JCAP 10-K & 10-Q changes, risk factors and insider trading

We are headquartered in Minneapolis, Minnesota, and as of MarchJune 31,30, 2026, with 1,1781,089 FTE (including our offshore co-sourced operation).

Creditors sell their volume in a mix of forward flow arrangements and competitive bid transactions. Sales levels are expected to fluctuate from quarter to quarter with portfolio pricing remaining competitive. 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, issuers’ selectiveness with buyers and lack of consistent access to capital. We believe these operational costs favor larger participants, such as us, because the larger market participants are better able to adapt to these pressures and commit to larger purchases and forward flow agreements.

Our deployments are a mix of spot sales and forward flow agreements. The timing, contract duration and volumes for each contract can fluctuate leading to variation when compared to prior periods. The average purchase price, as a percentage of face value, varies from period to period depending on, among other factors, the type and quality of the accounts purchased and the length of time from charge-off to the time we purchase the portfolios.

The average purchase price as a percentage of face value is higher for newly charged-off portfolios as compared to more seasoned portfolios because newly charged-off portfolios generally have higher liquidation rates. Similarly, portfolios consisting of paying accounts tend to have a higher purchase price relative to face value than non-paying accounts due to the higher expectations for collections, as well as lower anticipated collection costs. As a result, in years that we purchase a higher percentage of newly charged-off assets or paying portfolios, we expect that our purchase price as a percentage of face value would be higher than would be in years where a higher ratio of seasoned paperassets or non-paying portfolios were purchased.

We define ERC as the undiscounted sum of all future projected collections on our owned finance receivables portfolios. We calculate ERC using data derived from our databases of owned and serviced debt portfolio in the markets in which we operate and from our proprietary behavioral and asset valuation models. References to our ERC are references to gross ERC (which includes estimated collections in respect of the current charge-off balances.balances). We believe that our ERC estimation represents an important supplemental measure to compare our cash generating capacity with other companies in the debt collection industry, even though we can provide no assurance that we will achieve such collections within a specified time period, or at all.

For the three months ended MarchJune 31,30, 2026, ERC in our United States reportable segment included $237.7$218.2 million forfrom the Bluestem portfolio purchase with the comparative 2025 period having no ERC related to Bluestem.

During the three months ended MarchJune 31,30, 2026, we invested $149.7$152.2 million to acquire receivable portfolios, with face values aggregating $2,708.2$2,873.2 million, for an average purchase price of 5.5%5.3% of face value. The amount invested in receivable portfolios decreasedincreased $25.5$26.9 million, or 14.6%,21.5%, compared with the $175.2$125.3 million invested during the three months ended MarchJune 31,30, 2025, to acquire receivable portfolios with face values aggregating $2,757.4$1,759.6 million, for an average purchase price of 6.4%7.1% of face value.

Collections from purchased receivables increased by $49.0$45.2 million or 18.8% 17.7% to $309.9$300.9 million during the three months ended MarchJune 31,30, 2026, from $260.9$255.7 million during the three months ended MarchJune 31,30, 2025. The increase in collections from purchased receivables compared to the periodthree months ended MarchJune 31,30, 2025, was primarily a result of increased purchases during the period. Collections in our United States reportable segment included for the periodthree months ended MarchJune 31,30, 2026 and 2025 were $54.5$41.0 million  for the Bluestem portfolio with no collections in the comparative 2025 period.

Adjusted net income is calculated as net income in accordance with GAAP, adjusted to exclude (i) foreign exchange and other income (expense); (ii) stock-based compensation; (iii) provision for income taxes and (iiiiv) merger and acquisition and other infrequent, non-recurring, non-core or unusual charges. Adjusted net income is a supplemental measure of performance that is not required by, or presented in accordance with, GAAP. We present adjusted net income because we consider it an important supplemental measure of our operations and financial performance. Our management believes adjusted net income helps us provide enhanced period-to-period comparability of operations and financial performance and is useful to investors as other companies in our industry report similar financial measures. Adjusted net income should not be considered as an alternative to net income determined in accordance with GAAP.

