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___________________________________________________________________________________

(Mark One)

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026 or

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to__________.

COMMISSION FILE NUMBER: 000-26489

_______________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class						Outstanding at April 29, 2026
Common Stock, $0.01 par value						21,440,412 shares

 

			Page
PART I – FINANCIAL INFORMATION			3
Item 1— Condensed Consolidated Financial Statements (Unaudited)			3
Condensed Consolidated Statements of Financial Condition			3
Condensed Consolidated Statements of Income			4
Condensed Consolidated Statements of Comprehensive Income			5
Condensed Consolidated Statements of Equity			6
Condensed Consolidated Statements of Cash Flows			7
Notes to Condensed Consolidated Financial Statements			8
Note 1: Ownership, Description of Business, and Summary of Significant Accounting Policies			8
Note 2: Earnings Per Share			9
Note 3: Fair Value Measurements			10
Note 4: Derivatives and Hedging Instruments			12
Note 5: Receivable Portfolios, Net			13
Note 6: Other Assets			15
Note 7: Borrowings			15
Note 8: Variable Interest Entities			19
Note 9: Accumulated Other Comprehensive Loss			20
Note 10: Income Taxes			19
Note 11: Commitments and Contingencies			20
Note 12: Segment and Geographic Information			21
Note 13: Goodwill			22
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3 – Quantitative and Qualitative Disclosures About Market Risk			41
Item 4 – Controls and Procedures			41
PART II – OTHER INFORMATION			42
Item 1 – Legal Proceedings			42
Item 1A – Risk Factors			42
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds			42
Item 5 – Other Information			42
Item 6 – Exhibits			43
SIGNATURES			44

(In Thousands, Except Par Value Amounts)

(Unaudited)

			March 31, 2026						December 31, 2025
Assets
Cash and cash equivalents			$	227,204					$	156,784
Receivable portfolios, net			4,437,415						4,371,532
Property and equipment, net			79,292						82,080
Other assets			177,163						193,113
Goodwill			529,487						536,291
Total assets			$	5,450,561					$	5,339,800
Liabilities and Equity
Liabilities:
Accounts payable and accrued liabilities			$	252,277					$	230,261
Borrowings			4,033,301						4,001,293
Other liabilities			130,175						131,496
Total liabilities			4,415,753						4,363,050
Commitments and contingencies (Note 11)
Equity:
Convertible preferred stock, $0.01 par value, 5,000 shares authorized, no shares issued and outstanding			—						—
Common stock, $0.01 par value, 75,000 shares authorized, 21,499 and 21,688 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively			215						217
Additional paid-in capital			—						—
Accumulated earnings			1,167,038						1,104,640
Accumulated other comprehensive loss			(132,445)						(128,107)
Total stockholders’ equity			1,034,808						976,750
Total liabilities and stockholders’ equity			$	5,450,561					$	5,339,800

The following table presents certain assets and liabilities of consolidated variable interest entities (“VIEs”) included in the condensed consolidated statements of financial condition above. Most assets in the table below include those assets that can only be used to settle obligations of consolidated VIEs. The liabilities exclude amounts where creditors or beneficial interest holders have recourse to the general credit of the Company. See “Note 8: Variable Interest Entities” for additional information on the Company’s VIEs.

			March 31, 2026						December 31, 2025
Assets
Cash and cash equivalents			$	50,115					$	40,256
Receivable portfolios, net			1,177,046						1,151,221
Other assets			4,392						3,540
Liabilities
Accounts payable and accrued liabilities			2,986						3,101
Borrowings			783,444						791,182
Other liabilities			1,352						2,774

(In Thousands, Except Per Share Amounts)

(Unaudited)

			Three Months Ended March 31,
			2026						2025
Revenues
Portfolio revenue			$	390,019					$	345,218
Changes in recoveries			62,740						21,464
Total debt purchasing revenue			452,759						366,682
Servicing revenue			20,638						22,547
Other revenues			2,014						3,546
Total revenues			475,411						392,775
Operating expenses
Salaries and employee benefits			114,541						105,932
Cost of legal collections			89,221						68,013
General and administrative expenses			39,629						41,018
Other operating expenses			34,833						34,252
Collection agency commissions			6,337						6,873
Depreciation and amortization			6,858						7,344
Total operating expenses			291,419						263,432
Income from operations			183,992						129,343
Other expense
Interest expense			(73,050)						(70,530)
Other income			790						1,647
Total other expense			(72,260)						(68,883)
Income before income taxes			111,732						60,460
Provision for income taxes			(25,489)						(13,664)
Net income			$	86,243					$	46,796
Earnings per share:
Basic			$	3.97					$	1.96
Diluted			$	3.86					$	1.93
Weighted average shares outstanding:
Basic			21,728						23,879
Diluted			22,320						24,269

Encore Capital Group, Inc. (“Encore”), through its subsidiaries (collectively with Encore, the “Company”), is an international specialty finance company providing debt recovery solutions and other related services for consumers across a broad range of financial assets. The Company purchases portfolios of defaulted consumer receivables at deep discounts to face value and manages them by working with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial obligations to credit originators, including banks, credit unions, consumer finance companies and commercial retailers. Defaulted receivables may also include receivables subject to bankruptcy proceedings. The Company also provides debt servicing and other portfolio management services to credit originators for non-performing loans in Europe.

Through Midland Credit Management, Inc. and its domestic affiliates (collectively, “MCM”), the Company is a market leader in portfolio purchasing and recovery in the United States. Through Cabot Credit Management Limited and its subsidiaries and European affiliates (collectively, “Cabot”), the Company is one of the largest credit management services providers in Europe and the United Kingdom. These are the Company’s primary operations.

The Company also has investments and operations in Latin America and Asia-Pacific, which the Company refers to as “LAAP.”

The accompanying interim condensed consolidated financial statements have been prepared by the Company, without audit, in accordance with the instructions to the Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the “SEC”) and, therefore, do not include all information and footnotes necessary for a fair presentation of its condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”).

