Propel Holdings Inc. (PRLPF) Q3 2026 Earnings Call Transcript

Operator: Good morning, everyone. Welcome to Propel Holdings Third Quarter 26 Financial Results Conference Call. As a reminder, this conference call is being recorded on 11/04/2026. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at the time for research analysts to queue up for questions. I will now turn the call over to Devon Ghelani, Propel's Vice President, Capital Markets and Investor Relations. Please go ahead, sir.

Devon Ghelani: Thank you, operator. Good morning, everyone, and thank you for joining us today. PROPEL's third quarter 26 financial results were released yesterday after market close. The press release, financial statements and MD and A are available on SEDAR plus as well as on the company's website, propellholdings.com. Before we begin, I would like to remind all participants that our statements and comments today may include forward looking statements within the meaning of applicable securities laws. The risks and considerations regarding forward looking statements can be found in our Q3 26 MD and A and annual information form for the year ended 12/31/2025. Both of which are available on Sierra Plus. Additionally, during the call, we may refer to non-IFRS measures. Participants are advised to review the section entitled Non-IFRS Financial Measures industry metrics of the company's Q3 26 MD and A for definitions of our non-IFRS measures and a reconciliation of these measures to the most comparable IFRS measures. Lastly, all dollar amounts referenced during the call are in US dollars unless otherwise noted. I am joined on the call today by Clive Kinross, Founder and Chief Executive Officer and Sheldon Saidakovsky, Founder and Chief Financial Officer. Clive will provide an overview of our Q3 results and observations on our consumer segment and overall economic environment before Sheldon covers our financials in more detail. Before we open the call to questions, I will provide an update on PROPEL's growth strategy and outlook for the remainder of 2026. With that, I will pass the call to Clive.

Clive Kinross: Thank you, Devon, and welcome, everyone, to our third quarter conference call. We delivered another record quarter. Achieving record revenue, originations, ending CLAB, adjusted EBITDA, and adjusted net income. Revenue increased 32% year over year to a record $201.5 million surpassing $200 million in quarterly revenue for the first time in our history. This was supported by record total originations funded of $260.7 million an increase of 27% and record ending CLAB of $690.5 million up 24% year over year. New customer originations, including the any as a service increased 55% year over year. Importantly, we achieved this growth while maintaining disciplined credit performance. Net charge offs remained at approximately 12% of average CLAB consistent with the prior quarter and our seasonal expectations. This reflects the strength of our proprietary AI powered underwriting platform and the continued resilience of the consumers we serve. Adjusted net income increased 54% to a record $24.9 million. Outpacing revenue growth and contributing to an annualized adjusted return on equity of 34%. Demonstrating our ability to generate attractive returns on equity as we scale. Our growth is also becoming increasingly diversified. Lending-as-a-Service revenue increased 170% to a record $13.5 million while PROPEL UK revenue increased 69% to a record $22 million and Propel Bank continues to contribute to this growth through its U.S. servicing capabilities. Together, these results demonstrate the breadth of our platform, and the strength of our execution. I am incredibly proud of what we have accomplished. Turning to our consumers and the broader economy, As we have discussed on previous calls, the K-shaped economy continues to shape consumer behavior and the credit markets. Lower income consumers continue to face an evolving economic environment but they have also demonstrated considerable resilience. While inflation has moderated from its peaks, the cumulative impact of higher housing, energy, and other living costs continue to weigh on household budgets. The critical counterbalance, particularly in the United States, is employment and wage growth. The US unemployment rate was 4.2% in September. Remaining relatively low by historical standards. The employment picture is particularly encouraging when we look at the sectors relevant to the consumers we serve including health care, construction, and hospitality. The broader economy has also demonstrated resilience with US GDP growing at annualized rates of 3.4% in the third quarter. Supported by continued strong consumer spending. Importantly, wage growth continues to help offset inflationary pressures. According to the bank of America, after tax wage growth amongst low income households was 4.5% year over year outpacing headline inflation of 3.7%. Consumer spending has also remained encouraging, with the Bank of America reporting that credit and debit card spending per household increased 6.2% year over year in September. In this environment, as we have discussed previously, traditional financial institutions continue to concentrate much of their lending at the prime and super prime end of the credit spectrum. This combination of resilient consumers sustained credit demand, and limited access to mainstream lending creates an opportunity for our business. And our third quarter record originations demonstrate that we can continue expanding access to credit while maintaining disciplined underwriting with our bank partners and credit performance in line with our expectations. Turning to the United Kingdom, September inflation was 3.5%. While the unemployment rate declined to 4.7%. Against this backdrop, QuidMarket delivered its strongest quarter of year over year revenue growth, since our acquisition in 2024. Reflecting strong demand and our expanded customer acquisition capabilities. In Canada, which represents approximately 2% of our revenue, the labor market remains softer than in the United States. With more sustained pressure on lower income households, amid ongoing trade related uncertainty. Even in this environment, we achieved record revenues with stable credit performance. Overall, we are exceptionally proud of the third quarter performance, and are continuing to realize benefits from the investments we have been making over the past several quarters. Reflecting this performance and our strong financial position, our board approved another increase in our quarterly dividend to C$0.27 per share or $1.00 on an annualized basis. This represents a 6% increase and marks our thirtieth consecutive quarterly increase. I will speak more about the outlook for the rest of 2026 and our priorities heading into 2027 later in the call But first, I will pass the call over to Sheldon.

