EZCORP's Q4 2025: Contradictions Emerge on U.S. Retail Margins, Gold Prices, and Simple Investment

Date of Call: None provided

Financials Results

• Revenue: $1.3B, up 12% YOY
• Operating Margin: Adjusted EBITDA margin 14.7%, compared to 13% in prior year

Guidance:

• Company does not provide formal guidance.
• Expect a sequential increase in total expenses through fiscal 2026.
• With current gold prices, similar scrap-sales gross profit should continue into Q1, then scrap margins expected to decline sequentially through FY2026 toward normal levels.
• Focus for FY2026: grow PLO, improve inventory efficiency, scale operational best practices; active, disciplined M&A pipeline.

Business Commentary:

* Revenue and Profit Growth: - EZCORP achieved record revenue of $1.3 billion for 2025, up 12% year over year, and adjusted EBITDA of $191.2 million, up 26%. - This growth was driven by an increase in store count across five countries and strong consumer demand for pawn transactions.

• Digital Transformation and Customer Engagement:
• EZCORP's digital initiatives, including instant quote tools and online payments, saw significant growth, with online payments increasing by 42% year-over-year.

• The company's strategy of enhancing customer experience through digital platforms and loyalty programs contributed to the increase in EZ Plus Rewards membership by 26%.

• Inventory and Lending Management:

• The company's PLO reached a record $303.9 million, up 11% year over year, while inventory increased by 28% to $245.2 million.

• The inventory growth was driven by an increase in jewelry purchases and a strategic focus on long-term layaways, although aged general merchandise remained disciplined at 2.6%.

• Market Expansion and Store Growth:

• EZCORP expanded its store base, adding 24 new stores in the quarter and growing from 1,148 stores in Fiscal 2021 to 1,360 stores at Fiscal 2025 year-end.
• This expansion, particularly in Latin America, was supported by strategic acquisitions and organic growth, leading to increased loan and merchandise sales across regions.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management highlighted 'record revenue of $1.3 billion, up 12% YOY', 'adjusted EBITDA of $191.2 million, up 26%', and 'net income surged 30% to $110.7 million', and repeatedly described the company as 'well‑positioned' with a 'robust balance sheet' to grow.

Q&A:

• Question from Brian McNamara (Canaccord Genuity): What’s your message on gold prices — should investors worry about a potential decline in gold price and how should we think about managing the business?
  Response: Rising gold helped results but the pawn business is resilient; customer need for cash drives demand independent of gold price and the company can adjust quickly to price changes.

• Question from Brian McNamara (Canaccord Genuity): What inning are we in regarding improvements in Mexico/Latin America — how much runway remains?
  Response: Latin America is still early with strong momentum; significant runway remains for DeNovo expansion, jewelry-led lending growth, and M&A.

• Question from Brian McNamara (Canaccord Genuity): How should investors think about the M&A pipeline for 2026 given recent acquisitions and post-quarter activity?
  Response: Pipeline is robust and opportunistic; acquisitions are evaluated disciplinarily on return on invested capital and we expect continued, selective activity.

• Question from David Sharf (Citizens Capital Markets): Are you seeing increased pawn loan demand in Mexico related to the slowdown in remittances/money transfers?
  Response: Evidence is anecdotal; lending is robust across Latin America but there is no clear direct correlation to remittance volume—operational improvements are a major driver.

• Question from David Sharf (Citizens Capital Markets): Given scrap-driven U.S. revenue growth, any benchmark for U.S. top-line growth for fiscal 2026?
  Response: We do not provide formal guidance; objective is to continue robust revenue and profit growth, acknowledging scrap was a significant tailwind recently.

• Question from Kyle Joseph (Stephens): Please walk us through the loyalty program and marketing efforts and the results in terms of foot traffic or transactions per consumer.
  Response: Omnichannel and digital initiatives (inventory online, instant quotes, SEO/SEM, social) and a ~6.9M-member rewards program are increasing digital discovery, online payments/extensions, store efficiency and are expected to drive traffic, transactions and margin.

• Question from Kyle Joseph (Stephens): How is the recently acquired auto-pawn business performing and will M&A focus be in existing geographies or expansion?
  Response: Auto-pawn in Mexico started well and is being assessed for broader rollout; bias is toward M&A in existing markets first though new geographies are considered selectively.

• Question from Raj Sharma (Texas Capital): Have digital initiatives changed customer cohorts or behavior, and do you track macro indicators or just store/online flow?
  Response: Digital adoption (online extensions/payments, rewards) is changing behavior and improving store productivity; management focuses on controllable operating metrics rather than trying to time macro indicators.

