ENCORE CAPITAL GROUP INC (ECPG)

CIK: 0001084961. SIC: 6153 Short-Term Business Credit Institutions. Latest 10-K as of: 2026-02-25.

SIC breadcrumb: Finance, Insurance, And Real Estate > SIC Major Group 61 > SIC 6153 Short-Term Business Credit Institutions

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1084961. Latest filing source: 0001084961-26-000009.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-25. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001084961.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-06. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001084961.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001084961-26-000039.

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high. Filing date: 2026-05-06. Report date: 2026-03-31.

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains “forward-looking statements” relating to Encore Capital Group, Inc. (“Encore”) and its subsidiaries (which we may collectively refer to as the “Company,” “we,” “our” or “us”) within the meaning of the securities laws. The words “believe,” “expect,” “anticipate,” “estimate,” “project,” “intend,” “plan,” “will,” “may,” and similar expressions often characterize forward-looking statements. These statements may include, but are not limited to, projections of collections, revenues, income or loss, estimates of capital expenditures, plans for future operations, products or services, and financing needs or plans, as well as assumptions relating to these matters. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we caution that these expectations or predictions may not prove to be correct or we may not achieve the financial results, savings, or other benefits anticipated in the forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties, some of which may be beyond our control or cannot be predicted or quantified, that could cause actual results to differ materially from those suggested by the forward-looking statements. Many factors including, but not limited to, those set forth in our Annual Report on Form 10-K under “Part I, Item 1A—Risk Factors” could cause our actual results, performance, achievements, or industry results to be very different from the results, performance, achievements or industry results expressed or implied by these forward-looking statements. Our business, financial condition, or results of operations could also be materially and adversely affected by other factors besides those listed. Forward-looking statements speak only as of the date the statements were made. We do not undertake any obligation to update or revise any forward-looking statements to reflect new information or future events, or for any other reason, even if experience or future events make it clear that any expected results expressed or implied by these forward-looking statements will not be realized. In addition, it is generally our policy not to make any specific projections as to future earnings, and we do not endorse projections regarding future performance that may be made by third parties.

Our Business

We are an international specialty finance company providing debt recovery solutions and other related services for consumers across a broad range of financial assets. We primarily purchase portfolios of defaulted consumer receivables at deep discounts to face value and manage them by working with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial obligations to credit originators, including banks, credit unions, consumer finance companies and commercial retailers. Defaulted receivables may also include receivables subject to bankruptcy proceedings. We also provide debt servicing and other portfolio management services to credit originators for non-performing loans in Europe.

Encore Capital Group, Inc. (“Encore”) has three business units: MCM, which consists of Midland Credit Management, Inc. and its subsidiaries and domestic affiliates; Cabot, which consists of Cabot Credit Management Limited and its subsidiaries and European affiliates, and LAAP, which is comprised of our investments and operations in Latin America and Asia-Pacific.

MCM (United States)

Through MCM, we are a market leader in portfolio purchasing and recovery in the United States.

Cabot (Europe)

Through Cabot, we are one of the largest credit management services providers in Europe and the United Kingdom. Cabot, in addition to its primary business of portfolio purchasing and recovery, also provides a range of debt servicing offerings such as early stage collections, business process outsourcing (“BPO”), and contingent collections, including through Wescot Credit Services Limited (“Wescot”).

LAAP (Latin America and Asia-Pacific)

We have purchased non-performing loans in Mexico. Additionally, we have a subsidiary Encore Asset Reconstruction Company (“EARC”) in India.

To date, operating results from LAAP have not been significant to our total consolidated operating results. Our long-term growth strategy is focused on continuing to invest in our core portfolio purchasing and recovery business in the United States and United Kingdom and strengthening and developing our business in France and Spain.

Government Regulation

MCM (United States)

As discussed in more detail under “Part I - Item 1 - Business - Government Regulation” contained in our Annual Report on Form 10-K, our operations in the United States are subject to federal, state and municipal statutes, rules, regulations and

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ordinances that establish specific guidelines and procedures that debt purchasers and collectors must follow when collecting consumer accounts, including among others, specific guidelines and procedures for communicating with consumers and prohibitions on unfair, deceptive or abusive debt collection practices.

Cabot (Europe)

As discussed in more detail under “Part I - Item 1 - Business - Government Regulation” contained in our Annual Report on Form 10-K, our operations in Europe are affected by foreign statutes, rules and regulations regarding debt collection and debt purchase activities. These statutes, rules, regulations, ordinances, guidelines and procedures are modified from time to time by the relevant authorities charged with their administration, which could affect the way we conduct our business.

Portfolio Purchasing and Recovery

MCM (United States)

In the United States, the defaulted consumer receivable portfolios we purchase are primarily charged-off credit card debt portfolios. A small percentage of our capital deployment in the United States is comprised of unsecured personal loans.

We purchase receivables based on robust, account-level valuation methods and employ proprietary statistical and behavioral models across our U.S. operations. These methods and models generally allow us to value portfolios accurately (limiting the risk of overpaying), avoid buying portfolios that are incompatible with our methods or strategies and align the accounts we purchase with our business channels to maximize future collections. As a result, we have generally been able to realize significant returns from the receivables we acquire. We maintain strong relationships with many of the largest financial service providers in the United States.

Cabot (Europe)

In Europe, our purchased defaulted debt portfolios primarily consist of credit card and consumer loan accounts. We purchase receivable portfolios using proprietary pricing models that utilize account-level statistical and behavioral data. These models generally allow us to accurately value portfolios and to develop collection strategies that maximize future returns. As a result, we have generally been able to realize significant returns from the assets we have acquired. We maintain strong relationships with many of the largest financial services providers in the United Kingdom and Europe.

Purchases and Collections

Portfolio Pricing, Supply and Demand

MCM (United States)

With lending and charge-off rates remaining near recent peak levels, U.S. portfolio supply continues to be robust. Issuers have continued to sell predominantly fresh portfolios. Fresh portfolios are portfolios that are generally sold within six months of the consumer’s account being charged-off by the financial institution. Pricing in the first quarter remained at favorable levels as a result of elevated market supply. Issuers continue to sell their volume in mostly forward flow arrangements that are often committed early in the calendar year. We believe steady lending and delinquency rates at elevated levels will result in stable and strong market supply.

We believe that smaller competitors continue to face difficulties in the portfolio purchasing market because of the high cost to operate due to regulatory pressure and increasing cost of capital. We believe this favors larger participants, like MCM, because the larger market participants are better able to adapt to these pressures and commit to larger forward flow agreements and fluctuating volumes.

Cabot (Europe)

The UK market for charged-off portfolios generally provides a relatively consistent pipeline of opportunities, despite a historically low level of charge-offs, as creditors have embedded debt sales as an integral part of their business models.

France and Spain continue to be two of the largest non-performing loan markets in Europe with significant portfolio sales. Financial institutions continue to look to dispose of non-performing loans in these markets.

While sales activity across all of our European markets remains stable, underlying default rates are generally low by historic levels, and consumer lending volumes have stagnated. Sales levels are expected to fluctuate from quarter to quarter. In general, portfolio pricing remains competitive across our European footprint, constraining the amount of capital we elect to deploy in Europe.

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Purchases by Geographic Location

The following table summarizes purchases of receivable portfolios by geographic location during the periods presented (in thousands):

Three Months Ended

March 31,

2026

2025

MCM (United States)

$

315,794 

$

316,366 

Cabot (Europe)

47,047 

51,485 

Total purchases of receivable portfolios

$

362,841 

$

367,851 

In the United States, capital deployment remained consistent during the three months ended March 31, 2026, as compared to the corresponding period in the prior year. The majority of our deployments in the U.S. come from forward flow agreements, and the timing, contract duration, and volumes for each contract can fluctuate leading to variation when comparing to prior periods. Portfolio purchases in the U.S. were robust as supply increased and pricing remained at favorable levels.

In Europe, capital deployment decreased during the three months ended March 31, 2026, as compared to the corresponding period in the prior year. Pricing continues to remain competitive in our European footprint, constraining the amount of capital we choose to deploy in Europe. Capital deployment can fluctuate based on the timing of the forward flow contracts and spot purchases.

Collections from Purchased Receivables by Channel and Geographic Location

We utilize three channels for the collection of our receivable portfolios: call center and digital collections; legal collections; and collection agencies. The call center and digital collections channel consists of collections that result from our call centers, direct mail program and online collections. The legal collections channel consists of collections that result from our internal legal channel or from our network of retained law firms. The collection agencies channel consists of collections from third-party collections agencies to whom we pay a fee or commission. We utilize this channel to supplement capacity in our internal call centers, to service accounts in regions where we do not have collections operations or for accounts purchased where we maintain the collection agency servicing relationship.