In the opinion of management, the unaudited financial information for the interim periods presented reflects all adjustments, consisting of only normal and recurring adjustments, necessary for a fair statement of the Company’s condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in the Company’s condensed consolidated financial statements and the accompanying notes. Actual results could materially differ from those estimates.

The condensed consolidated financial statements have been prepared in conformity with GAAP and reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. The Company also consolidates variable interest entities (“VIEs”) for which it is the primary beneficiary. The primary beneficiary has both (a) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance, and (b) either the obligation to absorb losses or the right to receive benefits. Refer to “Note 8: Variable Interest Entities” for further details. All intercompany transactions and balances have been eliminated in consolidation.

The condensed consolidated statements of certain of the Company’s foreign subsidiaries are measured using their local currency as the functional currency. Assets and liabilities of foreign operations are translated into U.S. dollars using period-end exchange rates, and revenues and expenses are translated into U.S. dollars using average exchange rates in effect during each period. The resulting translation adjustments are recorded as a component of other comprehensive income or loss. Equity accounts are translated at historical rates, except for the change in retained earnings during the year which is the result of the income statement translation process. Intercompany transaction gains or losses at each period end arising from subsequent measurement of balances for which settlement is not planned or anticipated in the foreseeable future are included as translation adjustments and recorded within other comprehensive income or loss. Translation gains or losses are the material components of accumulated other comprehensive income or loss and are reclassified to earnings upon the substantial sale or liquidation of investments in foreign operations.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”) and in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses: Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual periods beginning after December 15, 2026 and interim periods with fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-04, Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The new standard is effective for annual periods beginning after December 15, 2025. The Company adopted ASU 2024-04 on a prospective basis as of January 1, 2026. The adoption did not have a material impact on the Company's condensed consolidated financial statements and related disclosures.

In November 2025, the FASB issued ASU 2025-08, Financial Instruments - Credit Losses (Topic 326): Purchased loans. Under ASU 2025-08, loans acquired without credit deterioration and deemed “seasoned” will be considered purchased seasoned loans and accounted for using the gross-up approach at acquisition. The amendments in this update also clarify the recognition and measurement guidance for purchased seasoned loans, including the determination of the initial allowance for credit losses and the subsequent accounting for changes in expected credit losses. The new standard is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the potential impact, but does not expect the adoption of this standard to have a material impact on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. ASU 2025-09 introduces targeted amendments intended to further align hedge accounting with an entity’s risk management activities and to simplify the application of certain aspects of the hedge accounting guidance in ASC 815. The new standard is effective for annual periods beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the potential impact, but does not expect the adoption of this standard to have a material impact on its consolidated financial statements and related disclosures.

Basic earnings per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period.

The number of shares used to calculate the diluted earnings per share is computed by using the basic weighted-average number of common shares outstanding plus any potentially dilutive common shares outstanding during the period, except when their effect is anti-dilutive. Dilutive potential common shares include outstanding stock based awards, and the dilutive effect of the convertible senior notes, if applicable.

As announced in May 2021, the Company’s Board of Directors authorized a $300.0 million share repurchase program. In November 2025, the Company’s Board of Directors authorized an increase of an additional $300.0 million under the share repurchase program. During the three months ended March 31, 2026 and 2025, the Company repurchased 345,548 and 289,425 shares of common stock for $20.0 million and $10.0 million, respectively, under the share repurchase program. The Company’s practice is to retire the shares repurchased.

A reconciliation of shares used in calculating earnings per basic and diluted shares follows (in thousands, except per share amounts):

			Three Months Ended March 31,
			2026						2025
Net income			$	86,243					$	46,796
Shares:
Total weighted-average basic shares outstanding			21,728						23,879
Dilutive effect of stock-based awards			592						170
Dilutive effect of convertible senior notes			—						220
Total weighted-average dilutive shares outstanding			22,320						24,269
Basic earnings per share			$	3.97					$	1.96
Diluted earnings per share			$	3.86					$	1.93

Fair value is defined as the price that would be received upon sale of an asset or the price paid to transfer a liability, in an orderly transaction between market participants at the measurement date (i.e., the “exit price”). The Company uses a fair value hierarchy that prioritizes the inputs used in valuation techniques to measure fair value into three broad levels. The following is a brief description of each level:

•Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

•Level 3: Unobservable inputs, including inputs that reflect the reporting entity’s own assumptions.

Financial assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

The Company uses derivative instruments to manage its exposure to fluctuations in interest rates and foreign currency exchange rates. Fair values of these derivative instruments are estimated using models that project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves, foreign currency exchange rates, and forward and spot prices for currencies.

Certain assets are measured at fair value on a nonrecurring basis. Goodwill and property and equipment are adjusted to fair value when an impairment charge is recognized. Such fair values are determined using various valuation techniques under Level 3 fair value hierarchy. REO assets are classified as held for sale at the lower of their carrying value or fair value less cost to sell. The fair value of the assets held for sale and estimated selling expenses were determined at the time of initial recognition and in each reporting period using Level 3 measurements based on appraised values using market comparables. The fair value estimate of the assets held for sale was $14.5 million and $18.1 million as of March 31, 2026 and December 31, 2025, respectively.

The table below summarizes fair value estimates for the Company's financial instruments that are not required to be carried at fair value. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company.

The carrying amounts in the following table are included in the condensed consolidated statements of financial condition as of March 31, 2026 and December 31, 2025 (in thousands):

									March 31, 2026												December 31, 2025
			Fair Value Level						Carrying Amount						Estimated Fair Value						Carrying Amount						Estimated Fair Value
Financial Assets
Cash and cash equivalents			Level 1						$	227,204					$	227,204					$	156,784					$	156,784
Receivable portfolios, net			Level 3						4,437,415						4,979,583						4,371,532						4,895,167
Other assets(1)			Level 2						108,480						108,480						118,130						118,130
Financial Liabilities
Accounts payable and accrued liabilities			Level 2						252,277						252,277						230,261						230,261
Global senior secured revolving credit facility			Level 2						681,267						681,267						631,998						631,998
Senior secured notes(2)			Level 2						2,309,031						2,353,735						2,322,890						2,385,645
Convertible senior notes due March 2029			Level 2						230,000						290,529						230,000						253,260
Cabot securitisation senior facility			Level 2						337,253						337,253						343,539						343,539
U.S. facility			Level 2						450,000						450,000						450,000						450,000
Other borrowings			Level 2						54,410						54,410						52,926						52,926
Other liabilities(1)			Level 2						122,451						122,451						115,158						115,158

_______________________

(1)Only includes financial instruments not required to be carried at fair value. Derivative instruments, which are required to be carried at fair value are excluded.

