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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


	☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026


	☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-42718

Jefferson Capital, Inc.

(Exact name of registrant as specified in its charter)


DELAWARE		33-1923926
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

600 SOUTH HIGHWAY 169, SUITE 1575,

MINNEAPOLIS, MINNESOTA 55426

(Address of principal executive offices, zip code)

(320) 229-8505

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on which Registered
Common stock, $0.0001 par value per share	JCAP	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☒		Smaller reporting company ☐
		Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s common stock outstanding as of May 14, 2026 was 55,418,467

Table of Contents

TABLE OF CONTENTS


	Page
Part I — Financial Information	5
Item 1 — Combined and Condensed Consolidated Financial Statements	5
Combined and Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 (Unaudited)	5
Combined and Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2026 and 2025 (Unaudited)	6
Combined and Condensed Consolidated Statements of Stockholder’s Equity for the three months ended March 31, 2026 and 2025 (Unaudited)	7
Combined and Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025 (Unaudited)	8
Notes to Combined and Condensed Consolidated Financial Statements (Unaudited)	10
1. Organization, Description of Business and Summary of Significant Accounting Policies	10
2. Earnings Per Share	13
3. Acquisitions	14
4. Fair Value Measurements	14
5. Investment in receivables, net	15
6. Credit Card Receivables	17
7. Goodwill	18
8. Notes Payable, Net	19
9. Leases	22
10. Stock Based Compensation	23
11. Commitments and Contingencies	25
12. Income Taxes	26
13. Segment Reporting	27
14. Subsequent Events	28
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3 — Quantitative and Qualitative Disclosures about Market Risk	52
Item 4 — Controls and Procedures	53

Part II — Other Information	54
Item 1 — Legal Proceedings	54
Item 1A — Risk Factors	54
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3 — Defaults Upon Senior Securities	55
Item 4 — Mine Safety Disclosures	55
Item 5 — Other Information	55
Item 6 — Exhibits	55
Signatures	57

Table of Contents

BASIS OF PRESENTATION

Except as otherwise indicated or as the context otherwise requires, all references in this Quarterly Report on Form 10-Q (the “Quarterly Report”) to the “Company,” “we,” “our,” and “us” and similar terms refer to Jefferson Capital, Inc. a Delaware corporation, together with its subsidiaries. Unless otherwise indicated, all references to our financial information are to the combined and condensed consolidated financial information of the Company and references to “dollars” and “$” in this Quarterly Report are to, and amounts are presented in, U.S. dollars. Financial data as of March 31, 2026 and December 31, 2025, and for the three months ended March 31, 2026 and the twelve months ended December 31, 2025, relate to financial information of the Company on a combined and condensed consolidated basis. All amounts referred to in the combined and condensed consolidated financial statements have been rounded to the nearest thousand, unless otherwise stated. All percentages are calculated based on actual amounts. Minor differences may exist due to rounding.

Special Note Regarding Forward-Looking Statements

This Quarterly Report contains forward-looking statements about Jefferson Capital, Inc. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements and are based on the information available to, and assumptions and estimates made by, management as of the date hereof. These forward-looking statements cover, among other things, future economic conditions and the anticipated future revenue, expenses, financial condition, asset quality, capital and liquidity levels, plans, prospects and operations of Jefferson Capital, Inc. Forward-looking statements often use words such as “anticipates,” “targets,” “expects,” “hopes,” “estimates,” “projects,” “forecasts,” “intends,” “plans,” “goals,” “believes,” “continue” and other similar expressions or future or conditional verbs such as “will,” “may,” “might,” “should,” “would” and “could.”

Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those set forth in forward-looking statements. Factors that may materially affect such forward-looking statements include:

●	Deterioration in general business and economic conditions or turbulence in domestic or global financial markets, which could adversely affect Jefferson Capital, Inc.’s revenues and the values of its assets and liabilities;

●	Turmoil and volatility in the financial services industry;

●	Actions taken by governmental agencies to stabilize the financial system and the effectiveness of such actions;

●	Changes in interest rates;

●	Increases in unemployment rates;

●	Impacts of current, pending or future litigation and governmental proceedings;

●	Increased competition from both banks and non-banks;

●	Effects of climate change and related physical and transition risks;

●	Changes in customer behavior and preferences and the ability to implement technological changes to respond to customer needs and meet competitive demands;

●	Failures or disruptions in or breaches of Jefferson Capital, Inc’s operational, technology or security systems or infrastructure, or those of third parties, including as a result of cybersecurity incidents;

●	Failures to safeguard personal information;

●	Impacts of pandemics, natural disasters, terrorist activities, civil unrest, international hostilities and geopolitical events;

●	Impacts of supply chain disruptions, rising inflation, slower growth or a recession;

●	Failure to execute on strategic or operational plans;

●	Effects of mergers and acquisitions and related integration;

●	Effects of critical accounting policies and judgments;

●	Effects of changes in or interpretations of tax laws and regulations; and

●	Management’s ability to effectively manage market risk, operational risk, compliance risk, strategic risk, liquidity risk and reputation risk.

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Factors other than these risks, including those described under the sections in this Quarterly Report entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report, also could adversely affect Jefferson Capital, Inc.’s results, and the reader should not consider these risks to be a complete set of all potential risks or uncertainties. Readers are cautioned not to place undue reliance on any forward-looking statements. Forward-looking statements speak only as of the date hereof, and Jefferson Capital, Inc. undertakes no obligation to update them in light of new information or future events, except as required by applicable law.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

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Part 1. Financial Information

Jefferson Capital, Inc.

Combined and Condensed Consolidated Balance Sheets

(Unaudited, in Thousands)


		As of March 31,			As of December 31,
	* *	2026			2025		* *
Assets
Cash and cash equivalents		$	26,249		$	23,231
Restricted cash			19,359			24,320
Accounts receivable			15,108			12,245
Other assets			13,915			16,273
Investments in receivables, net			1,929,069			1,928,742
Credit card receivables (net of allowance for			15,130			16,312
credit losses of $1,663 and $1,784)
Property, plant and equipment, net			1,490			1,695
Other intangible assets, net			5,870			6,541
Goodwill			57,915			58,014
Total Assets		$	2,084,105		$	2,087,373

Liabilities
Accounts payable and accrued expenses		$	89,899		$	95,208
Other liabilities			3,891			4,179
Current tax liabilities			933			855
Deferred tax liabilities			113,186			101,957
Notes payable, net			1,433,321			1,409,039
Total Liabilities		$	1,641,230		$	1,611,238

Stockholders' Equity
Common Stock par value $0.0001 per share; 330,000,000 shares authorized as of March 31, 2026 and December 31, 2025 and 55,371,991 and 58,298,923 shares issued and outstanding as of March 31, 2026 and December 31, 2025		$	6		$	6
Additional paid-in capital			(41,024)			(49,549)
Retained earnings			486,548			522,632
Accumulated other comprehensive income (loss)			(2,655)			3,046
Total stockholders' equity		$	442,875		$	476,135
Total Liabilities and Stockholders' Equity		$	2,084,105		$	2,087,373

See accompanying notes to the combined and condensed consolidated financial statements.

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Jefferson Capital, Inc.

Combined and Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited in Thousands, except Per Share amounts)



		For the Three Months Ended March 31,
	* *	2026			2025		* *
Revenues
Total portfolio income		$	157,606		$	138,693
Changes in recoveries			7,057			3,621
Total portfolio revenue			164,663			142,314
Credit card revenue			1,735			1,898
Servicing revenue			10,041			10,731
Total Revenues			176,439			154,943
Provision for credit losses			624			542
Operating Expenses
Salaries and benefits			22,375			14,022
Servicing expenses			65,578			42,791
Depreciation and amortization			872			1,608
Professional fees			2,281			2,165
Other selling, general and administrative			4,524			4,549
Total Operating Expenses			95,630			65,135
Net Operating Income			80,185			89,266

Other Income (Expense)
Interest expense			(30,578)			(24,819)
Foreign exchange and other income (expense)			1,449			2,459
Total other expense			(29,129)			(22,360)
Income Before Income Taxes			51,056			66,906
Provision for income taxes			(13,422)			(2,679)
Net Income			37,634			64,227
Foreign currency translation gain / (loss)			(5,701)			3,884
Comprehensive Income		$	31,933		$	68,111

Earnings per share
Basic		$	0.61		$	—
Diluted			0.61			—
Weighted average common shares outstanding
Basic			55,589			—
Diluted			55,592			—

See accompanying notes to the combined and condensed consolidated financial statements.

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Jefferson Capital, Inc.

Combined and Condensed Consolidated Statements of Stockholder’s Equity

(Unaudited, in Thousands, except per share amounts)


							Accumulated
	* *		Common Stock			Other Comprehensive			Additional		Retained		Total
		Share		Par		Income (Loss)			Paid-in Capital		Earnings		Equity
Balance, December 31, 2025			58,299	$	6	$	3,046	$	(49,549)	$	522,632		476,135
Net income											37,634		37,634
Dividends to stockholders ($0.24 per share)											(14,805)		(14,805)
Shares issued			73		—						—		—
Shares repurchased			(3,000)		—						(58,912)		(58,912)
Stock based compensation									8,525				8,525
Foreign currency translation							(5,701)						(5,701)
Balance, March 31, 2026			55,372	$	6	$	(2,655)	$	(41,024)	$	486,548	$	442,875


Balance, December 31, 2024				$	(15,593)	$	—	$	398,122	$	382,529
Net income									64,227		64,227
Distribution to members									(16,000)		(16,000)
Foreign currency translation					3,884						3,884
Balance, March 31, 2025	—	$	—	$	(11,709)	$	—	$	446,349	$	434,640

See accompanying notes to the combined and condensed consolidated financial statements.

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Jefferson Capital, Inc.