The following table summarizes the total collections by collection channel and geographic area during the periods presented (in thousands):

Three Months Ended

March 31,

2026

2025

MCM (United States):

Call center and digital collections

$

361,457 

$

298,222 

Legal collections

192,393 

151,675 

Collection agencies

2,621 

4,128 

Subtotal

556,471 

454,025 

Cabot (Euro

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-25. Report date: 2025-12-31.

Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is intended to help investors understand our business, financial condition, results of operations, liquidity and capital resources. You should read this discussion together with our consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K. This Annual Report on Form 10-K contains “forward-looking statements” relating to Encore Capital Group, Inc. (“Encore”) and its subsidiaries (which we may collectively refer to as the “Company,” “we,” “our” or “us”) within the meaning of the securities laws. The words “believe,” “expect,” “anticipate,” “estimate,” “project,” “intend,” “plan,” “will,” “may,” and similar expressions often characterize forward-looking statements. These statements may include, but are not limited to, projections of collections, revenues, income or loss, estimates of capital expenditures, plans for future operations, products or services, and financing needs or plans, as well as assumptions relating to these matters. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we caution that these expectations or predictions may not prove to be correct or we may not achieve the financial results, savings or other benefits anticipated in the forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties, some of which may be beyond our control or cannot be predicted or quantified, that could cause actual results to differ materially from those suggested by the forward-looking statements. Many factors including, but not limited to, those set forth in this Annual Report on Form 10-K under “Part I, Item 1A—Risk Factors,” could cause our actual results, performance, achievements, or industry results to be very different from the results, performance, achievements or industry results expressed or implied by these forward-looking statements. Our business, financial condition, or results of operations could also be materially and adversely affected by other factors besides those listed. Forward-looking statements speak only as of the date the statements were made. We do not undertake any obligation to update or revise any forward-looking statements to reflect new information or future events, or for any other reason, even if experience or future events make it clear that any expected results expressed or implied by these forward-looking statements will not be realized. In addition, it is generally our policy not to make any specific projections as to future earnings, and we do not endorse projections regarding future performance that may be made by third parties.

Our Business

We are an international specialty finance company providing debt recovery solutions and other related services for consumers across a broad range of financial assets. We primarily purchase portfolios of defaulted consumer receivables at deep discounts to face value and manage them by working with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial commitments to credit originators, including banks, credit unions, consumer finance companies and commercial retailers. Defaulted receivables may also include receivables subject to bankruptcy proceedings. We also provide debt servicing and other portfolio management services to credit originators for non-performing loans in Europe.

Encore Capital Group, Inc. (“Encore”) has three business units: MCM, which consists of Midland Credit Management, Inc. and its subsidiaries and domestic affiliates; Cabot, which consists of Cabot Credit Management Limited and its subsidiaries and European affiliates, and LAAP, which is comprised of our investments and operations in Latin America and Asia-Pacific.

MCM (United States)

Through MCM, we are a market leader in portfolio purchasing and recovery in the United States.

Cabot (Europe)

Through Cabot, we are one of the largest credit management services providers in Europe and the United Kingdom. Cabot, in addition to its primary business of portfolio purchasing and recovery, also provides a range of debt servicing offerings such as early stage collections, business process outsourcing (“BPO”), and contingent collections, including through Wescot Credit Services Limited (“Wescot”).

LAAP (Latin America and Asia-Pacific)

We have purchased non-performing loans in Mexico. Additionally, we have a subsidiary Encore Asset Reconstruction Company (“EARC”) in India.

To date, operating results from LAAP have not been significant to our total consolidated operating results. Our long-term growth strategy is focused on continuing to invest in our core portfolio purchasing and recovery business in the United States and United Kingdom and strengthening and developing our business in France and Spain.

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Government Regulation

As discussed in more detail under “Part I - Item 1—Business - Government Regulation” contained in this Annual Report on Form 10-K, our operations in the United States are subject to federal, state and municipal statutes, rules, regulations and ordinances that establish specific guidelines and procedures that debt purchasers and collectors must follow when collecting consumer accounts, including among others, specific guidelines and procedures for communicating with consumers and prohibitions on unfair, deceptive or abusive debt collection practices. Additionally, our operations in Europe are affected by foreign statutes, rules and regulations regarding debt collection and debt purchase activities. These statutes, rules, regulations, ordinances, guidelines and procedures are modified from time to time by the relevant authorities charged with their administration, which could affect the way we conduct our business.

Portfolio Purchasing and Recovery

MCM (United States)

In the United States, the defaulted consumer receivable portfolios we purchase are primarily charged-off credit card debt portfolios. A small percentage of our capital deployment in the United States is comprised of unsecured personal loans.

We purchase receivables based on robust, account-level valuation methods and employ proprietary statistical and behavioral models across our U.S. operations. These methods and models generally allow us to value portfolios accurately (limiting the risk of overpaying), avoid buying portfolios that are incompatible with our methods or strategies and align the accounts we purchase with our business channels to maximize future collections. As a result, we have generally been able to realize significant returns from the receivables we acquire. We maintain strong relationships with many of the largest financial service providers in the United States.

Cabot (Europe)

In Europe, our purchased defaulted debt portfolios primarily consist of credit card and consumer loan accounts. We purchase receivable portfolios using proprietary pricing models that utilize account-level statistical and behavioral data. These models generally allow us to accurately value portfolios and to develop collection strategies that maximize future returns. As a result, we have generally been able to realize significant returns from the assets we have acquired. We maintain strong relationships with many of the largest financial services providers in the United Kingdom and Europe.

Purchases and Collections

Portfolio Pricing, Supply and Demand

MCM (United States)

With lending and charge-off rates remaining near recent peak levels, U.S. portfolio supply continues to be robust. Issuers have continued to sell predominantly fresh portfolios. Fresh portfolios are portfolios that are generally sold within six months of the consumer’s account being charged-off by the financial institution. Pricing in the fourth quarter remained at favorable levels as a result of elevated market supply. Issuers continue to sell their volume in mostly forward flow arrangements that are often committed early in the calendar year. We believe steadying lending and delinquency rates at elevated levels will result in stable and strong market supply.

We believe that smaller competitors continue to face difficulties in the portfolio purchasing market because of the high cost to operate due to regulatory pressure and increasing cost of capital. We believe this favors larger participants, like MCM, because the larger market participants are better able to adapt to these pressures and commit to larger forward flow agreements and fluctuating volumes.

Cabot (Europe)

The UK market for charged-off portfolios generally provides a relatively consistent pipeline of opportunities, despite a historically low level of charge-offs, as creditors had embedded debt sales as an integral part of their business models. The percentage of volume that is sold in multi-year forward flow arrangements is increasing.

France and Spain continue to be two of the largest non-performing loan markets in Europe with significant portfolio sales. Financial institutions continue to look to dispose of non-performing loans in these markets.

While sales activity across all of our European markets remains stable, underlying default rates are generally low by historic levels, and consumer lending volumes have stagnated. Sales levels are expected to fluctuate from quarter to quarter. In

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general, portfolio pricing remains competitive across our European footprint, constraining the amount of capital we elect to deploy in Europe.

Purchases by Geographic Location

The following table summarizes purchases of receivable portfolios by geographic location during the periods presented (in thousands):

Year Ended December 31,

2025

2024

2023

MCM (United States)

$

1,174,025 

$

998,853 

$

814,557 

Cabot (Europe)

234,058 

353,182 

259,255 

Total purchases of receivable portfolios

$

1,408,083 

$

1,352,035 

$

1,073,812 

In the United States, capital deployment continued to increase during the periods presented. The majority of our deployments in the U.S. come from forward flow agreements, and the timing, contract duration, and volumes for each contract can fluctuate leading to variation when comparing to prior periods. Portfolio purchases in the U.S. were robust as supply increased and pricing remained at favorable levels.

In Europe, capital deployment decreased during the year ended December 31, 2025, as compared to 2024, and increased during the year ended December 31, 2024, as compared to 2023, due to higher than normal purchases that included large spot-market portfolios in the fourth quarter of 2024. Pricing continues to remain competitive in our European footprint, constraining the amount of capital we choose to deploy in Europe. Capital deployment can fluctuate based on the timing of the forward flow contracts and spot purchases.

Collections from Receivable Portfolios by Channel and Geographic Location

We utilize three channels for the collection of our receivable portfolios: call center and digital collections; legal collections; and collection agencies. The call center and digital collections channel consists of collections that result from our call centers, direct mail program and online collections. The legal collections channel consists of collections that result from our internal legal channel or from our network of retained law firms. The collection agencies channel consists of collections from third-party collections agencies to whom we pay a fee or commission. We utilize this channel to supplement capacity in our internal call centers, to service accounts in regions where we do not have collections operations or for accounts purchased where we maintain the collection agency servicing relationship.