Sheldon Saidakovsky: Thank you, Clive. And good morning, everyone. We are pleased to deliver another quarter of record results. During Q3, we and our bank partners experienced strong demand across our operating brands. Achieving record originations from both new customers and existing customers. This resulted in record total originations funded of $260.7 million an increase of 27% compared to Q3 of last year. New customer originations were particularly strong increasing by 37% year over year or 55% including our Lending-as-a-Service program. New customers represented 47% of total originations funded in Q3 compared to 44% last year. Marking the highest proportion since Q4 of 24. This reflects the continued expansion of our geographic footprint, product offering, marketing partnerships, and customer acquisition channels. Together with strong consumer demand. The record quarterly originations drove ending CLAB to a record $691 million an increase of 24% year over year. Supported by broad based growth across our operating brands and programs. Further diversifying our revenue base across products, geographies and business models. The combination of higher average CLAB and an increase in our annualized revenue yield drove record quarterly revenue of $201.5 million representing growth of 32% over Q3 of last year. Our annualized revenue yield increased to 121% in Q3 from 113% in Q3 of last year. The increase was primarily driven by significant growth across our higher yielding programs. Including the MoneyKey bank service program, and QuidMarket in the UK. Lending-as-a-Service as well as a higher proportion of originations from new customers. The MoneyKey bank service program was a particular contributor with ending CLAB increasing by 87% year over year. To $141.6 million supported by the migration from legacy MoneyKey products, geographic expansion, and additional marketing channels and partnerships. New customer originations were a key driver of this growth, representing approximately 50% of the program's total originations funded during the quarter. Across the entire business, the higher proportion of originations from new customers in Q3 was consistent with the trend we have seen throughout 2026, contributing to higher revenue yields both during the quarter and for the first 9 months of the year. For the first 9 months of 2026, our annualized revenue yield increased to 117% compared to 114%. In the prior year. Turning to provisioning and charge offs. Our provision for loan losses and other liabilities represented 53% of revenue in Q3 26. Compared to 52% in Q3 of last year. The modest year over year increase was primarily driven by a higher proportion of originations from new customers particularly within the MoneyKey bank service program. As a reminder, new customer originations generally carry higher upfront provisions, compared to returning and existing customers. Reflecting the expected credit losses recognized at origination. With respect to net charge offs, our net charge offs as a percentage of average CLAB remained at approximately 12% in Q3 26. Consistent with Q3 of last year and within our targeted range. for driving profitable growth. Overall, both our provision expense at 53% of revenue and net charge offs at approximately 12% of average CLAB. Were consistent with our seasonal expectations for the quarter. Maintaining net charge offs at levels consistent with last year despite significant growth in our loan portfolio and a higher proportion of new customer originations. Reflects the effectiveness of our AI powered underwriting technology disciplined approach to credit risk management, and continued resilience of our consumer sector. Turning to profitability. Our net income increased by 23% year over year. To $18.4 million while adjusted net income increased by 54%. to a record $24.9 million. On an earnings per share basis, diluted EPS increased by 22% to $0.43 while adjusted diluted EPS increased by 53% to a record $0.59. Our adjusted return on equity increased to 34% on an annualized basis, compared to 25% in Q3 of last year. Reflecting strong earnings growth and our ability to generate attractive returns. On shareholders' capital. With respect to the record adjusted EBITDA and adjusted net income, the continued growth of the MoneyKey Bank service program together with higher Stage 1 provisions across our other programs, contributed to the larger non cash adjustments to EBITDA, and net income in Q3 compared to the same quarter last year. Turning to operating expenses, Acquisition and data expense increased by 40% year over year, to $25.7 million primarily reflecting higher origination volumes. A greater proportion of new customer originations, and continued investments in marketing, and customer acquisition capabilities. Sequentially, acquisition and data expense decreased from $26.1 million in Q2, despite new customer originations increasing by 11%. This reflects continued improvement in customer acquisition efficiency, with our cost per new customer funded origination declining to approximately $0.21 in Q3. compared to $0.24 in Q2 and $0.27 in Q1, Representing an improvement of approximately 23% since the beginning of the year. These efficiencies reflect the investments we have been making to expand and diversify our customer acquisition channels. as we have been highlighting since Q4 of 2025. These include our AI driven search engine optimization strategy, new marketing partnerships, and expanded advertising across digital channels, connected television, and social media. As these initiatives continue to expand and scale, we are beginning to see the benefits through improved customer acquisition efficiency, while generating record application volume and new customer originations. We also continue to realize operating leverage across other areas of the business. Combined salaries, wages and benefits and G&A expenses declined to 9.2% of revenue in Q3, compared to 9.8% in the prior year period, reflecting the continued scalability of our operating platform. Processing technology and program servicing expenses which include all direct costs associated with the Lending-as-a-Service program, increased by 60% year over year. Primarily driven by the continued significant growth of Lending-as-a-Service. Importantly, we are also seeing improved operating leverage within Lending-as-a-Service. With servicing costs declining to 50% to 52% of Lending-as-a-Service revenue compared to 64% in Q3 of last year. Resulting in an increase in Lending-as-a-Service program margins from 36% to 48% this quarter. Turning to our cost of debt. Our average effective interest rate decreased to 10.2% in Q3 from 11% in the prior year period. The improvement primarily reflects lower benchmark interest rates, compared to last year. Together with the benefit of the repricing of our foreign credit facility in April 2026. Overall, we are very pleased with the continued expansion in earnings the increasing diversification of our growth drivers, and the operating efficiencies being realized across the business. Turning to PROPEL's capitalization. We ended Q3 with a strong balance sheet, and a debt to equity ratio of 1.2 times. An improvement from 1.3 times at year end 2025. Reflecting our disciplined approach to capital management. We also had approximately $71 million of undrawn credit commitment capacity, under our existing credit facility. Together with our strong operating cash flow generation, this provides us with substantial financial flexibility to support continued growth across our operating programs, and our increasing dividend. With that, I will now turn the call back to Clive.

