair value mark.
• Delinquency and Charge-Off Trends — Described in the transcript as “stable and consistent with our expectations.”
• Interest Expense — $123 million, a 158% year-over-year decrease, reflecting higher debt balances and borrowing costs associated with receivables growth and Mercury portfolio financing.
• Total Operating Expenses — $131 million, a 69% year-over-year rise, driven by scale from the combined platform, increased marketing, customer acquisition, and servicing costs.
• Total Assets — $7.5 billion at quarter end.
• Total Equity — $44 million at quarter end.
• Unrestricted Cash — $650 million as of quarter end, noted as providing ample capital for continued growth.
• Operational Integration Progress — Integration of the Mercury acquisition is ahead of schedule, with faster portfolio management actions, origination volumes, and unit-level economics than originally modeled.
• Competition and Market Dynamics — The company notes increased competition, lower response rates due to elevated solicitation, and consolidation among major credit card providers, but management continues to find opportunities for prudent growth.
• Customer Behavior and Portfolio Performance — No material changes observed; payment and purchase trends remain stable, with customer cohorts performing as expected.
• Portfolio Mix and Expansion — Growth remains broad-based across private label and general purpose product lines, supported by higher customer acquisition and deeper engagement with retail partners.
• Management Outlook — The company expects to deliver earnings growth and return on equity at or above 20% targets going forward.

SUMMARY

Atlanticus Holdings Corporation (ATLC 4.66%) reported a transformational increase in both top- and bottom-line results, with rapid managed receivables growth and notable contributions from the Mercury acquisition. Management described operational synergies and cost realization ahead of internal timelines, specifically citing accelerated integration and improved origination rates. The company indicated competitive dynamics have shifted toward more rational market behavior, supporting sustained portfolio expansion without a rise in risk indicators. Strategic commentary highlighted a continued focus on technology unification, portfolio optimization, and a multiyear plan to enhance value within the expanded business segments.

• Jeffrey A. Howard said, “we are ahead of schedule on our operational integration and the creation of 1 Atlanticus.”
• William R. McCamey stated, “we are seeing the benefits of operating leverage begin to emerge.” as the combined platform grows.
• Management confirmed stable credit performance, noting the benefit of tax-season paydowns resulted in lower delinquencies and improved charge-offs in subprime and near-prime portfolios.
• The company emphasized that consumer trends—such as payment rates and on-time payments—have remained normal despite macroeconomic uncertainty and inflationary pressures.
• Regarding competitive shifts, Howard explained consolidation after the fintech bubble has led to fewer competitors engaging in “rational pricing,” favoring Atlanticus’s long-term positioning.

INDUSTRY GLOSSARY

• Managed Receivables: Total outstanding customer loan balances serviced or owned by the company, used as a core measure of credit portfolio growth.
• Contingent Consideration: Future payments contingent on specific conditions, commonly linked to M&A performance metrics, and recognized as a gain or liability adjustment in financial statements as those conditions change.

Full Conference Call Transcript

Dan Mock: Thank you, operator, and good afternoon, everyone. Atlantica released results for the first quarter ended March 31, 2026 this afternoon after market close. If you did not receive a copy of our earnings press release, you may obtain it from the investor Relations section of our website at investors.atlanticus.com. We have also posted an updated investor presentation. With me on today’s call are Jeffrey A. Howard, president and chief executive officer, and William R. McCamey, chief financial officer. This call is being webcast and will be archived on the investor relations section of our website.

Today’s discussion may contain forward looking statements that reflect the company’s current views with respect to, among other things, earnings growth, returns on equity, portfolio performance, the benefits of the acquisition of Mercury, including expected synergies, and future financial and operating results. These statements are subject to certain risks and uncertainties, that could cause actual results to differ materially from those included in the forward looking statements. Please review our earnings release and the risk factors discussed in our SEC filings. The forward looking statements speak only as of the date on which they are made, and except to the extent required by federal securities laws, the company disclaims any obligation to update any forward looking statement.

In addition, during this call, we may refer to certain non GAAP financial measures. Please refer to our earnings release for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measures. And with that, I will turn the call over to Jeffrey.