The following table summarizes the total collections by collection channel and geographic area during the periods presented (in thousands):

Year Ended December 31,

2025

2024

2023

MCM (United States):

Call center and digital collections

$

1,272,096 

$

991,051 

$

783,164 

Legal collections

663,164 

560,699 

526,197 

Collection agencies

14,039 

19,904 

5,221 

Subtotal

1,949,299 

1,571,654 

1,314,582 

Cabot (Europe):

Call center and digital collections

263,360 

249,472 

217,784 

Legal collections

229,350 

200,211 

189,406 

Collection agencies

148,231 

138,348 

136,841 

Subtotal

640,941 

588,031 

544,031 

Other geographies:

2,546 

2,793 

3,954 

Total collections

$

2,592,786 

$

2,162,478 

$

1,862,567 

Collections from receivable portfolios increased by $430.3 million, or 19.9%, to $2,592.8 million during the year ended December 31, 2025, from $2,162.5 million during the year ended December 31, 2024. Collections from receivable portfolios increased by $299.9 million, or 16.1%, to $2,162.5 million during the year ended December 31, 2024, from $1,862.6 million during the year ended December 31, 2023. The increases in collections in the United States were primarily a result of consistent increases in capital deployments and enhanced collections strategies in recent years. The increases in collections from

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receivable portfolios in Europe were primarily due to the acquisition of receivable portfolios with higher returns in recent periods. Additionally, collections in Europe were favorably impacted by foreign currency translation by approximately $22.1 million, during the year ended December 31, 2025, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 3.0% for the year ended December 31, 2025 as compared to the year ended December 31, 2024.

Results of Operations

Results of operations, in dollars and as a percentage of total revenues, were as follows for the periods presented (in thousands, except percentages):

Year Ended December 31,

2025

2024

2023

Revenues

Portfolio revenue

$

1,455,795 

82.3 

%

$

1,302,567 

99.0 

%

$

1,204,437 

98.5 

%

Changes in recoveries

208,771 

11.8 

%

(89,740)

(6.8)

%

(82,530)

(6.7)

%

Total debt purchasing revenue

1,664,566 

94.1 

%

1,212,827 

92.2 

%

1,121,907 

91.8 

%

Servicing revenue

88,388 

5.0 

%

84,783 

6.4 

%

83,136 

6.8 

%

Other revenues

15,848 

0.9 

%

18,751 

1.4 

%

17,637 

1.4 

%

Total revenues

1,768,802 

100.0 

%

1,316,361 

100.0 

%

1,222,680 

100.0 

%

Operating expenses

Salaries and employee benefits

458,233 

25.9 

%

422,910 

32.1 

%

391,532 

32.0 

%

Cost of legal collections

315,451 

17.8 

%

259,298 

19.7 

%

224,252 

18.3 

%

General and administrative expenses

165,948 

9.4 

%

163,847 

12.4 

%

144,862 

11.8 

%

Other operating expenses

144,476 

8.2 

%

130,802 

9.9 

%

111,179 

9.1 

%

Collection agency commissions

29,287 

1.7 

%

30,596 

2.3 

%

35,657 

2.9 

%

Depreciation and amortization

28,760 

1.6 

%

32,434 

2.5 

%

41,737 

3.4 

%

Goodwill impairment

— 

— 

%

100,600 

7.6 

%

238,200 

19.5 

%

Impairment of assets

— 

— 

%

18,544 

1.4 

%

18,726 

1.5 

%

Total operating expenses

1,142,155 

64.6 

%

1,159,031 

87.9 

%

1,206,145 

98.5 

%

Income from operations

626,647 

35.4 

%

157,330 

12.1 

%

16,535 

1.5 

%

Other expense

Interest expense

(293,910)

(16.6)

%

(252,545)

(19.2)

%

(201,877)

(16.5)

%

Loss on extinguishment of debt

(1,614)

(0.1)

%

(7,832)

(0.6)

%

— 

— 

%

Other income

5,036 

0.3 

%

6,832 

0.4 

%

5,078 

0.3 

%

Total other expense

(290,488)

(16.4)

%

(253,545)

(19.4)

%

(196,799)

(16.2)

%

Income (loss) before income taxes

336,159 

19.0 

%

(96,215)

(7.3)

%

(180,264)

(14.7)

%

Provision for income taxes

(79,325)

(4.5)

%

(43,029)

(3.3)

%

(26,228)

(2.1)

%

Net income (loss)

$

256,834 

14.5 

%

$

(139,244)

(10.6)

%

$

(206,492)

(16.8)

%

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Table of Contents

Comparison of Results of Operations

Our Annual Report on Form 10-K for the year ended December 31, 2024 includes discussion and analysis of our financial condition and results of operations for the year ended December 31, 2024 as compared to the year ended December 31, 2023 in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

Revenues

Our revenues primarily include debt purchasing revenue, which is revenue recognized from engaging in debt purchasing and recovery activities. We apply our charge-off policy and fully write-off the amortized costs (i.e., face value net of noncredit discount) of the individual receivables we acquire immediately after purchasing the portfolio. We then record a negative allowance that represents the present value of all expected future recoveries for pools of receivables that share similar risk characteristics using a discounted cash flow approach, which is presented as “Receivable portfolios, net” in our consolidated statements of financial condition. The discount rate is an effective interest rate (or “purchase EIR”) established based on the purchase price of the portfolio and the expected future cash flows at the time of purchase.

Debt purchasing revenue includes two components:

(1)     Portfolio revenue, which is the accretion of the discount on the negative allowance due to the passage of time (generally the receivable portfolio balance multiplied by the EIR), and

(2)     Changes in recoveries, which includes:

(a)     Recoveries above (below) forecast, which is the difference between (i) actual cash collected/recovered during the current period and (ii) expected cash recoveries for the current period, which generally represents over or under performance for the period; and

(b)     Changes in expected future recoveries, which is the present value change of expected future recoveries, where such change generally results from (i) collections “pulled forward from” or “pushed out to” future periods (i.e. amounts either collected early or expected to be collected later) and (ii) magnitude and timing changes to estimates of expected future collections (which can be increases or decreases).

Certain pools already fully recovered their cost basis and became zero basis portfolios (“ZBA”) prior to our adoption of the accounting standard for Financial Instruments - Credit Losses (“CECL”) in January 2020. All subsequent collections to the ZBA pools are recognized as ZBA revenue, which is included in portfolio revenue in our consolidated statements of operations. We expect our ZBA revenue to continue to decline as we collect on these legacy pools. We do not expect to have new ZBA pools in the future.

Servicing revenue consists primarily of fee-based income earned on accounts collected on behalf of others, primarily credit originators. We earn fee-based income by providing debt servicing (such as early stage collections, BPO, contingent collections, trace services and litigation activities) to credit originators for non-performing loans in Europe.

Other revenues primarily include revenues recognized from the sale of real estate assets that are acquired as a result of our investments in non-performing secured residential mortgage portfolios and real estate assets in Europe and LAAP.

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Table of Contents

The following table summarizes revenues for the periods presented (in thousands, except percentages):

Year Ended December 31,

2025

2024

$ Change

% Change

Revenue recognized from portfolio basis

$

1,432,312 

$

1,279,467 

$

152,845 

11.9 

%

ZBA revenue

23,483 

23,100 

383 

1.7 

%

Portfolio revenue

1,455,795 

1,302,567 

153,228 

11.8 

%

Recoveries above forecast

197,761 

78,202 

119,559 

Changes in expected future recoveries

11,010 

(167,942)

178,952 

Changes in recoveries

208,771 

(89,740)

298,511 

NM

Debt purchasing revenue

1,664,566 

1,212,827 

451,739 

37.2 

%

Servicing revenue

88,388 

84,783 

3,605 

4.3 

%

Other revenues

15,848 

18,751 

(2,903)

(15.5)

%

Total revenues

$

1,768,802 

$

1,316,361 

$

452,441 

34.4 

%

__________________

NM - Not meaningful.

Our operating results are impacted by foreign currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency. The strengthening of the U.S. dollar relative to other foreign currencies has an unfavorable impact on our international revenues, and the weakening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international revenues. Our revenue was favorably impacted by foreign currency translation by approximately $16.1 million, during the year ended December 31, 2025, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 3.0% for the year ended December 31, 2025 as compared to the year ended December 31, 2024.

