TORONTO, May 6, 2025 /CNW/ - Propel Holdings Inc. ("Propel" or the "Company") (TSX: PRL), the fintech facilitating access to credit for underserved consumers, today reported record financial results for the three months ended March 31, 2025 ("Q1 2025"). Propel also announced that its Board of Directors has approved a further increase to its dividend from C$0.66 to C$0.72 per share on an annualized basis, effective Q2 2025. This represents an increase of 9% and the Company's eighth dividend increase since the beginning of 2023. All amounts are expressed in U.S. dollars unless otherwise stated.
Propel Holdings Inc. Logo (CNW Group/Propel Holdings Inc.)
Financial and Operational Highlights for Q1 2025 (Shown in U.S. Dollars) Comparable metrics relative to Q1 2024
Revenue: increased by 44% to $138.9 million in Q1 2025, representing record quarterly performance
Adjusted EBITDA1,5: increased by 37% to $41.2 million in Q1 2025, representing record quarterly performance
Net Income: increased by 79% to $23.5 million in Q1 2025, representing record quarterly performance
Adjusted Net Income1,5: increased by 49% to $23.4 million in Q1 2025, representing record quarterly performance
Diluted EPS2: increased by 57% to $0.56(C$0.80) in Q1 2025, representing record quarterly performance
Adjusted Diluted EPS1,2,5: increased by 30% to $0.55(C$0.80) in Q1 2025, representing record quarterly performance
Return on Equity3: achieved 42% in Q1 2025 on an annualized basis compared to 49% in Q1 2024
Adjusted Return on Equity1,5: achieved 42% in Q1 2025 on an annualized basis compared to 59% in Q1 2024
Loans and Advances Receivable: increased by 40% in Q1 2025 to $380.1 million, a record ending balance
Ending Combined Loan and Advance Balances ("CLAB")1: increased by 38% in Q1 2025 to $483.2 million, a record ending balance
Dividend: paid a Q1 2025 dividend of C$0.165 per common share on March 5, 2025, representing a 10% increase to our Q4 2024 dividend
Management Commentary
"We have had an exceptionally strong start to the year and are proud to have delivered another quarter of record results on both the top and bottom line, including record quarterly revenue, Adjusted EBITDA1, net income, Adjusted Net Income1, diluted EPS, Adjusted Diluted EPS1 and Ending CLAB1.
Even amid economic uncertainty, we and our Bank Partners delivered the strongest credit performance for a quarter since Q2 2021, a result of our continued execution of profitable growth and our AI-powered technology platform. During what is typically our slowest demand quarter, we and our Bank Partners originated record volume for a Q1 period. We continue to observe strong demand as a growing number of consumers in our markets are left out of the traditional credit market and are turning to Propel and our Bank Partners. This is a trend we expect to fuel our growth throughout 2025.
While we remain vigilant in this dynamic environment, our consumers are resilient, and the need for credit remains significant. As banks and other traditional lenders continue to tighten their underwriting, we have an opportunity to introduce Propel's brands to more of the 90 million underserved consumers across the US, the UK and Canada. With our business development pipeline full and additional capital capacity secured, we are well positioned for growth. We are just getting started," said Clive Kinross, Chief Executive Officer.
