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Introduction & Market Context
Jefferson Capital (JCAP) reported its second quarter 2025 financial results on August 14, 2025, showcasing exceptional growth across key metrics. The recently public company, which completed its IPO on June 25, 2025, is operating in a favorable macroeconomic environment for debt buyers, with normalizing charge-offs driving strong supply of non-performing portfolios.
The company’s presentation highlighted how current market conditions are creating a robust pipeline of opportunities. Delinquency balances are rising across auto loans, credit cards, and other consumer loans, while personal savings have fallen to historic lows with COVID excess savings now depleted. Despite these challenges for consumers, the relatively low unemployment rate of 4.2% continues to support strong portfolio liquidation rates.
As shown in the following chart of macroeconomic factors influencing Jefferson Capital’s business:
Quarterly Performance Highlights
Jefferson Capital delivered exceptional results in Q2 2025, with collections reaching $255.7 million, representing an 85% increase compared to the same period last year. This growth was primarily driven by deployments made in 2023 and 2024, with a significant contribution of $65.1 million from the Conn’s portfolio purchase.
Revenue for the quarter reached $152.7 million, up 47% year-over-year, while operating expenses increased at a slower rate of 37%, demonstrating the company’s operational leverage. This resulted in net operating income of $86.6 million, a 57% improvement from Q2 2024.
The company’s estimated remaining collections (ERC) reached a record $2.9 billion, up 31% from the prior year, providing strong visibility into future cash flows. Jefferson Capital expects to collect $889 million of this balance over the next 12 months.
The following slide illustrates the company’s key financial metrics for Q2 2025:
Collections and deployment trends over recent quarters demonstrate the company’s growth trajectory and disciplined capital allocation approach:
Detailed Financial Analysis
Jefferson Capital’s financial performance shows impressive year-over-year improvements across virtually all metrics. Pre-tax income reached $62.0 million, up 82% compared to Q2 2024, while adjusted pre-tax income increased 55% to $61.7 million. The company reported pro forma adjusted diluted EPS of $0.81 for the quarter.
Particularly noteworthy is Jefferson Capital’s industry-leading cash efficiency ratio of 75.9%, which improved by 638 basis points year-over-year. This metric significantly outperforms the rest of the sector, which peaks at 62.4%. The company attributes this efficiency to its relentless focus on operating efficiency, outsourcing of commoditized aspects, and variable cost structure.
The detailed comparison of financial performance between Q2 2025 and Q2 2024 is illustrated in the following slide:
The company’s efficiency metrics have shown consistent improvement over recent quarters, driving strong profitability:
Jefferson Capital’s estimated remaining collections provide insight into future revenue potential, with a well-diversified portfolio across geographies and collection timelines:
Strategic Positioning and Outlook
Jefferson Capital has positioned itself to capitalize on favorable market conditions while maintaining financial discipline. The company’s leverage ratio improved to 1.76x, down from 2.47x in Q2 2024, providing significant strategic flexibility. Management indicated they seek to operate the business long-term within a range of 2.0-2.5x net debt to adjusted cash EBITDA.
The company has secured $257.3 million of deployments through forward flows as of June 30, 2025, with $218.8 million contracted for the next 12 months. This provides visibility into future growth while allowing flexibility to pursue opportunistic purchases.
Jefferson Capital’s funding structure appears robust, with $825 million of remaining capacity on its revolving credit facility and $51.7 million of unrestricted cash on the balance sheet. The company has also pre-funded its upcoming 2026 maturity with a $500 million unsecured debt offering.
The following slide illustrates the company’s leverage trend and funding structure:
Capital Allocation and Shareholder Returns
Jefferson Capital’s capital allocation framework balances growth investments with shareholder returns. The company declared a quarterly dividend of $0.24 per share, payable on September 4, 2025, to shareholders of record as of August 25, 2025. Based on the July 31, 2025 closing price of $16.87, this represents an annualized dividend yield of approximately 5.7%.
Management emphasized their commitment to deploying capital at attractive risk-adjusted returns while maintaining leverage within their target range. The company anticipates that the fourth quarter will offer an elevated level of deployment opportunities, consistent with historical patterns.
While share repurchases are being evaluated as a longer-term option, the company is currently focused on not reducing trading liquidity given its limited float following the recent IPO. Jefferson Capital also highlighted its history of disciplined M&A, including geographic expansion, specialized servicing capabilities, technology acquisitions, and tactical asset purchases.
The company’s capital allocation framework is illustrated in the following slide:
Jefferson Capital’s strong Q2 2025 results demonstrate the company’s ability to execute its strategy effectively in the current market environment. With industry-leading efficiency metrics, a conservative balance sheet, and a disciplined approach to capital deployment, the company appears well-positioned to continue delivering value to shareholders while capitalizing on growth opportunities in the non-performing loan market.
Full presentation:
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