Propel Holdings Inc

TSX:PRL

Q3-2025 Earnings Call

[Operator]

"

[Clive Kinross, executive]

"

[Sheldon Saidakovsky, executive]

"

[Devon Ghelani, executive]

"

[Andrew Scutt, analyst]

" ROTH Capital Partners, LLC, Research Division

[Jeff Fenwick, analyst]

" Cormark Securities Inc., Research Division

[Matthew Lee, analyst]

" Canaccord Genuity Corp., Research Division

[Rob Goff, analyst]

" Ventum Financial Corp., Research Division

[Stephen Boland, analyst]

" Raymond James Ltd., Research Division

[Operator]

Good morning, everyone. Welcome to Propel Holdings Third Quarter 2025 Financial Results Conference Call. As a reminder, this conference call is being recorded on November 5,2025. [Operator Instructions] I will now turn the call over to Devon Ghelani, Propel's Vice President of Capital Markets and Investor Relations. Please go ahead, Devin.

[Devon Ghelani, executive]

Thank you, operator. Good morning, everyone, and thank you for joining us today. Propel's third quarter 2025 financial results were released yesterday after market close. The press release, financial statements and MD&A are available on SEDAR+ as well as on the company's website, propelholdings.com.

Before we begin, I would like to remind all participants that our statements and comments today may include forward-looking statements within the meaning of applicable securities laws. The risks and considerations regarding forward-looking statements can be found in our Q3 2025 MD&A and annual information form for the year ended December 31, 2024, both of which are available on SEDAR+. Additionally, during the call, we may refer to non-IFRS measures. Participants are advised to review the section entitled Non-IFRS Financial Measures and Industry Metrics in the company's Q3 2025 MD&A for definitions of our non-IFRS measures and the reconciliation of these measures to the most comparable IFRS measure. Lastly, all dollar amounts referenced during the call are in U.S. dollars unless otherwise noted.

I am joined on the call today by Clive Kinross, Founder and Chief Executive Officer; and Sheldon Saidakovsky, Founder and Chief Financial Officer, will provide an overview of our Q3 2025 results and observations on the overall economic environment before covers the financials in more detail. Before we open the call up to questions, Clive will provide an update of our strategy and growth initiatives for the remainder of 2025 and into 2026. With that, I'll pass the call over to Clive.

[Clive Kinross, executive]

Thank you, Devin, and welcome, everyone, to our Q3 conference call. Building on a strong first half, we are proud to deliver another quarter of record results. Amid a dynamic macroeconomic environment, our AI-powered platform and disciplined risk management drove stable credit performance while delivering profitable growth. Before speaking about what we're observing in the broader economy and our consumer segment, I'd like to highlight our record third quarter results.

We delivered another quarter of strong growth with record quarterly revenue total originations funded and ending forward momentum from the first half of the year, we experienced healthy consumer demand and stable credit performance through Q3. At the same time, given evolving macroeconomic conditions and a modest uptick in delinquencies during the quarter, we and our bank partners maintained a tight underwriting posture, particularly in the U.S., making targeted adjustments to preserve credit quality in line with seasonal expectations. Even with these prudent measures, we achieved record total originations funded of $205 million, up 37% year-over-year and record revenue of $152.1 million, an increase of 30% from Q3 2024.

On the bottom line, net income rose by 43% to $15 million and adjusted net income increased by 16% to $16.2 million compared to the prior year. to what we observed in the macro environment and with our consumer segments. In the U.S., growth remains steady. However, inflation in essential spending categories such as food, shelter and health care remains elevated with each increasing more than 3% year-over-year, weighing more heavily on the consumers we serve spend a greater proportion of their income on these essentials. Furthermore, according to the Federal Reserve Bank of Atlanta, median nominal wage growth for lower income workers was 3.6% in August 2025. As a result, real wage growth for our consumers, while still moderately positive, has moderated in 2025.

In addition, the resumption of student loan collections in Q2 has put additional pressure on some of our consumers. these pressures on our U.S. consumers during the quarter, we and our bank partners made proactive underwriting adjustments to ensure our credit performance was in line with seasonal expectations. This is the benefit of our AI-powered platform and the resiliency of our business model. We benefit from the quick feedback loop where slight changes to the macro environment and consumer behavior are detected immediately and we are able to adjust our underwriting instantly. Notwithstanding some of the pressures we are observing in the U.S. employment remains healthy and continued job growth across key sectors where many of our customers are employed. The resiliency of our consumers cannot be understated. The are jobs demand and often interchangeable and consequently are able to replace lost income. Overall, the U.S. consumer remains resilient. However, we are taking a deliberately cautious stance in the U.S. market to prioritize strong credit performance and profitable growth.