Jeffrey A. Howard: Thanks, Dan. Good afternoon, everyone, and thank you for joining us. 2026 is off to a very good start. Combining strong legacy asset performance with continued momentum from our recent acquisition of Mercury Financial. Now 2 full quarters into the Mercury acquisition, and the integration continues to progress well. Last quarter, we noted that we were ahead of plan, and that pace continued throughout the first quarter. We are encouraged by the early results from our portfolio management actions which are ahead of our acquisition model, as well as better than planned origination volumes and unit level economics. And most importantly, we are ahead of schedule on our operational integration and the creation of 1 Atlanticus.

As I stated in our earnings release, we are a more scaled, better resourced, more talented, and capable company than we were at this time last year. And I will further add with the ability to serve an even broader customer base. We are excited about the opportunity to build on these enhancements in the periods ahead. Aside from the Mercury acquisition, we also experienced growth in our legacy portfolios which reinforces the underlying strength of the platform. With managed receivables growth excluding Mercury, of 35%. This growth remains broad based across both our private label and general purpose product lines. Supported by increased customer acquisition on behalf of our bank partners and deeper customer engagement.

As well as retail partners’ organic growth and market share gains within those partnerships. From an overall portfolio perspective, we continue to see favorable asset level performance. Payment behavior remains consistent. Purchase activity is steady. And newer customer cohorts are performing well as they season. While macro uncertainty persists, we have not observed any material change in underlying trends. In fact, we continue to see stable and rational consumer behavior across the portfolio. Through our deep data driven insights, we are closely monitoring our book of managed receivables for any signs of stress, particularly given the market’s concern regarding recent increases in gas prices.

Utilization rates, payment rates, first pay default, early delinquency trends, percent of consumers making on time payments, percent of consumers making more than the monthly minimum payment, all exhibit normal behavior. Yes. Spending patterns have shown some changes. The percent being spent on gas did increase in March. But remains in line with 2023 and 2024 spending levels. And well below 2022 levels. Conversely, we are actually seeing higher levels of discretionary spending and dining out expenditures. While we are mindful of the risk associated with inflation and specifically the continued rise in gas prices, we also note that the economy at large is in reasonably good shape. Unemployment rates are steady, Jobless claims are at a 50-year low.

And according to published reports, deposits as a percent of disposable income and inflation adjusted deposit levels for middle income consumers remain substantially higher than pre pandemic levels. As a result, we continue to feel confident in our portfolio performance and the continued achievement of our unit level return targets. From a competitive standpoint, as mentioned last quarter, the general purpose card environment remains active with continued elevated solicitation levels across the markets we serve. As a result, we are seeing somewhat lower response rates. Despite this increased competition, we continue to see opportunities for prudent growth, attractive asset level returns which are supported by our differentiated analytics, multiple product offerings, and omnichannel origination capabilities. Turning to financial performance.

We delivered another strong quarter of earnings with net income attributable to common shareholders of 41.9 million or $2.23 per diluted share up 50% year over year and 27% sequentially. We also achieved a return on average equity of 26.8%. As we look ahead, we believe the business is better positioned than we have ever been. We remain focused on further optimizing the Mercury portfolio, leveraging our scale, driving disciplined growth, and maintaining stable credit performance as we continue to seek to serve the more than 100 million everyday Americans looking for a trusted financial partner.

We are excited about the momentum we have coming out of Q1, and continue to expect to deliver earnings growth and returns on equity at or above our targets of 20%. With that, I will turn the call over to Bill.

William R. McCamey: Awesome. Thanks, Jeffrey. Thank you, everyone, for joining us. I will begin with revenue. For the first quarter, total operating revenue and other income increased 97% year over year to $680 million including $224 million from the Mercury portfolio reflecting its continued contribution along with ongoing growth in our legacy receivables and customer base. Net margin increased over 60% year over year to 190 million reflecting the earnings contribution from a larger receivable base partially offset by higher funding costs and the higher fair value impacts of associated with portfolio growth.

Changes in fair value of loans were negative 366 million an increase of 105% year over year, reflecting a larger receivables base, and the corresponding charge offs, particularly offset or partially offset by favorable assumption changes and continued improvement in newer customer cohorts. First quarter seasonal dynamics, including tax related paydowns and typical moderation in new receivable growth, along with continued portfolios seasoning provided a modest benefit to fair value. The quarter also included approximately $13 million of favorable impact related to reduction in contingent consideration associated with the Mercury acquisition. Delinquency and charge off trends remain stable and consistent with our expectations.