(2)Carrying amount represents historical cost, adjusted for any related debt discount.

The fair value of receivable portfolios is measured by discounting the estimated future cash flows generated by the Company’s proprietary forecasting models. The key inputs include the estimated future gross cash flow, average cost to collect, and discount rate. The determination of such inputs requires significant judgment, including assessing the assumed market participant’s cost structure, its determination of whether to include fixed costs in its valuation, its collection strategies, and determining the appropriate weighted average cost of capital. The Company evaluates the use of these key inputs on an ongoing basis and refines the data as it continues to obtain better information from market participants in the debt recovery and purchasing business.

The Company’s convertible notes and senior secured notes are carried at historical cost, adjusted for the applicable debt discount. The fair value estimate for the convertible notes and the senior secured notes incorporates quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

The carrying values of the Company’s senior secured revolving credit facility, securitisation senior facility, U.S. facility, and other borrowings approximate their respective fair values due to the use of current market rates that are repriced frequently.

The carrying values of the Company’s cash and cash equivalents, certain other assets, accounts payable and accrued liabilities, and other liabilities approximate their respective fair values due to their short-term nature.

The Company may periodically enter into derivative financial instruments to manage risks related to interest rates and foreign currency. Certain of the Company’s derivative financial instruments qualify for hedge accounting treatment.

The following table summarizes the fair value of derivative instruments as recorded in the Company’s condensed consolidated statements of financial condition (in thousands):

March 31, 2026

December 31, 2025

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Interest rate cap contracts

Other assets

$

1,318

Other assets

$

286

Interest rate swap agreements

Other assets

224

—

—

Interest rate swap agreements

Other liabilities

(7,724)

Other liabilities

(16,338)

The Company may periodically enter into interest rate swap agreements and interest rate cap contracts to reduce its exposure to fluctuations in interest rates on variable interest rate debt and their impact on earnings and cash flows. Under the swap agreements, the Company receives floating interest rate payments and makes interest payments based on fixed interest rates. Under the cap contracts, the Company receives floating interest rate payments and makes interest payments based on capped interest rates. The Company designates its interest rate swap and interest rate cap instruments as cash flow hedges at inception.

The following tables summarize the terms of the derivative instruments designated as hedging instruments as recorded in the Company’s condensed consolidated statements of financial condition:

In April 2026, the Company entered into a new interest rate cap contract (the “2026 Cap”) with a notional amount of £255.0 million (approximately $337.3 million based on an exchange rate of $1.00 to £0.76, the exchange rate as of March 31, 2026). The 2026 Cap is intended to hedge the Company’s exposure to fluctuations in interest payments on debt bearing variable interest based on the Sterling Overnight Index Average (“SONIA”). The 2026 Cap has an effective date of January 2028 and a maturity date of January 2029, and will be accounted for as a cash flow hedge.

The Company expects to reclassify approximately $1.3 million of net derivative loss from OCI into earnings relating to its cash flow designated derivatives within the next 12 months. This amount will vary due to fluctuations in benchmark interest rates.

The following table summarizes the effects of derivatives designated as hedging instruments in the Company’s condensed consolidated financial statements (in thousands):

Derivatives Designated as Hedging Instruments						Gain (Loss) Recognized in OCI												Location of Loss Reclassified from OCI into Income						Loss Reclassified from OCI
						Three Months Ended March 31,																		Three Months Ended March 31,
						2026						2025												2026						2025
Interest rate swap agreements						$	6,802					$	(1,200)					Interest expense						$	(2,036)					$	(467)
Interest rate cap contracts						1,033						(696)						Interest expense						(440)						(364)

The Company’s purchased portfolios of loans are grossed-up to their face value with an offsetting allowance and noncredit discount allocated to the individual receivables as the unit of account is at the individual loan level. Since each loan is deeply delinquent and deemed uncollectible at the individual loan level, the Company applies its charge-off policy and fully writes-off the amortized costs (i.e., face value net of noncredit discount) of the individual receivables immediately after purchasing the portfolio. The Company then records a negative allowance that represents the present value of all expected future recoveries for pools of receivables that share similar risk characteristics using a discounted cash flow approach, which ultimately equals the amount paid for a portfolio purchase and presented as “Receivable portfolios, net” in the Company’s condensed consolidated statements of financial condition. The discount rate is an effective interest rate (or “purchase EIR”) based on the purchase price of the portfolio and the expected future cash flows at the time of purchase. The amount of the negative allowance (i.e., receivable portfolios) will not exceed the total amortized cost basis of the loans written-off.

Receivable portfolio purchases are aggregated into pools based on similar risk characteristics. Examples of risk characteristics include financial asset type, collateral type, size, interest rate, date of origination, term, and geographic location. The Company’s static pools are typically grouped into credit card, purchased consumer bankruptcy, and mortgage portfolios. The Company further groups these static pools by geographic location. Once a pool is established, the portfolios will remain in the designated pool unless the underlying risk characteristics change. The purchase EIR of a pool will not change over the life of the pool even if expected future cash flows change.

Revenue is recognized for each static pool over the economic life of the pool. Debt purchasing revenue includes two components:

(1)     Portfolio revenue, which is the accretion of the discount on the negative allowance due to the passage of time (generally the receivable portfolio balance multiplied by the EIR) and also includes all revenue from zero basis portfolio (“ZBA”) collections, and

(2) Changes in recoveries, which includes (a) Recoveries above or below forecast, which is the difference between (i) actual cash collected/recovered during the current period and (ii) expected cash recoveries for the current period, which generally represents over or under performance for the period; and

The Company measures expected future recoveries based on historical experience, current conditions, reasonable and supportable forecasts, and other quantitative and qualitative factors. Factors that may change the expected future recoveries may include both internal as well as external factors. Internal factors include operational performance, such as capacity and the productivity of the Company’s collection staff. External factors that may have an impact on the Company’s collections include new laws or regulations, new interpretations of existing laws or regulations, and macroeconomic conditions.