In Canada, revenue grew by 41% year-over-year to a record level in Q3, though the market still represents approximately 2% of total revenue as we continue to scale forward. Credit performance was particularly strong and is reflective of previous refinements to our risk model, further demonstrating our ability to adjust to macroeconomic conditions quickly and the resiliency of our operating model. This performance is even more encouraging considering the backdrop of the broader Canadian economy, which has softened due to U.S. trade tariffs and with relatively higher unemployment of 7.1% the Bank of Canada cut rates by cumulative 275 bps since mid-2024 to a policy rate of 2.25%. We continue to monitor the impact of recent trade measures and are encouraged by the federal budget stronger focus on driving investments in Canada, including much needed reforms to stray.

I had the opportunity to meet recently with Minister Solomon, Canada's Minister of AI. I was encouraged by the government's commitment to be a global AI leader and hope the AI strategy set the table later this year will include specific support for public companies like Propel who choose to build innovative businesses here in Canada.

Turning to Lending as a Service. We achieved record revenue, which exceeded $5 million in Q3, representing growth of more than 4x from last year and sequential growth of approximately 13% we launched in additional states, further broadening our geographic footprint. This expansion in addition to strong returns has led to increased commitments from our partners, which will fuel further growth.

In the U.K., we delivered record originations and revenue in Q3 while maintaining strong credit performance. Prior to Propel's acquisition of Market, the U.K.'s record monthly loan originations was approximately 7,600 has grown consistently month by 78%, totaling roughly 13,500 originations in September, demonstrating the market opportunity and our ability to successfully scale in new geographies. Our performance in the U.K. was supported by a resilient economy. The U.K. has seen inflation trending towards the Bank of England target. Unemployment remains low at 4.7% and wage growth is outpacing inflation, supporting spending and credit demand.

Lastly, reflecting our continued strong results and solid financial position, our Board of Directors has approved another increase to our dividend from $0.78 to $0.84 per share annually in Cans. 8% increase represents our ninth consecutive dividend, underscoring our strong financial performance and ongoing commitment to delivering shareholder returns. I will speak more about our outlook and business development pipeline for the remainder of 2025 and into 2026. But first, I'll turn the call over to Shell.

[Sheldon Saidakovsky, executive]

Thank you, Clive, and good morning, everyone. We're proud to deliver another quarter of record results and of achieving strong profitable growth while maintaining our disciplined approach to credit.

Given the uncertain economic environment and the uptick in delinquencies observed during the quarter, we and our bank partners operated with a more measured underwriting posture in Q3, particularly in North America. Notwithstanding this dynamic, consumer demand across our operating brands remained healthy. And together with our bank partners, we achieved record originations from both new and existing customers during the quarter. This resulted in record originations funded of $205 million, an increase of 37% from Q3 of last year. This growth drove ending CLAB to a record $558 million, up 29% year-over-year. Consistent with our disciplined underwriting posture, we and our bank partners prioritized a higher proportion of volume from return and existing customers to strengthen credit quality in North America. In addition, within our U.S. portfolios, we and our bank partners focused originations more on higher credit quality consumer segments that carry a lower cost of credit. In contrast, in the U.K., where credit performance remained very strong, we emphasized new customer originations.

Overall for Propel, new customers represented 44% of total originations in Q3, consistent with prior quarters and reflecting our balanced and deliberate approach to growth across all markets. Our record loans and advances receivable balance and ending CLAB drove record revenues of $152.1 million in Q3, representing a 30% increase over Q3 last year. Our annualized revenue yield in Q3 was 113%, a modest decrease from 114% last year. This decline primarily reflects the shift toward returning and existing customers, the emphasis on higher credit quality new customer originations at lower fee tiers the continued aging of the portfolio, including graduation and the ongoing expansion of Fora. These factors were partially offset by the higher-yielding quid market portfolio and our last revenue.

Turning to provisioning and charge-offs. Our provision for loan losses and other liabilities as a percentage of revenue was 52% in Q3 2025, consistent with Q3 of last year and within our targeted range. As noted earlier, we experienced a modest uptick in delinquencies within the U.S. portfolios, reflecting normal seasonal trends and the broader macro pressures on our consumer segment discussed earlier. In response, we and our bank partners implemented underwriting adjustments and moderated new customer originations to maintain credit quality and deliver strong results within our established loss rate targets.

In the U.K., while delivering record originations, Quid Market continued to deliver strong credit performance. Furthermore, in Canada, where we've been operating with optimized underwriting and a tighter posture for several quarters, we experienced our strongest ever quarterly credit performance in Q3. Taken together, credit performance for Propel as a whole remained well within our targeted range, reflecting the diversification benefits of our multi-market platform and the strength of our disciplined underwriting capabilities.

Credit performance also continues to be supported by, firstly, the effectiveness of our AI-powered platform and disciplined underwriting by Propel and our bank partners; and secondly, the continued scale and maturation of the loan portfolio with a higher proportion of originations from return and existing customers who historically demonstrate lower default rates than new customers. Net charge-offs as a percentage of CLAB was 12% in Q3, also within our target range and consistent with seasonal trends. Overall, both the 52% provision and 12% net charge-off ratios remain firmly within expectations and continue to support strong unit economics and sustainable profitable growth.