The increase in revenue recognized from portfolio basis during the year ended December 31, 2025, as compared to the year ended December 31, 2024, was primarily due to a higher portfolio basis (i.e. a higher receivable portfolios balance) in the U.S. driven by a consistent higher volume of purchases in recent years.

Recoveries above or below forecast represent over and under-performance in the reporting period, respectively and are expected to vary from period to period. Collections over-performed the forecasted collections by $197.8 million during the year ended December 31, 2025, primarily as a result of collections over-performance in the U.S. The collections over-performance in the U.S. was driven by the deployment of new technologies, enhanced digital capabilities and continued operational innovation, which enabled us to reach more consumers, leading to more payments as well as a larger payer book. These initiatives had a greater impact on the early stages of a portfolio’s lifecycle, leading to over-performance for our recent vintages. Collections over-performed the forecasted collections by $78.2 million during the year ended December 31, 2024.

We reassess the forecasts of expected lifetime recoveries each quarter by considering, among other factors, historical and current collection performance, changes in consumer behaviors, and the macroeconomic environment. The significant recoveries above forecast in 2025 were carefully evaluated. We concluded that the recoveries above forecast during the year ended December 31, 2025 were primarily current period collections over-performance and did not represent any material shift in timing of the collections. Therefore, the updated forecast did not result in a material change in expected future recoveries. We recorded a net positive change in expected future recoveries of $11.0 million during the year ended December 31, 2025. We recorded $167.9 million in net negative change in expected future recoveries during the year ended December 31, 2024.

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Table of Contents

The following tables summarize collections from receivable portfolios, portfolio revenue, changes in recoveries, end of period receivable portfolios balance and other related supplemental data, by year of purchase (in thousands, except percentages):

Year Ended December 31, 2025

As of December 31, 2025

Collections

Portfolio Revenue

Changes in Recoveries

Receivable Portfolios

Monthly EIR

United States:

ZBA

$

23,478 

$

23,478 

$

— 

$

— 

— 

%

2021

323,258 

185,716 

15,571 

259,504 

4.9 

%

2021

85,407 

46,934 

(617)

80,005 

3.9 

%

2022

179,247 

80,010 

11,186 

173,909 

3.1 

%

2023

419,265 

197,114 

19,982 

407,059 

3.3 

%

2024

625,051 

345,695 

92,254 

762,765 

3.3 

%

2025

293,593 

208,451 

42,529 

1,126,992 

3.2 

%

Subtotal

1,949,299 

1,087,398 

180,905 

2,810,234 

3.4 

%

Europe:

ZBA

5 

5 

— 

— 

— 

%

2021

293,641 

185,554 

14,521 

626,087 

2.4 

%

2021

42,985 

26,200 

(6,549)

105,108 

1.9 

%

2022

52,865 

25,788 

3,457 

131,938 

1.5 

%

2023

78,352 

31,961 

19,000 

175,808 

1.5 

%

2024

128,970 

72,390 

(550)

291,993 

1.9 

%

2025

44,123 

26,499 

(1,756)

217,650 

2.1 

%

Subtotal

640,941 

368,397 

28,123 

1,548,584 

2.0 

%

Other geographies:(1)

All vintages

2,546 

— 

(257)

12,714 

— 

%

Subtotal

2,546 

— 

(257)

12,714 

— 

%

Total

$

2,592,786 

$

1,455,795 

$

208,771 

$

4,371,532 

2.9 

%

_______________________

(1)All portfolios are on non-accrual basis. Annual pool groups for other geographies have been aggregated for disclosure purposes.

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Table of Contents

Year Ended December 31, 2024

As of December 31, 2024

Collections

Portfolio Revenue

Changes in Recoveries

Receivable Portfolios

Monthly EIR

United States:

ZBA

$

23,097

$

23,097

$

—

$

—

—%

2020

324,330

196,005

19,267

256,000

5.4%

2020

127,555

69,461

(2,867)

126,055

3.7%

2021

131,870

69,185

6,921

119,734

3.9%

2022

254,329

121,998

(2,765)

262,669

3.1%

2023

471,838

277,750

16,152

610,793

3.3%

2024

238,635

173,924

23,821

954,105

3.3%

Subtotal

1,571,654

931,420

60,529

2,329,356

3.6%

Europe:

ZBA

3

3

—

—

—%

2020

299,473

213,619

(101,870)

608,395

2.3%

2020

31,454

20,055

(11,885)

53,577

2.2%

2021

52,278

34,892

(21,063)

116,711

1.9%

2022

64,555

34,045

(14,916)

142,813

1.5%

2023

89,799

39,774

(3,124)

187,267

1.5%

2024

50,469

28,759

361

321,419

1.9%

Subtotal

588,031

371,147

(152,497)

1,430,182

2.0%

Other geographies: (1)

All vintages

2,793

—

2,228

16,831

—%

Subtotal

2,793

—

2,228

16,831

—%

Total

$

2,162,478

$

1,302,567

$

(89,740)

$

3,776,369

3.0%

_______________________

(1)All portfolios are on non-accrual basis. Annual pool groups for other geographies have been aggregated for disclosure purposes.

Servicing revenue increased during the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily driven by increased demand for BPO clients. Servicing revenue was also favorably impacted by foreign currency translation as a result of the weakening of the U.S. dollar against the British Pound. Other revenues decreased during the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily driven by a decrease in gains recognized on the sale of real estate assets.

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Table of Contents

Operating Expenses

The following table summarizes operating expenses during the periods presented (in thousands, except percentages):

Year Ended December 31,

2025

2024

$ Change

% Change

Salaries and employee benefits

$

458,233 

$

422,910 

$

35,323 

8.4 

%

Cost of legal collections

315,451 

259,298 

56,153 

21.7 

%

General and administrative expenses

165,948 

163,847 

2,101 

1.3 

%

Other operating expenses

144,476 

130,802 

13,674 

10.5 

%

Collection agency commissions

29,287 

30,596 

(1,309)

(4.3)

%

Depreciation and amortization

28,760 

32,434 

(3,674)

(11.3)

%

Goodwill impairment

— 

100,600 

(100,600)

(100.0)

%

Impairment of assets

— 

18,544 

(18,544)

(100.0)

%

Total operating expenses

$

1,142,155 

$

1,159,031 

$

(16,876)

(1.5)

%

Our operating results are impacted by foreign currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency. The strengthening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international operating expenses, and the weakening of the U.S. dollar relative to other foreign currencies has an unfavorable impact on our international operating expenses. Our operating expenses were unfavorably impacted by foreign currency translation by approximately $11.4 million, during the year ended December 31, 2025, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 3.0% for the year ended December 31, 2025 as compared to the year ended December 31, 2024.

Operating expenses are explained in more detail as follows:

Salaries and Employee Benefits

The increase in salaries and employee benefits during the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily driven by a general increase in wages and higher account manager compensation as a result of higher collection performance.

Cost of Legal Collections

Cost of legal collections primarily includes contingent fees paid to our external network of attorneys and the cost of litigation. We pursue legal collections using a network of attorneys that specialize in collection matters and through our internal legal channel. Under the agreements with our contracted attorneys, we advance certain out-of-pocket court costs. Cost of legal collections does not include internal legal channel employee costs, which are included in salaries and employee benefits in our consolidated statements of operations.

The following table summarizes our cost of legal collections during the periods presented (in thousands, except percentages):

Year Ended December 31,

2025

2024

$ Change

% Change

Court costs

$

213,911 

$

170,528 

$

43,383 

25.4 

%

Legal collection fees

101,540 

88,770 

12,770 

14.4 

%

Total cost of legal collections

$

315,451 

$

259,298 

$

56,153 

21.7 

%

The increase in cost of legal collections during the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily due to increased legal placements in this channel in the United States.

General and Administrative Expenses

General and administrative expenses remained relatively consistent during the year ended December 31, 2025, compared to the year ended December 31, 2024.

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Table of Contents

Other Operating Expenses

The increase in other operating expenses during the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily due to an increase in postage and printing expenses of $13.1 million.

Collection Agency Commissions

Collection agency commissions are commissions paid to third-party collection agencies. Collections through the collections agencies channel are predominately in Europe and vary from period to period depending on, among other things, the number of accounts placed with an agency versus accounts collected internally. Commission rates vary depending on, among other things, the amount of time that has passed since the charge-off of the accounts placed with an agency, the asset class, and the geographic location of the receivables. Generally, freshly charged-off accounts have a lower commission rate than accounts that have been charged off for a longer period of time, and commission rates for purchased bankruptcy portfolios are lower than the commission rates for charged-off credit card accounts. Collection agency commissions decreased by $1.3 million during the year ended December 31, 2025, compared to the year ended December 31, 2024. The decrease was primarily due to fewer accounts placed with external agencies in the United States.

