Earnings call transcript: World Acceptance beats Q3 2025 forecasts

World Acceptance Corporation (NASDAQ:WRLD) reported its Q3 2025 earnings, significantly surpassing analyst expectations. The company posted an earnings per share (EPS) of $2.45, compared to the forecasted $1.23, and achieved a revenue of $138.6 million, exceeding the anticipated $136.67 million. Following the announcement, WRLD’s stock price surged by 10.36% in pre-market trading, reflecting strong investor confidence.

Key Takeaways

• EPS of $2.45 far exceeded the forecast of $1.23.
• Revenue reached $138.6 million, surpassing the projected $136.67 million.
• Stock price increased by 10.36% in pre-market trading.
• Portfolio growth returned to pre-pandemic levels with a 6.6% increase.
• Shift towards smaller loan products continues to drive strategy.

Company Performance

World Acceptance’s performance in Q3 2025 marked a significant improvement compared to the previous year. The company’s portfolio grew by 6.6%, a substantial increase from the 1.5% growth seen in Q3 2024. This growth was accompanied by a 200 basis points improvement in yields and a 4% increase in the customer base year-over-year. Despite a decrease in the average loan balance by 5.1% from December 31, 2023, the strategic focus on smaller loans appears to be paying off.

Financial Highlights

• Revenue: $138.6 million, up from the forecast of $136.67 million.
• Earnings per share: $2.45, exceeding the forecast of $1.23.
• Portfolio growth: 6.6% in Q3 2025 vs. 1.5% in Q3 2024.
• Customer base: Increased by 4% year-over-year.

Earnings vs. Forecast

World Acceptance delivered an EPS of $2.45, significantly outperforming the forecast of $1.23, marking a surprise of approximately 99%. This beat represents one of the strongest performances in recent quarters, highlighting the company’s effective strategic adjustments. Revenue also exceeded expectations, coming in at $138.6 million against a forecast of $136.67 million.

Market Reaction

Following the earnings announcement, WRLD’s stock price rose by 10.36% in pre-market trading, reaching a new high within its 52-week range. This positive movement reflects investor optimism driven by the company’s strong earnings performance and strategic focus on smaller loan products.

Outlook & Guidance

Looking ahead, World Acceptance remains cautiously optimistic. The company anticipates continued improvements in yield and delinquency trends and expects steady portfolio growth into fiscal 2026. Management is also optimistic about the upcoming tax refund season, which traditionally boosts loan demand.

Executive Commentary

CEO Chad Prashad expressed confidence in the company’s strategic direction, stating, "We’re excited about the results we’re seeing throughout the portfolio after a few years of rightsizing and derisking." He emphasized the shift towards smaller loans, noting, "We’ve moved and shifted towards smaller loans over the last 2 to 3 years."

Q&A

During the earnings call, analysts inquired about the company’s portfolio growth strategy and the impact of shifting to smaller loan products. Management addressed these concerns, highlighting the positive impact on customer acquisition and retention, as well as the improved approval rates.

Risks and Challenges

• Potential macroeconomic shifts, such as changes in unemployment or inflation, could impact loan demand.
• Competition in the consumer loan sector remains intense, requiring ongoing strategic adjustments.
• The focus on smaller loans may pressure margins if not managed effectively.
• Regulatory changes in consumer lending could affect operational dynamics.
• Seasonal factors, like the tax refund period, introduce variability in demand.

Full transcript - World Acceptance Corporation (WRLD) Q3 2025:

Conference Moderator, World Acceptance Corporation: Good morning, and welcome to World Acceptance Corporation’s 3rd Quarter 2025 Earnings Conference Call. This call is being recorded. The comments made during this conference call may contain certain forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 that represent the corporation’s expectations and beliefs concerning future events. Such forward looking statements are about matters that are inherently subject to risks and uncertainties. Statements other than those of historical facts as well as those identified by the words anticipate, estimate, intend, plan, expect, believe, may, will and should or any variation of the foregoing and similar expressions are forward looking statements.

Additional information regarding forward looking statements and any factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward looking statements are included in the paragraph discussing forward looking statements in today’s earnings press release and in the Risk Factors section of the corporation’s most recent Form 10 ks for the fiscal year ended March 31, 2024, and subsequent reports filed with or furnished to the SEC from time to time. The corporation does not undertake any obligation to update any forward looking statements it makes. At this time, it is my pleasure to turn the floor over to your host, Chad Prashad, President and Chief Executive Officer.

Chad Prashad, President and Chief Executive Officer, World Acceptance Corporation: Good morning. Thank you for joining our fiscal 2025 Q3 earnings call. Before we open up to questions, there are a few areas I’d like to highlight. We’re excited about the results we’re seeing throughout the portfolio after a few years of rightsizing and derisking. Notably, yields have improved by over 200 basis points year over year.