Turning to profitability. Adjusted net income increased to $16.2 million in Q3 2025, up 16% from last year. On an EPS basis, diluted adjusted EPS grew to $0.38 for the quarter. For the 9-month period, adjusted net income increased to $58.7 million and diluted adjusted EPS grew to $1.39, both representing 9-month period records. As a reminder, all figures are expressed in U.S. dollars. The year-over-year increase in earnings reflects the company's strong top line growth, stable credit performance and disciplined expense management.

I would note that our IFRS net income increased by 43% year-over-year, which is a larger increase relative to the adjusted measure. This is a result of two main factors. Firstly, a lower quarter-over-quarter CLAB increase in Q3 2025 relative to last year resulted in a relatively lower Stage 1 add-back this quarter. And secondly, transaction costs relating to the QuidMarket acquisition were expensed in Q3 last year, thereby reducing our Q3 2024 IFRS net income.

On a return on equity basis, our annualized adjusted ROE for Q3 declined to 25% from 45% last year. For the year-to-date period, annualized adjusted ROE was 33% versus 52% last year. The declines were driven primarily by the CAD 115 million equity offering completed in Q4 2024 to finance the QuidMarket acquisition. We believe these metrics demonstrate strong returns to our investors as well as our ability to efficiently utilize shareholders' capital.

Acquisition and data expenses increased by 41% to $18.3 million in Q3 2025, driven primarily by strong total originations funded growth and an increase in the cost per funded origination. Cost per funded origination increased to $0.089 per dollar in Q3 from $0.087 per dollar last year, while cost per new customer funded increased to $0.204 per dollar from $0.193 per dollar funded last year. Overall, these costs remain well within our acceptable range to achieve targeted profitability during a period of significant growth. Other operating expenses represented 15% of revenue in Q3 compared with 16% in Q3 last year. This reduction reflects several factors, investments in AI, driving operating efficiencies and the inherent operating leverage in our model.

At the same time, these have been somewhat offset by the increased operating expenses this year due to our investments in our infrastructure to support forthcoming business development initiatives. These initiatives, several of which are nearing launch are expected to meaningfully contribute to growth and profitability as they scale. Lastly, operating expenses were impacted last year by onetime transaction costs relating to the Quip Market acquisition. Our profitability also benefited from a lower overall cost of debt, driven by recent interest rate reductions and improved credit facility terms. Combined, these factors decreased our cost of debt to 11% in Q3 from 13.4% in the prior year. Any further reductions in interest rates as we experienced in the U.S. and Canada last week will further benefit profitability.

Overall, our adjusted net income margin was 11% in Q3 compared to 12% last year. The modest year-over-year decline in margin percentage primarily reflects a lower Stage 1 provision add-back and the strategic investments being made to support our growth initiatives. These initiatives are expected to drive growth and margin expansion over the long term.

Turning to Propel's capitalization. At the end of Q3, we had approximately $125 million of undrawn capacity across our various credit facilities, and our debt-to-equity ratio was approximately 1.2x, reflecting a well-capitalized balance sheet and continued financial flexibility. We believe that our strong balance sheet, debt capacity and cash flow generation position us well to support the continued expansion of our existing programs, new growth initiatives and the recently increased dividend.

Lastly, I want to provide an update on the integration of our U.K. business, which, as Clive mentioned, has achieved significant growth ahead of expectations. We successfully completed the integration of financial, corporate and IT systems ahead of schedule, including the identifying of enhanced acquisition, risk and analytics capabilities. We're now focused on accelerating growth through ongoing product enhancements, opening new customer acquisition channels, product expansion and the continued refinement of our underwriting and analytics strategies, all of which are helping us capture a greater share of the addressable market.

Recently, Noah Buckman, our President and Chief Revenue Officer, joined me in the U.K. to meet with senior U.K. leadership and discuss new business development initiatives. These included potential strategic partnerships, marketing channels and innovative opportunities to further expand our U.K. footprint. The market remains full of potential, and we're confident the U.K. will continue to be a meaningful and growing contributor to Propel's success in 2026 and beyond. I'll now turn the call over to Clive.

[Clive Kinross, executive]

Thanks, Sheldon. We're now more than a month into our fourth quarter, and we and our bank partners continue to operate with a deliberate and disciplined underwriting stance. Operating in a dynamic macroeconomic environment and having observed a slight uptick in delinquencies in Q3, we proactively adjusted our underwriting to prioritize credit performance. Macroeconomic backdrop remains uncertain, particularly in the U.S. where persistent inflation in essential spending categories and moderating wage growth continue to pressure lower income consumers.