Depreciation and Amortization

Depreciation and amortization expenses decreased by $3.7 million during the year ended December 31, 2025, compared to the year ended December 31, 2024. The decrease was primarily due to a smaller depreciable and amortizable asset balances during the year ended December 31, 2025, compared to the year ended December 31, 2024.

Goodwill Impairment

During the fourth quarter of 2025, we performed our annual goodwill impairment assessment as of December 31, 2025, which did not result in any goodwill impairment charge. We recorded a goodwill impairment charge of $100.6 million during the year ended December 31, 2024. Refer to “Note 15: Goodwill” to our consolidated financial statements for further details.

Impairment of Assets

We did not incur any asset impairment charge during the year ended December 31, 2025. During the year ended December 31, 2024, we recorded an impairment charge of $18.5 million related to our acquired definite-lived intangible assets within our debt servicing business. Refer to “Property and Equipment, Net” in “Note 5: Composition of Certain Financial Statement Items” to our consolidated financial statements for further details.

Interest Expense

The following table summarizes our interest expense (in thousands, except percentages):

Year Ended December 31,

2025

2024

$ Change

% Change

Stated interest on debt obligations

$

279,546 

$

236,220 

$

43,326 

18.3 

%

Amortization of debt issuance costs

13,437 

14,763 

(1,326)

(9.0)

%

Amortization of debt discount

927 

1,562 

(635)

(40.7)

%

Total interest expense

$

293,910 

$

252,545 

$

41,365 

16.4 

%

The increase in interest expense during the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily due to the following reasons:

•The effect resulting from increased average debt balance of approximately $32.1 million;

•The effect resulting from higher weighted average interest rates on our borrowings of approximately $6.0 million; and

•An unfavorable impact of foreign currency translation of approximately $3.3 million driven by the weakening of the U.S. dollar against the British Pound.

Loss on Extinguishment of Debt

Loss on extinguishment of debt associated with various financing transactions was $1.6 million and $7.8 million during the year ended December 31, 2025 and 2024, respectively. Refer to “Note 6: Borrowings” in the notes to our consolidated financial statements for details of our financing activities.

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Table of Contents

Other Income (Expense)

Other income or expense consists primarily of foreign currency exchange gains or losses, interest income and gains or losses recognized on certain transactions outside of our normal course of business. Other income was $5.0 million and $6.8 million during the years ended December 31, 2025 and 2024, respectively. Interest income included in other income, net of other expense, was $5.0 million and $7.0 million during the years ended December 31, 2025 and 2024, respectively.

Provision for Income Taxes

The following table summarizes provision for income taxes and the respective effective tax rate during the periods presented (in thousands, except percentages):

Year Ended December 31,

2025

2024

$ Change

% Change

Income (loss) before income taxes

$

336,159 

$

(96,215)

Provision for income taxes

79,325 

43,029 

36,296 

84.4 

%

Effective tax rate

23.6 %

(44.7)%

For the year ended December 31, 2025, the difference between our effective tax rate and the federal statutory rate was primarily due to state income taxes, offset by other foreign adjustments. For the year ended December 31, 2024, the difference between our effective tax rate and the federal statutory rate was primarily due to a non-cash goodwill impairment charge of $100.6 million at our Cabot reporting unit and a change in valuation allowance for certain foreign subsidiaries’ operating losses. The change in our effective tax rate during the year ended December 31, 2025, as compared to 2024, was primarily due to the impact of the goodwill impairment charge and the change in valuation allowance recorded in 2024.

Our effective tax rate could fluctuate significantly on a quarterly basis and could be adversely affected to the extent earnings are lower than anticipated in countries that have lower statutory tax rates and higher than anticipated in countries that have higher statutory tax rates. Refer to “Note 11: Income Taxes” to our consolidated financial statements for further details.

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Table of Contents

Non-GAAP Disclosure

In addition to the financial information prepared in conformity with Generally Accepted Accounting Principles (“GAAP”), we provide historical non-GAAP financial information. Management believes that the presentation of such non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of our operations. Management believes that these non-GAAP financial measures reflect an additional way of viewing aspects of our business that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business.

Management believes that the presentation of these measures provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments, and amortization methods, which provide a more complete understanding of our financial performance, competitive position, and prospects for the future. Readers should consider the information in addition to, but not instead of, our financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of these measures for comparative purposes.

Adjusted EBITDA. Management utilizes adjusted EBITDA (defined as net income before interest income and expense, taxes, depreciation and amortization, stock-based compensation expenses, acquisition, integration and restructuring related expenses, and other charges or gains that are not indicative of ongoing operations), in the evaluation of our operating performance. Adjusted EBITDA for the periods presented is as follows (in thousands):

Year Ended December 31,

2025

2024

2023

GAAP net income (loss), as reported

$

256,834 

$

(139,244)

$

(206,492)

Adjustments:

Interest expense

293,910 

252,545 

201,877 

Loss on extinguishment of debt

1,614 

7,832 

— 

Interest income

(4,955)

(7,008)

(4,746)

Provision for income taxes

79,325 

43,029 

26,228 

Depreciation and amortization

28,760 

32,434 

41,737 

Net gain on derivative instruments(1)

— 

(267)

(3,170)

Stock-based compensation expense

18,269 

14,012 

13,854 

Acquisition, integration and restructuring related expenses(2)

3,201 

10,451 

7,401 

Goodwill impairment(3)

— 

100,600 

238,200 

Impairment of assets(3)

— 

18,544 

18,726 

Adjusted EBITDA

$

676,958 

$

332,928 

$

333,615 

Collections applied to principal balance(4)

$

953,476 

$

1,004,230 

$

776,280 

________________________

(1)Amount represents gain or loss recognized on derivative instruments that are not designated as hedging instruments or gain or loss recognized on derivative instruments upon dedesignation of hedge relationships. We adjust for this amount because we believe the gain or loss on derivative contracts is not indicative of ongoing operations.

(2)Amount represents acquisition, integration and restructuring related expenses. We adjust for this amount because we believe these expenses are not indicative of ongoing operations; therefore, adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results.

(3)During the years ended December 31, 2024 and 2023, we recorded non-cash goodwill impairment charges of $100.6 million and $238.2 million, respectively. We recorded a non-cash impairment of long-lived assets of $18.5 million and a non-cash impairment of intangible assets of $18.7 million during the years ended December 31, 2024 and 2023, respectively. We believe these non-cash impairment charges are not indicative of ongoing operations, therefore adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results.

(4)Collections applied to principal balance is calculated in the table below:

Year Ended December 31,

2025

2024

2023

Collections applied to receivable portfolios, net

$

1,136,991 

$

859,911 

$

658,130 

Changes in recoveries

(208,771)

89,740 

82,530 

Other proceeds applied to basis

25,256 

54,579 

35,620 

Collections applied to principal balance

$

953,476 

$

1,004,230 

$

776,280 

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Table of Contents

Supplemental Performance Data

The tables included in this supplemental performance data section include detail for purchases, collections and ERC by year of purchase.

Our collection expectations are based on account characteristics and economic variables. Additional adjustments are made to account for qualitative factors that may affect the payment behavior of our consumers and servicing related adjustments to ensure our collection expectations are aligned with our operations. We continue to refine our process of forecasting collections both domestically and internationally with a focus on operational enhancements. Our collection expectations vary between types of portfolio and geographic location. As a result, past performance of pools in certain geographic locations or of certain types of portfolio are not necessarily a suitable indicator of future results in other locations or for other types of portfolio.

The supplemental performance data presented in this section is impacted by foreign currency translation, which represents the effect of translating financial results where the functional currency of our foreign subsidiary is different than our U.S. dollar reporting currency. For example, the strengthening of the U.S. dollar relative to other foreign currencies has an unfavorable reporting impact on our international purchases, collections, and ERC, and the weakening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international purchases, collections, and ERC.

We utilize proprietary forecasting models to continuously evaluate the economic life of each pool.

