Propel Posts Record Q3 Revenue of $201.5 Million, Up 32%

Propel Holdings (TSE:PRL) grew third-quarter revenue 32% year over year to $201.5 million, crossing $200 million in a single quarter for the first time in its history. Executives on the November 4 earnings call said record originations, a surging Lending-as-a-Service segment and rapid U.K. expansion powered the result.

Net income rose 23% to $18.4 million, while adjusted net income climbed 54% to $24.9 million. Diluted earnings per share came in at $0.43, with adjusted diluted EPS at $0.59 — up 22% and 53% respectively.

Founder and CEO Clive Kinross said Propel and its bank partners continued to see strong demand early in the fourth quarter, with credit performance in line with seasonal expectations.

What drove originations?

Total originations funded rose 27% from a year earlier to $260.7 million, and ending CLAB (the credit line and loan portfolio on balance sheet) increased 24% to $690.5 million. New customer originations jumped 37%, or 55% when Lending-as-a-Service volumes are included. New customers accounted for 47% of total originations funded, up from 44% a year earlier.

Founder and CFO Sheldon Saidakovsky said the provision for loan losses and other liabilities consumed 53% of revenue, versus 52% a year earlier. He attributed the uptick primarily to the higher share of new customer originations, which generally carry higher upfront provisions.

Net charge-offs held at approximately 12% of average CLAB, consistent with both the prior-year quarter and the preceding quarter. Kinross said Propel receives more than 100,000 discrete applications per day, with approval rates roughly unchanged through the year.

Near the end of the quarter, the company began rolling out a new cash-flow underwriting model and is expanding it in the fourth. Kinross said the model uses consumer-permissioned financial data and could enable more approvals without adding credit risk, describing early results as promising.

How is the revenue mix shifting?

Annualized revenue yield rose to 121% from 113% a year earlier. Saidakovsky credited growth in higher-yielding programs — the MoneyKey Bank Service Program, QuidMarket and Lending-as-a-Service — plus a greater proportion of new customers.

He expects the yield to decline slightly in the fourth quarter as existing customers graduate to lower rates, and guided to a normalized yield of approximately 116% to 120% next year.

Lending-as-a-Service revenue surged 170% to $13.5 million, approaching 7% of quarterly revenue. Its program margin expanded to 48% from 36% as servicing costs declined relative to revenue. The business generates fee-based revenue without Propel funding the underlying loan receivables on its balance sheet.

On the previously discussed goal of Lending-as-a-Service reaching a 10%-of-revenue exit run rate in the fourth quarter, Kinross said he expects the contribution to move closer to that level but not quite reach it.

Saidakovsky confirmed the company holds sufficient committed capital for its growth targets, including $210 million associated with its Column program plus additional commitments for other programs. He said provisions as a percentage of revenue could decline over time as the fee-based business grows and more customers mature.

What about the U.K. and the balance sheet?

U.K. revenue increased 69% to $22 million. Kinross said QuidMarket has generated roughly $70 million in revenue over the past 12 months — more than double the approximately $30 million in annual revenue when Propel announced the acquisition nearly two years ago. He expects full-year 2026 U.K. revenue to be significantly higher than the trailing figure.

Technology platform integration with QuidMarket has not yet begun; Saidakovsky expects it to start in early 2027. Kinross said 2026 U.K. investments should contribute to bottom-line expansion there in 2027.

Propel ended the quarter with a debt-to-equity ratio of 1.2 times, down from 1.3 times at the end of 2025, and approximately $71 million in undrawn credit commitments. The company expects to increase its credit facilities at renewal in early 2027, with Kinross anticipating improved rates and terms on components Propel controls.

The board raised the quarterly dividend 6% to C$0.27 per share — the 13th consecutive quarterly increase. Kinross added that ending CLAB growth could land near or above the top of the company's 18% to 24% guidance range, though management declined to revise guidance at this point in the year.