As anticipated, we are seeing the benefit of tax season in the first quarter with lower delinquency levels and corresponding improvements in charge offs last year. Interest expense decreased 158% year over year to 123 million reflecting higher debt balances associated with receivables growth, higher borrowing costs, and financing associated with the Mercury portfolio. Total operating expenses increased 69% year over year to $131 million, reflecting the scale of the combined platform, higher marketing and customer acquisition activity, and increased servicing costs as the portfolio continues to grow. As we continue to scale the platform, we are seeing the benefits of operating leverage begin to emerge. Turning to the balance sheet.

We ended the quarter with total assets of $7.5 billion and total equity of $44 million along with $650 million of unrestricted cash providing ample capital to can support continued growth. The first quarter reflects continued revenue growth stable credit performance, meaningful integration progress, and solid earnings expansion. Looking ahead, we remain focused on disciplined, profitable growth to most effectively deploy our capital. With that, I will turn the call back to the operator for questions.

Operator: Thank you. Ladies and gentlemen, it is a reminder to ask a question. And wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from the line of David Sharp with Citizens Capital Markets. Your line is open.

Analyst: Hi. Good afternoon. Thanks for taking my questions. Congrats on a very strong start to the year. And I guess 1 of the things I was, well, curious to get some color on, Jeffrey, is maybe how you define ahead of plan in so many of the aspects of the Mercury deal, You obviously were looking at this target for quite a while.

And can you provide a little more color maybe first on why you think you are kind of performing ahead of pace on originations in that asset, whether it is something that is deliberate in terms of kind of a lean into marketing or if there was just something about the product that seems to be capturing share. And then, I guess, secondly, on the integration front, does being ahead of plan refer to just timing? Or are there potentially greater cost synergies than you originally anticipated?

Jeffrey A. Howard: Yes. Thanks, David. I will try to go through those sequentially as you ask them, but obviously, a lot of good questions there. Really getting behind the detail of why we are so excited about what we have been able to accomplish and look forward to accomplishing with the Mercury acquisition. You rightly point out that we had a lot of time to due diligence and build models and come up with an operating and financial plan for the Mercury acquisition. You know, that included repricing and in terms activities that include operational integration, that include overhead reduction. A whole host of things that we had, you know, well laid out as our operating plan.

I think the biggest driver of it thus far has been the change in terms. We were able to be executed more quickly. And the adoption rate, and I will call it stickiness, and response from consumers has been better than modeled. And so we are getting better financial performance on that repricing that we had originally modeled. Additionally, we are seeing I guess, the more rapid realization of some of the operating synergies and, therefore, the leveraging of the combined infrastructure. And we are putting the companies together from a technology and infrastructure perspective ahead of our schedule.

So across all of the metrics that you have mentioned as possibilities for areas that we, quote, unquote, say we are ahead of plan, we are checking all of those boxes. As it relates to, new originations and being a bit ahead of tempo there as well, we were really conservative. We were conservative in terms of our acquisition model and the change in terms. We are also very conservative in terms of what we thought we might be able to do from an origination perspective. And I would say, having the capital to put behind the team and to lean into opportunities where we see at or above unit level target return opportunities in the market.

We have been able to put capital to work there, and that supported the team to find those opportunities, bring those opportunities up, and increase the mail velocity, increase some of our online partnerships. And really expand at a rate that is a bit faster than we had in terms of new account origination.

Analyst: Got it. No. I appreciate that color. And maybe just as a follow-up, this is more in the weeds. The $13 million kind of contingency release, where would we see that in the p and l?

William R. McCamey: Well, that is in our fair value mark, David.

Analyst: Oh, okay. Got it. Okay. Understood. Great. Thank you. Yep.

Operator: Our next question comes from the line of Vincent Kaintic with BTIG. Your line is open.

Vincent Kaintic: Hey, thank you. Good afternoon. Thanks for taking my questions and congratulations on that great quarter. First, I wanted to talk about the relative comp competition comments. You talked earlier about maybe competition increasing a little bit. But it is pretty amazing to see, you know, the same company managed receivables growth 35% year over year. Think of I do not cover any other company that is growing that fast. And it seems like loan growth, you know, with other credit card and purchase finance providers are slowing down. So should we read that to mean that you are taking shares, maybe some prime lenders and others are tightening. Would you attribute it to your to– Atlanticus’s own sales efforts?