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Table of Contents

Cumulative Collections Money Multiple - Cumulative Collections from Receivable Portfolios to Purchase Price Multiple

The following table summarizes our receivable purchases, related collections, and cumulative collections money multiples (in thousands, except multiples):

Year of

Purchase

Purchase

Price(1)

Cumulative Collections through December 31, 2025

2021

2021

2022

2023

2024

2025

Total(2)

CCMM(3)

United States:

2021

$

7,182,871 

$

14,692,377 

$

1,521,344 

$

1,016,050 

$

672,989 

$

474,982 

$

346,736 

$

18,724,478 

2.6 

2021

403,039 

— 

120,354 

240,605 

188,895 

131,870 

85,407 

767,131 

1.9 

2022

548,825 

— 

— 

98,277 

268,516 

254,329 

179,247 

800,369 

1.5 

2023

805,742 

— 

— 

— 

184,182 

471,838 

419,265 

1,075,285 

1.3 

2024

990,751 

— 

— 

— 

— 

238,635 

625,051 

863,686 

0.9 

2025

1,169,613 

— 

— 

— 

— 

— 

293,593 

293,593 

0.3 

Subtotal

11,100,841 

14,692,377 

1,641,698 

1,354,932 

1,314,582 

1,571,654 

1,949,299 

22,524,542 

2.0 

Europe:

2021

3,178,179 

3,867,902 

601,897 

449,785 

374,156 

330,930 

293,646 

5,918,316 

1.9 

2021

242,825 

— 

43,082 

66,529 

58,515 

52,278 

42,985 

263,389 

1.1 

2022

231,869 

— 

— 

36,957 

70,385 

64,555 

52,865 

224,762 

1.0 

2023

259,255 

— 

— 

— 

40,975 

89,799 

78,352 

209,126 

0.8 

2024

353,182 

— 

— 

— 

— 

50,469 

128,970 

179,439 

0.5 

2025

234,058 

— 

— 

— 

— 

— 

44,123 

44,123 

0.2 

Subtotal

4,499,368 

3,867,902 

644,979 

553,271 

544,031 

588,031 

640,941 

6,839,155 

1.5 

Other geographies(4):

All vintages

340,283 

518,266 

20,682 

3,334 

3,954 

2,793 

2,546 

551,575 

1.6 

Subtotal

340,283 

518,266 

20,682 

3,334 

3,954 

2,793 

2,546 

551,575 

1.6 

Total

$

15,940,492 

$

19,078,545 

$

2,307,359 

$

1,911,537 

$

1,862,567 

$

2,162,478 

$

2,592,786 

$

29,915,272 

1.9 

________________________

(1)Adjusted for Put-Backs and Recalls. Put-Backs (“Put-Backs”) and recalls (“Recalls”) represent ineligible accounts that are returned by us or recalled by the seller pursuant to specific guidelines as set forth in the respective purchase agreement.

(2)Cumulative collections from inception through December 31, 2025, excluding collections on behalf of others.

(3)Cumulative Collections Money Multiple (“CCMM”) through December 31, 2025 refers to cumulative collections as a multiple of purchase price.

(4)Annual pool groups for other geographies have been aggregated for disclosure purposes.

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Table of Contents

Purchase Price Multiple - Total Estimated Collections from Receivable Portfolios to Purchase Price Multiple

The following table summarizes our purchases, resulting historical collections, estimated remaining collections from receivable portfolios, and purchase price multiple (in thousands, except multiples):

Purchase Price(1)

Historical

Collections(2)

Estimated

Remaining

Collections

Total Estimated

Collections

Purchase Price Multiple (3)

United States:

2021

$

7,182,871 

$

18,724,478 

$

673,646 

$

19,398,124 

2.7 

2021

403,039 

767,131 

182,954 

950,085 

2.4 

2022

548,825 

800,369 

348,578 

1,148,947 

2.1 

2023

805,742 

1,075,285 

838,059 

1,913,344 

2.4 

2024

990,751 

863,686 

1,555,536 

2,419,222 

2.4 

2025

1,169,613 

293,593 

2,443,943 

2,737,536 

2.3 

Subtotal

11,100,841 

22,524,542 

6,042,716 

28,567,258 

2.6 

Europe:

2021

3,178,179 

5,918,316 

1,698,845 

7,617,161 

2.4 

2021

242,825 

263,389 

228,865 

492,254 

2.0 

2022

231,869 

224,762 

242,240 

467,002 

2.0 

2023

259,255 

209,126 

313,999 

523,125 

2.0 

2024

353,182 

179,439 

631,452 

810,891 

2.3 

2025

234,058 

44,123 

485,465 

529,588 

2.3 

Subtotal

4,499,368 

6,839,155 

3,600,866 

10,440,021 

2.3 

Other geographies(4):

All vintages

340,283 

551,575 

16,541 

568,116 

1.7 

Subtotal

340,283 

551,575 

16,541 

568,116 

1.7 

Total

$

15,940,492 

$

29,915,272 

$

9,660,123 

$

39,575,395 

2.5 

________________________

(1)Purchase price refers to the cash paid to a seller to acquire a portfolio less Put-backs, Recalls, and other adjustments. Put-Backs and Recalls represent ineligible accounts that are returned by us or recalled by the seller pursuant to specific guidelines as set forth in the respective purchase agreement.

(2)Cumulative collections from inception through December 31, 2025, excluding collections on behalf of others.

(3)Purchase Price Multiple represents total estimated collections divided by the purchase price.

(4)Annual pool groups for other geographies have been aggregated for disclosure purposes.

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Estimated Remaining Collections by Year of Purchase

The following table summarizes our estimated remaining collections from receivable portfolios and estimated future cash flows from real estate-owned assets (in thousands):

Estimated Remaining Collections by Year of Purchase(1)

2026

2027

2028

2029

2030

2031

2032

2033

2034

2034

Total(2)

United States:

2021

$

227,789 

$

144,301 

$

98,098 

$

66,448 

$

45,174 

$

31,000 

$

21,301 

$

14,408 

$

9,679 

$

15,448 

$

673,646 

2021

56,371 

39,528 

26,912 

18,603 

12,845 

8,783 

6,114 

4,306 

3,040 

6,452 

182,954 

2022

109,005 

75,135 

49,788 

34,372 

24,460 

17,364 

12,089 

8,374 

5,894 

12,097 

348,578 

2023

261,320 

179,081 

122,704 

83,505 

58,447 

41,344 

29,299 

20,147 

14,104 

28,108 

838,059 

2024

517,893 

322,406 

214,981 

151,775 

106,720 

75,768 

53,083 

37,071 

25,697 

50,142 

1,555,536 

2025

631,661 

585,299 

371,868 

253,617 

181,467 

128,405 

91,325 

63,968 

44,694 

91,639 

2,443,943 

Subtotal

1,804,039 

1,345,750 

884,351 

608,320 

429,113 

302,664 

213,211 

148,274 

103,108 

203,886 

6,042,716 

Europe:

2021

250,032 

221,343 

189,126 

162,157 

138,757 

120,046 

105,472 

93,260 

82,578 

336,074 

1,698,845 

2021

37,727 

32,505 

27,370 

23,083 

19,358 

16,415 

14,048 

12,074 

10,368 

35,917 

228,865 

2022

46,120 

39,280 

30,806 

25,096 

20,508 

16,917 

13,877 

11,154 

9,222 

29,260 

242,240 

2023

60,770 

49,774 

41,626 

33,430 

26,706 

21,598 

17,646 

14,476 

11,712 

36,261 

313,999 

2024

106,671 

89,932 

75,191 

62,583 

51,926 

43,142 

36,558 

31,749 

27,595 

106,105 

631,452 

2025

83,437 

74,794 

60,668 

49,585 

40,370 

32,961 

27,239 

23,265 

19,726 

73,420 

485,465 

Subtotal

584,757 

507,628 

424,787 

355,934 

297,625 

251,079 

214,840 

185,978 

161,201 

617,037 

3,600,866 

Other geographies(3):

All vintages

6,189 

4,099 

2,650 

1,727 

887 

468 

244 

143 

74 

60 

16,541 

Subtotal

6,189 

4,099 

2,650 

1,727 

887 

468 

244 

143 

74 

60 

16,541 

Portfolio ERC

2,394,985 

1,857,477 

1,311,788 

965,981 

727,625 

554,211 

428,295 

334,395 

264,383 

820,983 

9,660,123 

REO ERC(4)

18,967 

5,125 

124 

— 

— 

— 

— 

— 

— 

— 

24,216 

Total ERC

$

2,413,952 

$

1,862,602 

$

1,311,912 

$

965,981 

$

727,625 

$

554,211 

$

428,295 

$

334,395 

$

264,383 

$

820,983 

$

9,684,339 

________________________

(1)As of December 31, 2025, ERC for Zero Basis Portfolios includes $26.9 million for purchased consumer and bankruptcy receivables in the United States. ERC for Zero Basis Portfolios in Europe and other geographies was immaterial. ERC also include $16.5 million from non-accrual portfolios, primarily in other geographies.

(2)Represents the expected remaining gross cash collections over a 180-month period. As of December 31, 2025, ERC for 84-month was $8,264.6 million.