Combined and Condensed Consolidated Statements of Cash Flows

(Unaudited, in Thousands)



		For the Three Months Ended March 31,
	* *	2026			2025		* *
Cash flows from operating activities
Net income		$	37,634		$	64,227
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Depreciation and amortization			872			1,608
Amortization of debt issuance costs			1,643			1,120
Provision for credit losses			624			542
Stock-based compensation			8,525			350
Deferred income tax			11,309			(18)
Changes in assets and liabilities:
Other assets			2,190			(1,484)
Accounts receivable			(2,968)			(6,557)
Accounts payable and accrued expenses			(20,189)			(8,108)
Net cash provided by operating activities			39,640			51,680
Cash flows from investing activities
Purchases of receivables, net			(149,705)			(175,222)
Purchases of credit card receivables			(5,466)			(6,123)
Collections applied to investments in receivables, net			145,235			118,502
Collections applied to credit card receivables			5,912			6,752
Purchases of property and equipment, net			—			(143)
Net cash used in investing activities			(4,024)			(56,234)
Cash flow from financing activities
Proceeds from notes payable			313,148			174,790
Payments on notes payable			(290,243)			(159,251)
Payment of debt issuance costs			—			(2)
Repurchase of common stock			(58,912)			—
Dividends paid to stockholders			—			(16,000)
Net used in financing activities			(36,007)			(463)
Exchange rate effects on cash balances held in foreign currencies			(1,552)			(2,819)
Net decrease in cash and cash equivalents and restricted cash			(1,943)			(7,836)
Cash and cash equivalents and restricted cash, beginning of period			47,551			38,243
Cash and cash equivalents and restricted cash, end of period		$	45,608		$	30,407

See accompanying notes to the combined and condensed consolidated financial statements.

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Jefferson Capital, Inc.

Combined and Condensed Consolidated Statements of Cash Flows

(Unaudited, in Thousands)



		For the Three Months Ended March 31,
	* *	2026			2025
Supplemental cash flow disclosures
Interest paid		$	28,935		$	37,822
Income taxes paid		$	2,330		$	2,699

New leases assumed		$	—		$	127

Deferred tax liability recognized in connection with reorganization		$	—		$	—

The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents reported within the accompanying combined and condensed consolidated balance sheets that sum to the total of the same such amounts shown in the combined and condensed consolidated statements of cash flows:

Cash and cash equivalents		$	26,249		$	26,989
Restricted cash			19,359			3,418

Total cash and cash equivalents and restricted cash as shown in the combined and condensed consolidated statements of cash flows		$	45,608		$	30,407

See accompanying notes to the combined and condensed consolidated financial statements.

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Jefferson Capital, Inc.

Notes to Combined and Condensed Consolidated Financial Statements (unaudited)

1.Organization, Description of Business and Summary of Significant Accounting Policies

The accompanying combined and condensed consolidated financial statements include the combined and condensed consolidated results of operations of Jefferson Capital, Inc., and its subsidiaries (the “Company”). Jefferson Capital, Inc. is a Delaware corporation headquartered in Minneapolis, Minnesota.

The Company and its subsidiaries in the U.S., Canada, the U.K and Latin America provide debt recovery solutions and other related services across a broad range of consumer receivables, including credit card, secured and unsecured automotive, utilities, telecom, and other receivables. The Company primarily purchases portfolios of consumer receivables at deep discounts to face value and manages them by working with individuals as they repay their obligations and work toward financial recovery. Previously charged-off receivables include receivables subject to bankruptcy proceedings. The Company also provides debt servicing and other portfolio management services to credit originators for non-performing loans. Through credit card acquisition programs, the Company earns credit card revenue. All deployments are purchased from independent third parties.

The Company purchases portfolios of receivables from a diverse client base, including Fortune 500 creditors, banks, fintech origination platforms, telecommunications providers, credit card issuers, and auto finance companies. The Company’s top five clients accounted for 41.3% and 53.4%, with the top client representing 9.2% and 17.0% of purchases for the three months ended March 31, 2026 and 2025, respectively. For credit card receivables, the Company purchases from two issuers.

Initial Public Offering June 2025

In June 2025, the Company completed its initial public offering (the “IPO”), in which the selling shareholders sold 10,875,000 shares after giving effect to the underwriters’ exercise of the over-allotment option, at a public offering price of $15.00 per share. The Company also issued and sold 625,000 shares of its common stock in the IPO, which resulted in net proceeds of $4.5 million after deducting the underwriting discounts and commissions. Prior to the IPO, our business operations were generally conducted through Jefferson Capital Holdings, LLC, and its subsidiaries. JCAP TopCo, LLC is a holding company and the direct parent of Jefferson Capital Holdings, LLC. JCAP TopCo, LLC was owned by (i) entities affiliated with J.C. Flowers, (ii) members of Management Invest, LLC, and (iii) former equity holders of Canaccede.

Following a series of transactions that we refer to collectively as the “Reorganization,” Jefferson Capital, Inc. became a holding company with no material assets other than 100% of the equity interests in JCAP TopCo, LLC, which is held by Jefferson Capital, Inc. both directly and indirectly through other wholly-owned holding companies that have no material assets other than direct or indirect equity interests in JCAP TopCo, LLC. JCAP TopCo, LLC remains a holding company with no material assets other than 100% of the equity interests in Jefferson Capital Holdings, LLC. Jefferson Capital, Inc. also succeeded to federal Net Operating Losses (NOLs), state NOLs and tax credit carryforwards under Section 381 of the Code as a result of its acquisition in the Reorganization of certain affiliated corporations that held direct or indirect equity interests in JCAP TopCo, LLC. As indirect parent of Jefferson Capital Holdings, LLC, following the Reorganization, Jefferson Capital, Inc. operates and controls all of the business and affairs, and consolidates the financial results of, Jefferson Capital Holdings, LLC, and its subsidiaries. To effect the Reorganization, the then-current direct and indirect owners of JCAP TopCo, LLC, including (i) entities affiliated with J.C. Flowers, (ii) members of Management Invest, LLC, an entity through which employees of JCAP TopCo, LLC and its subsidiaries and certain of our directors held equity interests, and (iii) former equity holders of Canaccede, exchanged their direct and indirect interests in JCAP TopCo, LLC for shares of our common stock. We refer to the entities affiliated with J.C. Flowers, members of Management Invest, LLC and former stockholders of Canaccede who own shares of our common stock following the Reorganization and the IPO as the “JCF Stockholders,” “Management Stockholders” and “Former Canaccede Stockholders,” respectively. As of March 31, 2026, as a result of the Reorganization and after giving effect to the completion of the IPO at the initial public offering price of $15.00 per share and after the equity offering in January 2026:

●

the investors in the IPO collectively own 32.4% of our common stock;

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●

the JCF Stockholders collectively owned 67.6% of the outstanding shares of our common stock. In January 2026, we executed a follow-on equity offering, which reduced the ownership of JCF Stockholders to 53.1%. The company repurchased $58.9 million of stock to support that transaction;

●

the Management Stockholders collectively own 14.5%;

●

The number of shares of common stock received by the JCF Stockholders, the Former Canaccede Stockholders and the Management Stockholders in exchange for the 132,828,019 Class A Units and Class C Units of JCAP TopCo, LLC outstanding immediately prior to the Reorganization was based on an exchange ratio of one share of our common stock for every 2.4150549 interests in JCAP TopCo, LLC (the “Exchange Ratio”), resulting in an aggregate of 55,000,000 shares of our common stock being issued in exchange for such Class A Units and Class C units.

In addition, based on the initial public offering price of $15.00 per share, an aggregate of 9,060,082 shares of common stock were issued in exchange for the 27,937,232 Class B Units of JCAP TopCo, LLC outstanding immediately prior to the Reorganization, resulting in a total of 64,060,082 shares of common stock outstanding immediately after the Reorganization and before giving effect to the IPO. The number of shares of common stock that the Management Stockholders collectively received pursuant to the Reorganization was based in part on the value that Management Invest, LLC would have received under the distribution provisions of the limited liability agreement of JCAP TopCo, LLC, with shares of our common stock valued by reference to the ultimate initial public offering price of shares of common stock in the IPO. Specifically, of the 9,060,082 shares of common stock issued to the Management Stockholders in the Reorganization, 6,418,775 shares were issued in respect of Class B Units of Management Invest, LLC (which correspond to Class B Units of JCAP TopCo, LLC) that are “in- the-money” but remain subject to certain vesting conditions specified in individual award agreements. These shares were issued as restricted stock either with the same time-based vesting requirements that the corresponding Class B Units were subject to prior to the Reorganization or, if such corresponding Class B Units had performance vesting requirements, with a three year time-vesting requirement. If the vesting conditions of the restricted stock are not satisfied, such restricted stock will be forfeited and canceled.

Basis of Presentation

The accompanying unaudited combined and condensed consolidated interim financial statements include our accounts and those of our wholly-owned subsidiaries, and they reflect all adjustments which are necessary for a fair statement of results of operations, financial position, and cash flows as if entities had been combined and consolidated for all periods presented and are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Such unaudited combined and condensed consolidated interim financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.

These unaudited combined and condensed consolidated interim financial statements should be read in conjunction with our annual financial statements for the year ended December 31, 2025 and have been prepared on a consistent basis with the accounting policies described in Note 1 of the Notes to the Combined and Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”).

All intercompany transactions and balances have been eliminated in consolidation.

Translation of Foreign Currencies

The combined and condensed consolidated financial statements of certain of the Company’s foreign subsidiaries are measured using their local currency as the functional currency. Assets and liabilities of foreign operations are translated into U.S. dollars using period-end exchange rates, and revenues and expenses are translated into U.S. dollars using average exchange rates in effect during each period. The resulting translation adjustments are recorded as a component of other comprehensive income or loss. Revenues and expenses are translated monthly utilizing average exchange rates and assets and liabilities are translated as of the balance sheet date utilizing the period end exchange rate.

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Equity accounts are translated at historical rates, except for the change in retained earnings during the year which is the result of the income statement translation process. Intercompany transaction gains or losses at each period end arising from subsequent measurement of balances for which settlement is not planned or anticipated in the foreseeable future are included as translation adjustments and recorded within other comprehensive income or loss. Translation gains or losses are the material components of accumulated other comprehensive income or loss.

Use of Estimates

The combined and condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and these principles require making estimates and assumptions affecting the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the combined and condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during each reporting period. These estimates are based on information available as of the date of the combined and condensed consolidated financial statements. The actual results could differ materially from these estimates. Significant estimates include the determination of recovery income associated with the investment in charged off receivables. The recognition of revenue from previously charged-off receivables is primarily calculated using ASC 326 – Financial Instruments – Credit Losses, which is commonly referred to as the Current Expected Credit Loss model or “CECL,” which is based on expected future collections and involved significant judgement, including forecasts of macroeconomic conditions and collection trends, which are inherently uncertain and may change over time. Additionally, estimates of future credit losses on credit card receivables may have a significant effect on the provision for loan losses.

Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies from the audited combined and condensed consolidated financial statements for the fiscal year ended December 31, 2025, included in the Company’s 2025 Form 10-K.

Recently adopted Accounting Standards

In November 2025, the FASB issued ASU 2025-08, Financial Instruments—Credit Losses (Topic 326): Purchased Loans. The update amends the accounting for purchased loans by eliminating the recognition of a day-one provision for expected credit losses for certain purchased loans and expanding the application of the gross-up approach previously applicable to purchased credit-deteriorated (“PCD”) assets. Under the amended guidance, expected credit losses for qualifying purchased loans are reflected in the amortized cost basis of the loans at acquisition rather than recognized as a credit loss expense at acquisition. The new standard is effective for fiscal years beginning after December 15, 2026, and interim periods within those fiscal years. Early adoption is permitted. The standard is to be applied prospectively to purchased loans acquired on or after the date of adoption. The Company has elected to early adopt this change as of January 1, 2026. The adoption did not have an impact on the Company’s combined and condensed consolidated quarterly financial statements for the period ended March 31, 2026, as the Company did not purchase any receivables subject to the guidance during the period.

Recent Accounting Standards or Updates Not Yet Adopted

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, to amend certain disclosure and presentation requirements for a variety of topics within the Accounting Standards Codification (“ASC”). These amendments align the requirements in the ASC to the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, announced by the SEC. The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited. The Company is currently evaluating these provisions and the impact they may have on its combined and condensed consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, which requires disaggregated disclosure of income statement expenses for public business entities. The objective of ASU 2024-03 is to address requests from investors for more detailed information about the types of expenses. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. The effective date for annual reporting periods is after December 15, 2026, and interim periods within those annual periods beginning after December 15, 2027. The Company is currently evaluating these provisions of this ASU and the impact they may have on its combined and condensed consolidated financial statements and related disclosures.

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2.Earnings Per Share

The Company’s unvested restricted stock awards have the right to receive nonforfeitable dividends on the same basis as common shares; therefore, unvested restricted stock is considered a participating security in the computation of earnings per share (“EPS”). Accordingly, the Company applies the two-class method in the computation of basic EPS which allocates earnings from holders of common stock to holders of unvested restricted stock awards. Diluted EPS attributable to the Company’s common stock is computed using both the two-class method and the treasury stock method, and the more dilutive of the two computations is presented.

Historical earnings per unit are not meaningful or comparable because, prior to the IPO and Reorganization, Jefferson Capital Holdings, LLC, the predecessor to Jefferson Capital, Inc., was a single member limited liability company. Accordingly, earnings per unit are not presented for the three months ended March 31, 2025. In addition, because the nature of the Reorganization described in Note 1 does not constitute a stock dividend, stock split or reverse stock split, basic EPS and diluted EPS does not give retroactive effect to the Reorganization in a manner similar to a stock split or stock dividend in the historical financial statements of the Company. Therefore, EPS for periods preceding the Reorganization and IPO is not presented.

The computation of earnings per share for the three months ended March 31, 2026 and 2025 are (in thousands, except per share and footnote amounts):


		For the Three Months Ended March 31,
	* *	2026		* *	2025
Basic EPS
Numerator
Net income		$	37,634		$	64,227
Less: Earnings allocated to participating securities			3,838			—
Net income available to common stockholders			33,797			64,227

Denominator
Weighted average shares outstanding			55,589			—
Basic EPS		$	0.61		$	—

Diluted EPS
Numerator
Net income available to common stockholders		$	33,797		$	64,227
Reallocation of earnings from participating securities			—			—
Net income available to common stockholders for diluted EPS		$	33,797		$	64,227

Denominator
Weighted average shares outstanding			55,589			—
Weighted average effect of dilutive securities:
Options⁽¹⁾			3			—
Nonvested restricted stock			—			—
Number of shares used for diluted EPS computation			55,592			—
Diluted EPS		$	0.61		$	—

(1)

Options outstanding of 484,322 at March 31, 2026 were determined to be antidilutive and excluded from the dilutive EPS computation.

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3.Acquisitions

Effective December 4, 2025, the Company’s U.S. subsidiary Jefferson Capital Systems, LLC completed a portfolio acquisition of credit card assets from affiliates of Bluestem Brands (“Bluestem”). As part of the transaction, the Company paid a net purchase price of $196.3 million to acquire a revolving loan portfolio for which the ability to draw on the receivables has been suspended with face value of $407.7 million. The net purchase price reflected adjustments for interim portfolio cash flows, net of servicing expense and adjusted for new purchases from a cut-off date of June 30, 2025 through the closing date of December 4, 2025 as well as $0.2 million in direct transaction costs. In addition, $20.0 million of the net purchase price was placed in escrow to secure post-closing implementation obligations. The entirety of the $20.0 million that was placed in escrow has been released to the seller. The Company does not intend to pursue ongoing originations through the Bluestem platform, and the acquisition does not include any Bluestem retail operations or assets.

The Bluestem Portfolio Purchase was accounted for as an asset acquisition in accordance with ASC 805-50, Business Combinations—Related Issues. Under the asset acquisition method of accounting, the cost of the acquired asset group was allocated to the individual assets acquired and liabilities assumed based on their relative fair values as of the acquisition date. The acquired receivables were determined to be purchased financial assets with credit deterioration (“PCD”) in accordance with ASC 326, Financial Instruments—Credit Losses. At the acquisition date, the Company recorded an allowance for expected credit losses with a corresponding increase to the amortized cost basis of the acquired receivables (the “gross-up” approach). Accordingly, the initial allowance for credit losses was not recognized through earnings on the acquisition date.

In the three months ended March 31, 2026, the Company recognized portfolio revenue of $15.3 million, and net operating income of $7.9 million related to the Bluestem portfolio purchase, with no portfolio revenue or net operating income recognized in the three months ended March 31, 2025.

4.Fair Value Measurements

The Company measures the fair values of its assets and liabilities, where applicable, based on the price that would be received upon sale of an asset or the price paid to transfer a liability, in an orderly transaction between market participants at the measurement date, i.e., the “exit price.” Under applicable accounting standards, fair value measurements are categorized into one of three levels based on the inputs to the valuation technique with the highest priority given to unadjusted quoted prices in active markets and the lowest priority given to unobservable inputs. The Company categorizes its fair value measurements of financial instruments based on this three-level hierarchy. The following is a brief description of each level:

Level 1

Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2

Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3

Unobservable inputs that are supported by little or no market activity and that are significant to the overall fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments for which the determination of fair value requires significant management judgment or estimation. The fair value for such assets and liabilities is generally determined using pricing models, discounted cash flow methodologies or similar techniques that incorporate the assumptions a market participant would use in pricing the asset or liability.

The Company does not have any financial instruments that are subject to fair value measurements on a recurring basis.

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Financial Instruments Not Required to Be Carried at Fair Value

The table below summarizes fair value estimates for the Company’s financial instruments that are not required to be carried at fair value.

The carrying amounts in the following table are recorded in the combined and condensed consolidated balance sheet as of March 31, 2026 and December 31, 2025 (in thousands):


		March 31, 2026						December 31, 2025
		Carrying			Estimated			Carrying			Estimated
	* *	Amount			Fair Value			Amount			Fair Value
Financial Assets
Cash and cash equivalents		$	26,249		$	26,249		$	23,231		$	23,231
Accounts receivable			15,108			15,108			12,245			12,245
Investments in receivables, net			1,929,069			2,131,126			1,928,742			2,156,926
Credit card receivable, net			15,130			15,130			16,312			16,312

Financial Liabilities
Revolving credit facility			244,214			244,214			231,584			231,584
Senior unsecured bond due 2026			299,543			300,444			299,200			300,330
Senior unsecured bond due 2029			396,118			420,885			395,775			421,200
Senior unsecured bond due 2030			493,447			519,875			493,046			525,560

Investment in receivables, net

The fair value of investments in receivables, net is measured using Level 3 inputs by discounting the estimated future cash flows generated by the Company’s proprietary forecasting models. The key inputs include the estimated future gross cash flow, average cost to collect, and a discount rate. The determination of such inputs requires significant judgment. The Company evaluates the use of key inputs on an ongoing basis and refines the data as it continues to obtain market data. See Note 5 to the combined and condensed consolidated financial statements for additional information.

Credit card receivables, net

The fair value approximates the carrying value, due to their short-term nature.

Revolving Credit Facility

The fair value of the Revolving Credit Facility, as supplemented or modified from time to time, (the “Revolving Credit Facility”) is measured using Level 3 inputs. The fair value approximates the principal value due to the short-term adjustable-rate nature of the notes payable.

Senior unsecured bonds due 2026, 2029 and 2030

The fair value estimates for the Senior Unsecured Bonds are based on quoted prices for identical assets or liabilities in markets that are not active. Accordingly, the Company uses Level 2 inputs for its fair value estimates.

5.Investment in receivables, net

The following table presents the roll forward of the balance of the investment in receivables, net for the following periods (in thousands):


	For the Three Months Ended
	March 31,
	2026			2025
Balance, beginning of year	$	1,928,742		$	1,497,748
Purchases		149,705			175,222
Cash collections		(309,898)			(260,891)
Total portfolio income		157,606			138,693
Changes in expected current period recoveries		10,731			6,398
Changes in expected future period recoveries		(3,674)			(2,777)
Foreign currency adjustments		(4,143)			7,202
Balance, end of period	$	1,929,069		$	1,561,595

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The table below provides the detail on the establishment of negative allowance for expected recoveries of portfolios purchased during the periods presented (in thousands):


	For the Three Months Ended
	March 31,
	2026			2025
Purchase price	$	149,705		$	175,222
Allowance for credit losses		2,417,429			2,434,302
Amortized cost		2,567,134			2,609,524
Noncredit discount		141,038			147,851
Face value		2,708,172			2,757,375
Write-off of amortized cost		(2,567,134)			(2,609,524)
Write-off of noncredit discount		(141,038)			(147,851)
Negative allowance		149,705			175,222
Negative allowance for expected recoveries	$	149,705		$	175,222

For the three months ended March 31, 2026, the Company purchased receivable portfolios with face values of $2,708.2 million for a purchase price of $149.7 million or 5.5% of face value. For the three months ended March 31, 2025, the Company purchased receivable portfolios with face values of $2,757.4 million for a purchase price of $175.2 million or 6.4% of face value. The price paid relative to the face amount of receivables will vary based upon the type of debt purchased, the age of the debt at the time of acquisition and the overall debt acquisition market. The percentage reported represents the weighted average of activity for the period and is a function of the mix of assets acquired in any period. For the receivables purchased in the three months ended March 31, 2026 and 2025, the estimated amount of cash flows to be collected were $290.7 million and $323.1 million (as of purchase), respectively.