Clive Kinross: Thank you, Sheldon. Now going into the fourth quarter, we continue to see strong demand and credit performance in line with our seasonal expectations. In the United States, we have entered new states broadened our product offerings across the credit spectrum, and expanded our customer acquisition channels. We are serving more U.S. customers than ever. We also continue to strengthen our marketing strategy through digital advertising brand awareness, marketing partnerships, and AI optimized content. Looking ahead to next year, we expect to enter 2027 with a stronger position than ever. We see substantial opportunities as our geographic expansion new products and distribution investments, continue to grow at scale. Lending as a service remains an important part of this strategy. Supported by committed long term capital partners Lending-as-a-Service enables us to enter additional markets and generate capital-light fee based revenue without funding the underlying loan receivables on our balance sheet. As it scales, we expect lending as a service to become an increasingly meaningful contributor to our business. Further diversifying our revenue mix, improving capital efficiency, and supporting expanding margins and returns on equity. In this area, we are working on additional opportunities for further geographic expansion product development, and new partnerships. Looking beyond North America, our UK business will also continue to be a significant growth driver. When we announced a QuidMarket acquisition nearly 2 years ago, the business was on track to generate roughly $30 million in annual revenue. Today, its revenue over the last 12 months is approximate $70 million more than double that level. The third quarter revenue increased 69% year over year $22 million We expect full year 2026 revenue to be significantly higher than the current trailing 12 month figure. That growth breaks both the strength of the underlying business and enhancements made since the acquisition. Looking ahead, UK consumers remain underserved by traditional financial institutions, creating opportunities for further product development and new partnerships. Another important contributor to our future growth is Propel Bank, securing a banking license through an established regulatory structure in Puerto Rico was a deliberate long term investment in our U.S. business. Propel Bank is already supporting our U.S. operations through servicing activities geographic expansion. As its role expands, we expect it to help consolidate servicing and related operational activities simplifying our licensing and operating structure, and support our long term 50 state strategy. to serve consumers across the U.S. with limited credit options. Finally, technology and AI remain central to how we operate and how we grow. Our investments in automation and operating infrastructure are enabling us to support significantly higher business volumes. without a corresponding increase in operating expenses. These investments are translating into meaningful productivity gains with loans originated per customer service representative increasing approximately 24% year over year in Q3. While our operations labor costs as a percentage of revenue reached an all time low in the quarter. We are also advancing our AI powered underwriting capabilities through our latest cash flow underwriting model. Using consumer permission transaction and account information to better assess recent income, expenses, financial capacity. Alongside additional credit information. This can help us better understand and ultimately underwrite consumers. Who are not fully served by conventional credit scoring methods. We began rolling out our latest cash flow underwriting model towards the end of Q3 and we are expanding it as we progress through Q4. Ultimately, we expect these capabilities will support higher approval rates while maintaining our and our bank partners' disciplined risk posture. To support this initiative, we have recently integrated Plaid, a leader in financial data connectivity. Through consumer permission financial data, we can gain a more complete view of income cash flows, and financial obligations. Plaid was cofounded by William Hockey, who also leads Column, 1 of our existing banking partners. Together, these relationships reflect the broader financial technology ecosystem deploying Propel's next phase of growth. Before closing, I want to reflect on 2 important milestones. In September, we celebrated Propel's 15th anniversary. Just last month, we marked 5 years since becoming a publicly traded company. When my cofounders and I started Propel 15 years ago, $4 million raised from friends and family, and a belief that technology could change our underserved consumers' access credit. Today, we have facilitated more than $3 billion in credit through over 2 million loans and lines of credit. And built an international fintech business operating in the United States, Canada, the United Kingdom, and Puerto Rico, The numbers speak for themselves. Between 2019 and 2025, revenue grew at a compounded annual rate of approximately 43%. While adjusted EPS grew approximately 64% annually. At the time of our IPO, earning 12 month revenue was approximately $95 million compared with the midpoint of our guidance of $750 million. In addition, since becoming public, we have grown revenue each and every quarter. As a public company, we have raised our quarterly dividend 14 times. Including 13 consecutive increases. Representing a cumulative increase. Of approximately a 184%. But it is not just about the numbers. 1 of the things I am most proud of is that 15 years later, my cofounders and I are still building this company together. We have stayed true to the same principles. Using technology to offer vastly superior products to underserved consumers otherwise locked out, Delivering profitable growth and a commitment to doing right by our consumers shareholders, and team. And it is not just the founders. I could spend the rest of this call recognizing individuals who built this business with integrity, commitment, and passion. across Canada, the UK, and now Puerto Rico. The list is long. And to all of you, thank you. I also want to thank the nearly 2 million consumers who have placed their trust in us. The many financial institutions, our consumers are not just a credit score to us; we see the full picture. Each step of our 15 years of growth is about being able to better serve these consumers. in the U.S., in Canada, in the UK, and more globally in years to come. At Propel, we are not content to rest on what we have accomplished over the past 15 years. That is what drives us. We are focused on what comes next. As we enter 2027, our priorities are clear. To advance our mission of providing consumers with better credit products and greater access to credit, by expanding our products and partnerships. Entering new geographies, and advancing our AI technology. While continuing to deliver sustainable profitable growth. The company has achieved a great deal together. But as I have said many times, and as we have demonstrated, quarter after quarter after quarter. The best is yet to come. With that operator, you may open the line for questions. Thank you.