Receivable portfolios, net consists of the following as of the dates presented (in thousands):

			March 31, 2026						December 31, 2025
Amortized cost			$	—					$	—
Negative allowance for expected recoveries			4,437,415						4,371,532
Balance, end of period			$	4,437,415					$	4,371,532

The following table summarizes the changes in the balance of receivable portfolios, net during the periods presented (in thousands):

			Three Months Ended March 31,
			2026						2025
Balance, beginning of period			$	4,371,532					$	3,776,369
Negative allowance for expected recoveries - portfolio purchases(1)			362,841						367,851
Collections applied to receivable portfolios, net(2)			(328,395)						(259,589)
Changes in recoveries(3)			62,740						21,464
Put-backs and recalls			(3,378)						(5,139)
Disposals and transfers to real estate owned			(1,020)						(1,040)
Foreign currency translation adjustments			(26,905)						52,615
Balance, end of period			$	4,437,415					$	3,952,531

_______________________

(1)The table below provides the detail on the establishment of negative allowance for expected recoveries of portfolios purchased during the periods presented:

(2)Collections applied to receivable portfolios, net, is calculated as follows during the periods presented:

(3)Changes in recoveries is calculated as follows during the periods presented, where recoveries include cash collections, put-backs and recalls, and other cash-based adjustments:

Recoveries above or below forecast represent over and under-performance in the reporting period, respectively. Collections during the three months ended March 31, 2026 over-performed the forecasted collections by $46.0 million, primarily driven by collections over-performance in the U.S. resulting from enhanced collections strategies. Collections during the three months ended March 31, 2025 over-performed the forecasted collections by $27.0 million.

Changes in expected future recoveries are reassessed each quarter; the Company considers, among other factors, historical and current collection performance, changes in consumer behavior, and the macroeconomic environment when updating the forecasts of expected lifetime recoveries. The significant recoveries above forecast during the three months ended March 31, 2026 were carefully evaluated. Management concluded that the recoveries above forecast were primarily current period collections over-performance and did not represent any material shift in timing of the collections. Additionally, the sustained over-performance in recent quarters led to increases in forecasted future recoveries for recently acquired vintages. As a result, the Company recorded a net positive change of $16.7 million in expected future recoveries during the three months ended March 31, 2026. During the three months ended March 31, 2025, the Company recorded a net negative change of $5.5 million in expected future recoveries.

Other assets consist of the following (in thousands):

			March 31, 2026						December 31, 2025
Operating lease right-of-use assets			$	52,645					$	56,629
Prepaid expenses			41,137						36,162
Other financial receivables			18,465						21,110
Real estate owned			14,496						18,068
Service fee receivables			12,002						13,131
Income tax deposits			6,578						12,959
Deferred tax assets			4,155						5,766
Other			27,685						29,288
Total			$	177,163					$	193,113

The Company is in compliance in all material respects with all covenants under its financing arrangements as of March 31, 2026. The components of the Company’s consolidated borrowings were as follows (in thousands):

Encore is the parent of the restricted group for the Global Senior Facility and the Senior Secured Notes, both of which are guaranteed by the same group of material Encore subsidiaries and secured by the same collateral, which represents substantially all of the assets of those subsidiaries.

In September 2020, the Company entered into a multi-currency senior secured revolving credit facility agreement (as amended and restated, the “Global Senior Facility”). As of March 31, 2026, the Global Senior Facility provided for a total committed facility of $1,485.0 million that matures in September 2029, except for a $69.5 million tranche that terminates in September 2028, and included the following key provisions:

•Interest at Term SOFR (or EURIBOR for any loan drawn in Euro or a rate based on SONIA for any loan drawn in British Pound), with a Term SOFR (or EURIBOR or SONIA) floor of 0.00%, plus a margin of 2.25%, plus in the case of Term SOFR borrowings, a credit adjustment spread of 0.10%;

•An unused commitment fee of 0.40% per annum, payable quarterly in arrears;

•A restrictive covenant that limits the LTV Ratio (defined in the Global Senior Facility) to 0.75 in the event that the Global Senior Facility is more than 20% utilized;

•A restrictive covenant that limits the SSRCF LTV Ratio (defined in the Global Senior Facility) to 0.275;

•A restrictive covenant that requires the Company to maintain a Fixed Charge Coverage Ratio (as defined in the Global Senior Facility) of at least 2.0;

•Additional restrictions and covenants which limit, among other things, the payment of dividends and the incurrence of additional indebtedness and liens; and

•Standard events of default which, upon occurrence, may permit the lenders to terminate the Global Senior Facility and declare all amounts outstanding to be immediately due and payable.

The Global Senior Facility is secured by substantially all of the assets of the Company and the guarantors. Pursuant to the terms of an intercreditor agreement entered into with respect to the relative positions of (1) the Global Senior Facility and any super priority hedging liabilities (collectively, “Super Senior Liabilities”) and (2) the Senior Secured Notes, Super Senior Liabilities that are secured by assets that also secure the Senior Secured Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets.

As of March 31, 2026, the outstanding borrowings under the Global Senior Facility were $681.3 million. The weighted average interest rate of the Global Senior Facility was 5.53% and 6.56% for the three months ended March 31, 2026 and 2025, respectively. Available capacity under the Global Senior Facility, after taking into account applicable debt covenants, was approximately $791.3 million as of March 31, 2026.