Recoveries above or below forecast represent over and under-performance in the reporting period, respectively. Actual collections during the three months ended March 31, 2026, and 2025, overperformed the projected collections by approximately $10.7 million and $6.4 million, respectively, primarily driven by continued strong collection performance.

When reassessing the forecasts of expected lifetime recoveries during the three months ended March 31, 2026, management considered historical and current collection performance and believes that for certain static pools sustained collections overperformance resulted in decreased total future expected recoveries. As a result, the Company has updated its forecast, resulting in a net decrease of total estimated remaining collections, which in turn, when discounted to present value, resulted in a change in expected future period recoveries of approximately $3.7 million and $2.8 million during the three months ended March 31, 2026, and 2025, respectively.

At the time of the Bluestem portfolio purchase, which consisted primarily of performing receivables, the Company established an allowance for credit losses of $304.8 million. Additionally, the Company also established a non-credit premium of $93.4 million at the time of purchase.

The Company places performing receivables on nonaccrual status when the receivables are greater than 90 days. To facilitate the monitoring of credit quality for performing receivables, and for the purpose of determining an appropriate allowance for losses for these receivables, the Company utilizes payment history and current payment status. The table below presents the information on the past due and non-accrual buckets for the assets acquired in the Conn’s and Bluestem portfolio purchases, and does not include all other purchased loans as they were charged-off at the time of purchase (in thousands):

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		As of March 31,			As of December 31,
Delinquency vintage		2026			2025
United States
Current		$	217,681		$	326,381
30-59			26,602			49,467
60-89			19,470			39,402
>90			145,137			109,562
Total		$	408,890		$	524,812

The following table presents non-accrual performing loans by segment (in thousands).


	As of March 31,					As of December 31,
	2026					2025
				Nonaccrual					Nonaccrual
				with No					with No
	Nonaccrual			Allowance		Nonaccrual			Allowance
United States		145,137			—		109,562			—
Total	$	145,137		$	—	$	109,562		$	—

6.Credit Card Receivables

The following table summarizes the credit card receivables, gross of allowance for credit losses, by segment (in thousands):


	As of March 31,			As of December 31,
	2026			2025
United States		8,235			8,615
Canada		8,559			9,480
Total	$	16,794		$	18,095

The Company places credit card receivables on nonaccrual status when the credit card receivables are greater than 90 days past due or within 60 days of being notified that the customer is in bankruptcy status, whichever is earlier. The below tables present the information on the Company’s past due and non-accrual credit card receivables as of March 31, 2026, and December 31, 2025.

Age analysis of past-due credit card receivables at March 31, 2026 (in thousands)


																			Amortized Cost
										Total									> 90 DPD and
($ in 000s)	30-59			60-89			>90			Past Due			Current			Total			Accruing
United States	$	249		$	221		$	663		$	1,133		$	7,102		$	8,235		$	—
Canada		182			115			252			549			8,010			8,559			—
Total	$	431		$	336		$	915		$	1,682		$	15,112		$	16,794		$	—

Age analysis of past-due credit card receivables at December 31, 2025 (in thousands)


																			Amortized Cost
										Total									> 90 DPD and
($ in 000s)	30-59			60-89			>90			Past Due			Current			Total			Accruing
United States	$	323		$	210		$	588		$	1,121		$	7,494		$	8,615		$	—
Canada		232			130			333			695			8,786			9,480			—
Total	$	554		$	340		$	921		$	1,815		$	16,280		$	18,095		$	—

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Allowance for Credit Losses

The following table summarizes the change in the allowance for credit losses for the Company’s credit card receivables portfolio (in thousands).


	United States		Canada			Total
Balance as of December 31, 2025	$	1,008	$	775	$	1,784
Charge-offs		(593)		(371)		(964)
Recoveries		91		129		220
Provision		457		167		624
Balance as of March 31, 2026	$	963	$	700	$	1,663


Balance as of December 31, 2024	$	957	$	950	$	1,907
Charge-offs		(532)		(395)		(927)
Recoveries		81		98		179
Provision		332		210		542
Balance as of March 31, 2025	$	838	$	863	$	1,701

Non-Accrual Loans

The following table presents non-accrual loans by segment (in thousands).


	As of March 31, 2026						As of December 31, 2025
				Nonaccrual						Nonaccrual
				with No						with No
	Nonaccrual			Allowance			Nonaccrual			Allowance
United States	$	663		$	—		$	588		$	—
Canada		252			—			333			—
Total	$	915		$	—		$	921		$	—

No interest income was recorded for the non-accrual receivables for the three months ended March 31, 2026.

7.Goodwill

The Company tests goodwill for impairment at least annually as of October 1, or more frequently, if certain events or circumstances warrant. During the three months ended March 31, 2026, and fiscal year 2025, no impairment of goodwill was recorded.

The following table summarizes the changes in goodwill (in thousands) in the Company’s reportable segments:


	United			United					Latin
	States			Kingdom		Canada			America	Total
Goodwill
December 31, 2024	$	31,633		$	19,209	$	6,841	$	—	$	57,683
Acquisitions		—			—		—		—		—
Impact of FX translation		—			—		9		—		9
March 31, 2025	$	31,633		$	19,209	$	6,850	$	—	$	57,692

December 31, 2025	$	31,633		$	19,209	$	7,172	$	—	$	58,014
Acquisitions		—			—		—		—		—
Impact of FX translation		—			—		(99)		—		(99)
March 31, 2026	$	31,633		$	19,209	$	7,073	$	—	$	57,915

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8.Notes Payable, Net


		As of March 31,				As of December 31,
		2026				2025
		Amount		Interest		Amount		Interest
(in thousands)		Outstanding		Rate		Outstanding		Rate
Senior unsecured bond due 2026		$	300,000	6.00	%	$	300,000	6.00	%
Senior unsecured bond due 2029			400,000	9.50	%		400,000	9.50	%
Senior unsecured bond due 2030			500,000	8.25	%		500,000	8.25	%
Revolving credit facility			254,224	6.15	%		231,584	6.79	%
Total		$	1,454,224	7.76	%	$	1,431,584	7.89	%
Unamortized debt issuance costs			(20,903)				(22,544)
Notes Payable, net		$	1,433,321			$	1,409,039

On August 4, 2021, the Company completed an offering of $300.0 million aggregate principal amount of 6.000% senior notes due 2026 (the “2026 Notes”) under an indenture (the “2026 Notes Indenture”), dated as of August 4, 2021, among the Company, the guarantors party thereto and U.S. Bank Trust Company, National Association (as successor to U.S. Bank National Association), as trustee. The 2026 Notes are general senior unsecured obligations of the Company and are guaranteed by certain of the Company’s wholly-owned domestic restricted subsidiaries. Interest on the 2026 Notes is payable semi-annually on February 15 and August 15 of each year, commencing on February 15, 2022. The 2026 Notes mature on August 15, 2026. On and after August 15, 2023, the 2026 Notes may be redeemed, at the Company’s option, in whole or in part, at any time and from time to time, at the redemption prices set forth below. The 2026 Notes will be redeemable at the redemption prices (expressed as percentages of principal amount of the 2026 Notes to be redeemed) set forth below plus accrued and unpaid interest thereon, if any, excluding the applicable redemption date, subject to the right of holders of the 2026 Notes on the relevant record date to receive interest due on the relevant interest payment date, if redeemed during the 12-month period beginning on August 15 of each of the years indicated below:


		Percentage
Dates		of Principal
2026		100.000	%

The 2026 Notes Indenture contains covenants that limit the Company’s ability and the ability of the Company’s restricted subsidiaries to, among other things: (i) incur or guarantee additional debt; (ii) incur certain liens; (iii) make certain investments; (iv) create restrictions on the payment of dividends or other amounts from the Company’s restricted subsidiaries that are not guarantors under the 2026 Notes Indenture; (v) enter into certain transactions with affiliates (vi) sell certain assets, including capital stock of the Company’s subsidiaries; (vii) designate the Company’s subsidiaries as unrestricted subsidiaries; and (viii) pay dividends, redeem or repurchase capital stock or make other restricted payments.

The 2026 Notes incurred issuance costs of $6.9 million, including legal expenses and origination fees, which reduces the expense over the 5-year term of the 2026 Notes. At March 31, 2026, the unamortized balance of the deferred debt issuance costs was $0.5 million.

On February 28, 2022, the Company amended its credit agreement entered into on May 21, 2021 (as amended, the “Credit Agreement”) to include a new $150.0 million Canadian sub-facility to go alongside the $35.0 million UK sub-facility.

On April 26, 2023, the Company amended and extended its Credit Agreement to an aggregate commitment of $600 million with a 5-year maturity of April 26, 2028.

On September 29, 2023, the Company amended its Credit Agreement to an aggregate commitment of $750 million and modified its sub-facility limits to $85 million for the Canadian sub-facility and $50 million for the U.K. sub-facility.

The Credit Agreement contains five financial covenants:

●

The Maximum Senior Leverage Ratio to not exceed 2.50 to 1.00

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●

The Maximum Leverage Ratio to not exceed 3.25 to 1.00

●

The Minimum Fixed Charge Coverage Ratio of not less than 1.25 to 1.00

●

Minimum Tangible Net Worth not to be less than a starting value plus 50% of each subsequent quarter’s Net Income

●

Minimum Actual Collections where the Company must collect at least 85% of the projected collections over the trailing twelve-month period.

On November 13, 2024, the Company amended its Credit Agreement to an aggregate commitment of $825 million through the exercise of its accordion feature and modified its sub-facility limits to $110 million for the Canadian sub-facility and $665 million for the U.S. sub-facility.