Discussion of Financial Results and Business Strategy
Strong consumer demand led to record first quarter Total Originations Funded1, and quarterly record Ending CLAB1 and revenue
Propel and its Bank Partners continue to benefit from the tightening of underwriting by traditional financial institutions and a resilient consumer segment as demonstrated by record Total Originations Funded1 for a Q1 period
Total Originations Funded1 increased by 32% to a Q1 record of $153.7 million in Q1 2025 vs. Q1 2024, resulting in Ending CLAB1 growing year-over-year by 38% to a record of $483.2 million
Annualized Revenue Yield1 increased to 115% in Q1 2025 from 112% in Q1 2024. The increase was driven by a variety of factors including: the continued strong originations from new customers leading into Q1 2025, the ongoing expansion of our Lending as a Service program and the recent acquisition of QuidMarket
The record Ending CLAB1 and increased Annualized Revenue Yield1 drove the 44% growth and record revenue in Q1 2025 of $138.9 million
Propel's North American operations, supported by its AI-powered technology and a robust tax refund season, delivered strong credit performance
Propel and its Bank Partners were able to capitalize on significant consumer demand while continuing to drive strong credit performance
Our AI-powered platform processed on average approximately 60% more unique applications a day in Q1 2025 than in Q1 2024, allowing us to continue serving more consumers and meet the strong demand
Provision for loan losses and other liabilities as a percentage of revenue decreased to 42% in Q1 2025 from 44% in Q1 2024
Propel's and its Bank Partners prudent underwriting approach, a strong tax season and resilient consumer drove the lower year-over-year provision for loan losses and other liabilities as a percentage of revenue
The provision for loan losses and other liabilities as a percentage of revenue in Q1 2025 represented the lowest percentage in a quarter since Q2 2021, an atypical period of repayment impacted by government support related to COVID-19
Overall growth, lower relative provisions, operating leverage and effective cost management contributed to the year-over-year increase in net income and Adjusted Net Income1 and margin expansion
Net income was $23.5 million in Q1 2025, a 79% increase over Q1 2024, and Adjusted Net Income1,5 was $23.4 million in Q1 2025, a 49% increase over Q1 2024
Net income margin increased to 17% in Q1 2025 from 14% in Q1 2024 and Adjusted Net Income Margin1,5 increased to 17% in Q1 2025 from 16% in Q1 2024, both representing record quarterly margins since becoming a public company
Adjusted Net Income1 approximated net income in Q1 2025 primarily due to a lower stage 1 provision add back and an unrealized gain from changes in foreign exchange rates which is deducted from Adjusted Net Income1
In Propel's first full quarter in the UK, QuidMarket performance was strong and ahead of our quarterly expectations
QuidMarket was able to deliver record Q1 revenue and exceptional credit performance, supported by strong macro economic conditions in the UK
Integration remains on track and management is committed to accelerating QuidMarket's growth and building it into a leader for the 20 million underserved consumers in the UK
Solid consolidated financial position and continued earnings growth supports the continued expansion of existing programs, growth initiatives and increased dividend
The Company ended Q1 2025 with approximately $96 million of undrawn credit capacity on its various credit facilities with a Debt-to-Equity3 ratio of 1.2x
On April 28, Propel announced a reduction in its cost of capital and increased capacity to achieve its growth targets
The Company amended and upsized its CreditFresh credit facility by $70 million to $400 million with an additional bank and with increased commitments from several existing lenders
Furthermore, Propel refinanced its MoneyKey credit facility with a $15 million commitment
With the CreditFresh amendment and MoneyKey refinancing, the overall cost of capital will be lowered by approximately 150 basis points per annum4
Strong operating results and financial position supported the decision to increase our quarterly dividend by 9% to C$0.18 per common share in Q2 2025
Notes:
(1)
See "Non-IFRS Financial Measures and Industry Metrics" and "Reconciliation of Non-IFRS Financial Measures" below. See also "Key Components of Results of Operations" in the accompanying Q1 2025 MD&A for further details concerning the non-IFRS financial measures and industry metrics used in this press release including definitions and reconciliations to the relevant reported IFRS measure.
(2)
Results converted from USD to CAD assuming an exchange rate of USD/CAD $1.4352 for the three-month period ending March 31, 2025.
(3)
See "Supplemental Financial Measures" in the accompanying Q1 2025 MD&A for further details concerning certain financial metrics used in this press release including definitions.
(4)
Represents the weighted average cost of capital saving assuming full utilization of both the CreditFresh and MoneyKey credit facilities.
(5)
Comparative figures have been updated to conform with current presentation.
Dividend Increase
Propel also announced today that its board of directors has approved an increase to its dividend that represents an increase from C$0.66 per common share to C$0.72 per common share on an annualized basis. This 9% increase is the Company's eighth dividend increase since the beginning of 2023. The board declared a dividend of C$0.18 per common share, payable on June 4, 2025 to shareholders of record as of the close of business on May 15, 2025. The Company has designated this dividend as an eligible dividend within the meaning of the Income Tax Act (Canada).
Conference Call Details
The Company will be hosting a conference call and webcast tomorrow morning with a presentation by Clive Kinross, Chief Executive Officer, and Sheldon Saidakovsky, Chief Financial Officer.