The recent federal government shutdown has also temporarily impacted some consumers further tightening household budgets. When we provided our initial 2025 guidance in March, the economic backdrop look materially different. Since then, new U.S. trade tariffs, sustained inflationary pressure and slower real wage growth created a more cautious operating -- given the evolving dynamics and consistent with our long-standing commitment to profitable growth, we are maintaining a cautious risk posture. As prudent operators, we have always prioritized disciplined risk management over short-term expansion. This deliberate approach ensures we protect credit quality, sustain profitability and position the business for long-term success.

Importantly, we're continuing to see the benefits of these actions with continued stability in portfolio performance despite an uncertain macroeconomic backdrop. Reflecting this disciplined stance and the resulting slower pace of NCA growth, we are modestly revising our 2025 guidance. We now expect NCAB growth to come in moderately below the low end of our previously communicated range with the adjusted margin and adjusted return on equity metrics following a similar trend. Important we continue to expect to be in line with our full year targets for revenue, net income margin and return on equity. While growth has moderated this measured approach is deliberate so that we can remain well positioned for continued profitable growth heading into 2026.

Looking ahead, our business development pipeline is robust, and we are well positioned heading into 2026 with several strategic initiatives underway. Starting in the U.S., which remains our largest market, we continue to see significant untapped potential. In the weeks and months to come, we expect to announce strategic initiatives designed to expand our addressable market by introducing new products, expanding into new geographies and building new partnerships.

In Canada, while the impact of U.S. trade tariffs and a higher unemployment rate are weighing on consumers, the market remains sign government of Canada recently noted there is a clear need for greater competition in financial services. We're actively pursuing partnerships across Canada's fintech ecosystem to deliver modern forward credit solutions and expand access to credit for Canadian consumers.

In the U.K., strong originations and credit performance continue to exceed expectations. We now expect top line growth of more than 50% in 2025, our first full year since acquiring Markets. The business is well positioned to accelerate this momentum into 2026 and beyond as we further expand our product set, deep partnerships and further leverage our technology and analytics cap. Just over a year since joining Propel, the U.K. team has exceeded all of our expectations, demonstrating the passion, discipline, expertise and focus on profitable growth that position us to succeed in this market.

A key pillar to our growth strategy is geographic expansion and through the recent performance of the U.K. and Canada, we are already seeing the benefits of that diversification strategy. AI is also central to our growth strategy and has been integral to our success. As you know, for the past decade, AI has been a differentiator to underwrite underserved consumers at scale. But with the advancements in generative AI, we go even further to embed AI into every -- over the past several quarters we've made significant investments in partnerships to enhance productivity and decision-making across the organization from improving customer service and satisfaction to streamlining marketing to accelerating software development. While these investments weigh on profitability in 2025, we are already seeing efficiencies materialize. For example, we set records for percentage of customers in Q3 this year at approximately 60%, up from 50% in the prior year.

When we look at other gains made year-over-year, loans originated per agent in Q3 2025 were 53% higher in Q3 2024. The gains are in our origins Use of AI generative tools and software engineering has doubled unit test, meaning that one developer is able to produce more accurate and stable code, which in the longer term saves developer resources. We expect to see these initiatives accelerate into 2026 as we improve service levels whilst also driving increasing bottom line margins. Ultimately, while technology and AI at our foundation, it's our people that have made Propel a success. The passion and focus of our teams across North America and the U.K. turn innovation into performance and ambition into results. Our voluntary turnover is around 3%.

And looking at our senior leadership team where the average tenure is more than 7 years, the turnover is even lower. People who come to Propel stay at Propel and in doing so, strengthen our company. Powered by investments in AI by our people, Propel continues to be recognized for exceptional growth and performance. In the past quarter alone, we were named to the Global [indiscernible] companies, Deloitte Technology Fast 50 and the TSX 30, where we ranked as the sixth best performing stock over the past 3 years. These achievements reflect what our shareholders already know. We've built a powerhouse that delivers quarter after quarter.

It's now been 4 years since our IPO. And over that time, we've delivered consistent compounding growth, including 16 consecutive quarters of year-over-year revenue growth of at least 30% figin6000ans and serving hundreds of thousands of consumers across North America and the U.K. 50% CAGR in LTM revenues and 55% in LTM adjusted net income and dividend increases, resulting in a cumulative increase of more than 120% and we're just getting started. That concludes our prepared remarks. Operator, you may now open the line for questions.

[Operator]

[Operator Instructions] And your first question comes from Matthew Lee with Canaccord Genuity.

[Matthew Lee, analyst]

I want to start with the guidance. If I've done the math correctly, it sounds like a pretty big step down in origination activity for Q4, even with credit remaining pretty steady. I understand you try to protect quality, but how quickly do you think you could turn that growth machine back on? And then when we look at 2026, should we be 20% to be the growth rate we're expecting on?