On October 27, 2025 the Company further amended and extended its Credit Agreement to an aggregate commitment of $1.0 billion via a syndication led by Citizens Bank. This effected certain amendments to the terms of the credit facility under the Credit Agreement, including, among other things:

●

An increase of the aggregate commitments as defined in the Credit Agreement capital by $175,000,000 to $1,000,000,000

●

A reduction of the interest rate margins applicable to loans outstanding under the Revolving Credit Facility (defined below) by fifty (50) basis points

●

A reduction of the non-use fee rate for unutilized commitments under the Revolving Credit Facility by five (5) basis points and a reduction of the maximum applicable non-use fee rate for unutilized commitments to thirty-five (35) basis points

●

Elimination of any credit spread adjustments from the calculation of the interest rate applicable to loans outstanding under the Revolving Credit Facility

●

Extension of the maturity of the Revolving Credit Facility to October 27, 2030, subject to such maturity being

reduced to 91 days in advance of the earliest final scheduled maturity date of either the 9.500% Senior Notes due

February 15, 2029 or the 8.250% Senior Notes due May 15, 2030, in each case issued by Jefferson Capital Holdings, LLC

●

Removal of the existing financial covenant requiring a minimum tangible net worth of certain subsidiaries

●

Customary changes (including changes to financial reporting requirements and ‘change of control’ thresholds) to

reflect the status of Jefferson Capital as a public company.

On February 2, 2024, the Company completed an offering of $400.0 million aggregate principal amount of 9.500% senior notes due 2029 (the “2029 Notes”) under an indenture (the “2029 Notes Indenture”), dated as of February 2, 2024, among the Company, the guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee. The 2029 Notes are general senior unsecured obligations of the Company and are guaranteed by certain of the Company’s wholly-owned domestic restricted subsidiaries. Interest on the 2029 Notes is payable semi-annually on February 15 and August 15 of each year, commencing on August 15, 2024. The 2029 Notes mature on February 15, 2029. At any time and from time to time prior to February 15, 2026, the 2029 Notes may be redeemed at the Company’s option, in whole or in part, at a redemption price equal to 100% of the principal amount of the 2029 Notes redeemed, plus accrued and unpaid interest thereon, if any, to but excluding the applicable date of redemption, subject to the rights of holders of 2029 Notes on the relevant record date to receive interest due on the relevant interest payment date, plus the applicable premium as of the applicable redemption date. On and after February 15, 2026, the 2029 Notes may be redeemed, at the Company’s option, in whole or in part, at any time and from time to time, at the redemption prices set forth below. The 2029 Notes will be redeemable at the redemption prices (expressed as percentages of principal amount of the 2029 Notes to be redeemed) set forth below plus accrued and unpaid interest thereon, if any, excluding the applicable redemption date, subject to the right of holders of the 2029 Notes on the relevant record date to receive interest due on the relevant interest payment date, if redeemed during the 12-month period beginning on February 15 of each of the years indicated below:


		Percentage
Dates		of Principal
2026		104.750	%
2027		102.375	%
2028 and thereafter		100.000	%

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The 2029 Notes Indenture contains covenants that limit the Company’s ability and the ability of the Company’s restricted subsidiaries to, among other things: (i) incur or guarantee additional debt; (ii) incur certain liens; (iii) make certain investments; (iv) create restrictions on the payment of dividends or other amounts from the Company’s restricted subsidiaries that are not guarantors under the 2029 Notes Indenture; (v) enter into certain transactions with affiliates; (vi) merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of the Company’s assets; (vii) sell certain assets, including capital stock of the Company’s subsidiaries; (viii) designate the Company’s subsidiaries as unrestricted subsidiaries; and (ix) pay dividends, redeem or repurchase capital stock or make other restricted payments.

The 2029 Notes incurred issuance costs of $6.8 million, including legal expenses and origination fees, which reduce the carrying amount of the 2029 Notes. These costs were capitalized at the time of issuance and are being amortized to interest expense over the 5-year term of the 2029 Notes. At March 31, 2026, the unamortized balance of the deferred debt issuance costs was $3.9 million.

On May 2, 2025, Jefferson Capital Holdings, LLC completed an offering of $500.0 million aggregate principal amount of 8.250% senior notes due 2030 (the “2030 Notes”) under an indenture (the “2030 Notes Indenture”), dated as of May 2, 2025, among Jefferson Capital Holdings, LLC, the guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee. The 2030 Notes are general senior unsecured obligations of Jefferson Capital Holdings, LLC and are guaranteed by certain of Jefferson Capital Holdings, LLC’s wholly-owned domestic restricted subsidiaries. Interest on the 2030 Notes is payable semi-annually on May 15 and November 15 of each year, commencing on November 15, 2025. The 2030 Notes mature on May 15, 2030.

At any time and from time to time prior to May 15, 2027, the 2030 Notes may be redeemed at Jefferson Capital Holdings, LLC’s option, in whole or in part, at a redemption price equal to 100% of the principal amount of the 2030 Notes redeemed, plus accrued and unpaid interest thereon, if any, to but excluding the applicable date of redemption, subject to the rights of holders of 2030 Notes on the relevant record date to receive interest due on the relevant interest payment date, plus the applicable premium as of the applicable redemption date. On and after May 15, 2027, the 2030 Notes may be redeemed, at Jefferson Capital Holdings, LLC’s option, in whole or in part, at any time and from time to time, at the redemption prices set forth below. The 2030 Notes will be redeemable at the redemption prices (expressed as percentages of principal amount of the 2030 Notes to be redeemed) set forth below plus accrued and unpaid interest thereon, if any, excluding the applicable redemption date, subject to the right of holders of the 2030 Notes on the relevant record date to receive interest due on the relevant interest payment date, if redeemed during the 12-month period beginning on May 15 of each of the years indicated below:


	Percentage
Dates	of Principal
2027	104.125	%
2028	102.063	%
2029 and thereafter	100.000	%

The 2030 Notes Indenture contains covenants that limit Jefferson Capital Holdings, LLC’s ability and the ability of Jefferson Capital Holdings, LLC’s restricted subsidiaries to, among other things: (i) incur or guarantee additional debt; (ii) incur certain liens; (iii) make certain investments; (iv) create restrictions on the payment of dividends or other amounts from Jefferson Capital Holdings, LLC’s restricted subsidiaries that are not guarantors under the 2030 Notes Indenture; (v) enter into certain transactions with affiliates; (vi) merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of Jefferson Capital Holdings, LLC’s assets; (vii) sell certain assets, including capital stock of Jefferson Capital Holdings, LLC’s subsidiaries; (viii) designate Jefferson Capital Holdings, LLC’s subsidiaries as unrestricted subsidiaries; and (ix) pay dividends, redeem or repurchase capital stock or make other restricted payments.

The 2030 Notes incurred issuance costs of $8.0 million, including legal expenses and origination fees, which reduce the carrying amount of the 2030 Notes. These costs were capitalized at the time of issuance and are being amortized over the 5-year term of the 2030 Notes. At March 31, 2026, the unamortized balance of the capitalized deferred debt costs was $6.6 million.

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Components of interest expense for the three months ended March 31, 2026, and 2025 (in thousands):


		For the Three Months Ended
		March 31,
	* *	2026			2025
Interest expense		$	28,935		$	23,699
Amortization of debt issuance costs			1,643			1,120
Total Interest Expense		$	30,578		$	24,819

As of March 31, 2026, the outstanding balances of notes payable were $1,433.3 million with a weighted average interest rate of 7.76%. In comparison, as of December 31, 2025, the outstanding balances of notes payable were $1,409.0 million with a weighted average interest rate of 7.89%.

The Company incurred costs related to the issuance and origination of its notes payable which are deferred and recorded net of the debt balance and amortized to interest expense over the life of the debt on an effective interest method. The unamortized debt issuance costs related to the notes payable were $20.9 million and $22.5 million as of March 31, 2026 and December 31, 2025.

As of March 31, 2026, the Company was in compliance with all the financial covenants of its notes payable.

9.Leases

The Company enters into leases as a lessee for data centers, office space, and technology equipment. Lease expense associated with these arrangements are included in other selling, general and administrative expenses in the Company’s combined and condensed consolidated statements of operations.

The components of lease expense for the three months ended March 31, 2026 and 2025, are presented as follows (in thousands):


	For the Three Months Ended March 31,
	2026			2025
Operating lease costs	$	289		$	537
Total lease costs	$	289		$	537

The following table provides supplemental combined and condensed consolidated balance sheet information related to leases as of March 31, 2026, and December 31, 2025 (in thousands, except lease term and discount rate):


			As of March 31,			As of December 31,
	Classification		2026			2025
Assets
Operating lease right-of-use assets	Other assets		$	3,458		$	3,658
Total lease right-of-use assets			$	3,458		$	3,658

Liabilities
Operating lease liabilities	Other liabilities		$	3,891		$	4,179
Total lease liabilities			$	3,891		$	4,179

Weighted-average remaining lease term (in years)				4.7			4.8
Weighted-average discount rate				7.3	%		7.6	%

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Minimum future payments on non-cancellable operating leases as of March 31, 2026, are summarized as follows (in thousands):


	Operating Leases
2026	$	889
2027		1,129
2028		763
2029		570
2030		541
Thereafter		796
Total undiscounted lease payments		4,688
Less: imputed interest		(797)
Lease obligations under operating leases	$	3,891

10.Stock Based Compensation

Prior to the initial public offering in June 2025, the Company maintained the JCAP TopCo, LLC 2018 Underlying Units Plan (the “Plan”) and the Management Invest LLC 2018 Management Incentive Plan (the “Management Invest Plan”), effective August 31, 2018, to promote the long-term growth and profitability of the Company by providing certain of the Company’s employees and other service providers who were involved in the Company’s growth with an opportunity to acquire equity interests that enable them to share in the appreciation of value of the Company, thereby encouraging such persons to contribute to and participate in the success of the Company.