Propel Holdings (TSX: PRL) the fintech building a new world of financial opportunity for consumers, partners, and investors. Propel's operating brands — Fora Credit, CreditFresh, MoneyKey and QuidMarket — and its Lending-as-a-Service product line facilitate access to credit for consumers underserved by traditional financial institutions. Through its AI-powered platform, Propel evaluates customers in a more comprehensive way than traditional credit scores can. The result is better products and an expanded credit market for consumers while creating sustainable, profitable growth for Propel. The revolutionary fintech platform has already helped consumers access over one million loans and lines of credit and over two billion dollars in credit. At Propel, we are here to change the way customers, partners and investors succeed together. Learn more at propelholdings.com
Non-IFRS Financial Measures and Industry Metrics
This press release makes reference to certain non-IFRS financial measures and industry metrics. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. Such measures include "Adjusted Diluted EPS", "Adjusted EBITDA", "Adjusted Net Income", "Adjusted Net Income Margin", "Adjusted Return on Equity", "EBITDA", "Ending CLAB", and "Total Originations Funded". This press release also includes references to industry metrics such as "Annualized Revenue Yield", "Return on Equity" and "Total Originations Funded" which are supplementary measures under applicable securities laws.
These non-IFRS financial measures and industry metrics are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We believe that securities analysts, investors and other interested parties frequently use non-IFRS financial measures and industry metrics in the evaluation of issuers. The Company's management also uses non-IFRS financial measures and industry metrics in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts, and to determine components of management and executive compensation. The key performance indicators used by the Company may be calculated in a manner different than similar key performance indicators used by other similar companies.
Definitions and reconciliations of non-IFRS financial measures to the relevant reported measures can be found in our accompanying MD&A available on SEDAR+. Such reconciliations can also be found in this press release under the heading "Reconciliation of Non-IFRS Financial Measures" below.
Forward-Looking Information
Certain statements made in this press release may constitute forward-looking information under applicable securities laws. These statements may relate to our dividend scheduled for June 4, 2025, the strong demand from consumers we expect to see throughout 2025, our ability to introduce the Propel brand to a growing number of consumers and grow our business, our ability to accelerate QuidMarket's growth in 2025. Often but not always, forward-looking statements can be identified by the use of forward-looking terminology such as "may", "will", "expect", "believe", "estimate", "plan", "could", "should", "would", "outlook", "forecast", "anticipate", "foresee", "continue" or the negative of these terms or variations of them or similar terminology.
Many factors could cause our actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the factors discussed in the "Risk Factors" section of the Company's annual information form dated March 12, 2025 for the year ended December 31, 2024 (the "AIF"). A copy of the AIF and the Company's other publicly filed documents can be accessed under the Company's profile on SEDAR+ at www.sedarplus.ca.
The Company cautions that the list of risk factors and uncertainties described in the AIF is not exhaustive and other factors could also adversely affect its results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. The forward-looking information contained in this press release represents our expectations as of the date of this press release (or as the date they are otherwise stated to be made), and are subject to change after such date. However, we disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws.
Selected Financial Information
Three months ended March 31,
2025
2024
(US$ other than percentages)
Revenue
138,937,567
96,503,606
Provision for loan losses and other liabilities
58,678,626
42,361,627
Operating expenses
Acquisition and data
17,981,988
11,496,889
Salaries, wages and benefits
11,778,633
9,396,722
General and administrative
3,209,164
2,475,417
Processing and technology
5,355,548
3,633,968
Total operating expenses
38,325,333
27,002,996
Operating income
41,933,608
27,138,983
Other (income) expenses
Interest and fees on credit facilities
8,648,654
7,104,827
Interest expense on lease liabilities
65,661
72,521
Amortization of internally developed software, customer relationships and brand
1,720,297
949,783
Depreciation of property and equipment
54,566
51,632
Amortization of right-of-use assets
210,386
188,684
Foreign exchange (gain) loss
524,408
74,211
Unrealized (gain) loss on derivative financial Instruments
(486,398)
536,309
Total other (income) expenses
10,737,574
8,977,967
Income before income tax
31,196,034
18,161,016
Income tax expense (recovery)
Current
7,490,654
6,249,475
Deferred
204,849
(1,210,312)
Net income for the period
23,500,531
13,121,853
Earnings per share ($USD):
Basic
0.60
0.38
Diluted
0.56
0.35
Earnings per share ($CAD)(1):
Basic
0.87
0.52
Diluted
0.80
0.48
Return on equity(2)
42 %
49 %
Dividends:
Dividends.