[Clive Kinross, executive]

Thanks so much, Matt. And maybe before I answer the question, let's just take a step back to see what's going on right now in the economy. I think a lot of people describe this economy as a K-shaped economy where kind of the rich are getting richer and those that are struggling, there's more and more of them that are struggling. I was actually on a call recently with TransUnion with the top economists over there, and they were just speaking about the bifurcation in the credit market. There's a real polarization with the super prime segment of the market growing and the other big growth is happening in the subprime segment of the market in terms of applications. Everything between the two is shifting to the two poles. And it's important to think about why that's happening. The unemployment rate in the U.S. has started to trickle up a little bit -- we don't know exactly what it is in this government shutdown, but the ADP data suggested that it's gone up in the last couple of months.

I recently actually earlier this morning saw that they actually said there was job growth in October. So that's encouraging. But at the same time, given this backdrop, wages are also starting to have softened a little bit or wage growth particularly for our consumer, all of which translates to lower real wage growth. So that's different to what we've been experiencing in the last few years. On top of it, we're right in the midst of a big U.S. government shutdown, the longest U.S. government shutdown in history. And the easy thing for us to understand in that context is employees being furloughed, many of whom are not customers of ours in and around Washington, D.C., Virginia places like that. So we're not really impacted by that. government shutdown has impacted other areas of the economy. SNAP benefits go out to about 40 million consumers. Some of those consumers overlap with our customer segments. You also have the Affordable Care Act where prices are set to go up currently, even though it hasn't impact consumer spending yet, those two developments are certainly impacting consumer sentiment, which in turn is driving slower spending, particularly by our consumers and slowing growth down a little bit. So that's the broader market.

And until the government shutdown is over, and I suspect now that these recent elections are behind us, the government shutdown will come to an end sooner rather than later. But until they are, we need to be prudent in the face of some of these risks. And as a result of that, as you say, we're prioritizing credit quality ahead of anything else we are growing at the pace that we continue to perform in line with our credit quality standards. Notwithstanding these comments, let me provide a little bit of additional color.

The steps that we've taken in further tightening our underwriting has led to declining delinquencies. So we're already seeing the improvement in delinquencies in our partly in the U.S. market, which is where the majority of the adjustments were made. But bear in mind, we moved quickly to fine-tune or to tighten our underwriting and we move a lot slower to open it up as we start to see green shoots and positive signs in the economy. So we've already started to gradually open up from where we were and I absolutely suspect that by the end of the year, our approval rate will be where we thought it would be. But that said, it's going to take a little bit of time to grow into that.

Just a little bit of additional color every day when I look at our management reporting systems, which are contrasting the volume of applications relative to the initial budget that we set at the beginning of the year, I can tell you I see green on the screen every single day, meaning the number of applications that we're seeing is significant and higher than our initial expectations, which really dovetails and is consistent with my comments about the polarizing economy that we're seeing right now. There's zero issue with the number of applications we're seeing. If anything, that's growing. And I do know in every single crisis that we've seen over the last few years, the global financial crisis of '08, the oil price collapse of 2014, COVID-19, the spike of 2023, our segment of the market has grown. So we absolutely expect that at the end of the day, with the pullback in risk, our segment of the market will grow significantly. And if anything, that we absolutely expect to return to the growth metrics in 2025. Now you meant 2026, sorry.

Now part of your question was speaking about CLAB growth. Bear in mind more and more of the growth in our business is also going to be reflected in CLAB. We mentioned at the Canaccord conference earlier this year that we expect as a Service program, which is the CLAB to grow at around 10% in 2026. We don't -- we still have that position. And by the same token, as brilliantly as the U.K. is doing, we expect that to accelerate as well and continue to believe that, that will produce 100% growth in 2026, even though the impact on the CLAB is not that material.

The final thing I'd like to say is we have several business development initiatives that we hope to be announcing in the coming days and weeks that if anything, will accelerate the growth beyond what I just spoke to.

[Sheldon Saidakovsky, executive]

Matt, maybe -- I just wanted to add one data point over here just on top of what Clive provided a lot of good context. We've seen this before. the beauty of our operating model is that we can adapt and shift very quickly, tighten and then once we like what's going on, we can, as Clive said, gradually open again. We saw this earlier in 2022. In Q4, just that as a data point, in Q4 2023, we had tightened relatively speaking, where we saw CLAB growth by about 36% in that quarter. And 2 quarters later, we were growing CLAB by 44%. So just to put into context a couple of data points, how we can shift things around. We've seen this in Q4 recently. And 1 quarter later, we were right back kind of with almost 10% absolute higher growth.

[Matthew Lee, analyst]

That's helpful. So maybe just as a follow-up on that, if we have the government shutdown stopping today, for example, and credit quality starts looking better, could you be back to kind of steady state or historical growth by December? Like is that the speed at which you guys can move that machine? Or is there other things that need to kind of come into place before we reach that kind of level?