Under the Plan, awards of Class B Units representing limited liability company interests in JCAP TopCo, LLC, a holding company and direct parent of the Company, were issued to Management Invest LLC, which in turn issued corresponding awards of Class B Units in Management Invest LLC to certain of the Company’s employees and other service providers under the Management Invest Plan. As of June 26, 2025, there were 26,932,232 Class B units available for issuance, of which 26,932,232 were issued and outstanding. The Class B units qualified as liability awards since they would have been settled in cash upon redemption and were included in accounts payable and accrued expenses on the combined and condensed consolidated balance sheet. The unit value was calculated based on the estimated fair value of the Company over the original investment amount. Generally, approximately thirty percent (30%) of the units vested in five equal installments on each of the first five anniversaries of their respective grant dates, and the remaining seventy percent (70%) vested upon a change of control if applicable distribution thresholds were achieved. The Company valued its units awarded under the Plan based on the market approach. The Company utilized public company comparable information to establish the measure of invested capital (“MOIC”), which was then applied against the strike prices of the respective vested portion of the units awarded under the Plan to calculate the compensation exposure.

As part of the initial public offering, all of the Class B Units issued pursuant to the Management Invest Plan were crystalized and converted into shares of common stock on the basis of the Exchange Ratio used to convert the Class A Units and Class C Units. The conversion took into account the number of Class B Units held, the applicable distribution threshold and the value of the distributions that the holder would have been entitled to receive through their indirect ownership interest in JCAP TopCo, LLC had JCAP TopCo, LLC been liquidated on the date of such conversion in accordance with the terms of the distribution waterfall set forth in the JCAP TopCo LLC Agreement. If in-the-money, the Class B Units were converted into a number of shares based on the respective distribution thresholds and terms of such awards, and if out-of-the-money, were canceled. For Class B Units that were in-the-money but unvested and subject solely to time vesting requirements, such Class B Units were converted into shares of restricted stock and subject to the same time vesting requirements that the corresponding Class B Units were subject to prior to the Reorganization. For Class B Units that were in-the-money but unvested and subject to performance vesting requirements, those were converted into shares of restricted stock and subject to a three-year time-vesting requirement in equal increments from the date of the initial public offering, subject to continued service through the applicable vesting dates (provided, that any such unvested shares of restricted stock will be subject to acceleration in the event of a holder’s termination of service without cause or due to such holder’s death or disability). The conversion of such in-the-money unvested Class B Units was evidenced by individual restricted stock agreements and were not issued under the Company’s 2025 Incentive Award Plan (the “2025 Plan”). Specifically, 6,418,775 shares were issued in respect of Class B Units of Management

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Invest, LLC (which correspond to Class B Units of JCAP TopCo, LLC) that were in- the-money. These shares were issued as restricted stock either with the same time-based vesting requirements that the corresponding Class B Units were subject to prior to the Reorganization or, if such corresponding Class B Units had performance vesting requirements, with a three year time-vesting requirement. If the vesting conditions of the restricted stock are not satisfied, such restricted stock will be forfeited and canceled. The Company accounts for forfeitures when they occur. The modification of the award Class B Units did not result in a material impact to compensation costs. Holders of converted restricted stock awards will be eligible to receive non-forfeitable dividends in the event the Company determines to pay dividends in respect of its common stock. For Class B Units that were in-the-money and fully vested, those were converted into shares of common stock. With respect to Class B Units that were out-of-the-money and were canceled in the Reorganization, the Company issued new stock options under the 2025 Plan to the employee and director holders of such canceled Class B Units to put them in an approximately equivalent economic position in terms of number of options and exercise prices as they would be in if their Class B Units were not canceled and instead exchanged for new options. Such options were granted effective as of immediately following the determination of the initial public offering price per share of our common stock and were in an amount equal to the number of the out-of-the-money Class B Units that were canceled, multiplied by the Exchange Ratio, and have an exercise price per share equal to the distribution threshold of the out-of-the-money Class B Units, multiplied by the Exchange Ratio (or if greater, the initial public offering price per share of our common stock). The options are subject to the same time-vesting requirements that the corresponding Class B Units were subject to prior to the Reorganization.

The Company measures the fair value of stock option awards on the grant date using a Black-Scholes option-valuation model. The model incorporates various assumptions, including the exercise price, expected term, risk-free interest rate, expected stock price volatility, and expected dividend yield.

Awards are assumed to be exercised at the midpoint of the earliest and latest exercisable dates and adjusted for moneyness. The earliest expected term for awards with multiple vesting tranches is determined as the weighted average of each vesting tranche, with weights determined by the percentage vesting in a tranche. As the options were granted out-of-the-money, the midlife term is extended ratably, assuming a term based on the midlife for an option at-the-money (100% moneyness) and the full contractual life for an out-of-the-money option at 0% moneyness. The midpoint approach and moneyness adjustments are supported by industry studies, which suggest the contractual term typically overstates the value of the option and the mid-point provides a more reasonable estimate, given the Company’s limited exercise history and the specific terms of the award.

The risk-free rate is assumed to be the term-matched zero-coupon risk-free interest rate derived from the Treasury Constant Maturities yield curve on the grant date (or most recently available). The interest rate is converted from a semi-annually compounded rate to a continuously compounded rate for purposes of Black-Scholes calculations. For terms where a risk-free rate is not available, the nearest terms greater than and less than the expected term are interpolated to estimate the risk-free rate.

Expected volatility is estimated using the historical volatility of a peer group of comparable publicly traded companies, given the limited trading history of the Company’s common stock. The expected dividend yield reflects a dividend rate of 6.40% per year is assumed. This is calculated assuming a quarterly dividend of $0.24 (provided by the Company) and the share price of $15.00 at the initial public offering date.

A summary of the status of the Company’s equity-based awards and activity as of March 31, 2026 with the comparative 2025 period having no restricted stock or stock options issued.

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	Outstanding		Weighted-Average
	Restricted		Grant Date
	Shares		Fair Value
Balance December 31, 2025	6,330,304		$	15.00
Granted	—
Vested	(73,068)
Forfeited, expired or canceled	(14,411)
Balance March 31, 2026	6,242,825		$	15.00


					Weighted-Average
			Weighted-Average		Remaining		Aggregate
	Stock Options		Grant		Contractual Term		Intrinsic Value
	Outstanding		Exercise Price		(Years)		(in thousands)
Balance December 31, 2025	477,542		$	24.84	9.2		$	580.2
Granted	470,000			27.75	10.0
Vested
Exercised
Forfeited, expired or canceled
Balance March 31, 2026	947,542		$	26.28	9.4		$	181.1

For the three months ended March 31, 2026 and 2025, stock-based compensation expense recognized was $8.5 million and $0.4 million, respectively. The change in stock-based compensation expense for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 is driven by the recognition of stock-based compensation expense associated with the unvested restricted stock, and stock options issued as part of the IPO and Class B Units that existed prior to the IPO.

As of March 31, 2026, the total unrecognized stock-based compensation expense related to unvested restricted shares was $69.8 million, which is expected to be recognized over a remaining weighted average term of 2.25 years. As of March 31, 2026, the total unrecognized compensation expense related to unvested stock options was $3.7 million, which is expected to be recognized over a remaining weighted average term of 4.3 years.

11.Commitments and Contingencies

Purchase Commitments

In the normal course of business, the Company enters into forward flow purchase agreements. A forward flow purchase agreement is a commitment to purchase receivables over a duration that is typically three to twelve months, but can be longer, generally with a specifically defined volume range, frequency, and pricing. Typically, these forward flow contracts have provisions that allow for early termination or price re-negotiation should the underlying quality of the portfolio deteriorate over time or if any particular month’s delivery is materially different than the original portfolio used to price the forward flow contract. Certain of these forward flow purchase agreements may also have termination clauses, whereby the agreements can be canceled by either party upon providing a certain specified amount of notice.

As of March 31, 2026 and 2025 the Company had entered into forward flow purchase agreements for the purchase of receivables with an estimated minimum aggregate purchase price of approximately $353.2 million and $263.6 million, respectively. The Company expects actual purchases under these forward flow purchase agreements to be significantly greater than the estimated minimum aggregate purchase price.

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Employee Savings and Retirement Plan

The Company sponsors defined contribution plans in the U.S., Canada, and the U.K. The U.S. plan is organized as a 401(k) plan under which all employees are eligible to make voluntary contributions to the plan up to 100% of their compensation, subject to IRS limitations, as defined in the plan. The Company makes matching contributions of 25% of up to 6% of an employee’s salary. In Canada, the Company has a Deferred Profit-Sharing Plan (DPSP) in which the Company contributes 3% of salary to their DPSP fund. Employees contributing to the Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA) receive up to a 2% match, bringing the potential total match to 5% of salary. In the U.K., the Company operates the government contribution plan where employees contribute 5% of their salary and the Company contributes 3% of the employee salary on a monthly basis. Employees can make additional contributions to the plan via their salary, either by one off extra contribution or increasing the monthly percentage but must contribute a minimum of 5%. Total compensation expense related to the Company’s contributions was $0.3 million and $0.2 million for the three months ended March 31, 2026 and 2025, respectively.

Commitments to extend credit

The Company, in the normal course of business through its credit card programs, agrees to purchase the credit card receivables from the issuing bank, thereby incurring off-balance-sheet risk. This risk includes the cardholder’s rights to borrow up to the maximum credit limit on their credit card accounts, which is $14.4 million as of March 31, 2026 and $16.0 million as of March 31, 2025, beyond their current balances. The Company has not experienced a situation in which all of the Company’s cardholders have exercised their entire available line of credit at any given point in time, nor does management anticipate this will ever occur in the future. Also, the Company can, subject to certain regulatory requirements, reduce or cancel these available credit limits.

Contingent payments

As part of the Company’s acquisition of Canaccede Financial Group, Ltd. “(Canaccede”) in March 2020, an exit incentive was awarded to the former shareholders of Canaccede for up to $15.625 million Canadian dollars that would be payable only on a Liquidity Event for J.C. Flowers (“JCF”), defined to mean a final exit, that yielded net returns to JCF in excess of certain hurdles as defined in the purchase agreement. The payment, which is contingent on a Liquidity Event and achieving certain hurdles, would be based on cash-on-cash returns to JCF, measured at that final exit, as an equity-linked incentive with capped upside and designed to be paid with sale proceeds received from a new owner. Each year the Company reassesses the fair value of the exit incentive payment to determine whether such amount should be recorded within the combined and condensed consolidated financial statements. As of March 31, 2026, the Company determined that the occurrence in the future of a Liquidity Event above the requisite MOIC thresholds will be probable by December 31, 2027. As a result, the Company accrued a liability related to the Canaccede Exit Incentive Payment of $9.3 million as of March 31, 2026, reflecting the net present value of an anticipated payment of the maximum amount. $0.2 million has been recorded as expense on the income statement in other selling, general and administrative with the offset being a liability on the balance sheet in accounts payable and accrued expenses for both periods ended March 31, 2026 and 2025.