Operator: Ladies and gentlemen, we will now conduct a question-and-answer session. Please press 1 on your telephone keypad. A confirmation tone will 1 moment, please, while we call for questions. Your first question comes from Rob Goff with Ventum. Please go ahead.

Rob Goff: Thank you very much. And congratulations on the quarter and of greater importance congratulations on the full suite of milestones that you did discuss. An incredible accomplishment in the market.

Clive Kinross: Thank you, Rob.

Sheldon Saidakovsky: Thanks, Rob.

Clive Kinross: Very much appreciated.

Rob Goff: And getting back to the day to day, can you talk about the level of inbounds that you are seeing and how that is allowing you to manage the filter and direct the filter and what you are seeing both on those inbounds and how tight the filter might be or changes to the tightness of the filter as we go forward.

Clive Kinross: Yeah. that is a great question. You know, after 15 years of business, to increase originations by 55%, in the most recent quarter. Obviously, that includes Lending-as-a-Service. Is pretty extraordinary, I think anyway. We knew it was coming. We invested a ton over the past several quarters to generate that type of increase. But that notwithstanding. We do not take it for granted, but very proud of it. But your question is about, what are we seeing from an inbound perspective And we have mentioned that we are now seeing in excess of 100 thousand discrete applications every day. And growing and I could tell you the 55% growth in originations is less than the increase in inbound applications that we are seeing every day. The demand from consumers, given the funding of credit across the credit spectrum has been very strong. Our job at the end of the day is to make sure that we are underwriting those effectively to manage risk effectively. So our approval rates is approximately what it is been over the course of the year. We have not opened up the filters at all. And as you could see, that is producing very strong credit. Provision for loan losses at around 53%, is consistent with where we would expect to be in a Q3 and charge offs at around 12% is also where we expect to be and roughly consistent with the last quarter. If anything, Rob, our new cash flow underwriting model that, as I mentioned in my prepared remarks, we launched towards the end of Q3. We think it is gonna generate excellent results. At the end of the day, it is going to allow us to approve more consumers without taking on more credit risk. The team has been working on this for a long time now, and I could say that the early results are exceptionally promising as far as that is concerned.