Three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025.

Total revenues were $176.4$177.5 million for the three months ended MarchJune 31,30, 2026, an increase of $21.5$24.8 million, or 13.9%,16.2%, compared to $154.9$152.8 million for the three months ended MarchJune 31,30, 2025. The increase is primarily a result of strong deployment growth in prior periods.

Total operating expenses were $95.6$95.4 million for the three months ended MarchJune 31,30, 2026, an increase of $30.5$29.9 million, or 46.8%,45.6%, compared to $65.1$65.5 million for the three months ended MarchJune 31,30, 2025 driven primarily by an increase of $22.8$21.3 million in servicing expenses due to increased court costs of $8.0$9.3 million which are incurred upfront at the outset of consumer litigation in anticipation of generating future collections, $7.4higher agency and legal commissions of $6.5 million related to the Bluestem portfolio purchase and collectionan growthincrease asof well as $8.5$16.6 million in stock-based compensation expense.expense over the three months ended June 30, 2025 partially offset by lower professional fees of $6.3 million due to legal and professional fees incurred as part of the initial public offering in June 2025.

Salaries and benefits were $22.4$21.9 million for the three months ended MarchJune 31,30, 2026 an increase of $8.4$15.6 million, or 59.6%,247.6%, compared to $14.0$6.3 million for the three months ended MarchJune 31,30, 2025. The increase in Salaries was driven by $8.5$8.3 million in stock-based compensation costs which primarily reflects the amortization of grant-date fair value of restricted stock awards granted in connection with the IPO as well as the reversal of compensation accrual of $8.3 million for outstanding Class B units prior to the IPO.

Servicing expenses were $65.6$64.8 million for the three months ended MarchJune 31,30, 2026, an increase of $22.8$21.3 million, or 53.3%,49.0%, compared to $42.8$43.5 million for the three months ended MarchJune 31,30, 2025. The increase in servicing expenses was primarily driven by increased collections and court costs which are incurred upfront at the outset of consumer litigation in anticipation of generating future collections. Servicing expenses consisted of the following for the three months ended MarchJune 31,30, 2026 and 2025:

Depreciation and amortization was $0.9$0.8 million for the three months ended June 30, 2026, a $0.5 million, or 38.5%, decrease from the $1.3 million for the three months ended MarchJune 31, 2026, a $0.7 million, or 45.8%, decrease from the $1.6 million for the three months ended March 31,30, 2025. The decrease was primarily due to assets fully amortizing since June 30, 2025 and lower intangible amortization expense of $0.6$0.3 million associatedrelated withto the Conn’s purchaseportfolio compared to the three months ended March 31, 2025.purchase.

Professional fees were $2.3$3.1 million for the three months ended MarchJune 31,30, 2026 ana increasedecrease of $0.1$6.3 million, or 5.4%,67.0%, compared to $2.2$9.4 million for the three months ended MarchJune 31,30, 2025. The increasedecrease was primarily due to one-time legal and professional fees incurred as part of the follow-oninitial equitypublic offering in JanuaryJune 2026.2025.

Other selling, general and administrative expenses which generally consists of rent, travel and entertainment expenses, and other general overhead expenses whichwere totaled $4.5$4.8 million for the three months ended MarchJune 31,30, 2026, whicha wasdecrease of flat$0.2 million or 4.0%, compared to the $4.5$5.0 million for the three months ended MarchJune 31,30, 2025. The decrease is primarily due to lower rent in the three months ended June 30, 206 related to the Conn’s portfolio purchase compared to the three months ended June 30, 2025.

Total interest expense was $30.6$30.4 million for the three months ended MarchJune 31,30, 2026, an increase of $5.8$4.6 million, or 23.2%,18.0%, compared to $24.8$25.8 million for the three months ended MarchJune 31,30, 2025. The increase was primarily driven by an increase in the cost of debt due to the payoff of the credit facility with the net proceeds of the 2030 Senior Notes issued in May 2025 as well as by increased amortization of debt issuance costs of $1.6$1.7 million, $0.5an increase of $0.3 million or 46.7% 21.4% higher compared to $1.1$1.4 million for the three months ended MarchJune 31,30, 2025, due to the issuance of the 2030 Senior Notes in May 2025.

