Encore Capital Group, Inc.

Encore reported Q1 2026 revenue of $475 million, up 21% year over year, with portfolio revenue of $390 million, up 13%, and debt purchasing revenue of $453 million, up 23.5%. Collections were a record $718 million, up 19%, with collection yield of 65.2% and portfolio yield of 35.4%. Net income was $86 million and EPS was $3.86, both sharply higher than the prior year; operating expenses were $291 million, up 11%, and leverage improved to 2.3x from 2.6x a year ago. For 2026, management continues to expect global portfolio purchases of $1.4 billion to $1.5 billion, now expects global collections to increase by 8% to $2.8 billion, expects EPS to increase by 19% to $13 per share, interest expense and other income to be approximately $300 million, and the effective tax rate to be in the mid-20s. They also reiterated full-year cash efficiency margin guidance to exceed 58% and said Q1 cash efficiency margin was 60.9%.

Ashish Masih framed the quarter as evidence that Encore’s buying, collecting, and funding strategy is working well, emphasizing record collections, strong U.S. market conditions, and continued balance-sheet strength. He said the company is benefiting from technology, enhanced digital capabilities, and operational innovation, especially in early-stage vintages, but stressed that the overall environment is still broadly similar to recent quarters rather than materially changed. He also highlighted disciplined capital allocation, with portfolio buying as the top priority and share repurchases used opportunistically when leverage and market conditions allow.

Tomas Hernanz emphasized operating leverage and margin strength, noting that collections grew 19% while operating expenses rose only 11%, and that cash efficiency margin improved to 16.9% for the quarter versus 58.3% last year, with Q1 cash efficiency margin at 60.9%. He pointed to portfolio revenue of $390 million, debt purchasing revenue of $453 million, and total revenues of $475 million, and said changes in recoveries were $62.7 million, including $46 million above forecast and $16.7 million in expected future recoveries. He also highlighted leverage at 2.3x, the one-year extension of the securitization facility to January 2031, no material maturities until 2028, and ample liquidity.

Analysts pressed management on whether anything had materially changed in the buying or collections environment, and Masih said the short answer was no: U.S. supply, pricing, and returns remain stable and Europe is also steady, though competition is somewhat higher there. Questions on AI focused on regulatory and operational implications; management said Encore is already using technology extensively, is piloting AI tools carefully, and is mindful of the higher regulatory bar and the continued importance of human empathy in collections calls. Analysts also asked about the source of outperformance in the vintages, and management said both the 2024 and 2025 vintages are outperforming, with early-stage improvements driving higher recoveries and future revenue recognition over time.