Rob Goff: Okay. Thank you. And 1 more if I may, perhaps for Sheldon. On QuidMarket, could you update us on where you are right now with respect to the automation of the services and the service offerings in that market.

Sheldon Saidakovsky: Yeah. Hi. Hi, Rob. Thanks a lot for the question. I mean, first of all, we could not be more pleased with the progress in quid market. As we said in the prepared remarks, we have grown it by 69% year over year. Delivered record revenue. And what is more is, a couple-- Just a couple years after we have acquired it, we are at a revenue run rate that is pretty much triple. Of where we were at the time when we did the acquisition. Again, as we mentioned in the prepared remarks. So, we really could not be more pleased with the progress over there As I have mentioned, what we have focused on this year, and has been a big investment here, where we have expanded the infrastructure, expanded the team, put the balance sheet to work, and grown the originations by record after record over there. But we have done that by applying our expertise in analytics opening up additional marketing channels expanding the product set a little bit. We have not fully integrated our tech platform yet. We started to spec it out and work through it, and we expect that to start being integrated and rolled out in the early part of 2027, which will supercharge the growth. You know, on a go forward basis in the years to come over there. In addition, Rob, you know, we are looking for opportunities to expand our product suite over there. But the team in the UK is doing an absolutely outstanding job and we are capturing more of the addressable market. And there is a lot more to come.

Clive Kinross: And I will just want to layer on a little bit to the UK. Sheldon and I were there a few weeks ago. Could see that the team in The UK is on the call over here. They really are doing an outstanding job. And it is been a lot of hard work by that team. You could see the growth you could see the growth coming through in the top line. What you will see in 2027, and this is a little bit of a preview, is that the investments that we have made in 2027, which 2026, sorry, which will lead to a record profitability in the year in the UK as well. But in 2027, that is going to lead to dramatic expansion, in particular, in the bottom line. So we are very excited about that. As well as many of the other growth drivers in the business. Positioning us exceptionally well not only for continued top line growth next year, but also with even faster bottom line growth none more so than in the UK. that is fantastic.

Rob Goff: Thank you very much.

Clive Kinross: Thank you, Rob.

Sheldon Saidakovsky: Thank you.

Operator: The next question comes from Tomer Levitan with Raymond James. Please go ahead.

Tomer Levitan: Hi, it is Tomer Levitan on behalf of Stephen Boland at Raymond James. Congratulations on the quarter My first question is regarding the forward flow commitment about $210 million in the last quarter. I was curious to how much of that was used over the past 2 quarters and if you are close to the upper end, if there is any plans to procure more forward flow funding. Thanks.

Sheldon Saidakovsky: Yeah. Thanks for the question, Tomer. So the forward flow, again, is another program that is just performed remarkably well. We are very proud of it. And, frankly, as everyone can see, that our revenues for the business are as diversified as ever. 1 of the things that we are quite proud of now notwithstanding the fact that CreditFresh, our most mature portfolio, is growing at a very fast pace. The proportion of Credit Fresh is 55% of our revenue this quarter versus just a couple of years ago it was about 75% of our revenue. It just shows how diversified our revenues and drivers for the business are. So with that said, lending as a service has grown by 170% year over year. We have got a lot of committed capital We have not utilized We have got a lot of runway to utilize what we have. And by the way, the $210 million that you have mentioned is only from 1 institutional provider. And that is from the program. Only. We have got, obviously, our other lending as a service programs that have additional capital committed as well. So we have got, as I think we have said on the last call, it took a while for us to get all the committed capital to start scaling the program. We have got enough capital right now to hit our growth targets between the allocation of $210 million on the column program only. And all the other capital committed on the other forward flow programs. So we can continue at this pace of growth and possibly increasing the pace of growth on a go forward basis in 2027? But the providers of the capital are very, very happy with the returns. And frankly, we are getting a lot of inbound calls. For additional capital which frankly, we are turning away at the moment. But there. there is more than ample capital available with the existing providers and opportunity to raise more when we are ready to deploy it. The other.