[Clive Kinross, executive]

Yes, certainly. So just to be clear and just to explain in a little bit broader terms the government shutdown and if we're seeing anything, even though SNAP benefits supposedly stopped this month, the states in the U.S. have different coverage for the SNAP benefits. Some of the southern states have a higher percentage of their consumers who are eligible for SNAP benefits. And for sure, you're seeing the impact of that in those states where they have relatively higher delinquencies than we've seen in other parts of the country. All of which is to say once the government shut down once the government opens up again, I absolutely expect to see those turning around relatively quickly, which again is what we've seen in the past. One of the benefits of doing this for 14 years is that there's nothing new under the sum we've seen this before and we know when we know when to put our foot on the gas.

So from a new origination standpoint, we can absolutely be at the absolute number of new originations towards the back half of December as would have been the case. But what we cannot make up, we cannot make up a slightly lower at the end of and slightly slower growth in October relative to what we thought we would be, which means we can't make up the full difference heading into the end of the year. So where we thought that the CLAB in was going to be 25%, it's going to be less than that as you can see with our revised guidance, but we expect to end the year give or take the same number of new loan originations that otherwise would have been the case, and that will serve us well heading into 2026 over and above the new initiatives that we'll be announcing soon that will further fuel that growth.

[Matthew Lee, analyst]

That's helpful. And then I just want to sneak one last one in here. Philosophically, your shares are trading at a place that's probably too low. Would you consider a buyback to be honest.

[Clive Kinross, executive]

Yes, philosophic, we think that we agree with you. And when I say we, I'm really referring more to our Board and our Board discussion as recently as last night where that became a much more serious consideration given where the share prices are, given where the shares trading, notwithstanding a company that's consistently demonstrated 30% quarter-over-quarter growth since being a public company, including the most recent quarter as well as 50% bottom line growth. So that's certainly a more serious consideration. We're thinking hard about it, Matt. We need to weigh that up against some of the big investments that we've got coming down the pipe to really launch some of these big initiatives which I think [indiscernible].

[Operator]

Your next question comes from Andrew Scott with ROTH Capital Partners.

[Andrew Scutt, analyst]

[Technical Difficulty] So first one for me, something in the prepared remarks as you guys are talking about potentially expanding your footprint with the market. So could you kind of remind us of the competitive environment in the U.K., the market faces and your kind of belief and ability to capture market share there?

[Sheldon Saidakovsky, executive]

Yes. Andrew, thanks for the question. Yes, I mean, the U.K. market is very exciting. Obviously, it was our -- we really liked it to start with, and that was one of the key criteria in our acquisition strategy. We needed to really, really like and be bullish on the jurisdiction. Just to remind you and everyone just around kind of the thesis over there, there were a lot of regulatory changes in the U.K. from the Financial Conduct Authority a number of years ago. And that the regulator kind of acknowledged that they overcorrected. It led to a lot of kind of a huge growth in illicit lending or legal lending in the U.K. and an exit of a significant amount of credit supply. A lot of big players, actually a couple of

U.S. big players used to operate in the U.K. and they exited after those significant regulatory changes. Quid market actually sort of survived through that as did a couple of other strong operators. But effectively, on the other side, that led to a vast sort of undersupply of credit relative to the demand in the market. There just weren't any dominant players like, for example, a goeasy that you see in Canada or some of our competitors in the U.S. There was nothing like -- there's nothing like that in the U.K. today, although demand is growing significantly. So that's kind of the competitive aspect over there, which allows QuidMarket to have grown by the percentages that they've grown by 30% to 40% before we acquired them, really by cherry taking good quality volume in the market.

Now with us on board, applying our sophisticated underwriting and technology capabilities and having their systems ultimately integrate with ours us being able to open a number of marketing partnerships and channels that they haven't had before and applying our expertise in terms of profitability modeling and product expansion and finally, having the balance sheet to finance them will enable QuidMarket to really hit its stride and start growing in the U.K. So without having integrated all of this optimization that I'm speaking about, we're sort of on a path to do so, we're still pushing the growth in excess of 50% this year. But starting next year, we're expecting to accelerate that growth much faster as we really start to put our foot on the growth side and start integrating a lot of those -- a lot of our expertise and capabilities.

[Andrew Scutt, analyst]

Really appreciate the color. And second for me, you guys have talked a lot about preemptively tightening the underwriting. But on the flip side, I was wondering, are there any initiatives you guys can put in place on the servicing side to kind of support your customers as they're going through the stress now?

[Clive Kinross, executive]

Yes. Look, to the extent that customers call us and ask us for concessions, obviously, we like to accommodate those where need be. There's certainly been a slight uptick in those requests, as you would imagine. And if you said to me what's the #1 reason for it, the #1 reason for it and what we keep hearing from consumers, which is one of the benefits of our [indiscernible] and government shutdown. So to the extent that they do that where possible, we try and accommodate those concessions to keep these consumers in good standing so that it doesn't impact their credit profile. From our perspective, it's obviously a little bit detrimental for a tiny portion of our consumers in so far as oftentimes, we'll waive the next payment. But once again, it's a tiny percentage of consumers, albeit has grown a little bit in this government shutdown. Hopefully, and based on experience, that will come to a halt as soon as things open up again.

