goeasy Limited Reports Record Q2 Results and Strategic Growth

goeasy Limited, a prominent provider of loans and financial services, has reported strong financial outcomes for the second quarter of 2024, achieving record loan originations and substantial growth in its loan portfolio, resulting in impressive earnings. The company’s gross consumer loan balances surpassed CAD 4 billion, alongside securing an additional CAD 450 million in debt funding capacity.

During the quarter, loan originations reached CAD 827 million, which included an organic loan growth of CAD 286 million. The company has declared a quarterly dividend of CAD 1.17 per share and is preparing for a transition in its CEO by the end of the year. Furthermore, goeasy has revised its three-year commercial forecast, predicting significant growth in its loan portfolio while expecting stable credit performance and enhanced operating margins.

Key Highlights:

• Record loan originations totaled CAD 827 million, and the loan book has grown to over CAD 4 billion.
• Unsecured lending represented more than 58% of total loan originations.
• The company reported revenue of CAD 378 million for the quarter, reflecting a 25% increase year-over-year.
• Adjusted net income reached CAD 71.3 million, translating into earnings per share of CAD 4.10.
• Projected loan portfolio growth is anticipated to fall between CAD 4.55 billion and CAD 4.65 billion by the end of 2024.
• Plans are underway for introducing a new credit card product in 2025.

Company Outlook:

• Loan portfolio growth is expected to reach CAD 4.55 billion to CAD 4.65 billion by the close of 2024.
• Anticipated growth projections aim for between CAD 6 billion and CAD 6.4 billion by 2026.
• Continued expectations for stable credit performance and an increase in operating margins.

Challenges:

• There has been a rise in delinquency rates due to macroeconomic conditions and shifts in collection strategies.
• The guidance for loss rates is expected to increase by 25 basis points over the next three years, partly due to a forecast of a mild to moderate recession.

Positive Indicators:

• Automotive financing originations have surged by 79% year-over-year.
• Home equity lending volume has risen by 55%.
• The efficiency ratio improved to a historical low of 26.9%.
• The company is investing in infrastructure to enhance automation and efficiency.

Concerns:

• The company is adopting a cautious approach to credit management, which could lead to stricter credit tolerance levels.

Q&A Highlights:

• Management expressed confidence in maintaining a low charge-off rate despite increased delinquencies and outlined expectations for a smooth transition to a new APR level.
• The mobile app has shown potential with 150,000 users and several thousand loans funded, despite limited marketing efforts.

In conclusion, goeasy Limited showcased impressive performance in the second quarter of 2024 and maintains a positive outlook for ongoing growth and innovation. The company is strategically navigating regulatory changes and economic challenges while preparing for new product launches and technological advancements aimed at enhancing customer experience. The next quarterly update is anticipated in November.