Clive Kinross: Tom, I just want to add on to that as well. And we have said it many times before that the area where we are exceptionally prudent is how we manage our balance sheet and how we assess how we and our bank partners assess risk. And that will not change. Where we are less prudent and where we are more aggressive is in how we grow the business. How we grow the business, how we expand products, how we bring on new partners, and in the context of lending as a service. And maybe let me just take a step back before I before I before I put it into lending as a service. Given our new cash flow underwriting models, we are profitable right across the spectrum in all the geographies that we operate and in all the products that we operate. And as a consequence of that, given the strong demand, that we are seeing from our Lending-as-a-Service capital partners, They are pushing us to go out and expand into more products into more geographies. So that means not only will we continue the exceptional growth that we are already seeing, in Lending-as-a-Service as we onboard new-- as we onboard more distribution partners as we expand into additional geographies, but we are already in-depth discussions to broaden a product set where we provide Lending-as-a-Service to continue to fuel long term profitable growth in that area. And besides the growth, that we are demonstrating 170% year over year, I think everybody caught it in Sheldon's prepared remarks. The margins on Lending-as-a-Service. Increased. Sheldon, just correct me if I am wrong over here. Increased from, I think from 36% in the prior year to 48%. In the most recent quarter. Yeah. So it is another area where on top of top line growth. You will also continue to see expanded margins.

Tomer Levitan: that is very helpful. Thank you. And then my last question is around PCLs, It was 53%, slight tick up due to upfront provisioning and the customer mix. But my question is, as LaaS expands and then there is no associated credit risk there, and the customer cohort shifts from newly acquired customers to more existing customers. Can we see that structurally decline from call it, the 50% we are used to seeing?

Sheldon Saidakovsky: The quick answer, Tom, is yes. Structurally, as lending as a service, which you correctly said, does not carry a provision for loan losses. So naturally, as that grows, at faster pace than the rest of the business, You will see the provision for loan losses as a percentage of revenue start ticking down. Secondly, as repeat customers and our existing customers continue to graduate and we continue to offer them better products than they can access anywhere else in the market. continues to mature. Those consumers carry a much lower loss rate They perform incredibly well. And that will lead to lower provision for loan losses as well over time. However, with that said, as you could see, all of the investments we are making across our marketing partnerships and strategies and distribution channels are driving more new application volume than ever. We are able, as a 15-year-old company, to grow our new customer acquisitions. Or new customer originations by 55% year over year. So we are we are nowhere near, finished You know, there is many, many years ahead of us with all the programs and drivers we have built out to continue generating significant new customer growth across the business. So I would say looking at that mix, I still think that the new customer volumes will continue to represent a large a large proportion of what we are funding. 47% in Q3 was quite high. I would not expect that you know, on a normalized basis. But, certainly, it is gonna be. It will continue to be high, and we are gonna continue, originating record new customer volume on a go-forward basis. So you know, it will take some time before the portfolio gets to gets to maturity.

Tomer Levitan: that is all on my end. Thank you, guys.

Sheldon Saidakovsky: Thank you.

Clive Kinross: Thank you.

Operator: The next question comes from Suthan Sukumar. please go ahead.

Suthan Sukumar: Good morning, gents, and congrats on an impressive set of results here. For my first question, I wanted to touch on the strength in revenue yields. Obviously, this past quarter's performance was ahead of what you described as a full year outlook. Was there anything in particular that drove the upside in the quarter, and how should we be thinking about the trajectory into Q4 and beyond?

Sheldon Saidakovsky: Yes. Yes. Suthan, thanks very much for the question. You know, it is another metric we are very proud of. it is really, really been an outstanding quarter, and you could probably tell from where we are coming across. We are very proud of all the milestones and what we have achieved a growth perspective and from an earnings perspective. You know, the revenue yield has been coming up. Quarter after quarter. And the primary drivers for that to start with, were all of the investments that we made to expand all of our marketing partnerships, channels, strategies, and we have made enormous progress over there, which ultimately has led to record application volume that is. That we are seeing across the platform. And ultimately then translating into record new customer originations. You know, for year to date, we have been in excess of 45% quarter over quarter of our new customer proportion funded versus last year it was well under 45%. So if you look at that, our new customers, as you know, start at a higher revenue yield before they get graduated over time to lower rates. So that is certainly 1 thing that is been driving the revenue yield up. Quarter over quarter. Secondly, our MoneyKey bank service program, as we said in our prepared remarks, has been an outstanding growth driver. That program generally carries a higher revenue yield, proportion as well as QuidMarket, which has grown, as we have mentioned, 69% year over year, which also carries a higher revenue yield. And finally, our lending as a service, which we just spent quite a bit of time talking about, that is included in the revenue yield calculation, and it is reaching record revenues quarter after quarter. So all of these factors are leading to quite an uptick quarter after quarter in our revenue yield to 121% here in Q3. With that said, I will say that in Q4 in particular, you know, I would expect it actually to tick down slightly primarily because Q4 is generally a period of very large graduation. And we expect significant records on the existing customer funded side. So there will be a lot of consumers that are graduating. This is, again, regular, you know, normal course for the period that they typically graduate in. So that will probably tick down the revenue yield. I think that the revenue yield we experienced in Q3 is probably the probably near the high point I would expect it to continue to be, as we head into next year, between about 116% to 120% on a normalized basis. Keep in mind that all of these programs that we have grown over the past 3, 4 quarters. That had the outsized growth have been the higher yielding portfolios, and there is been quite a big ramp up in those portfolios in particular. So, again, we are very, very proud to have reached it, and especially maintaining our net charge off rate consistent with last year given all this incredible growth. And a provision for loan losses right in line with where we want to be from a targeted profitability standpoint.