[Operator]

Your next question comes from Rob Goff with Ventum.

[Rob Goff, analyst]

You talked about the new product developments in the last 2 quarters. Can you talk a bit further in terms of how significant you see the geographic expansion? How impactful are the new services? Are they more fine-tuning or new introductions...

[Clive Kinross, executive]

Yes. Yes, it's a great question. Let me think carefully, Rob, about how to frame it up because we're getting closer and closer to be able to provide more detail. I think what I we're always very, very concerned about our credibility and we're very concerned always about doing what we say we're going to do. So everybody on this call and most people have been long-standing investors know that about us. And sorry that I'm a little bit over here. And I also know that we've always said we prioritize credit quality over everything else and profitable growth over everything else. So I know a bit over there.

But these are initiatives that are going to provide geographic expansion in our biggest market, that's the U.S. market and also going to facilitate the addition of new products also for underserved consumers but different segments of underserved consumers so they will expand our geographic reach as well as expand our consumer reach by offering products to products themselves and the underwriting and risk and marketing associated with those customers is not that different to what we currently have in place, which is why we feel highly confident that when we do launch these, we'll be able to hit the ground running and they will be incremental in a fairly sizable way early on of the launch.

[Rob Goff, analyst]

I appreciate the sit. And perhaps more for Sheldon. It's encouraging to read the discussion with respect to quid market and talks about 100% growth next year. Can you talk about the significance of partnerships there and new services?

[Sheldon Saidakovsky, executive]

Yes. Rob, yes, the market is, as I mentioned, it's wide open over there. And I think that right now, markets acquisition strategy and acquisition, I would say, the channels through which they acquire customers look a lot like what ours looked, call it, probably 4, 5 years ago. Now over the last number of years, as our profile has grown, our capabilities have grown, we've been able to open up new channels and spend money on initiatives and marketing distribution channels that we never had before. We've gotten to scale in a number of them in the U.S. in the U.S. market. And with that, we'll be able to bring those capabilities and open up those channels in the U.K.

So notwithstanding that, the company is still growing well in excess of 50% just given their marketing channels available to them right now. The way we're going to get well beyond the 50%, I mean, you mentioned 100% that is an official guidance, but we have spoken about that before. That's certainly possible, and we'll be able to achieve that by expanding some of their origination channels and entering into some key partnerships. So that's certainly part of our immediate strategy.

[Operator]

Your next question comes from Jeff Fenwick with Cormark Securities.

[Jeff Fenwick, analyst]

I wanted to focus in on the relationship you have with your bank partners. You referred to that making changes in conjunction with them. I was hoping you could just give us a bit of color in terms of just the balance of decision-making. Is there ever disagreement there? Who's really sort of driving the decisions in terms of adjustments to the credit box or the volume of originations that you're doing? And I think it's probably different between your sort of traditional model that you have with CreditFresh versus the lending as a Service programs that you're structuring now. But could you just maybe offer us a little bit of commentary around that? And are you in agreement or what happens if you disagree?

[Clive Kinross, executive]

Yes. No, it's a great question, and it's certainly a very collaborative approach. As you can imagine, we have an exceptionally close relationship across the board with our bank partners. Several key executives and employees at Propel are in contact with our bank partners on a regular basis. So they understand exactly what's going on with the business. They're tracking daily activities of originations, delinquencies, things like that. And more often than not, they're the ones leaning in and they're the ones suggesting that we tighten up and ask us for additional data to support those decisions. And more often than not, we're on the exact same page -- that's the way it's been since day 1. And the collaborative approach ultimately with them taking the initial initiative has worked exceptionally well and continues to work well in this environment.

We're getting -- we're now getting more calls from them suggesting that with the demand -- the strong demand that we're seeing in the market and delinquencies coming back in line with where we expect them to, can we open things up a little bit more. And as recently as earlier this week – was it earlier this week? Yes, earlier this week, we already started to put some of those initiatives in place.

[Jeff Fenwick, analyst]

And I guess within the Lending as a Service program, I mean that's one where I would imagine you've got partners both on the front and the back end on the funding side of things, like there's going to be something maybe a bit more of a dynamic the way that you work with those players are in a situation where they can say let's just stop when you want to go or help us understand how that relationship works.

[Clive Kinross, executive]

Yes. So yes, you're right in the sense that it's a 3-way relationship. And in that sense, those loans ultimately don't go on our balance sheet, they go on somebody else's balance sheet and not dissimilar to our bank partners, the purchasers who purchase those receivables are taking the activity each and every day, loan originations, the delinquency performance. And one of the reasons that they're increasing their commitments is because they're seeing the returns that we represent that they would see. But that said, similar to what's happened in our sponsorship business. We've had to maintain a tight underwriting posture for them too, meaning the way they've continued to those returns in Q3 was through a tighter underwriting posture, meaning the 4x-over-year growth that we saw would have been even higher had we maintained the same underwriting posture.