(3)Annual pool groups for other geographies have been aggregated for disclosure purposes.

(4)Real estate-owned assets (“REO”) ERC includes $23.8 million and $0.4 million of estimated future cash flows for Europe and Other Geographies, respectively.

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Table of Contents

Estimated Future Collections Applied to Receivable Portfolios

As of December 31, 2025, we had $4.4 billion in receivable portfolios. The estimated future collections applied to the receivable portfolios net balance is as follows (in thousands):

Years Ending December 31,

United States

Europe

Other

Geographies

Total

Amortization

2026

$

799,873 

$

233,907 

$

5,143 

$

1,038,923 

2027

652,719 

210,484 

3,190 

866,393 

2028

412,075 

174,598 

1,938 

588,611 

2029

278,292 

144,686 

1,187 

424,165 

2030

196,853 

118,230 

508 

315,591 

2031

140,002 

97,648 

339 

237,989 

2032

99,955 

83,144 

186 

183,285 

2033

70,128 

73,099 

113 

143,340 

2034

49,070 

65,070 

59 

114,199 

2035

34,919 

61,513 

32 

96,464 

2036

25,942 

58,099 

15 

84,056 

2037

19,460 

55,925 

4 

75,389 

2038

15,416 

57,663 

— 

73,079 

2039

10,743 

59,083 

— 

69,826 

2040

4,787 

55,435 

— 

60,222 

Total

$

2,810,234 

$

1,548,584 

$

12,714 

$

4,371,532 

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Table of Contents

Supplemental quarterly financial information

Financial highlights

Three Months Ended December 31,

(in thousands, except percentages and earnings per share)

2025

2024

% Change

Collections

$

669,976 

$

554,595 

21 

%

Revenues

$

473,552 

$

265,619 

78 

%

Portfolio purchases

$

327,064 

$

495,144 

(34)

%

Operating expenses

$

300,159 

$

399,809 

(25)

%

Net income (loss)

$

76,657 

$

(225,307)

NM

Income (loss) per share

$

3.37 

$

(9.42)

NM

__________________

NM - Not meaningful.

Consolidated financial statements of operations

Three Months Ended December 31,

(in thousands)

2025

2024

Revenues

Portfolio revenue

$

379,277 

$

336,666 

Changes in recoveries

68,072 

(95,760)

Total debt purchasing revenue

447,349 

240,906 

Servicing revenue

21,366 

20,525 

Other revenues

4,837 

4,188 

Total revenues

473,552 

265,619 

Operating expenses

Salaries and employee benefits

117,445 

104,616 

Cost of legal collections

87,779 

68,989 

General and administrative expenses

44,383 

52,019 

Other operating expenses

36,178 

37,786 

Collection agency commissions

7,439 

8,288 

Depreciation and amortization

6,935 

8,967 

Goodwill impairment

— 

100,600 

Impairment of assets

— 

18,544 

Total operating expenses

300,159 

399,809 

Income (loss) from operations

173,393 

(134,190)

Other expense

Interest expense

(75,195)

(68,498)

Loss on extinguishment of debt

(1,614)

(7,832)

Other income

1,234 

541 

Total other expense

(75,575)

(75,789)

Income (loss) before income taxes

97,818 

(209,979)

Provision for income taxes

(21,161)

(15,328)

Net income (loss)

$

76,657 

$

(225,307)

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Table of Contents

Quarterly revenues summary

Three Months Ended December 31,

2025

2024

$ Change

% Change

Revenue recognized from portfolio basis

$

373,570 

$

331,560 

$

42,010 

12.7 

%

ZBA revenue

5,707 

5,106 

601 

11.8 

%

Portfolio revenue

379,277 

336,666 

42,611 

12.7 

%

Recoveries above forecast

57,087 

26,944 

30,143 

Changes in expected future recoveries

10,985 

(122,704)

133,689 

Changes in recoveries

68,072 

(95,760)

163,832 

NM

Debt purchasing revenue

447,349 

240,906 

206,443 

85.7 

%

Servicing revenue

21,366 

20,525 

841 

4.1 

%

Other revenues

4,837 

4,188 

649 

15.5 

%

Total revenues

$

473,552 

$

265,619 

$

207,933 

78.3 

%

__________________

NM - Not meaningful.

45

Table of Contents

Liquidity and Capital Resources

Liquidity

The following table summarizes our cash flow activities for the periods presented (in thousands):

Year Ended December 31,

2025

2024

2023

Net cash provided by operating activities

$

153,199 

$

156,168 

$

152,991 

Net cash used in investing activities

(242,586)

(440,430)

(401,941)

Net cash provided by financing activities

44,854 

317,774 

268,300 

Operating Cash Flows

Cash flows from operating activities represent the cash receipts and disbursements related to all of our activities other than investing and financing activities.

Net cash provided by operating activities was $153.2 million, $156.2 million, and $153.0 million during the years ended December 31, 2025, 2024, and 2023, respectively. Operating cash flows are derived by adjusting net income for non-cash operating items such as depreciation and amortization, changes in recoveries, goodwill impairment, impairment of assets, stock-based compensation charges, deferred income tax, and changes in operating assets and liabilities which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in results of operations. During the year ended December 31, 2024, we recorded a goodwill impairment of $100.6 million and an impairment of long-lived assets of $18.5 million. During the year ended December 31, 2023, we recorded a goodwill impairment of $238.2 million and an impairment of intangible assets of $18.7 million. Changes in recoveries decreased the operating cash flows by $208.8 million during the year ended December 31, 2025 and increased the operating cash flows by $89.7 million, and $82.5 million during the years ended December 31, 2024, and 2023, respectively. Refer to “Note 4: Receivable Portfolios, Net” in the notes to our consolidated financial statements for discussion relating to changes in recoveries.

Investing Cash Flows

Net cash used in investing activities was $242.6 million, $440.4 million, and $401.9 million during the years ended December 31, 2025, 2024, and 2023, respectively. Cash provided by or used in investing activities is primarily affected by receivable portfolio purchases offset by collection proceeds applied to the principal of our receivable portfolios. Receivable portfolio purchases were $1,389.1 million, $1,336.4 million, and $1,060.2 million during the years ended December 31, 2025, 2024, and 2023, respectively. Collection proceeds applied to the principal of our receivable portfolios were $1,137.0 million, $859.9 million, and $658.1 million during the years ended December 31, 2025, 2024, and 2023, respectively. Refer to Purchases and Collections within “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations” for discussion relating to purchases and collections.

Financing Cash Flows

Net cash provided by financing activities was $44.9 million, $317.8 million, and $268.3 million during the years ended December 31, 2025, 2024, and 2023, respectively. Financing cash flows are generally affected by borrowings under our credit facilities and proceeds from various debt offerings, offset by repayments of amounts outstanding under our credit facilities and repayments of various notes. Borrowings under our credit facilities were $1,273.3 million, $2,031.5 million, and $1,196.0 million during the years ended December 31, 2025, 2024, and 2023, respectively. Repayments of amounts outstanding under our credit facilities were $1,359.0 million, $1,868.1 million, and $989.6 million during the years ended December 31, 2025, 2024, and 2023, respectively. During the year ended December 31, 2025, we issued $500.0 million 6.625% in senior secured notes that mature in 2031. We used a portion of proceeds from this offering to pay down drawings under our Global Senior Facility. Proceeds from the issuance of senior secured notes were $1.0 billion and $104.2 million during the years ended December 31, 2024, and 2023, respectively. In 2025, we repaid €100.0 million (approximately $117.5 million based on an exchange rate of $1.00 to €0.85, the exchange rate as of December 31, 2025) of the principal outstanding under our 2028 Floating Rate Notes using borrowings from our Global Senior Facility. Repayments of senior secured notes were $789.1 million, and $39.1 million during the years ended December 31, 2024, and 2023, respectively. During the year ended December 31, 2025, we settled our $100.0 million 3.25% 2025 convertible notes using borrowings from our Global Senior Facility. During the year ended December 31, 2023, we issued $230.0 million 4.00% convertible senior notes that mature in 2029, and used $212.5 million in cash to repurchase and settle our exchangeable senior notes due 2023. During the year ended December 31, 2024, in connection with the early redemptions of our senior secured notes due 2026 and 2026, we settled the corresponding cross currency swaps on the respective loan redemption date for $40.0 million in cash. Repayments of other debt were $42.5 million, $22.1 million, and $12.7 million during the years ended December 31, 2025, 2024, and 2023, respectively.