Portfolio growth in the 3rd quarter returned to pre pandemic norms. The loan portfolio itself continues to perform well as 1st pay default rates remain low, even as we’ve increased our growth over the last several quarters. And finally, our portfolio has returned to essentially the same size year over year after shrinking 10% year over year at the end of the Q3 last year, as well as shrinking 3 of the last 4 years year to date. Our customer base has actually increased by 4% year over year compared to shrinking 2.2% for the 12 months ending December of 2024 and shrinking 14% for the same period of fiscal ’twenty 3. All of these results show a stabilized portfolio with both higher credit quality and higher yields as we’re poised to steadily grow in fiscal ’twenty six.

During the Q3 of ’twenty five, we grew the portfolio by 6.6% compared to 1.5% during the Q3 of fiscal ’twenty four, and shrinking 2.8% in fiscal ’twenty three. For the customer base, we experienced 7% growth in our customer base during the Q3, which compares to 3% during the Q3 of the prior year, as well as an average of 6.3 percent customer base growth pre pandemic. We worked diligently to regrow our customer base with higher credit quality customers, while decreasing our overall average balance to ensure the right risk reward profile across our customer base and to improve our yields and long term customer profitability. Year over year, our average balance has decreased by almost 5.1% from December 31, 2023, and by 12.6% from December 31, 2022. Our yields have improved notably for the entire portfolio, driven by an improvement in yields for both our non refinance customers as well as now including our refinance customers.

Our non refinance volume has rebounded during the Q3 with over 18% more loans made during the Q3 compared to fiscal ’twenty four and 53% more compared to fiscal ’twenty three. All this growth comes with marked improvement in yield as well as stable early performance indicators for credit quality. For new customers, marketing and acquisition channel adjustments continue to show increased quality and applications. Our approval rates for new customers has improved dramatically. The 3rd quarter approval rates increased by 47% compared to the same period of fiscal ’twenty four and by 80% compared to the same period of fiscal ’twenty three, all again while maintaining low first payment default rates and improving our gross yields.

With these shifts in the portfolio makeup and the weighting continuing into this current calendar year, we expect to see yields and delinquency trends continue to convert to the same revenue and income trends that we’ve already seen so far this year, as well as into fiscal ’twenty six. We do continue to see an opportunity to improve our delinquency and charge off rates, especially related to the large loan portfolio, part of which stems from our outsized investments into large loans made during fiscal years ’twenty one and ’twenty two. Finally, in closing, we have an absolutely amazing team and I’m very grateful to their commitment to our customers and to each other. They are helping our customers every day to establish credit, rebuild credit, as well as meeting an immediate financial need. At this time, Johnny Cummings, our Chief Financial and Strategy Officer, and I would like to open up to any questions you have.

Conference Moderator, World Acceptance Corporation: And the first question will come from Kyle Joseph with Stephens. Please go ahead.

Kyle Joseph, Analyst, Stephens: Just thinking about growth versus credit quality in the macro environment, obviously, inflation is lingering and there is still macro environment, obviously, inflation is lingering and there’s still good loan demand, but it really sounds like a lot of your kind of return to growth has been driven by new customers. Is that fair? And then going forward, is this kind of the type of environment where you can see sustaining portfolio quality while also growing the portfolio?

Chad Prashad, President and Chief Executive Officer, World Acceptance Corporation: Yes. Good morning, Kyle. So a lot of our growth has been from non refinance customers. So that includes our former customer base as well. While we have increased our approval rates and overall booking rates of our new customers, they still remain, I would say, within the normal range from a historic perspective.

Over time, over the last year or 2, we’ve really focused in on attracting former customers to return to us, as well as increasing the retention of our current customers. So to that point, from a risk perspective in the current macro environment, we’re not any more weighted towards new customers now than we have been in the past, pre pandemic especially. We’re certainly less weighted towards new customers today than we were from 2018 on through like 2021 or so. In terms of credit quality in the macroeconomic environment, We’ve moved and shifted towards smaller loans over the last 2 to 3 years than we were doing in fiscal ’twenty one and fiscal ’twenty two, which allows us a little more flexibility in how we’re underwriting and the type of loan products that we are fitting our customers with to make sure that we can recognize the product matches the risk of the customers, especially with new customers. So in this environment, I don’t anticipate unemployment to move up dramatically or even on the inflation side to see any real additional demands on our customers’ pocketbooks that would have any real significant change in the way that we expect them to be able to repay their loans.

So I don’t really anticipate anything in the short term to have any significant impacts negatively.

Kyle Joseph, Analyst, Stephens: Got it. Hey, so it’s a good segue. Yes, on the portfolio yield you highlighted, I think, a 200 basis point improvement. Is that a function of mix? Is that a function of credit quality?

And kind of give us a sense for do you see that being stable going forward at the new base level?

Johnny Cummings, Chief Financial and Strategy Officer, World Acceptance Corporation: Yes. I’ll take that. It’s primarily mix, right? So you can see that our large loan portfolio as a percent of the mix has shrunk to 48.2%, whereas it was 55.2% last year. So year over year our large loans have shrunk close to 14%, while our small loans have grown close to 14%.

So that’s the largest part of it. But yes, certainly credit quality will have a part in that as well. So yes, we’re not accruing interest on our non performing loans. So that does help as well.