We're now in a position, again, with our bank partners and with their support where we could start to open up a little bit. And as we do, we'll continue to drive more growth over there. The good thing is because they've gotten those returns, they all -- the majority of them last their -- so we're very well positioned to continue to expand and grow that program going forward. One of the things that I've been saying on the call leading up to this point is at the early stages of this program, it really has been an exercise of bringing on the capital at the same time as we expand our geographic reach over there and our distribution partnerships. And if anything, where we were playing catch up all the time was bringing the capital to the table. Where we are right now is that's almost balanced in the sense that there's almost enough capital to drive the growth to support the market demand.

[Jeff Fenwick, analyst]

And then maybe just last one because we are in a bit of a dynamic environment here, is that maybe what's causing a little bit of delay in terms of the expansion of lending as a service. You did say you were making progress there, which is good to hear, but is it sort of that sort of dynamic that might be slowing down the process...

[Clive Kinross, executive]

Just say it again, if you don't mind, I'm not sure that...

[Jeff Fenwick, analyst]

Sure. There was commentary that you're expanding lending as a service. But I'm just wondering, we haven't seen new announcements yet on that. Is there just some concerns maybe or maybe some hesitancy on those partners given the volatility we're seeing in the U.S. market to sign on the bottom line and move forward? Or what's the dynamic there?

[Clive Kinross, executive]

Yes. It's one of the interesting things about running a public company is the emphasis on quarter-to-quarter. And I would say that at a high level, and what's the impact from the slowdown for the long-term growth of the company, and I'll get to your question in a minute. I think that the fundamentals of providing credit to underbanked and underserved consumers have never been stronger. The market opportunity ahead of us is going to grow at the back of this. I was watching the election results coming out of the U.S. last night. And to me, the biggest element on the elections last night was affordability. That speaks to our customers. More and more of them are the underserved market is growing, the need for this type of credit is going to grow on a go-forward basis.

Given the long-term trajectory, I would say that the growth is probably going to slow us down by maybe a quarter, maybe we'll get to where we're ultimately going to get to 1 quarter later. That's kind of how I would view it in light of these developments and I the same thing as it relates to as a service. One day, we're going to look at it and think back to the early days of some of the gyrations quarter-to-quarter, which ultimately will smoothen out over time, all of which is to say watch this space, you're going to see a lot of really interesting developments in the lending service arena that will, if anything, speak to accelerated growth there on a go-forward basis.

[Operator]

Your next question comes from Stephen Boland with Raymond James.

[Stephen Boland, analyst]

Yes. Just one question. Sheldon, in the past, you talked about diversifying your funding sources. I know with maybe slower growth, that's not a big requirement. You did talk about term debt in the past. I'm just wondering if there's any update in terms of funding sources going forward.

[Sheldon Saidakovsky, executive]

Yes. Steve, yes, we're constantly looking at ways to, number one, lower our cost of debt; and number two, sort of size up our capital requirement on a go-forward basis. Firstly, I mean, our cost of debt has come down quite a lot year-over-year to 11% from close to 13.5%. And that's as a result of our renegotiated credit fresh facility earlier in the year and the reduction in the rates, in the government rates generally. So any further reductions are going to be a tailwind for us. It will reduce our cost of debt further. And also, I would say that from an overall capacity standpoint, we're pretty well situated right now. I mean our debt-to-equity ratio is lower than 1.2:1 going into Q4. So we don't have an immediate need to upsize. And hopefully, we expect further reductions in our cost of debt just given future rate changes.

With all of that said, we are looking specifically at increasing our capacity on the Canadian side, in particular. Clive mentioned earlier in the call that our credit performance in Canada, in particular, just this past Q3 was our best ever. So we're feeling better and more bullish on growing the Canadian side. And with that said, we'll look to optimize the capital structure over there, reduce the debt and increase capacity. And then also the term debt or high-yield bonds -- they're always out there for us, and we're always sort of examining them on when is the right time to go in and what the best use of proceeds will be. But that will, I would say, will eventually come. We just don't have any specific guidance right now.

[Operator]

There are no further questions at this time. I'd like to turn the call back over to Clive.

[Clive Kinross, executive]

Yes. Thank you again, everybody, for attending our call this morning. I would also like to thank our investors and partners for their continued support and our vision of building a new world of financial opportunity. And as always, I would like to extend a big thank you to the Propel teams in Canada and the U.K. for delivering these outstanding record results and achievements. On that note, have an excellent day. And operator, you may end the call.

[Operator]

Thank you so much for your participation. You may now disconnect.