Earnings call transcript: World Acceptance beats Q4 2025 expectations

World Acceptance Corporation (WRLD) reported its fourth-quarter earnings for 2025, surpassing analyst expectations with an earnings per share (EPS) of $8.13, significantly higher than the forecasted $5.20. The company also exceeded revenue projections, reporting $165.3 million against an expected $152.46 million. Following the announcement, the stock saw a modest increase of 0.35%, reflecting positive investor sentiment. According to InvestingPro data, the company maintains a "GREAT" financial health score of 3.03, with particularly strong profitability metrics. The stock has gained over 22% year-to-date, outperforming many peers in the financial services sector.

Key Takeaways

• World Acceptance’s EPS of $8.13 beat the forecast by 56.3%.
• Revenue reached $165.3 million, surpassing expectations by 8.4%.
• The company’s stock increased by 0.35% in pre-market trading.
• A strategic shift towards smaller loans is underway.
• The company is piloting a new credit card product.

Company Performance

World Acceptance demonstrated robust financial performance in Q4 2025, with a notable increase in customer base by 3.5% and a strategic shift from larger to smaller loans. The company’s gross yields improved by over 100 basis points, indicating stronger efficiency and profitability. InvestingPro analysis reveals an impressive gross profit margin of 70.38% and a strong current ratio of 19.54, demonstrating excellent operational efficiency and liquidity. Despite a 4% decrease in total outstanding letters year-over-year, the firm maintained a focus on enhancing its product offerings and operational efficiencies. For deeper insights into WRLD’s financial health and growth potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

Financial Highlights

• Revenue: $165.3 million, up from the forecasted $152.46 million.
• Earnings per share (EPS): $8.13, including a $0.38 one-time benefit.
• Customer base increased by 3.5%.
• Non-refinance loan volume grew by 12.6% year-over-year.

Earnings vs. Forecast

World Acceptance’s actual EPS of $8.13 significantly outpaced the forecast of $5.20, marking a 56.3% surprise. This substantial beat reflects the company’s effective management and strategic initiatives, particularly in expanding its customer base and optimizing its loan portfolio.

Market Reaction

Following the earnings release, World Acceptance’s stock experienced a 0.35% increase, trading at $137.78. The stock’s movement indicates a positive market reaction, with investors responding favorably to the company’s earnings beat and strategic initiatives. The stock remains within its 52-week range, with a high of $161.63 and a low of $101.85, suggesting room for growth.

Outlook & Guidance

Looking ahead, World Acceptance plans to continue its shift towards smaller loans and expects a natural reduction in charge-off rates as its portfolio grows. The company is also preparing for a broader rollout of its credit card pilot in the spring and summer, aiming to capture a larger market share and improve credit quality. InvestingPro highlights several positive indicators, including management’s aggressive share buybacks and the company’s strong liquidity position. With a P/E ratio of 9.78 and solid growth prospects, WRLD presents an interesting value proposition. InvestingPro subscribers have access to 6 additional key insights about WRLD, along with detailed valuation metrics and growth forecasts.

Executive Commentary

CEO Chad Prashad expressed confidence in the company’s strategic direction, stating, "We’re confident in our strategy to control our own credit card and market it prudently to select customer types." Prashad emphasized the company’s return to its roots with a focus on smaller loans, highlighting ongoing research and competitor analysis in credit card development.

Risks and Challenges

• Potential macroeconomic pressures affecting consumer credit behavior.
• Competition from larger financial institutions in the small loan market.
• Execution risks associated with the rollout of the new credit card product.
• Regulatory changes that could impact lending practices.

Q&A

During the earnings call, analysts inquired about the company’s consumer behavior trends and tax preparation revenue growth. Management noted no significant changes in consumer behavior and attributed tax revenue growth to price increases. Additionally, the potential for increased share repurchases was discussed, contingent on bond negotiations.

Full transcript - World Acceptance Corporation (WRLD) Q4 2025:

Conference Operator: Good morning, and welcome to World Acceptance Corporation’s Fourth Quarter twenty twenty five 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 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 03/31/2024, 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. Please go ahead.

Chad Prashad, President and Chief Executive Officer, World Acceptance Corporation: Good morning and thank you for joining our fiscal twenty twenty five year end earnings call. Before we open up to questions, there are a few areas I’d like to highlight. We ended the year with a $1,220,000,000 outstanding letter, which is a 4% decrease year over year. However, our customer base increased by 3.5%. Of note, this is the first year of year over year customer growth since fiscal year twenty twenty two and we’ve returned to the largest customer base since the end of fiscal year twenty twenty two.