The following table provides a summary of the Company’s senior secured notes (the “Senior Secured Notes”) ($ in thousands):

			March 31, 2026						December 31, 2025						Issue Currency						Maturity Date						Interest Payment Dates						Interest Rate
Encore 2028 Notes			$	330,640					$	336,803					GBP						Jun 1, 2028						Jun 1, Dec 1						4.250		%
Encore 2028 Floating Rate Notes			479,632						487,532						EUR						Jan 15, 2028						Jan 15, Apr 15, Jul 15, Oct 15						EURIBOR +4.250%(1)
Encore 2029 Notes			500,000						500,000						USD						Apr 1, 2029						Apr 1, Oct 1						9.250		%
Encore 2030 Notes			500,000						500,000						USD						May 15, 2030						May 15, Nov 15						8.500		%
Encore 2031 Notes			500,000						500,000						USD						Apr 15, 2031						Apr 15, Oct 15						6.625		%
			$	2,310,272					$	2,324,335

_______________________

(1)Interest rate is based on three-month EURIBOR (subject to a 0% floor) plus 4.250% per annum, resets quarterly.

The Senior Secured Notes are secured by the same collateral as the Global Senior Facility. The guarantees provided in respect of the Senior Secured Notes are pari passu with the guarantee given in respect of the Global Senior Facility. Subject to the intercreditor agreement described above under the section “Global Senior Secured Revolving Credit Facility,” Super Senior Liabilities that are secured by assets that also secure the Senior Secured Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets.

The Encore 2028 Floating Rate Notes had a weighted average interest rate of 6.27% and 7.10% for the three months ended March 31, 2026 and 2025, respectively.

On April 30, 2026, the Company issued a conditional notice of redemption for €200.0 million of the €415.0 million outstanding Encore 2028 Floating Rate Notes at par, with a redemption date of May 28, 2026.

The following table provides a summary of the principal balance, maturity date and interest rate for the Company’s convertible senior notes (the “Convertible Notes”) ($ in thousands):

In order to reduce the risk related to the potential dilution and/or the potential cash payments the Company may be required to make in the event that the market price of the Company’s common stock becomes greater than the conversion prices of the Convertible Notes, the Company may enter into hedge programs that increase the effective conversion price for the Convertible Notes. In connection with the issuance of the 2029 Convertible Notes, the Company entered into privately negotiated capped call transactions that effectively raised the conversion price of the 2029 Convertible Notes from $65.89 to $82.69. These hedging instruments have been determined to be indexed to the Company’s own stock and meet the criteria for equity classification. The Company recorded the cost of the hedge instruments as a reduction in additional paid-in capital, and does not recognize subsequent changes in fair value of these financial instruments in its condensed consolidated financial statements.

Certain key terms related to the convertible features as of March 31, 2026 are listed below ($ in thousands, except conversion price):

									2029 Convertible Notes
Initial conversion price									$	65.89
Closing stock price at date of issuance									$	51.68
Closing stock price date									Feb 28, 2023
Initial conversion rate (shares per $1,000 principal amount)									15.1763
Effective conversion price(1)									$	82.69
Excess of if-converted value compared to principal(2)									$	14,757
Free conversion date									Dec 15, 2028

_______________________

(1)As discussed above, the Company maintains a hedge program that increases the effective conversion price for the 2029 Convertible Notes to $82.69.

(2)Represents the premium the Company would have to pay assuming the Convertible Notes were converted on March 31, 2026 using a hypothetical share price based on the closing stock price on March 31, 2026.

Prior to the close of business on the business day immediately preceding the free conversion date (listed above), holders may convert their Convertible Notes only under certain circumstances set forth in the indenture. On or after the free conversion date until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their notes at any time.

In the event of conversion, the Convertible Notes are convertible into cash up to the aggregate principal amount of the notes and the excess conversion premium, if any, may be settled in cash or shares of the Company’s common stock at the Company’s election and subject to certain restrictions contained in each of the indentures governing the Convertible Notes.

The Company’s convertible notes are carried as a single liability, which reflects the principal amount of the convertible notes. Interest expense related to the Convertible Notes was $2.3 million and $3.1 million during the three months ended March 31, 2026 and 2025, respectively.

Cabot Securitisation UK Ltd (“Cabot Securitisation”), an indirect subsidiary of Encore, has a senior facility for a committed amount of £255.0 million (as amended, the “Cabot Securitisation Senior Facility”). Prior to March 18, 2026, funds drawn under the Cabot Securitisation Senior Facility bore interest at a rate per annum equal to SONIA plus a margin of 3.20% plus, for periods after January 18, 2028, a step up margin ranging from zero to 1.00%. The Company amended its Cabot Securitisation Senior Facility, effective March 18, 2026, to extend the maturity date from January 2030 to January 2031, and to reduce the margin from 3.20% to 3.00%. For periods after January 18, 2029, a step up margin ranging from zero to 1.00% will apply. The amendment was accounted for as a debt modification.

As of March 31, 2026, the outstanding borrowings under the Cabot Securitisation Senior Facility were £255.0 million (approximately $337.3 million based on an exchange rate of $1.00 to £0.76, the exchange rate as of March 31, 2026). The obligations of Cabot Securitisation under the Cabot Securitisation Senior Facility are secured by first ranking security interests over all of Cabot Securitisation’s property, assets and rights (including receivables purchased from Cabot Financial UK from time to time), the book value of which was £277.7 million (approximately $367.3 million based on an exchange rate of $1.00 to £0.76, the exchange rate as of March 31, 2026) as of March 31, 2026. The weighted average interest rate of the Cabot Securitisation Senior Facility was 6.91% and 7.78% for the three months ended March 31, 2026 and 2025, respectively.

Cabot Securitisation is a securitized financing vehicle and is a VIE for consolidation purposes. Refer to “Note 8: Variable Interest Entities” for further details.

An indirect subsidiary of Encore (“U.S. Financing Subsidiary”) has a facility for a committed amount of $450.0 million (as amended, the “U.S. Facility”) that matures in October 2028. Funds drawn under the U.S. Facility bear interest at a rate per annum equal to Term SOFR plus a margin of 3.50%.

As of March 31, 2026, the outstanding borrowings under the U.S. Facility were $450.0 million. The obligations under the U.S. Facility are secured by first ranking security interests over all of U.S. Financing Subsidiary’s assets and rights. As of March 31, 2026, this included receivables acquired from MCM, the book value of which was $805.7 million. The weighted average interest rate of the U.S. Facility was 7.18% and 7.82% for the three months ended March 31, 2026 and 2025, respectively.

