World Acceptance reported QQ2 2026 revenue of $134.5 million with an exceptionally high gross margin (~99.4%), driven by a very low cost of revenue relative to top-line. Net loss of $1.95 million and an EPS of -$0.37 were largely driven by several one-off items and non-operating costs in the quarter: a $3.7 million onetime expense associated with early bond redemption (~$0.57 per share after tax), a $1.3 million discrete Mexico tax-related expense (~$0.26 per share after tax), and a marginal increase in loan loss provisions related to a surge in new customer originations (~$0.78 per share after tax). Management also highlighted a front-loaded long-term incentive expense of approximately $5.8 million in the quarter, which they expect to ease to around $3â$5 million in upcoming quarters before fading further in subsequent periods.
On the positives, World Acceptance delivered robust growth in new customer origination, with originations up about 40% year over year (YoY) by quarter-end and up 35% year-to-date (YTD), bringing new-portfolio expansion back toward pre-COVID levels. The company also reported a meaningful yield improvement, with portfolio yield rising by more than 130 basis points YoY, and a 15% YoY increase in originations when including returning customers. The portfolio remained resilient on credit quality, with first-pay-defaults in line with historical vintage performance. Management signaled a disciplined approach to marketing spending, aided by in-house modeling and test-and-learn campaigns that reduced customer acquisition costs. Additionally, the balance sheet and liquidity position was enhanced by lender-capital moves: the company repurchased and canceled the remaining $170 million of bonds, established a $175 million warehouse facility, and executed a new credit agreement increasing commitments to $640 million, with expanded stock repurchase authorization (up to 100% of net income plus an extra $100 million upfront). The universe of near-term catalysts includes continued healthy origination growth at moderate incremental credit risk, ongoing efficiency improvements in CAC, and a sizable buyback program, albeit offset in the near term by the one-off items and incentive comp timing.
Overall, the QQ2 2026 results illustrate a company navigating a volatile macro backdrop with a clear emphasis on growth through new and returning customers, while leveraging capital markets actions to strengthen liquidity and shareholder value. The near-term profitability is pressured by one-offs and LTI expenses, but the underlying business appears to be repositioning for higher nominal loan volumes and enhanced yields, potentially translating into stronger earnings power once the non-operating headwinds unwind.