4,442,098
3,030,807
Dividend per share
0.114
0.088
Note:
(1)
Results converted from USD to CAD assuming an exchange rate of USD/CAD $1.4352 and USD/CAD $1.3486 for the three-month periods ending March 31, 2025 and March 31, 2024, respectively.
(2)
See "Supplemental Financial Measures" in the accompanying Q1 2025 MD&A for further details concerning certain financial metrics used in this press release including definitions.
Reconciliation of Non-IFRS Financial Measures
The following table provides a reconciliation of Propel's net income to EBITDA1 and Adjusted EBITDA1,3:
Three months ended March 31,
2025
2024
(US$ other than percentages)
Net Income
23,500,531
13,121,853
Interest and fees on credit facilities
8,648,654
7,104,827
Interest expense on lease liabilities
65,661
72,521
Amortization of internally developed software, customer relationships and brand
1,720,297
949,783
Depreciation of property and equipment
54,566
51,632
Amortization of right-of-use assets
210,386
188,684
Income Tax Expense (Recovery)
7,695,503
5,039,163
EBITDA(1)
41,895,598
26,528,463
EBITDA(1) Margin
30 %
27 %
Unrealized loss (gain) on derivative financial instruments
(486,398)
536,309
Provision for credit losses on current status accounts(2)
480,249
1,542,679
Provisions for CSO Guarantee liabilities and Bank Service Program liabilities
(672,603)
1,454,824
Adjusted EBITDA (1)(3)
41,216,846
30,062,275
Adjusted EBITDA(1)(3) Margin
30 %
31 %
Note:
(1)
See "Non-IFRS Financial Measures and Industry Metrics".
(2)
Provision included for (i) loan losses on good standing current principal (Stage 1 — Performing) balances (see "Material Accounting Policies and Estimates — Loans and advances receivable" in the accompanying Q1 2025 MD&A).
(3)
Comparative figures have been updated to conform with current presentation
The following table provides a reconciliation of Propel's Net Income to Adjusted Net Income1,3, Adjusted Return on Equity1,3 and Adjusted Net Income margin1,3:
Three months ended March 31,
2025
2024
(US$ other than percentages)
Net Income
23,500,531
13,121,853
Unrealized loss (gain) on derivative financial instruments, net of taxes(2)
(357,503)
394,187
Amortization of acquired intangible assets, net of taxes(2)
360,787
—
Provision for credit losses on current status accounts, net of taxes(2)
352,983
1,133,869
Provisions for CSO Guarantee liabilities and Bank Service Program liabilities, net of taxes(2)
(494,363)
1,069,296
Adjusted Net Income(1)(3)
23,362,435
15,719,205
Multiplied by number of periods in year.
x4
x4
Divided by average shareholders' equity for the period
221,513,959
106,662,964
Adjusted Return on Equity(1)(3)
42 %
59 %
Adjusted Net Income Margin(1)(3)
17 %
16 %
Note:
(1)
See "Non-IFRS Financial Measures and Industry Metrics".
(2)
Each item is adjusted for after-tax impact, at an effective tax rate of 26.5% for the three months ended March 31, 2025 and comparative 2024 period.
(3)
Comparative figures have been updated to conform with current presentation.
The following table provides a reconciliation of Propel's Ending CLAB1 to loans and advances receivable:
As at March 31,
As at Dec 31,
(US$ other than percentages)
2025
2024
2024
Ending Combined Loan and Advance balances1
483,210,887
349,228,416
480,602,408
Less: Loan and Advance balances owned by third party lenders pursuant to CSO program
(4,853,215)
(3,606,703)
(5,892,783)
Less: Loan and Advance balances owned by a NBFI pursuant to the MoneyKey Bank Service program
(57,223,345)
(41,080,010)
(56,360,814)
Loan and Advance owned by the Company
421,134,327
304,541,703
418,348,811
Less: Allowance for Credit Losses
(113,704,371)
(77,984,175)
(111,227,713)
Add: Fees and interest receivable
55,983,713
37,969,448
52,592,513
Add: Acquisition transaction costs
16,662,346
6,700,303
15,451,381
Loans and advances receivable
380,076,015
271,227,279
375,164,992
Note:
(1)
See "Non-IFRS Financial Measures and Industry Metrics".