Litigation

The Company and its subsidiaries are subject to various legal proceedings and claims that arise in the ordinary course of business. For periods ended March 31, 2026 and December 31, 2025 there are no material pending legal proceedings to which the Company or its subsidiaries are a party.

12.Income Taxes

The Company’s effective tax rate for the three months ended March 31, 2026 and 2025 was as follows (in thousands):


	As of March 31,
	2026			2025
Income before income taxes	$	51,056		$	66,906
Income tax expense		13,422			2,679
Effective tax rate		26.3	%		4.0	%

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The change in the effective tax rate for the three months ended March 31, 2026 and 2025 was impacted by the period in which the Company was treated as a Partnership for US income tax purposes before the Initial Public Offering in June 2025.

13.Segment Reporting

The Company’s operating segments are based on the Company’s geographies, which is how management monitors and assesses performance. The Company’s geographies are the United States, the United Kingdom, Canada, and Latin America. The Company’s Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer. Assets are not reported by operating segment to the CODM.

For the Company’s operating segments, the CODM uses segment net operating income to allocate resources (including employees, property, and financial or capital resources). Additionally, the Company prepares an annual budget at the segment level. The CODM considers budget-to-actual variances on a monthly basis for the profit or loss measure when making decisions about allocating capital and personnel to the segments. The CODM also uses segment operating income to assess the performance for each segment by comparing the results of each segment with one another and for determining the compensation of certain employees.

The following table provides segment measure of profit and loss, presenting Net operating income, by each operating segment (in thousands) and is the measure that the CODM utilizes to determine resource and investment allocations:


		For the Three Months Ended March 31,											For the Three Months Ended March 31,
		2026											2025
		United		United				Latin					United		United				Latin
		States		Kingdom		Canada		America		Total			States		Kingdom		Canada		America		Total
Total portfolio revenue		$	127,210	$	9,354	$	16,136	$	11,963	$	164,663		$	111,747	$	4,485	$	16,110	$	9,972	$	142,314
Credit card revenue			723		—		1,012		—		1,735			664		—		1,234		—		1,898
Servicing revenue			1,782		7,774		485		—		10,041			4,538		5,866		327		—		10,731
Total Revenue		$	129,715	$	17,128	$	17,633	$	11,963	$	176,439		$	116,949	$	10,351	$	17,671	$	9,972	$	154,943

Provision for credit losses		$	457	$	—	$	167	$	—				$	332	$	—	$	210	$	—

Salaries and benefits		$	16,327	$	4,373	$	1,341	$	332				$	8,917	$	3,680	$	1,312	$	113
Servicing expenses			54,571		4,702		2,343		3,963					33,451		3,977		2,332		3,031
Depreciation and amortization			594		81		189		9					1,259		83		257		9
Professional fees			1,713		204		73		291					1,632		224		91		218
Other selling, general and administrative			3,266		722		341		196					3,559		592		328		70

Net operating income		$	52,788	$	7,046	$	13,179	$	7,172	$	80,185		$	67,799	$	1,795	$	13,141	$	6,531	$	89,266

Other Income / (Expense):
Interest expense										$	(30,578)										$	(24,819)
Foreign exchange and other income / (expense)											1,449											2,459
Total other expense											(29,129)											(22,360)
Income Before Income Taxes										$	51,056										$	66,906

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14.Subsequent Events

Other than the below, there have been no events since March 31, 2026 that require recognition or disclosure in the combined and condensed consolidated financial statements.

Revolving Credit Facility Amendment

On April 22, 2026, the Company entered into an amendment to its Credit Agreement dated May 21, 2021 (“The Amendment”). The Amendment increased the aggregate revolving credit commitments under the Credit Agreement by $150.0 million bringing the total to $1.150 billion. In addition, the Amendment increased the maximum cap on the aggregate amount to which the revolving credit commitments may be increased in the future pursuant to the incremental provisions of the Credit Agreement to $1.425 billion, allowing for future increases of up to an aggregate of $275.0 million. Except as described above, the Amendment did not include any other material changes.

Dividend Declaration

On May 13, 2026, the Company declared a dividend of $0.24 per share.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the combined and consolidated financial statements and the related notes included in our audited combined and consolidated financial statements included in the Company’s 2025 Form 10-K. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, beliefs, and expectations that involve risks and uncertainties. Our actual results and the timing of events could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and the sections titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q (the “Quarterly Report”) and the Company’s 2025 Form 10-K.

Overview

We provide debt recovery solutions and other related services across a broad range of consumer receivables, including credit card, secured and unsecured automotive, telecom and utilities, and other receivables. We primarily purchase portfolios of previously charged-off consumer receivables at deep discounts to face value and manage them by working with individuals as they repay their obligations and work toward financial recovery. Previously charged-off receivables include receivables subject to bankruptcy proceedings. We also provide debt servicing and other portfolio management services to credit originators for nonperforming loans. In addition, through our credit card acquisition programs, we earn credit card revenue. All deployments are purchased from independent third parties.

We operate and manage our business through four reportable segments that are based on geography: United States, United Kingdom, Canada, and Latin America. We also have the following two primary lines of business:

●

Distressed, our largest line of business, represents the purchase, collection, and servicing collection of nonperforming consumer loans; and

●

Insolvency, which consists of the purchasing and/or servicing of financial assets of consumers who have entered bankruptcy through Chapter 7 or 13 of the U.S. Bankruptcy Code in the United States, consumer proposal, credit counseling, or bankruptcy in Canada and the United Kingdom.

We are headquartered in Minneapolis, Minnesota, and as of March 31, 2026, with 1,178 FTE (including our offshore co-sourced operation).

Our Business Model

Portfolio Purchasing

We purchase portfolios of nonperforming loans, and occasionally those that are performing but with significant credit deterioration, through either single portfolio transactions, referred to as spot sales, or through the pre-arranged purchase of multiple portfolios at regular intervals, referred to as forward flow sales. Under a forward flow contract, we agree to purchase statistically similar nonperforming loan portfolios from credit grantors on a periodic basis at a negotiated price over a specified time period, generally from six months to a year.

When we purchase portfolios with credit deterioration, we find that our expertise in evaluating and managing charged-off accounts allows us to confidently manage such portfolios with a higher level of credit risk than a buyer without that level of expertise would be comfortable. In such instances, a portfolio may include a mix of loans that are delinquent and restructured as well as a significant amount of charged-off or nonperforming loans, with a high level of risk that more of the current loans will become delinquent over time and eventually need to be charged-off. In these cases, we can offer the seller the convenience of purchasing all its loan assets together as opposed to bidding for only a single category of loan, which might result in a seller needing to transact with multiple counterparties. We regularly evaluate the opportunity to purchase portfolios that include a mix of performing accounts and nonperforming accounts, and that comprise all of a

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credit originator’s loan assets and believe we will find attractive opportunities to make more purchases like these going forward.

We purchase portfolios of nonperforming loans from credit grantors through auctions and negotiated sales. In an auction process, the seller will assemble a portfolio of nonperforming loans and will seek purchase prices from specifically invited potential purchasers. In a privately negotiated sale process, the seller will contact one or more purchasers directly, receive a bid, and negotiate the terms of sale. In either case, invited purchasers will typically have already successfully completed a qualification process and due diligence examination that includes the seller’s review of the purchaser’s experience, financial standing, operating procedures, business practices, and compliance oversight.

We purchase receivables based on robust, account-level valuation methods and employ proprietary statistical and behavioral models across our operations. These methods and models allow us to value portfolios accurately (and limit the risk of overpaying), avoid buying portfolios that are incompatible with our methods or strategies, and align the accounts we purchase with our business and collection channels to maximize future collections. As a result, we have been able to realize attractive returns from the receivables we acquire. We maintain strong relationships with many of the largest financial service providers in the United States, Canada, United Kingdom, and Latin America.

Deployments and Collections

Creditors sell their volume in a mix of forward flow arrangements and competitive bid transactions. Sales levels are expected to fluctuate from quarter to quarter with portfolio pricing remaining competitive. We believe that smaller competitors continue to face difficulties in the portfolio purchasing market because of the high cost to operate due to regulatory pressure, issuers’ selectiveness with buyers and lack of consistent access to capital. We believe these operational costs favor larger participants, such as us, because the larger market participants are better able to adapt to these pressures and commit to larger purchases and forward flow agreements.

Deployments

Our deployments are a mix of spot sales and forward flow agreements. The timing, contract duration and volumes for each contract can fluctuate leading to variation when compared to prior periods. The average purchase price, as a percentage of face value, varies from period to period depending on, among other factors, the type and quality of the accounts purchased and the length of time from charge-off to the time we purchase the portfolios.

The average purchase price as a percentage of face value is higher for newly charged-off portfolios as compared to more seasoned portfolios because newly charged-off portfolios generally have higher liquidation rates. Similarly, portfolios consisting of paying accounts tend to have a higher purchase price relative to face value than non-paying accounts due to the higher expectations for collections, as well as lower anticipated collection costs. As a result, in years that we purchase a higher percentage of newly charged-off assets or paying portfolios, we expect that our purchase price as a percentage of face value would be higher than would be in years where a higher ratio of seasoned paper or non-paying portfolios were purchased.

Collections

We have two primary types of collection channels for the collection of our purchased receivables, legal and voluntary. The legal collection channel consists of collections that result from our internal legal channel or from our network of retained law firms. The voluntary collection channel utilizes call centers (domestic and offshore) and collection agencies. The call center collections include collections that result from our call centers, direct mail programs, and digital collections. The collection agencies collections consist of collections from third-party collection agencies that we utilize when we believe they can liquidate better or less expensively than we can.

Key Business Metrics and Non-GAAP Financial Measures

We regularly review net operating income and net income along with a number of key business metrics and non-GAAP financial measures to evaluate our business, measure our performance, identify trends, prepare financial projections, and make business decisions. Although we believe the key business metrics and non-GAAP financial measures we review are useful, they have limitations as analytical tools and should not be considered in isolation, or as substitutes for analysis of our financial results prepared in accordance with GAAP.

