stockrowLatest quarter
Credit Acceptance reported third-quarter revenue of $594.6 million, up from $582.4 million a year earlier. Adjusted earnings per share were $13.01, above the consensus estimate of $11.94. On a GAAP basis, the company reported a loss of −$5.43 per diluted share, compared with earnings of $9.43 a year earlier.
The company’s filing attributed the shift to a net loss primarily to a higher provision for credit losses. Credit Acceptance lowered its forecast for loan-portfolio cash flows after revising the collection rates it expects on loans assigned from 2022 through 2026. The filing said the methodology adjustment increased the provision by $143.7 million.
Credit Acceptance reported that consumer loan assignment unit volume rose 37.7% year over year, as both the number of active dealers and volume per dealer increased. The filing also said operating expenses fell $14.2 million, reflecting lower salaries and general and administrative costs, partly offset by higher sales and marketing expense. Free cash flow was $334.1 million, compared with $298.8 million a year earlier.
| Q3 FY2026 | Q3 FY2025 | Change | |
|---|---|---|---|
| Revenue | $594.6 million | $582.4 million | 2.09% |
| Diluted EPS | −$5.43 | $9.43 | −157.6% |
| Gross margin | 100.0% | 100.0% | 0.0 percentage points |
| Operating margin | 8.63% | 48.7% | −40.1 percentage points |
| Free cash flow | $334.1 million | $298.8 million | 11.8% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $13.01 | $11.94 | Beat by 8.96% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
CEO Vinayak Hegde said growth in loan assignments came from commercial execution, expanded distribution through application aggregators and a new scorecard designed to improve risk assessment. CFO Joe Billante said Credit Acceptance enrolled 1,350 dealers in the quarter and had 12,093 active dealers. In response to an analyst’s question about the dealer experience, Hegde said integrations help the company reach dealers on platforms they already use, while its existing dealer relationships also contributed to growth.
Hegde said analysis of loan performance revealed “small but consistent quarterly underperformance” against cash-flow forecasts, especially in lower scorecard bands. He said most of the forecast adjustment related to loans assigned before the new scorecard was introduced. The CEO added that loans assessed under the new scorecard need more performance history before the company can draw firm conclusions.
Asked about the affected risk bands, Hegde said the company used its own internal scoring to identify underperformance and had become more conservative in pricing those bands for future loans. Billante told analysts that adjusted results spread the forecast adjustment over the life of the affected loans, while GAAP rules require recognition up front.
On spending, Billante said lower salaries and general and administrative costs contributed to reduced operating expenses, partly offset by sales and marketing costs associated with higher loan volume. He said the company reduced its team member base by approximately 6% during the quarter and was using technology and automation to improve productivity.
Looking ahead, Hegde said Credit Acceptance was developing more personalized collections and servicing, using predictive models to identify dealer relationships and markets, and expanding digital and mobile capabilities. He said those initiatives remained in their early stages. Hegde also said agreements resolving New York and multi-state matters were not expected to materially affect the company’s growth strategy or operations.
Guidance
CFO Joe Billante said Credit Acceptance’s revised forecasted collection rate for its 2025 and 2026 loan vintages was approximately 65%. CEO Vinayak Hegde said the company would continue updating its forecasting assumptions as additional information became available.