PRA Group, Inc.

PRA Group reported Q2 revenue of $372 million, up 29% year over year, and net income of $58 million, or $1.51 per diluted share. Cash collections were $559 million, up 4% year over year, with U.S. cash collections up 6% and Europe up 4%; legal cash collections in the U.S. grew 26% to $150 million. Portfolio income rose 7% to $268 million, and changes in expected recoveries were $97 million, driven largely by a $349 million increase in European ERC. Adjusted EBITDA for the last 12 months was $1.4 billion, up 10% year over year, while net leverage improved to 2.67x. For capital deployment, the company invested $297 million in portfolios, including $174 million in Europe and $109 million in the U.S., repurchased $10 million of stock, and ended with about $1 billion of total availability under its credit facilities. Management said the full-year 2026 effective tax rate is expected to be 30%, and that legal collection cost growth should moderate versus the 40% growth rate in 2024 and 30% in 2025; it also said the long-term portfolio purchase target remains $1 billion to $1.3 billion.

Martin Sjolund framed the quarter as another step forward in executing PRA 3.0, emphasizing disciplined capital allocation, cost restructuring, and technology modernization. He highlighted the European ERC increase as validation of years of overperformance and said the business is becoming simpler, more flexible, and more technology-enabled. His tone was confident and constructive, with repeated references to stronger financial performance, improved forecasting, and long-term shareholder value.

Rakesh Sehgal focused on the drivers of revenue, margins, and balance-sheet improvement. He noted that total revenues rose to $372 million, portfolio income was $268 million, operating expenses were $219 million, net interest expense was $64 million, and net income was $58 million; he also cited $3.1 billion of total committed capital under credit facilities and about $1 billion of availability. On capital allocation and funding, he said the company refinanced its $730 million European credit facility, extended maturity by 5 years, and has no debt maturities until February 2028. He also pointed to the 30% full-year 2026 tax-rate expectation and reiterated that share repurchases remain opportunistic, with $10 million bought back in the quarter and $40 million repurchased over the last 12 months.

Analysts focused on three areas: the competitive backdrop in Europe, the scale and future pace of legal collections, and how much of the European ERC uplift should be viewed as pulled forward into this quarter. Management said both the U.S. and Europe remain competitive, but supply is healthy and the company is sticking to return hurdles rather than chasing volume. On legal, management said it is not the primary channel, but is becoming more important as more accounts are identified as economical for legal action; they said legal cost growth should moderate in 2026 versus the prior two years. On ERC, management said the $349 million uplift followed a deep portfolio review and now represents its best estimate going forward, with the main consequence being higher and more predictable portfolio income.