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Key Business Metrics

Estimated Remaining Collections

We define ERC as the undiscounted sum of all future projected collections on our owned finance receivables portfolios. We calculate ERC using data derived from our databases of owned and serviced debt portfolio in the markets in which we operate and from our proprietary behavioral and asset valuation models. References to our ERC are references to gross ERC which includes estimated collections in respect of the current charge-off balances. We believe that our ERC estimation represents an important supplemental measure to compare our cash generating capacity with other companies in the debt collection industry, even though we can provide no assurance that we will achieve such collections within a specified time period, or at all.

The following table summarizes the total ERC by geographic area, or segment, during the three months ended:


	March 31,				Increase		%
(in Millions)	2026		2025		(Decrease)		Change
United States	$	2,460.1	$	2,155.2	$	304.9	14.1	%
Canada		408.3		317.8		90.5	28.5	%
United Kingdom		198.0		146.4		51.6	35.3	%
Latin America		289.4		218.5		70.9	32.4	%
Total	$	3,355.8	$	2,837.9	$	517.9	18.2	%

For the three months ended March 31, 2026, ERC in our United States reportable segment included $237.7 million for the Bluestem portfolio purchase with the comparative 2025 period having no ERC related to Bluestem.

Deployments

Deployments refers to portfolios purchases in the ordinary course. We believe deployments represent an important measure of our investment activity. Deployments are a key driver of the growth of our ERC and a measure to compare growth in our business with the growth of other companies in the debt collection industry.

The following tables summarize the total deployments or purchases by geographic area, or reportable segments, during the three months ended:


	Three Months Ended
	March 31,				Increase		%
(in Millions)	2026		2025		(Decrease)		Change
United States	$	88.0	$	119.5	$	(31.5)	(26.4)	%
Canada		33.7		52.0		(18.3)	(35.2)	%
United Kingdom		9.5		1.9		7.6	399.2	%
Latin America		18.5		1.8		16.7	929.6	%
Total Purchases	$	149.7	$	175.2	$	(25.5)	(14.6)	%

During the three months ended March 31, 2026, we invested $149.7 million to acquire receivable portfolios, with face values aggregating $2,708.2 million, for an average purchase price of 5.5% of face value. The amount invested in receivable portfolios decreased $25.5 million, or 14.6%, compared with the $175.2 million invested during the three months ended March 31, 2025, to acquire receivable portfolios with face values aggregating $2,757.4 million, for an average purchase price of 6.4% of face value.

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Collections

The following tables summarize the total collections by geographic area, or reportable segment, during the periods presented:


	Three Months Ended
	March 31,				Increase		%
(in Millions)	2026		2025		(Decrease)		Change
United States	$	250.6	$	214.3	$	36.3	16.9	%
Canada		32.2		25.8		6.4	24.8	%
United Kingdom		10.8		10.2		0.6	5.9	%
Latin America		16.3		10.6		5.7	53.8	%
Total Collections	$	309.9	$	260.9	$	49.0	18.8	%

Collections from purchased receivables increased by $49.0 million or 18.8% to $309.9 million during the three months ended March 31, 2026, from $260.9 million during the three months ended March 31, 2025. The increase in collections from purchased receivables compared to the period ended March 31, 2025, was primarily a result of increased purchases during the period. Collections in our United States reportable segment included for the period ended March 31, 2026 and 2025 were $54.5 million for the Bluestem portfolio with no collections in the comparative 2025 period.

Non-GAAP Financial Measures

To supplement our combined and condensed consolidated financial statements prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures throughout this Quarterly Report, as described further below, to provide investors with additional useful information about our financial performance, to enhance the overall understanding of our past performance and future prospects and to allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making.

Non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, non-GAAP financial measures may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies. As a result, non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, our combined and condensed consolidated financial statements prepared and presented in accordance with GAAP.

Adjusted Net Income

Adjusted net income is calculated as net income in accordance with GAAP, adjusted to exclude (i) foreign exchange and other income (expense); (ii) stock-based compensation; and (iii) merger and acquisition and other infrequent, non-recurring, non-core or unusual charges. Adjusted net income is a supplemental measure of performance that is not required by, or presented in accordance with, GAAP. We present adjusted net income because we consider it an important supplemental measure of our operations and financial performance. Our management believes adjusted net income helps us provide enhanced period-to-period comparability of operations and financial performance and is useful to investors as other companies in our industry report similar financial measures. Adjusted net income should not be considered as an alternative to net income determined in accordance with GAAP.

Some of the limitations related to the use of adjusted net income as an analytical tool include:

●

does not reflect our future requirements for capital expenditures or contractual commitments;

●

does not reflect changes in, or cash requirements for, our working capital needs; and

●

other companies in our industry may calculate adjusted net income differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, adjusted net income should not be considered as a measure of discretionary cash available to us to invest in the growth of our business.

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Set forth below is a reconciliation of adjusted net income to net income, the most directly comparable financial measure calculated and reported in accordance with GAAP.


	Three Months Ended
	March 31,				Increase		%
(in Millions)	2026		2025		(Decrease)		Change
Net Income	$	37.6	$	64.2	$	(26.6)	(41.4)	%
Foreign exchange and other income (expense)		(1.4)		(2.5)		1.0	(41.1)	%
Stock compensation		8.5		0.4		8.1	2,025.0	%
Merger and acquisition and initial public offering related expenses		0.2		0.8		(0.6)	(76.5)	%
Adjusted Net Income	$	44.9	$	63.0	$	(18.1)	(28.7)	%

Components of Results of Operations

Revenue

Our revenue is primarily derived from revenue from investments in receivables, which is revenue recognized from engaging in debt purchasing and recovery activities, and from credit card and servicing revenue streams.

Total Portfolio Revenue

Portfolio revenue consists of two components: (i) portfolio income, which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the established pool effective interest rate (“EIR”)), and (ii) changes in recoveries, which includes recoveries above or below forecast (the difference between actual cash collected or recovered during the current period and expected cash recoveries for the current period) and changes in expected future recoveries (the present value change of expected future recoveries, where such change generally results from changes to the expected timing of collections and changes to the total amount of expected future collections).

For a majority of the portfolios we purchase, we apply our charge-off policy and fully write off the amortized costs of the individual receivables we acquire immediately after purchasing the portfolio. We then record a negative allowance that represents the present value of all expected future recoveries for pools of receivables that share similar risk characteristics using a discounted cash flow approach, which is presented as “investments in previously charged-off receivables, net” on our combined and condensed consolidated balance sheet. The discount rate is a purchase EIR established based on the purchase price of the portfolio and the expected future cash flows at the time of purchase. From time to time, we will also purchase performing portfolios for a discount, where we will apply the interest method and accrete the discount.

Credit Card Revenue

Credit card revenue consists of interest income, annual fees, late fees, as well as interchange fees, cash advance fees and other miscellaneous items from credit card transactions. Interest income is accrued monthly based on the outstanding receivables and their contractual interest rates.

Servicing Revenue

Servicing revenue consists of the revenue we generate from providing collection services to certain third parties. Generally, we receive a percentage of collections as the fee for services, and in some cases, we receive a fixed fee. Servicing revenue is recognized when the underlying receivables are collected or when a fixed fee service is performed.

Allowance for Credit Losses

Provision for credit losses is the allowance we provide for credit losses on loans and fees receivable. We compute the allowance for credit losses on loans and fees receivable at the pool level using a roll-rate methodology and consider a number of factors in the measurement of the allowance, including historical loss rates, current delinquency and roll-rate trends, the effects of changes in the economy, changes in underwriting criteria and estimated recoveries. The allowance is estimated based on amortized cost basis of the loan, including principal, accrued interest receivable, deferred fees and costs. We place receivables on non-accrual at 90 days past due and write off the accrued interest at 180 days past due or sooner if facts and circumstances indicate earlier non-collectability. Expected recoveries are included in the measurement of the allowance for credit losses.

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Operating Expenses

Salaries and Benefits Expense

Salaries and benefits expense primarily consists of base salary, commission, bonus expense and healthcare costs. Additionally, it includes 401k match and stock-based compensation expense. We expense all salaries and benefits expense as incurred. While we expect our salaries and benefits expense will increase in absolute dollars as we continue to invest in our growth and operate as a public company (including as a result of increased stock-based compensation), we expect such expense to decline as a percentage of revenue over time as we scale our business and leverage our investments already made.

Servicing Expenses

Servicing expenses primarily consists of collections and customer service expenses associated with previously charged-off receivables, such as the cost of outsourced collections, debtor correspondence, legal fees associated with the collection of debt and other direct expenses associated with collections and customer service efforts. While we expect our servicing expenses will increase in absolute dollars as our business grows, we expect such expenses will vary from period-to-period as a percentage of revenue for the foreseeable future and decrease as a percentage of revenue over the long term as a result of continued investments to improve the efficiency of our operations and support organization.

Depreciation and Amortization

Depreciation and amortization consists of depreciation of property and equipment and amortization of intangible assets.

Professional Fees

Professional fees primarily consists of legal and consulting expenses, including annual audit fees and various other outside service fees provided by expert services firms. In addition, it includes legal fees associated with settlements and fees associated with merger and acquisition expenses.

We incurred additional expenses related to the IPO and expect to incur additional expense primarily due to the costs of operating as a public company, which are expected to include additional legal, accounting and consulting expenses, among others.

Other Selling, General and Administrative Expenses

Other selling, general and administrative expenses generally consists of rent, travel and entertainment expenses, and other general overhead expenses.

Other Income (Expense)

Interest Expense

Interest expense consists of interest expense on our outstanding debt and amortization of debt issuance costs.

Foreign Exchange and Other Income (Expense)

Foreign exchange and other income (expense) consists of foreign currency related realized gains or losses on portfolio purchase transactions.

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Results of Operations

Three months ended March 31, 2026 compared to the three months ended March 31, 2025.

The following tables set forth combined and condensed consolidated income statement data expressed in a dollar amount and as a percentage of total revenues for the periods indicated:


	Three Months Ended March 31,
(in Millions)	2026				2025
Revenues:
Portfolio income	$	157.6	89.3	%	$	138.7	89.5	%
Changes in recoveries		7.1	4.0	%		3.6	2.3	%
Total portfolio revenue	$	164.7	93.3	%	$	142.3	91.8	%
Credit card revenue		1.7	1.0	%

Jefferson Capital, Inc. / DE 10-Q