• Question from Raj Sharma (Texas Capital): Why did inventory grow more than PLO in the U.S. and what explains lower turnover?
  Response: Inventory growth driven by more purchases, longer layaways and a higher jewelry mix amid rising gold prices; turns down but management views it as manageable with initiatives to boost selling and improve turns.

• Question from Andrew Scutt (Roth Capital Markets): Have you seen changes in U.S. consumer behavior or customer profiles (e.g., due to government shutdown) in stores?
  Response: U.S. lending demand remains strong; management cannot definitively attribute changes to the shutdown but customers appear under continued pressure driving loan demand.

Contradiction Point 1

U.S. Retail Margins and Gold Price Impact

It involves differing explanations of the impact of gold prices on U.S. retail margins, which directly affects the company's financial performance and investor expectations.

What's your message to investors regarding gold prices amid recent gains, and are you concerned about a potential decline? - Brian McNamara(Canaccord Genuity)

2025Q4: Rising gold prices are beneficial, but the core business remains strong even without it. - Lachlan Given(CEO)

Is the stronger-than-expected U.S. retail margin due to reduced consumer negotiation or rising gold prices increasing jewelry value? - John Hecht(Jefferies)

2025Q3: Improved lending and gold price increases have helped improve margins. - Timothy K. Jugmans(CFO)

Contradiction Point 2

Investment in Simple

It involves the rationale and extent of investment in Simple, which impacts the company's strategic direction and financial resources allocation.

Are you seeing any impact on pawn loan demand in Mexico due to the U.S. remittance slowdown? - David Sharf(Citizens Capital Markets)

2025Q4: Our investment in Simple through Founders has surpassed $60 million. Why is this the preferred investment route? - Lachlan Given(CEO)

Why is investing in Simple through Founders the preferred route for your $60 million+ investment? - Brian McNamara(Canaccord Genuity)

2025Q3: Investment supports growth in markets EZCORP is not in. The management team has proven capable, and the investment structure will be re-evaluated in the next 12-18 months for optimal returns. - Lachlan Given(CEO)

Contradiction Point 3

Impact of Tariffs on Customer Behavior

It involves differing opinions on the effects of tariffs on customer behavior, which could affect the company's strategic decisions and market positioning.

Have store managers noticed changes in consumer behavior due to the U.S. government shutdown? - Andrew Scutt (Roth Capital Markets)

2025Q4: We're seeing strong demand for loans despite any external factors, indicating continued customer pressure. - Lachlan Given(CEO)

Are you seeing a positive impact from tariffs through price increases in your primary market? Are new customers, particularly middle and upper-income shoppers trading down, entering your stores? - Brian McNamara (Canaccord Genuity)

2025Q2: We are seeing new faces, with people trading down. It's a strategic initiative to drive more traffic into the stores, both physically and digitally. - Lachlan Given(CEO)

Contradiction Point 4

Gold Prices Impact on Business

It involves the company's response to the impact of gold prices on its business, which is a key factor affecting financial performance and strategic decision-making.

What's your message to investors about gold prices with recent gains, and are you concerned about a potential drop? - Brian McNamara (Canaccord Genuity)

2025Q4: Rising gold prices are beneficial, but the core business remains strong even without it. We have a resilient business model that can adjust to price changes. - Lachlan Given(CEO)

U.S. PLO declined 9% sequentially during the tax season, which was the most normal since 2019. Is this a new normal or a reflection of the macro environment's impact on customers? - Brian McNamara (Canaccord Genuity)

2025Q2: We're seeing robust lending across Latin America, but it's more anecdotal. Tim Jugmans: Demand is strong due to operational improvements, not directly linked to remittance slowdown. - Lachlan Given(CEO)

Contradiction Point 5

Inventory Turnover and Management

It pertains to the company's approach to managing inventory and optimizing store efficiency, which are critical for operational performance and profitability.

Why did inventory growth outpace PLO growth in the U.S. pawn segment? - Raj Sharma (Texas Capital)

2025Q4: Inventory growth is due to increased purchases, longer layaways, and more jewelry. We're focusing on improving inventory turns and store efficiency. - Lachlan Given(CEO)

Why haven't merch margins improved, given that larger competitors maintain margins in the low 40s? Is it due to prioritizing the loan counter? - Brian McNamara (Canaccord Genuity)

2025Q2: We prioritize gross profit and PSC, which may lead to giving customers more money, resulting in lower margin on the sale of items. But overall, we're maximizing gross profit. - Timothy Jugmans(CFO)