Suthan Sukumar: Okay. Okay. Great. Appreciate the color on that. My second question, I want to touch on debt. I noticed your cost of capital has improved. it is lower. But your undrawn capacity is also lower. And in the backdrop of a growth acceleration, how are you thinking about your funding headroom and rates going forward?

Sheldon Saidakovsky: Yeah. I mean, firstly, the business is generating very strong operating cash flow and expanding earnings. that is number 1. Number 2 is our debt to equity ratio. And I will get to the capacity in a second because you rightfully said the capacity came down or the unused capacity came down a little bit. But our debt to equity ratio is at 1.2 times. Which has actually ticked down from the beginning of the year was at 1.3 times. So the balance sheet continues to be very, I guess, lightly light leverage in the business is expanding its profitability quite significantly. What we always try to do with our debt providers, and much like the lending as a service partnerships, I could tell you that we are fielding calls all the time from external parties and some tier 1 institutions that want to participate in our credit facilities So it is just a matter of us balancing some fees that we pay on unused credit commitments versus having required capital to continue funding the business. We do not wanna have a lot of committed capacity because it costs us money if we are not using it. On the first, obviously, ensure we size it appropriately. What you should expect is that our facilities are coming into kind of, you know, a renewal period in the early part of 2027, at which point we expect to upsize our credit facilities In addition to the external kind of calls and inbound that we are getting all the time. We have 9 lenders across our debt facility. And each 1 could not be-- as I am speaking for them, but each 1 is very happy with the performance of the portfolio and is only looking to continue funding the business. Gotcha.

Clive Kinross: Yeah. Just to layer on and just so that this point is clear. We are certainly expecting, Suthan, that when we do when we do renew the facility and upsize the facility. The rates and terms will be an improvement from where we are now. Obviously, we do not control the Fed funds rates. that is a component of the areas that we do control. I absolutely expect there to be an improvement in both the rates and returns. with a nice upsize. To facilitate all the growth that we are seeing.

Suthan Sukumar: Gotcha. That makes sense. Awesome update, guys. I will pass the line. Thanks so much, man.

Sheldon Saidakovsky: Thank you.

Clive Kinross: Thank you.

Operator: The next question comes from Andrew Scutt with Roth Capital Partners. Please go ahead.

Andrew Scutt: Hey, guys. Congrats on the strong results Thanks for taking my questions. First for me, kind of on the topic of new customers. 1 number that stood out to me was, the cost per new is down 23%, from the first quarter this year. Can you guys just kind of expand on what is driving that improvement? And how much room there may be for further gains as you continue to scale?

Sheldon Saidakovsky: Hey, Andrew. Thanks a lot for the question. Another metric we are very proud of, you know, that acquisition cost had. Was quite a topic when it started ticking up. In Q4 of 25 last year. At the time, we gave a lot of color on that. Where, you know, we started making some very deliberate and targeted investments in our acquisition strategies, partnerships and channels. We started investing in AI optimized content because consumers are using new ways of searching for loans and credit products online, so we are making investments over there. We are also investing in what we are calling mid funnel which is connected TV. Social ads, digital channels, online videos, all of those type of things that we had not done before. And also, this year alone, we added in excess of 20 new marketing partners. So we. We have made these deliberate investments and you saw the acquisition cost per funded loan tick up to just over 26¢ per new customer. Funded in Q1, which was the high point And as we always said, a lot of these things take a lot of upfront investments before you start seeing the efficiencies. And on the 1 hand, it started driving incredible increase in application volume and naturally origination volume. And over the last couple quarters, you have seen the acquisition cost coming down. As we have realized on the efficiencies from those investments made. So we are very proud of that. But we do not sit on our laurels. We continue investing So I think coming into Q4, I would not expect it to be at that level. I continue to give the range of between 20¢ and 24¢ given the rate at which the business is growing at the moment. And the other thing, we have to continue investing in the business and expanding. Ultimately, over time, we will see the efficiencies in that cost per funded loan take below the 20¢, but not yet. that is a I said, keep it between 20¢ and 24¢. Like, for example, Clive mentioned this in his prepared remarks, we are rolling out a new cash flow underwriting model which ultimately will result in higher conversion rates, lower cost per acquisition, then a lot more originations that we are going to be able to underwrite and approve more customers than ever before. But initially, we are very prudent and disciplined when we roll out these large transformational initiatives. So expect, actually, because of that, the data and underwriting costs, form part of the cost per acquisition to actually tick slightly up in Q4. Before it starts coming down again.