The U.S. Facility is a securitized financing vehicle and is a VIE for consolidation purposes. Refer to “Note 8: Variable Interest Entities” for further details.

A VIE is defined as a legal entity whose equity owners do not have sufficient equity at risk, or, as a group, the holders of the equity investment at risk lack any of the following three characteristics: decision-making rights, the obligation to absorb expected losses, or the right to receive expected residual returns of the entity. The primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and the obligation to absorb expected losses or the right to receive residual returns from the entity that could potentially be significant to the VIE. The Company consolidates VIEs when it is the primary beneficiary.

As of March 31, 2026, the Company’s VIEs include certain securitized financing vehicles and other immaterial special purpose entities that were created to purchase receivable portfolios in certain geographies. The Company is the primary beneficiary of these VIEs. The Company has the power to direct the activities of the VIEs including the ability to exercise discretion in the servicing of the financial assets and has the right to receive residual returns that could potentially be significant to the VIEs. The Company evaluates its relationships with its VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary.

Most assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets. Conversely, liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets; rather, they represent claims against the specific assets of the VIE.

The Company’s effective tax rate was 22.8% and 22.6% for the three months ended March 31, 2026 and 2025, respectively. The differences between the effective tax rate and the federal statutory rate during the periods presented were primarily due to state income taxes offset by other foreign adjustments.

Each interim period is considered an integral part of the annual period and tax expense or benefit is measured using an estimated annual effective income tax rate. The estimated annual effective tax rate for the full year is applied to the respective interim period, taking into account year-to-date amounts and projected amounts for the year. Since the Company operates in foreign countries with varying tax rates, the Company’s quarterly effective tax rate is dependent on the level of income or loss from international operations in the reporting period.

The Company’s subsidiary in Costa Rica is operating under a 100% tax holiday through April 6, 2034. The impact of the tax holiday in Costa Rica for the three months ended March 31, 2026 and 2025, was immaterial.

The Company is subject to income taxes in the U.S. and foreign jurisdictions. Significant judgment is required in evaluating uncertain tax positions and determining the provision for income taxes.

In December 2021, the Organization for Economic Cooperation and Development (“OECD”) enacted model rules for a new global minimum tax framework (“Pillar Two”). Under the Pillar Two rules, a company is required to determine a combined effective tax rate for each jurisdiction. If the jurisdictional effective tax rate determined under the Pillar Two rules is less than 15%, a top-up tax will be due to bring the jurisdictional effective tax rate up to 15%. In December 2022, European Union Member States adopted a directive implementing the Pillar Two rules requiring Member States to enact the directive into their national laws and these began to go into effect from January 1, 2024. The Company has estimated the applicable top-up tax and recorded this in tax expense for the three months ended March 31, 2026. The estimated impact of top-up tax for the three months ended March 31, 2026 was immaterial.

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (“OBBBA”), which includes a broad range of tax reform provisions affecting businesses. The legislation features permanent extension, with modifications, of key 2017 Tax Cuts and Jobs Act provisions that were set to change at the end of 2025. The effects of the OBBBA were included in the Company’s condensed consolidated financial statements for the three months ended March 31, 2026 and the impact was immaterial.

A summary of the Company’s changes in accumulated other comprehensive loss by component is presented below (in thousands):

			Three Months Ended March 31, 2026
			Derivatives						Currency Translation Adjustments						Accumulated Other Comprehensive Loss
Balance at beginning of period			$	(15,034)					$	(113,073)					$	(128,107)
Other comprehensive income (loss) before reclassification			7,835						(12,233)						(4,398)
Reclassification			2,476						—						2,476
Tax effect			(2,287)						(129)						(2,416)
Balance at end of period			$	(7,010)					$	(125,435)					$	(132,445)

The Company is involved in disputes, legal actions, regulatory investigations, inquiries, and other actions from time to time in the ordinary course of business. The Company, along with others in its industry, is routinely subject to legal actions asserting various claims, including those based on the Fair Debt Collection Practices Act (“FDCPA”), the Fair Credit Reporting Act (“FCRA”), the Telephone Consumer Protection Act (“TCPA”), comparable state statutes, state and federal unfair competition statutes, and common law causes of action. The violations of law investigated or alleged in these actions often include claims that the Company lacks specified licenses to conduct its business, attempts to collect debts on which the statute of limitations has run, has made inaccurate or unsupported assertions of fact in support of its collection actions and/or has acted improperly in connection with its efforts to contact consumers. Such litigation and regulatory actions could involve potential compensatory or punitive damage claims, fines, sanctions, injunctive relief, or changes in business practices. Many continue on for some length of time and involve substantial investigation, litigation, negotiation, and other expense and effort before a result is achieved, and during the process the Company often cannot determine the substance or timing of any eventual outcome.

As of March 31, 2026, there were no material developments in any of the legal proceedings disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 or any new material legal proceedings during the three months ended March 31, 2026.

In certain legal proceedings, the Company may have recourse to insurance or third-party contractual indemnities to cover all or portions of its litigation expenses, judgments, or settlements. The Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. Where a range of loss can be reasonably estimated with no best estimate in the range, the Company records the minimum estimated liability. The Company continuously assesses the potential liability related to its pending litigation and regulatory matters and revises its estimates when additional information becomes available. The Company’s legal costs are recorded to expense as incurred. As of March 31, 2026, the Company has no material reserves for legal matters.

In the normal course of business, the Company enters into forward flow purchase agreements. A forward flow purchase agreement is a commitment to purchase receivables over a duration that is typically three to twelve months, but can be longer, generally with a specifically defined volume range, frequency, and pricing. Typically, these forward flow contracts have provisions that allow for early termination or price re-negotiation should the underlying quality of the portfolio deteriorate over time or if any particular month’s delivery is materially different than the original portfolio used to price the forward flow contract.

Certain of these forward flow purchase agreements may also have termination clauses, whereby the agreements can be canceled by either party upon providing a certain specified amount of notice.

