EZCORP’s Latin America Dominance: How a 25% Revenue Surge Positions the Pawn Giant for Growth

EZCORP, a leading global provider of pawn services and consumer finance solutions, has delivered a standout performance in its Latin America segment, reporting a 25% year-over-year revenue increase in Q2 2025 on a constant currency basis. This surge underscores the company’s strategic focus on high-growth markets and operational excellence. Below, we dissect the drivers of this growth, evaluate its sustainability, and assess its implications for investors.

The Catalysts Behind the 25% Revenue Growth

EZCORP’s Latin America success stems from three core pillars: loan demand, merchandise sales, and strategic expansion.

1. Pawn Loan Outstandings (PLO) Boom:
   PLO, the lifeblood of pawn operations, grew 17% in constant currency, driven by increased loan origination and a 4% rise in average loan size (adjusted for currency). This reflects rising demand for affordable credit in inflationary environments, particularly in Mexico and Guatemala. The EZ+ Rewards program, now boasting 6.2 million global members, has also boosted customer retention, with repeat borrowers driving PLO growth.

2. Merchandise Sales Surge:
   Merchandise sales jumped 21% in constant currency, fueled by faster inventory turnover and a 44% increase in inventory levels. EZCORP’s focus on jewelry and luxury goods—categories with higher margins—has paid off, as these now represent 34% of PLO in Latin America. The company’s expansion of online layaway payments (now 17% of Mexico’s total) and its luxury e-commerce platform, Max Pawn, further supports this momentum.

3. Aggressive Store Optimization:
   EZCORP added 9 new stores in Guatemala, Mexico, Honduras, and El Salvador while consolidating 9 underperforming locations in Mexico. This strategic footprint adjustment brought the total Latin America store count to 742, up from 741 in Q1. The focus on high-growth urban centers and cost-effective de novo stores has improved same-store performance, with 18% revenue growth in existing locations.

Profitability and Efficiency Gains

The revenue surge translated to 36% growth in adjusted EBITDA (constant currency) to $10.6 million, with margins expanding 99 basis points to 13.9%. This improvement was driven by:
- Higher pawn service charges (PSC): Up 19% in constant currency due to increased loan volume and pricing discipline.
- Operational discipline: Store expenses rose only 11% despite labor cost pressures, while the EZ+ Rewards program’s cost efficiency reduced customer acquisition expenses.

Challenges and Risks

While the results are impressive, several risks linger:
- Currency headwinds: Reported revenue grew just 9% due to a stronger U.S. dollar. A further weakening of Latin American currencies could pressure nominal results.
- Inventory management: Aged merchandise rose to 1.9% of inventory, up from 1.4% in 2024, signaling potential liquidity risks if sales slow.
- Labor costs: Same-store expenses rose 13% in constant currency, driven by minimum wage hikes, which could compress margins if not offset by top-line growth.

Future Growth Catalysts

EZCORP’s management outlined several initiatives to sustain momentum:
1. Geographic Diversification: Plans to add 30–40 new stores in Latin America by end-2025, prioritizing Mexico’s untapped urban markets and Central American expansion.
2. Digital Integration: Expanding online pawn services and Max Pawn’s luxury e-commerce platform to capture younger, tech-savvy customers.
3. Debt Refinancing: The recent $300 million senior notes offering (due 2032) reduces near-term refinancing risks and provides liquidity for growth.

Conclusion: A Compelling Growth Story

EZCORP’s 25% revenue surge in Latin America is no fluke. The company has executed flawlessly on its strategy to dominate pawn markets in inflation-prone regions, leveraging strong customer loyalty, operational efficiency, and strategic store expansion. With adjusted EBITDA up 36%, a 43% increase in constant currency segment contribution, and a 30% rise in store count in five years, the fundamentals are robust.

Investors should note that the company’s Latin America segment now contributes a larger share of total revenue, reducing reliance on the slower-growing U.S. market. While currency risks and labor costs remain, the long-term tailwinds—rising unbanked populations, secondhand goods demand, and digital innovation—position EZCORP to capitalize on its regional dominance.

For those willing to look past near-term forex volatility, EZCORP’s valuation—currently trading at 12.4x 2025E EBITDA—offers a compelling entry point into a sector with structural growth. The 25% revenue milestone is not just a quarter’s triumph but a sign of the company’s enduring strength in Latin America’s financial ecosystem.