Reduced ledger and increased customer base are a result of our continued efforts to reduce our outstanding average balance per customer, which decreased 7.3% year over year following a 7.1% decrease last year. As we continue to focus on improving gross yields, which are improved by over 100 basis points this year and growing the customer base through primarily new and former customers as well as improved retention of existing customers, we continue to expect the average balance to right size in the upcoming fiscal year. On the surface, we continue to experience what may seem like sticky delinquency, which world looks like overall annual delinquency and charge off that appear stubborn to return to normal levels. Part of that roughly 125 to 150 basis points of the 17.5% annualized charge off rates is due to the portfolio shrinking this year and a reduction in the denominator itself as individual credit vintages appear steady or improved overall. With normal to mid single digit portfolio growth, we would expect natural 125 to 150 basis points reduction in the annualized rate, all else being equal.

The other major component of our delinquency rate is the growth in new customers this year. At the December 2024, we increased our newest customer bucket those with less than six months of tenure with the company by 36% compared to December 2023. That’s a $32,000,000 increase. This is important because these newest customers to world are our riskiest customers with the highest loss rates. As we rolled into the fourth quarter, this growth had an expected impact on our delinquency rates especially our sixty and ninety day buckets.

With our early stage zero to sixty day delinquent buckets, those actually improved. As of today, in April 2026, the current month, we’ve actually seen improvement sequentially in our thirty, sixty and ninety day buckets. It’s important to keep in mind that new customer growth is an investment with an outsized impact immediately to our provision for losses as well as the short term about one quarter lag impact to our delinquency rates. We’re also optimistic about the impact that improved training and quality of delinquency and loan servicing management will have on delinquency that’s already underway for fiscal year twenty twenty six. Our fourth quarter benefited from a 25% increase in tax return revenue this season, nearly $7,000,000 I do want to further point out that our fourth quarter EPS also benefited from a $2,800,000 after tax accrual release of share based comp expense or roughly zero three eight dollars per share.

This release comes from a portion of forfeited performance shares resulted in $8.13 per share this quarter, which would have been around 7.75 per share during the fourth quarter without this one time benefit. Non refinance loan volume during the fiscal year increased by 12.6% year over year, which followed a 10% increase last year. While maintaining high credit quality, low first payment default rates and improved gross and net yields. This has continued already into April of the current month fiscal year twenty twenty six with to date non refinance origination surpassing April of the most recent prior years going all the way back to April of fiscal year twenty twenty, including surpassing April of fiscal year twenty twenty three which was our previous high benchmark. Of note, the April non refinance volume here that I’m talking about is a number of originations not dollars originated.

This is an important distinction and the difference in our current strategy is really highlighted by comparing our April 2026 originations to April of fiscal year twenty twenty three. While the number originated thus far in this April is similar to April of twenty twenty three, the average balance from this April is 24% lower than it was back in April of fiscal year twenty twenty three and the gross yield today is 800 basis points higher. While the current month April’s originations first payments haven’t come due yet, The first pay default comparisons for the three prior months to each of these Aprils highlights an increase in our stability and performance. The Q4 originations from fiscal year twenty twenty five versus fiscal year twenty twenty two, the three months prior to each of those Aprils shows a lower first payment default rate in the most recent period. Again, coupled with a much lower balance and around 800 basis points higher gross yields with those comparable periods.

There’s must be optimistic about with the credit quality of what we’re originating today especially while growing our customer base. Our refinance loan volume has improved slightly by 3% year over year which we’re especially proud of during a period of increased refinance credit selectivity as well as reduced large loan credit offerings. Refinance volume dipped in the fourth quarter, namely during March, which we view as a temporary reduction in demand that has already rebounded in April of the current fiscal year. Refinance volume in the current month this April has already eclipsed the full month of April of last year both in terms of numbers as well as dollars of refinance originations still with a few days left of the current month. Similar to non refinance originations, these refinance originations also carry a lower average balance compared to prior periods.

Of note, the small and large loan makeup of our portfolio continues to shift towards small loans. For a peak of nearly 60% of the portfolio being large loans just two years ago, we’ve already reduced that down to 48% at the end of fiscal year twenty twenty five and expect the portfolio to continue to shift predominantly towards small loans. This is exemplified again by the reduction in average balance for non refinance and for refinance customers. For new customers, marketing and acquisition channel adjustments continue to show the increased quality in applications. Approval rates for new customers has continued to improve dramatically.

The third and fourth quarter approval rates increased around 50 compared to the third and fourth quarter of fiscal twenty twenty four, again while maintaining low first payment default rates and improved gross yields as well as significantly reducing our average loan size. Similar to refinance loan volume already in April of the current fiscal year 2026, we continue to see an increase of loan volume year over year and stability of credit quality for new customers. I’d also like to mention that the hard work of our special projects team for the last few years has resulted in our first World Finance credit card being piloted internally at the March. I’ve enjoyed the privilege of testing this credit card this month as we prepare wider pilots this spring and summer before offering it to our customers later this fiscal year. We’ve done a tremendous amount of research and vetting of competitor platforms, products and their successes and failures of the years as we reviewed several potential acquisition opportunities.