As of March 31, 2026, the Company had entered into forward flow purchase agreements for the purchase of nonperforming loans with an estimated minimum aggregate purchase price of $678.9 million. The Company expects actual purchases under these forward flow purchase agreements to be significantly greater than the estimated minimum aggregate purchase price.

The Company has one reportable segment, debt purchasing and recovery segment. Segment assets are presented in the Company’s condensed consolidated statements of financial condition as total assets. The following tables present the results of operations of the Company’s reportable segment for the periods presented (in thousands):

			Three Months Ended March 31, 2026
			Debt purchasing and recovery segment						Corporate and other unallocated						Consolidated
Total revenues			$	475,411					$	—					$	475,411
Total operating expenses(1)			(276,025)						(15,394)						(291,419)
Operating income			199,386												183,992
Other segment items(2)									790						790
Interest expense(3)									(73,050)						(73,050)
Provision for income taxes									(25,489)						(25,489)
Net income															$	86,243

_______________________ 

(1)Certain corporate activities that are not allocated to the debt purchasing and recovery segment are recorded under corporate and other unallocated. During the three months ended March 31, 2026, such non-allocated operating expenses primarily consisted of salaries and employee benefits of $10.3 million for corporate employees and general and administrative expenses of $4.9 million.

(2)The other segment items category includes other income.

(3)The Company manages its available capital resources at the corporate level. Interest expense is not allocated to operating segments.

			Three Months Ended March 31, 2025
			Debt purchasing and recovery segment						Corporate and other unallocated						Consolidated
Total revenues			$	392,775					$	—					$	392,775
Total operating expenses(1)			(249,509)						(13,923)						(263,432)
Operating income			143,266												129,343
Other segment items(2)									1,647						1,647
Interest expense(3)									(70,530)						(70,530)
Provision for income taxes									(13,664)						(13,664)
Net income															$	46,796

_______________________ 

(1)Certain corporate activities that are not allocated to the debt purchasing and recovery segment are recorded under corporate and other unallocated. During the three months ended March 31, 2025, such non-allocated operating expenses primarily consisted of salaries and employee benefits of $8.1 million for corporate employees and general and administrative expenses of $5.4 million.

(2)The other segment items category includes other income.

(3)The Company manages its available capital resources at the corporate level. Interest expense is not allocated to operating segments.

The following table presents information about geographic areas in which the Company operates (in thousands):

			Three Months Ended March 31,
			2026						2025
Total revenues:
United States			$	351,658					$	269,586
Europe
United Kingdom			88,525						84,468
Other European countries(1)			33,437						36,993
Total Europe			121,962						121,461
Other geographies(1)			1,791						1,728
Total			$	475,411					$	392,775

________________________

(1)None of these countries comprise greater than 10% of the Company's consolidated revenues.

The Company’s goodwill is tested for impairment at the reporting unit level annually and in interim periods if certain events occur that indicate that the fair value of a reporting unit may be below its carrying value. Determining the number of reporting units and the fair value of a reporting unit requires the Company to make judgments and involves the use of significant estimates and assumptions.

There have been no events or circumstances during the three months ended March 31, 2026 that have required the Company to perform an interim assessment of goodwill carried at these reporting units. Management continues to evaluate and monitor all key factors impacting the carrying value of the Company’s recorded goodwill. Adverse changes in the Company’s actual or expected operating results, market capitalization, business climate, economic factors or other negative events that may be outside the control of management could result in a material non-cash impairment charge in the future.

The Company’s goodwill is attributable to reporting units included in its portfolio purchasing and recovery segment. The following table summarizes the activity in the Company’s goodwill balance (in thousands):

			Total Company
Balance as of December 31, 2025			$	536,291
Effect of foreign currency translation			(6,804)
Balance as of March 31, 2026			$	529,487

As of March 31, 2026 and December 31, 2025, the Company’s accumulated goodwill impairment loss was $338.8 million, attributable to its Cabot reporting unit.

We are an international specialty finance company providing debt recovery solutions and other related services for consumers across a broad range of financial assets. We primarily purchase portfolios of defaulted consumer receivables at deep discounts to face value and manage them by working with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial obligations to credit originators, including banks, credit unions, consumer finance companies and commercial retailers. Defaulted receivables may also include receivables subject to bankruptcy proceedings. We also provide debt servicing and other portfolio management services to credit originators for non-performing loans in Europe.

Encore Capital Group, Inc. (“Encore”) has three business units: MCM, which consists of Midland Credit Management, Inc. and its subsidiaries and domestic affiliates; Cabot, which consists of Cabot Credit Management Limited and its subsidiaries and European affiliates, and LAAP, which is comprised of our investments and operations in Latin America and Asia-Pacific.

Through MCM, we are a market leader in portfolio purchasing and recovery in the United States.

Through Cabot, we are one of the largest credit management services providers in Europe and the United Kingdom. Cabot, in addition to its primary business of portfolio purchasing and recovery, also provides a range of debt servicing offerings such as early stage collections, business process outsourcing (“BPO”), and contingent collections, including through Wescot Credit Services Limited (“Wescot”).

We have purchased non-performing loans in Mexico. Additionally, we have a subsidiary Encore Asset Reconstruction Company (“EARC”) in India.

To date, operating results from LAAP have not been significant to our total consolidated operating results. Our long-term growth strategy is focused on continuing to invest in our core portfolio purchasing and recovery business in the United States and United Kingdom and strengthening and developing our business in France and Spain.

As discussed in more detail under “Part I - Item 1 - Business - Government Regulation” contained in our Annual Report on Form 10-K, our operations in the United States are subject to federal, state and municipal statutes, rules, regulations and ordinances that establish specific guidelines and procedures that debt purchasers and collectors must follow when collecting consumer accounts, including among others, specific guidelines and procedures for communicating with consumers and prohibitions on unfair, deceptive or abusive debt collection practices.

As discussed in more detail under “Part I - Item 1 - Business - Government Regulation” contained in our Annual Report on Form 10-K, our operations in Europe are affected by foreign statutes, rules and regulations regarding debt collection and debt purchase activities. These statutes, rules, regulations, ordinances, guidelines and procedures are modified from time to time by the relevant authorities charged with their administration, which could affect the way we conduct our business.

