Propel Holdings: A High-Growth Fintech Powerhouse in the Underserved Credit Market

Propel Holdings (TSX: PRL) has emerged as a standout player in the underserved credit market, combining AI-driven innovation with a relentless focus on shareholder returns. With record financial results, consistent dividend growth, and a scalable business model, the company is redefining access to credit for millions of consumers. But can this momentum last? Let's dissect the numbers, the risks, and the long-term value proposition for investors.

Financial Performance: A Recipe for Growth

Propel's Q2 2025 results were nothing short of explosive. Revenue surged 34% year-over-year to $143.0 million, while Adjusted EBITDA hit $35.2 million—a 16% increase. Net income grew 36% to $15.1 million, and diluted EPS rose 20% to $0.36. These metrics reflect a company that's not just surviving in the competitive fintech space but thriving.

What's even more impressive is the consistency. Year-to-date 2025 revenue is up 39%, and Adjusted EBITDA has grown 26%. Propel's ability to scale its AI-powered platform—processing 66,000 applications daily—has driven efficiency and profitability. Loans and Advances Receivable hit $407.3 million, a 33% increase, while Ending Combined Loan and Advance Balances (CLAB) reached $520.4 million. This growth isn't just volume-driven; it's underpinned by disciplined risk management.

Dividend Growth: A Track Record of Shareholder Reward

Propel's dividend story is equally compelling. The company has raised its annualized dividend for eight consecutive quarters, with the latest increase in Q2 2025 raising the payout from C$0.72 to C$0.78 per share—a 8% jump. This marks the eighth consecutive increase since 2023, with the Q3 2025 dividend set at C$0.195 per share, payable on September 4, 2025.

The dividend yield, now at 1.83%, outperforms the sector average of 1.388%. Crucially, the payout ratio remains sustainable at 26.04%, ensuring that growth and shareholder returns aren't at odds. For income-focused investors, this is a rare combination: a high-growth company with a growing dividend.

Sustainability in the Underserved Credit Market

Propel's AI-powered platform is the cornerstone of its competitive advantage. By analyzing over 5,000 data points per applicant—including cash flow, employment history, and macroeconomic trends—it offers credit to consumers excluded by traditional scoring models. This approach has unlocked a $2 billion credit market, serving 1 million consumers with an average credit score of 604.

The company's Lending-as-a-Service (LAAS) model further amplifies scalability. Partnerships with KOHO, Pathward Bank, and QuidMarket (acquired in 2024) allow Propel to expand its reach without bearing all the costs. For example, QuidMarket's UK operations have added 70 million potential customers to Propel's footprint.

Risks and Challenges

No investment is without risks. The underserved credit market is sensitive to macroeconomic shifts. Rising unemployment or a recession could strain borrowers' ability to repay, increasing delinquencies. While Propel's AI dynamically adjusts to macro trends, a prolonged downturn could test its models.

Regulatory scrutiny is another concern. The CFPB and other agencies are increasingly focused on fair lending practices. Any missteps in compliance could lead to fines or operational delays. However, Propel's “compliance-first” culture and transparent AI algorithms mitigate this risk.

Lastly, competition is intensifying. Traditional banks and fintechs are entering the underserved market, potentially driving down margins. But Propel's first-mover advantage, proprietary technology, and strategic partnerships give it a significant edge.

Long-Term Implications for Shareholders

For long-term investors, Propel's trajectory is promising. The company's focus on financial inclusion aligns with a growing global trend. As traditional banks retreat from high-risk segments, Propel is poised to capture market share. Its AI platform, with recurring revenue from LAAS and expanding international partnerships, offers a durable moat.

The dividend growth story is equally robust. With a payout ratio well below 50%, there's room for further increases. If Propel maintains its current growth rate, the dividend could reach C$1.00 per share by 2027—a 28% compound annual growth rate (CAGR) from today's C$0.78.

Investment Thesis

Propel Holdings is a rare blend of high growth and shareholder-friendly policies. Its AI-driven model is scalable, its financials are strong, and its dividend growth is sustainable. While risks exist, the company's strategic agility and focus on innovation position it to outperform in the underserved credit market.

For investors seeking exposure to the fintech revolution, Propel offers a compelling case. The key is to monitor macroeconomic conditions and regulatory developments while staying focused on the company's long-term vision.

Final Take: Buy for growth and income. Hold for 3–5 years.