Kyle Joseph, Analyst, Stephens: Very helpful. Thanks. And then one last one for me, just given where we are in the quarter. Any insight you guys have on tax refunds? How you’re thinking about this season in terms of timing and magnitude versus last year?

Chad Prashad, President and Chief Executive Officer, World Acceptance Corporation: Yes, I mean, I think it’s still a little too early to tell. I think we’re off to a good tax season. We’ve made a number of operational changes over the last couple of years that have really taken hold and taken root in our branches throughout the country. So kudos to our operators. I think they’ve done a wonderful job there.

From a marketing perspective, same thing. So I think we’ve seen early signs are at least the same or increased customer demand or interest in the product with us. But it’s still it’s early. We haven’t quite hit our biggest weeks yet that we normally file, which will be this week into the 1st couple of weeks of February. So I would say it’s early to tell, but we’re cautiously optimistic.

Kyle Joseph, Analyst, Stephens: Great. Thank you very much for answering my questions.

Johnny Cummings, Chief Financial and Strategy Officer, World Acceptance Corporation: Thanks, Kyle.

Conference Moderator, World Acceptance Corporation: Our next question will come from John Rowan with Janney. Please go ahead.

John Rowan, Analyst, Janney: Good morning, guys.

Johnny Cummings, Chief Financial and Strategy Officer, World Acceptance Corporation: Good morning, John.

John Rowan, Analyst, Janney: So, it feels like you guys are obviously kind of re embracing the small loan portfolio, kind of the history of the company. I’m curious, I mean, are you guys marketing to customers that I want to say jettisoned, but were not really the core focus as you were growing the large loan portfolio? Are you going back to former customers? Are you marketing to them? And what are you marketing to them?

Is it the same economics that we grew to know in the history of the company, meaning

Chad Prashad, President and Chief Executive Officer, World Acceptance Corporation: the yields,

John Rowan, Analyst, Janney: the periods in which you market or refinance and then also the typical refinancing rates that the company has had for 20 or so years. I’m just curious if you’re basically remarketing the same small loan product to the same customers that may have left the company during the growth of the large portfolio growth?

Chad Prashad, President and Chief Executive Officer, World Acceptance Corporation: Yes. Good morning, John. Great question. So there’s a little bit of yes, there’s a lot of no to that answer. So we are moving back towards smaller loan customers, not quite as small on the whole as you would have seen pre-twenty 20.

To give you some context, leading up to 2020, our average new or non refinance customer was seeking around a $6.50 loan. Today, that’s closer to around $800 to $8.50 which is still down a good bit from the $1100, dollars 11.50 that we were lending back in calendar 2022 and part 2021. So while we’ve come back down, it’s still not as low as it used to be. On the economic side, we have worked to get our yields up close to where they used to be. Again, the loans are not quite as small as they used to be, so the yields are not going to be quite as high as they used to be, the gross yields.

And then on the refinance side, I don’t see us ever being able to return to a super high refinance rate that you would see back pre-twenty 10, certainly not even back to what you would see pre-twenty 15. Part of that is the product itself is a little bit different. So our average term is longer than it used to be. So for a new customer walking the door, you’re looking at around 12 months. For a term, all of our loans today are closer to about 18 months for an average term.

So we’re typically not going to see customers refinance more than once or twice within a year, just given the length of that loans, right? So we’re not in a period where we’re looking at 6 month term loans or 7 month term loans and 4 refinances in a year. So it’s moved on to a different product from that perspective. From an overall performance perspective though, we are still really focused on, one, the small loan customer from a growth perspective for new and former customers, and we do continue to market to those former customers who’ve left us over the last couple of years to return for smaller dollar loans. On the larger loan side, we are actively and continue to actively continue to work to make sure that large loan portfolio is really well underwritten and also secured.

John Rowan, Analyst, Janney: Okay. Just make sure I understood one of the answers. Particularly with the duration. So on a small loan today, what’s the stated contractual length when the loan is underwritten and when are you marketing a refinance? Like what’s the contractual life versus the actual life of the average life of the portfolio basically?

Chad Prashad, President and Chief Executive Officer, World Acceptance Corporation: Yes. So the typical new loan will be, let’s say, around 12 months, with roughly 45% of our customers choosing to refinance in the 1st year. It’s probably the best way to articulate that. Yes.

Johnny Cummings, Chief Financial and Strategy Officer, World Acceptance Corporation: I think the expected life versus yes, probably more around 7 to 8 months where the contractual life is probably 12 to 13

John Rowan, Analyst, Janney: for the portfolio. Yes, that’s what I need to know. All right. Thank you very much.

Conference Moderator, World Acceptance Corporation: This concludes our question and answer session.

Chad Prashad, President and Chief Executive Officer, World Acceptance Corporation: I would like to turn the

Conference Moderator, World Acceptance Corporation: conference back over to Chhabra Shah for any closing remarks.

Chad Prashad, President and Chief Executive Officer, World Acceptance Corporation: Thank you guys for taking the time to join us today and this concludes our Q3 earnings call for World Acceptance Corporation.

Conference Moderator, World Acceptance Corporation: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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