In the United States, the defaulted consumer receivable portfolios we purchase are primarily charged-off credit card debt portfolios. A small percentage of our capital deployment in the United States is comprised of unsecured personal loans.

We purchase receivables based on robust, account-level valuation methods and employ proprietary statistical and behavioral models across our U.S. operations. These methods and models generally allow us to value portfolios accurately (limiting the risk of overpaying), avoid buying portfolios that are incompatible with our methods or strategies and align the accounts we purchase with our business channels to maximize future collections. As a result, we have generally been able to realize significant returns from the receivables we acquire. We maintain strong relationships with many of the largest financial service providers in the United States.

In Europe, our purchased defaulted debt portfolios primarily consist of credit card and consumer loan accounts. We purchase receivable portfolios using proprietary pricing models that utilize account-level statistical and behavioral data. These models generally allow us to accurately value portfolios and to develop collection strategies that maximize future returns. As a result, we have generally been able to realize significant returns from the assets we have acquired. We maintain strong relationships with many of the largest financial services providers in the United Kingdom and Europe.

With lending and charge-off rates remaining near recent peak levels, U.S. portfolio supply continues to be robust. Issuers have continued to sell predominantly fresh portfolios. Fresh portfolios are portfolios that are generally sold within six months of the consumer’s account being charged-off by the financial institution. Pricing in the first quarter remained at favorable levels as a result of elevated market supply. Issuers continue to sell their volume in mostly forward flow arrangements that are often committed early in the calendar year. We believe steady lending and delinquency rates at elevated levels will result in stable and strong market supply.

We believe that smaller competitors continue to face difficulties in the portfolio purchasing market because of the high cost to operate due to regulatory pressure and increasing cost of capital. We believe this favors larger participants, like MCM, because the larger market participants are better able to adapt to these pressures and commit to larger forward flow agreements and fluctuating volumes.

The UK market for charged-off portfolios generally provides a relatively consistent pipeline of opportunities, despite a historically low level of charge-offs, as creditors have embedded debt sales as an integral part of their business models.

France and Spain continue to be two of the largest non-performing loan markets in Europe with significant portfolio sales. Financial institutions continue to look to dispose of non-performing loans in these markets.

While sales activity across all of our European markets remains stable, underlying default rates are generally low by historic levels, and consumer lending volumes have stagnated. Sales levels are expected to fluctuate from quarter to quarter. In general, portfolio pricing remains competitive across our European footprint, constraining the amount of capital we elect to deploy in Europe.

The following table summarizes purchases of receivable portfolios by geographic location during the periods presented (in thousands):

			Three Months Ended March 31,
			2026						2025
MCM (United States)			$	315,794					$	316,366
Cabot (Europe)			47,047						51,485
Total purchases of receivable portfolios			$	362,841					$	367,851

In the United States, capital deployment remained consistent during the three months ended March 31, 2026, as compared to the corresponding period in the prior year. The majority of our deployments in the U.S. come from forward flow agreements, and the timing, contract duration, and volumes for each contract can fluctuate leading to variation when comparing to prior periods. Portfolio purchases in the U.S. were robust as supply increased and pricing remained at favorable levels.

In Europe, capital deployment decreased during the three months ended March 31, 2026, as compared to the corresponding period in the prior year. Pricing continues to remain competitive in our European footprint, constraining the amount of capital we choose to deploy in Europe. Capital deployment can fluctuate based on the timing of the forward flow contracts and spot purchases.

We utilize three channels for the collection of our receivable portfolios: call center and digital collections; legal collections; and collection agencies. The call center and digital collections channel consists of collections that result from our call centers, direct mail program and online collections. The legal collections channel consists of collections that result from our internal legal channel or from our network of retained law firms. The collection agencies channel consists of collections from third-party collections agencies to whom we pay a fee or commission. We utilize this channel to supplement capacity in our internal call centers, to service accounts in regions where we do not have collections operations or for accounts purchased where we maintain the collection agency servicing relationship.

The following table summarizes the total collections by collection channel and geographic area during the periods presented (in thousands):

Collections from purchased receivables increased by $113.6 million, or 18.8%, to $718.4 million during the three months ended March 31, 2026, as compared to $604.8 million during the three months ended March 31, 2025. The increase in collections in the United States was primarily a result of consistent increases in capital deployments in the United States in recent periods. Collections in Europe were favorably impacted by foreign currency translation by approximately $12.2 million, during the three months ended March 31, 2026, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 6.6% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.

Results of operations, in dollars and as a percentage of total revenues, were as follows for the periods presented (in thousands, except percentages):

			Three Months Ended March 31,
			2026												2025
Revenues
Portfolio revenue			$	390,019					82.0		%				$	345,218					87.9		%
Changes in recoveries			62,740						13.2		%				21,464						5.5		%
Total debt purchasing revenue			452,759						95.2		%				366,682						93.4		%
Servicing revenue			20,638						4.4		%				22,547						5.7		%
Other revenues			2,014						0.4		%				3,546						0.9		%
Total revenues			475,411						100.0		%				392,775						100.0		%
Operating expenses
Salaries and employee benefits			114,541						24.1		%				105,932						27.0		%
Cost of legal collections			89,221						18.8		%				68,013						17.3		%
General and administrative expenses			39,629						8.3		%				41,018						10.4		%
Other operating expenses			34,833						7.4		%				34,252						8.8		%
Collection agency commissions			6,337						1.3		%				6,873						1.7		%
Depreciation and amortization			6,858						1.4		%				7,344						1.9		%
Total operating expenses			291,419						61.3		%				263,432						67.1		%
Income from operations			183,992						38.7		%				129,343						32.9		%
Other expense
Interest expense			(73,050)						(15.4)		%				(70,530)						(18.0)		%
Other income			790						0.2		%				1,647						0.5		%
Total other expense			(72,260)						(15.2)		%				(68,883)						(17.5)		%
Provision for income taxes			(25,489)						(5.4)		%				(13,664)						(3.5)		%
Net income			$	86,243					18.1		%				$	46,796					11.9		%