Andrew Scutt: Understood. And second for me, Propel Bank kind of seems like a potentially under appreciated part of the story. I know some other fintechs are facing some hurdles in securing bank licenses. So kind of while still early days, can you kind of walk us through the advantages the bank provides today and then kind of talk through some additional capabilities that could you know, unlock over time?

Clive Kinross: Yeah. And it is another it is another area. You are absolutely right. it is 1 of those underappreciated areas. Of our business, and I think also underappreciated that we actually have a banking license as part of the Propel operation in Puerto Rico. And I was actually there with Sheldon, I think, a week or 2 ago. I see that team's also on the call over here, and they are doing quite exceptional job in Puerto Rico. We are growing that team up. We are at 30 people today. And we continue to put more investments in that team. We have mentioned geographic expansion as 1 of the reasons that we are driving the growth in the company. But that geographic expansion would not be possible without the Propel Global Bank. So our 50 state strategy ultimately is firmly intact. that is an incredibly important driver or facilitator of that 50 state strategy, and we expect to continue to add additional states not only in this quarter, but moving into 2027 as well. And the key differentiator ultimately, between us and our competitors is we have the regulatory framework with Propel Global Bank to do just that. Great.

Andrew Scutt: Well, thanks for taking my questions, and congrats again on the strong quarter. Thanks so much. Much appreciated.

Sheldon Saidakovsky: Thank you.

Operator: The next question comes from Mike Rizvanovic with TD Securities. Please go ahead.

Analyst: Hi, good morning. Just wanted to check with the various strong revenue growth across different lines. there is been previously discussed a target for LaaS of about 10% of total revenue as an exit run rate. For Q4 26. Looks like that will require a pretty healthy jump quarter over quarter in LaaS revenue to reach that. Are you still targeting that 10% exit run rate?

Clive Kinross: Yeah. So first of all, yeah, I appreciate the acknowledgement of the growth across the business. And you are absolutely right. Every single every single business within the broader Propel umbrella. Grew by a minimum of double digits. With some programs, as you know, Lending-as-a-Service, under 70%. Like The UK, just under 70% year over year growth. Lending as a service, specifically at $13.5 million, approached 7%. Of quarterly revenues, and the guidance that we provided for Q4, for Lending-as-a-Service to be approaching 10%. I think that, you know, relative to the 7%, we are gonna be closer to the 10% than we were in Q3. But I do not suspect we will quite get to the 10% even though we will obviously inch closer to it. And experience again, triple-digit growth on the Lending-as-a-Service side. Okay. Great. Thank you for that. And then just a second 1. For now, still maintaining that the 2026 guidance on ending CLAB growth of 18 to 24%. It would seem like you would be getting close to the high end of that. I just wanted to check if there is any updated commentary. Yeah. I think I think that is an accurate assessment. Insofar as we will be getting close to the high end of that. And excuse me, that only applies to CLAB. I do not think that only applies to see that. I think there is a lot of the guided numbers where we expect to be. close to the top end of the range. Just given the time of year, we are we are we are not inclined to start adjusting the guidance. But your comments that CLAB will be close to the top end of the range or even exceed the top end of the range. It is certainly a valid observation. Okay. Great. Thank you. That was all for me. Appreciate it. Thanks so much. I appreciate it.

Sheldon Saidakovsky: Thank you.

Operator: At this time, there are no further questions. I will now transfer the conference over to Clive Kinross. Please go ahead.

Clive Kinross: Thank you so much, and thanks, everybody, for attending our call this morning. I would certainly like to thank our investors and our partners for their continued support of our vision of building a new world of financial opportunity. And as always, I would like to extend a big thank you to the PROPEL team in Canada, the UK, and Puerto Rico for delivering these outstanding record results. And achievements. On that note,, have an excellent day, and operator, you may end the call. Thank you.

Operator: Ladies and gentlemen, this concludes the conference call for today. Thank you for your participation. You may now disconnect your lines.