I did not note on the press release, there was a paragraph about expanding with 1 of your retail partners. If you could maybe describe that in more detail, is that retailer shifting away from another provider towards Atlantica’s or is that a new kind of greenfield opportunity for expansion? Thank you.

Jeffrey A. Howard: Yeah. Thanks, Vincent. Appreciate the questions. On the general purpose side, I think that the competition has increased as people have realized that there is stability in the consumer segment that we market in, and I think that is indicative of not just our view, but of what our competitors are seeing as well. You know, we had a massive amount of what I would consider irrational competition during the, quote, unquote, fintech bubble. You know, call that from kind of, you know, 2015 to 2021, 2022. That competition is rationalized.

I think it is consolidated amongst, 5 or 6 players in this space that are, have a long history of serving this consumer, and they, like us, are seeing a good stable consumer and are leaning into those market opportunities. And we are just seeing more mail volume. In the direct mail channel than we have seen in a while. And as a result, you know, we have seen slightly lower response rates. But for the most part, it is rationally priced competition, We are, you know, all trying to serve that 100 million consumers, so it is a really, really, really big market at a time where we are seeing more rational pricing coming from fewer competitors.

And I think that is really the summation of it. I think a lot of concern and or headline grabbing quotes have been made about the k-shaped economy and I think a lot of that has more to do with the separation between the top half and the bottom half. But the bottom part of that case shape is really doing fine. it is stable. it is not decreasing. it is not showing any real signs of stress, and I think the market in total is just leaning into that and continue to serve that consumer, more fully. On the retail credit side, I think you hit the nail on the head. We are taking share.

You might recall that we bought a portfolio from another competitor in this space. Back in October. So there is some consolidation of the competition there as well. The merchant partners that competitor served, we have grown our share within. Well as continue to grow with existing merchants who are know, having some organic growth of their own. So I would say we are sort of checking the box boxes across all of those variables. We are taking share. We are continue to grow and supporting some of the organic growth that exists at our merchant partners. As a result, we are seeing, you know, good attractive growth across the entire portfolio. Okay. that is great. Thank you.

And then wanted to kind of touch back on that. Mercury acquisition update and maybe just a follow-up on David’s question. But so sounds like things are better relative to the guidance. Maybe if you could help us understand because you provided a multiyear guidance framework on the acquisition slide deck when Mercury was announced. Where are we in that path? Has your view of guidance changed since the terms of are we still in line with guidance? Are things looking better than that guidance pathway? If you could also talk about what is left in terms of the integration pathway. Thank you. Yeah. Good question. Thank you. I think we feel very good about the guidance we provided.

Obviously, we provided a range of guidance for both 2026, 2027, and feel very good about our progression towards the achievement. Of those financial outcomes within that range. As to what is left, you know, there is ongoing opportunities in the portfolio optimize it, continue to undertake portfolio management activities that we think will result in long term value creation, whether it be, you know, continue repricing, credit line increases, in some cases, APR reduction to help stimulate retention and growth with existing lower risk account holders. And that is just an ongoing exercise that we now have a more scaled portfolio to undertake those portfolio management activities on. So, you know, that will be an ongoing process for us.

It relates to sort of the operational integration, there is some more technology work that needs to be done. Obviously, we had 2 disparate infrastructures that we are trying to bring together. You know, those are gonna happen over the course of, as we had outlined before, about an 18-month timeline. We feel good about that timeline. Feel like we will probably come in before that 18 month period expires, but there is still some work to be done there. We had a multiple databases decision engine, system of records, all that needs to get consolidated, and this work that is well underway.

And we feel like we have a very thoughtful plan in place and a team that is extraordinarily adept at, in accomplishing those tasks.

Analyst: Okay. Great. Thank you.

Operator: Thank you. As a reminder, ladies and gentlemen, that star 1 to ask the question. Please stand by for our next question. Our next question comes from the line of Randy Binner with Texas Capital. Your line is open.

Analyst: I had a couple, if I could. I guess the first 1 is just on the lower response rates. And so there is a lot of competition, but is it is it also kind of a read on your target market like, not maybe not reaching as much for credit. Is there another way to look at you know, lower response rates in addition to just being a lot of competition? Is that is that kind of a sign of stability that they do not you are not getting, you know, like, really high responses?