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Capital Resources

Our primary sources of capital are cash collections from our receivable portfolios, bank borrowings, debt offerings, and equity offerings. Depending on the capital markets, we consider additional financings to fund our operations and any potential acquisitions. From time to time, we may repurchase outstanding debt or equity and/or restructure or refinance debt obligations. Our primary cash requirements include funding the purchase of receivable portfolios, operating expenses, the payment of interest and principal on borrowings, the payment of income taxes, funding any entity acquisitions and share repurchases.

We are in material compliance with all covenants under our financing arrangements. See “Note 6: Borrowings” in the notes to our consolidated financial statements for a further discussion of our debt. Available capacity under our Global Senior Facility was $814.3 million as of December 31, 2025.

On October 1, 2025, we issued $500.0 million in aggregate principal amount of 6.625% Senior Secured Notes due April 2031 at an issue price of 100.000% through a private placement offering. Also on October 1, 2025, we settled our $100.0 million 2025 Convertible Notes in cash for $106.2 million, of which $6.2 million (the excess above the principal amount) represented the conversion spread.

In November 2025, we repaid €100.0 million (approximately $117.5 million based on an exchange rate of $1.00 to €0.85, the exchange rate as of December 31, 2025) of the principal outstanding under our 2028 Floating Rate Notes. This repayment was funded by borrowings from our Global Senior Facility.

In May 2021, our Board of Directors authorized a $300.0 million share repurchase program. In November 2025, our Board of Directors authorized an increase of an additional $300.0 million under the share repurchase program. Repurchases under this program are expected to be made from cash on hand and/or a drawing from our Global Senior Facility and may be made from time to time, subject to market conditions and other factors, in the open market, through private transactions, block transactions, or other methods as determined by our management and Board of Directors, and in accordance with market conditions, other corporate considerations, and applicable regulatory requirements. The program does not obligate us to acquire any particular amount of common stock, and it may be modified or suspended at our discretion. During the year ended December 31, 2025, we repurchased 2,117,733 shares of our common stock for $89.5 million under the share repurchase program. We did not make any repurchases under the share repurchase program during the years ended December 31, 2024 and 2023. As of December 31, 2025, we had remaining authority to purchase $302.4 million of our common stock. Our practice is to retire the shares repurchased.

Our cash and cash equivalents as of December 31, 2025, consisted of $45.6 million held by U.S.-based entities and $111.2 million held by foreign entities. Most of our cash and cash equivalents held by foreign entities is indefinitely reinvested and may be subject to material tax effects if repatriated. However, we believe that our sources of cash and liquidity are sufficient to meet our business needs in the United States and do not expect that we will need to repatriate the funds.

Included in cash and cash equivalents is cash that was collected on behalf of, and remains payable to, third-party clients. The balance of cash held for clients was $22.5 million and $21.5 million as of December 31, 2025 and 2024, respectively.

Cash from operations could also be affected by various risks and uncertainties, including, but not limited to, timing of cash collections from our consumers, and other risks detailed in our Risk Factors. However, we believe that we have sufficient liquidity to fund our operations for at least the next twelve months, given our expectation of continued positive cash flows from operations, our cash and cash equivalents, our access to capital markets, and availability under our credit facilities. Our future cash needs will depend on our acquisitions of portfolios and businesses.

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Table of Contents

Future Contractual Cash Obligations

The following table summarizes our future contractual cash obligations as of December 31, 2025 (in thousands):

Payment Due By Period

Contractual Obligations

Total

Less

Than

1 Year

More

Than

1 Year

Principal payments on debt

$

4,032,798 

$

21,015 

$

4,011,783 

Estimated interest payments(1)

1,022,837 

279,149 

743,688 

Finance leases

646 

322 

324 

Operating leases

73,761 

18,391 

55,370 

Purchase commitments on receivable portfolios

436,573 

351,625 

84,948 

Total contractual cash obligations

$

5,566,615 

$

670,502 

$

4,896,113 

________________________

(1)Estimated interest payments are calculated based on outstanding principal amounts, applicable fixed interest rates or currently effective interest rates as of December 31, 2025 for variable rate debt, timing of scheduled payments and the term of the debt obligations.

Critical Accounting Estimates

We prepare our financial statements in conformity with GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. “Note 1: Ownership, Description of Business, and Summary of Significant Accounting Policies” of the notes to the consolidated financial statements describes the significant accounting policies and methods used in the preparation of our consolidated financial statements.

We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. Actual results may differ from these estimates and such differences may be material. We refer to accounting estimates of this type as critical accounting policies and estimates, which we discuss further below. We have reviewed our critical accounting policies and estimates with the audit committee of our board of directors.

Receivable Portfolios and Related Revenue

Receivable portfolio purchases are aggregated into pools based on similar risk characteristics. Examples of risk characteristics include financial asset type, collateral type, size, interest rate, date of origination, term, and geographic location. Our static pools are typically grouped into credit card, purchased consumer bankruptcy, and mortgage portfolios. We further group these static pools by geographic location. Once a pool is established, the portfolios will remain in the designated pool unless the underlying risk characteristics change. The purchase EIR of a pool will not change over the life of the pool even if expected future cash flows change.

Revenue is recognized for each static pool over the economic life of the pool. We make significant assumptions in determining the economic life of a pool, including the reasonable and supportable economic forecast period based on asset type and geography, which considers the availability of forward-looking scenarios and their respective time horizons. In general, we forecast recoveries over one or two years prior to reverting to historical averages at an estimate-level over the remaining life using various methodologies depending on the asset type and geography. The speed at which forecasts revert varies based on the spread between the forecast period and historical data. In addition, estimated recoveries include a qualitative component, which generally reflects management’s assessment of macroeconomic environment. We continue to evaluate the reasonable economic life of a pool and reversion method on an ongoing basis. Debt purchasing revenue includes two components:

(1)     Portfolio revenue, which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the EIR) and also includes all revenue from zero basis portfolio (“ZBA”) collections, and

(2)     Changes in recoveries, which includes:

(a)     Recoveries above or below forecast, which is the difference between (i) actual cash collected/recovered during the current period and (ii) expected cash recoveries for the current period, which generally represents over or under performance for the period; and

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(b)     Changes in expected future recoveries, which is the present value change of expected future recoveries, where such change generally results from (i) collections “pulled forward from” or “pushed out to” future periods (i.e. amounts either collected early or expected to be collected later) and (ii) magnitude and timing changes to estimates of expected future collections (which can be increases or decreases).

We measure expected future recoveries based on historical experience, current conditions, and reasonable and supportable forecasts. Factors that may change the expected future recoveries may include both internal as well as external factors. Internal factors include operational performance, such as capacity, the productivity of our collection staff, and the deployment of technologies and digital capabilities. External factors that may have an impact on our collections include macroeconomic conditions, new laws or regulations, and new interpretations of existing laws or regulations.

See “Note 4: Receivable Portfolios, Net” to our consolidated financial statements for further discussion of receivable portfolios.

Valuation of Goodwill

Business combinations typically result in the recording of goodwill and other intangible assets. The excess of the purchase price over the fair value assigned to the tangible and identifiable intangible assets, liabilities assumed, and noncontrolling interest in the acquiree is recorded as goodwill.

Goodwill is tested annually for impairment and in interim periods if events or changes in circumstances indicate that the assets may be impaired. We perform our annual goodwill impairment assessment at the reporting unit level. Effective for the year ended December 31, 2025, we changed our annual goodwill impairment testing date from the first day of the fourth quarter to the last day of the fourth quarter to better align with our annual budgeting process. Any impairment charges resulting from this impairment assessment process are reported in the fourth quarter.

We first assess qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test. The qualitative factors include economic environment, business climate, market capitalization, operating performance, competition, and other factors. If, after completing such assessment, we determine it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then there is no need to perform any further testing. If we conclude otherwise, or if we proceed directly to perform a quantitative assessment, then we calculate the fair value of the reporting unit and compare the fair value with the carrying value of the reporting unit.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. While we believe we have made reasonable estimates and assumptions to estimate the fair value of our reporting units, if: actual results are not consistent with our current estimates and assumptions; management significantly changes its estimates and assumptions; there is a deterioration in market factors outside of our control, such as general economic conditions in the countries in which we operate, discount rates, income tax rates, foreign currency exchange rates, or inflation; or there is a sustained decline in our stock price and market capitalization, goodwill impairment charges may be recorded in future periods. The goodwill impairment charges have no effect on liquidity or capital resources. However, they are a non-cash charge and could adversely affect our financial results in the period recognized.

Recent Accounting Pronouncements

Information regarding recent accounting pronouncements and the impact of those pronouncements, if any, on our consolidated financial statements is provided in this Annual Report in “Note 1: Ownership, Description of Business, and Summary of Significant Accounting Policies” to our consolidated financial statements.

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