World Acceptance (NASDAQ:WRLD) executives used the company’s fiscal 2026 third-quarter earnings call to highlight a rebound in growth, improved yield metrics, and early signs of better credit performance among a higher volume of new customers, while also addressing near-term expense pressures tied to staffing and incentive compensation.
New customer growth drove portfolio expansion
President and CEO Chad Prashad said the company originated 16% more in new customer volume during the quarter, and ended the period with 25% more outstanding ledger in active new customers versus the same quarter last year. Prashad emphasized that new customers are the company’s “riskiest customer segment,” and noted that the larger outstanding balance in that group required “around an $8 million additional provision” for the segment compared with the same quarter last year.
Underwriting and “credit box” changes aimed at faster returns
Management said it continues to make regular “credit box improvements.” Prashad explained that some changes are made in response to credit performance in “small credit and geographical pockets,” but said most underwriting improvements are geared toward generating a faster return on the initial investment and increasing long-term returns with the company’s most loyal customers.
Prashad described these as long-term investments intended to improve credit performance and customer retention, with an expectation that they will contribute to improved “long-term yields.”
Yields, customer counts, and ledger trends improved year-over-year
Prashad said yields improved 84 basis points year-over-year as income also improved, and said the company expects that trend to continue. He cited several drivers behind that outlook, including improved rates in some states, continued discipline on credit limits and underwriting, improving customer retention as customer tenure rises, and continued investment in the customer base and overall ledger.
On customer growth, Prashad said the customer base increased about 5.4% organically year-over-year. He contrasted that with 2.2% growth last year and declines in the two years prior, noting that fiscal 2022 was one of the company’s strongest years with 5.6% organic growth. He also pointed to the lower first-pay defaults on this year’s third-quarter new customers compared with fiscal 2022 cohorts.
Prashad added that organic growth in ledger was 2.4% year-over-year, compared with a 2.4% decline last year. The average outstanding loan declined about 2.5% year-over-year, which he attributed to tighter underwriting discipline and increased investment in new customers, who typically carry lower balances.
Expenses elevated, but management expects some relief
Management acknowledged that year-over-year earnings comparisons were “complicated” by several headwinds during the quarter, including higher share-based compensation expense, higher personnel expense tied to temporary overstaffing to improve branch staffing levels, investments in new customers, and higher provision for loan losses.
During the Q&A, Chief Financial and Strategy Officer John Calmes said incentive compensation expense should begin to decline starting in the fourth quarter. He attributed the elevated incentive line item to a share-based compensation grant made last December that has now been fully expensed, and said there will be another “cliff” in December of next year. Calmes also said field-level incentives could “tighten a little bit as we move forward,” and that he expects “some decent decreases” in incentive comp expense going forward.
Separately, management addressed staffing changes in branch operations. In response to a question on why headcount increased and then a reduction was planned, Prashad said the company built up staffing to improve team quality in anticipation of turnover among underperforming employees and areas of the business. He said this was done across roughly 80% of the company, with about half occurring quickly, and that reductions should happen “pretty quickly within this quarter.” Asked what underperformance meant, Prashad said it related to multiple factors including collections capability, overall performance, and engagement.
Tax season outlook, weather disruptions, and other topics
Prashad provided a mid-quarter update on tax filing season, saying the company is “very early” in the period but has already seen “substantial improvement” year-over-year in both the volume of filings and revenue. He also noted that an ice storm had affected about 10 states during the week, with some branch closures, but said management remains optimistic about increased tax filing volume and revenue throughout the quarter.
In Q&A, Prashad said the company has not seen degradation in collections or credit quality in the overall consumer base, though he described a “slight increase in demand.” He also said the cost of acquiring higher-credit-quality new customers has declined significantly, though he said he was not certain of the cause. On tax refunds, he said the company expects larger refunds this year, which he tied to tax law changes affecting the company’s customer base. He added that marketing was adjusted in late December and early January to attract customers in segments expected to benefit, including customers paid through tips.
Management also discussed share repurchases. Prashad said the company has repurchased nearly 600,000 shares so far this fiscal year, reducing outstanding shares by 11% in the first nine months. He said the company had more than $60 million in remaining repurchase capacity, which he estimated as roughly 9% of outstanding shares based on the prior day’s closing price—implying potential total repurchases of around 20% of shares for the year.
Asked about headlines related to a potential 10% cap on credit card rates, Prashad said he was not aware of discussions about how such a cap would apply to installment loans. He suggested such a cap could reduce access to credit cards given current capital costs, and estimated that consumers below roughly a 750–780 credit score could see a severe reduction in access to credit, potentially increasing demand for installment loans. He also noted the company’s own credit card portfolio remains “very small,” with only a few million dollars outstanding, and said the company could pivot quickly if needed.
Finally, Prashad recognized the upcoming retirement of long-tenured leader Clint Dyer, crediting his contributions over 30 years to branch leadership and talent development. He said Tobin Turner is stepping in to lead branch operations during the transition, bringing experience in analytics, marketing, and retail operations.
About World Acceptance (NASDAQ:WRLD)
World Acceptance Corporation (NASDAQ: WRLD) is a consumer finance company headquartered in Greenville, South Carolina. Founded in 1972, the company provides credit solutions to underserved customers who may have limited access to traditional banking services. Over the decades, World Acceptance has built a reputation for tailored lending that emphasizes responsible underwriting and personalized customer service.
The company’s core product offerings include short-term installment loans designed to meet the immediate financial needs of its clients.
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