We’re confident in our strategy to control our own credit card and market it prudently to select customer types. Our main goals are to use this product to slowly and wisely better align yield with risk especially in rate cap states we’re currently in, help customers manage both installment and revolving credit, lower our overall cost of acquisition and cost of service, allow existing customers to maintain a relationship with World when they pay off their loan and or move out of our footprint states as well as expand our markets. Our approach is to be prudent on the road to serving the one in three Americans with low to no credit. Finally, we have an absolutely amazing team here at World and I’m very grateful for their commitment to their customers as well as to each other. They’re helping our customers every day to establish credit and rebuild credit all while maintaining all while meeting an immediate financial need.

At this time, Johnny Calmese, our Chief Financial and Strategy Officer and I would like to open up any questions you have.

Conference Operator: We will now begin the question and answer session. And our first question will come from Kyle Joseph with Stephens. Please go ahead.

Kyle Joseph, Analyst, Stephens: Hey, good morning guys. Thanks for taking my questions. Just I know there’s a lot going on in first quarter with tax refunds and everything, but just want to get a sense if you’ve seen any sort of shift in consumer behavior, call it since, I don’t know, mid, late February really when tariff noise really got loud, whether it’s on the demand or the credit side?

Chad Prashad, President and Chief Executive Officer, World Acceptance Corporation: I would say we haven’t seen any significant increase or decrease in demand or change in payments. So to that extent, we that hasn’t hit us yet.

Kyle Joseph, Analyst, Stephens: Got it. And then the portfolio, the mix shift to smaller loans, is that really a function of your underwriting or consumer demand or customer mix shift? And I think I heard you right in saying you would expect this trend to continue, right?

Chad Prashad, President and Chief Executive Officer, World Acceptance Corporation: Yes, great question. So it’s really more of a return to world’s roots. So historically, roughly 60% or higher our portfolio has been small loans where we would graduate a small portion of customers to large loans. We hit a peak of around 60% of the portfolio being large loans a few years ago. The strategy for last couple of years has really been to return to the bread and butter of the company, which is focusing on small loan customers.

So more of a shift in who we’re marketing to and how we’re underwriting loans than it is in customer demand.

Kyle Joseph, Analyst, Stephens: Got it. Makes sense. And then last one for me. The revenue growth on the tax front, I mean, obviously, that’s really strong. What’s driving that?

Is that a function of marketing? Are there any sort of changes in the competitive dynamics in that market? Obviously, a good thing, but just want to know what’s the driver there?

Chad Prashad, President and Chief Executive Officer, World Acceptance Corporation: Yes. So we’ve been doing market research for the last couple of years around the product we’re offering, pricing and customer demand. This year we increased prices and experienced very little if any reduction in demand throughout the tax season. Overall revenue was up around 25%. I believe number that we filed was down around 3% or 4%.

Kyle Joseph, Analyst, Stephens: Okay, got it. Great. Thanks for taking my questions.

Conference Operator: Our next question will come from John Rowan with Janney Montgomery Scott. Please go ahead.

John Rowan, Analyst, Janney Montgomery Scott: Hey, guys. Forgive me if you just answered this, but can you just give let me know why the insurance and other income was up so much? I assume it’s tax prep, but just it was about $5,000,000 up year over year. Just give me an idea of what that came from?

Johnny Calmese, Chief Financial and Strategy Officer, World Acceptance Corporation: Yes. Chad, it’s all through that, right. So, it’s the tax prep revenue. So, the insurance revenue is actually down a little bit. It’s all driven by the tax prep business.

John Rowan, Analyst, Janney Montgomery Scott: Okay. And then the allowance was down a little bit sequentially. Any reason why that went down?

Johnny Calmese, Chief Financial and Strategy Officer, World Acceptance Corporation: Largely, it’s going be the runoff in the portfolio.

John Rowan, Analyst, Janney Montgomery Scott: Okay. And what are your expectations for share repurchases going forward?

Johnny Calmese, Chief Financial and Strategy Officer, World Acceptance Corporation: Probably more than we’ve done this year. But that’s part of the negotiations we have with our banks and a lot of it also depends on our bonds have a limit on how much we can repurchase. This capped at 50% of consolidated net income. But we’re coming up to the point where we need to take those out and that will give us more flexibility to do more than that 50 of net income.

Chad Prashad, President and Chief Executive Officer, World Acceptance Corporation: So We’ve already repurchased over $100,000,000 I think $115,000,000 of the bonds. I mean we have about 185,000,000 That’s right. Yes. Okay.

John Rowan, Analyst, Janney Montgomery Scott: All right. Thank you very much.

Kyle Joseph, Analyst, Stephens: Thanks.

Conference Operator: With no further questions, this will conclude our question and answer session. I would like to turn the conference back over to Chad Prashant for any closing remarks.

Chad Prashad, President and Chief Executive Officer, World Acceptance Corporation: Thank you for taking the time to join us today. This concludes the fiscal year end twenty twenty five earnings call for World Acceptance Corporation.

Conference Operator: Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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