Jeffrey A. Howard: Yeah. I think there is 2 ways to look at it. 1, do we have a supply issue, or 2, do we have a demand issue? We are certainly seeing, based on third party data, an increase of supply. We are certainly seeing more mail. You know? But you are right to point out that if there are early signs of stress, you typically see demand from consumers, and therefore response rates go up. And we are not seeing that across any of our channels per se. Like we said before, we are seeing good stable performance across all of our early indicators. You know, response rates or demand for credit being 1 of them.

But I think it is just indicative of stability. I think we see a lot of people using term resilience. Like the term stable better because we have not seen anything in our data that suggests the customer is struggling against some headwind. We know the gas prices are going up. Have not really seen it affect credit yet. We have seen some changes in other payment behavior. And like we have seen over in our 30 year history, if our consumer is given time to adjust, to whatever headwind, they have, they have found a way to do that. And that is what, you know, why we like the space that we are in.

The utility they see in our product, they treat accordingly. And, therefore, we see, you know, better performance over time as long as the consumers had a chance to, have time to adjust to that. I think that is what we are seeing now. You know, they can– we are seeing some indications that consumers are driving less because gas prices are up. We saw when, food inflation was up, a shift from dining out to groceries. Our consumer is typically gonna try to find ways to adjust their lifestyle, whether it be through changing expenditures or supplementing income. Continue to meet their credit obligations. And that is the sort of steady performance we are seeing.

It has not led back to your original question to what we have seen as an unusual demand for credit. Alright. that is helpful. And then I guess I guess I– and then I came into the call late. I apologize if I missed this, but the some tax refunds that was a big you know, it is been a big talking point, I guess, going into earnings, but it is it is broadly reported at this point that the refunds were you know, maybe, like, 9% to 12% higher than last year. It depends on the source you look at. But I think yeah.

I am I am I am wondering if you saw, like, kind of typical like, your experience with tax refunds because of the, you know, the big beautiful bill? Tax reforms. Did you see that? Is was most of it kind of front loaded, like, meaning it was in these first quarter numbers? Or would we still see it in the second quarter? And did that help organic growth at all? Does it anything on the delinquency numbers? Just kind of interested in how that keeps your first quarter numbers, and if it if it could be something to consider as we think about second quarter. Yeah. Good question. And let me answer the growth part of that question first.

And that is, no. It did not real it did not affect our growth or leaning into originations in any way, shape, or form. Obviously, we have got 30 years worth of modeling to understand how seasonality works for our consumer space and, you know, do not tend to try to play the timing game as it relates to tax season. I will say that our portfolio now is obviously much larger than it was a year ago. We have more data in the near prime space than we did before. So we are able to see the impact of tax season across a broader subsegment of the less than prime consumer space.

And, you know, what we did see was a what I would consider a better tax season in the deeper subprime. We saw greater reduction in early delinquencies. We saw, like, what I consider a longer tax season in the near prime space. But importantly is how do things look coming out of tax season? I would say as we look at it right now, coming out of tax season looks very much like it did last year. Okay. And it just, like, 1 because I feel like I have heard different accounts of this earnings season. You feel like a lot of that impact was before March 31?

Or will that kind of continue into some of the second quarter numbers? No. We see tax benefit that does lean into, you know, into April. I said, particularly on the near prime portfolio, that tax season was a little bit more extended. It started a little later, ended a little later. But, yeah, across our entire portfolio, we see the benefit of tax pay down through March 31 and into the early parts of first quarter.

Analyst: Okay. Yeah. Yeah. I see what you have– you are– that word. Excuse me. that is helpful. Yeah. Understand. Alright. Well, I will leave it there. Thank you. Yeah. Thank you.

Operator: Thank you. Ladies and gentlemen, this concludes the Q&A session. I would now like to turn the call back to Jeffrey A. Howard for closing remarks.

Jeffrey A. Howard: Yeah. Thank you. And I want to thank everyone for their interest. We are obviously very pleased with Q1 and equally so in positioning our business on a go forward basis. We are excited about the opportunities that lie ahead for us, not just with the Mercury acquisition integration and, obviously, the leveraging of that platform and the ongoing profit growth for us, but the organic opportunities that exist across our entire platform, whether it be retail credit, general purpose, health care, all of our lines of business.

So we are excited about the positioning of our business, excited about what lies ahead for us, and we are certainly looking forward to sharing those results with you in, in the next quarter. So thank you all.

Operator: That concludes today’s conference call. Thank you for your participation. You may now disconnect.