Interest expense consisted of the following for the three months ended MarchJune 31,30, 2026 and 2025:

The provision for income taxes consists primarily of income taxes in certain federal, state, local and foreign jurisdictions in which we conduct business. Foreign jurisdictions typically have different statutory tax rates from those in the United States. Accordingly, our effective tax rates may vary depending on the impact of the valuation allowance of our deferred tax assets and liabilities, and changes in tax laws. The provision for income tax was $13.4$12.0 million for the three months ended MarchJune 31,30, 2026, ana increasedecrease of $10.7$2.3 million or 401.0%16.1% compared to $2.7$14.3 million for the three months ended MarchJune 31,30, 2025 whichdue increasedto aslower taxable income for the Companythree ismonths noended longerJune treated30, as2026 acompared Partnership for US income tax purposes as it was beforeto the Initialthree Publicmonths Offering inended June 30, 2025.

Portfolio revenue grew $15.5$20.1 million or 13.8%18.9% in the three months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025, primarily due to the growth in deployments, including the Bluestem portfolio purchase.

Servicing revenue decreased $2.8$2.6 million or 60.7%68.4% for the three months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025, primarily due to the Conn’s portfolio purchase, which contributed $1.2$0.6 million of total servicing revenue in the three months ended MarchJune 31,30, 2026 compared with $3.7$3.1 million in the three months ended MarchJune 31,30, 2025.

Salaries and benefits increased $7.4$15.0 million or 83.1%2,142.9% in the three months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025 driven by $8.5$8.3 million for stock-based compensation which primarily reflects the amortization of grant-date fair value of restricted stock awards granted in connection with the IPO in June 2025 as well as the reversal of stock-based compensation accrual of $8.3 million for outstanding Class B units partially offset by reductions in personnel and benefit costs related to the Conn’s portfolio purchase due to 8972 less FTE.FTE for the three months ended June 30, 2026 compared to the three months ended June 30, 2025.

Servicing expenses grew $21.1$20.7 million or 63.1%63.7% in the three months endedending MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025 driven by increased collections,collections and increased court costs of $8.0$9.3 million which are incurred upfront at the outset of consumer litigation in anticipation of generating future collections.collections, higher agency and legal commissions. Servicing expenses includes $1.5 million for the three months ended March 31, 2026 related to the Conn’s portfolio purchase compared to $3.7 million in the three months ended March 31, 2025, and $7.4$3.9 million related to the Bluestem portfolio purchase with no expense in the comparative period in 2025.

Depreciation and amortization was $0.6 million for the three months ended MarchJune 31,30, 2026, a $0.7$0.3 million, or 52.9%,33.3%, decrease from the $1.3$0.9 million for the three months ended MarchJune 31,30, 2025. The decrease was primarily due to lower intangible amortization expense of $0.6$0.3 million for the three months ended June 30, 2026 associated with the Conn’s purchase compared to the three months ended MarchJune 31,30, 2025.

Professional fees were $1.7 decreased $6.3 million or 5.0% higher72.4% in the three months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025 driven by one-time legal and professional fees incurred as part of the follow-oninitial equitypublic offering in JanuaryJune 2026.2025.

Other selling, general and administrative expenses which generally consists of rent expense, travel and entertainment, and other general overhead expenses decreased $0.3$0.4 million or 8.2%10.5% in the three months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025 primarily due to lower rent expense related to the Conn’s portfolio purchase.purchase and various other expense reductions.

Overall net operating income decreased $15.0$11.3 million or 22.1%17.6% in the three months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025 to $52.8$52.7 million from $67.8$63.9 million driven by higher stock-based compensation which primarily reflects the amortization of grant-date fair value of restricted stock awards granted in connection with the IPO in June 2025, lower net operating income of $15.6$11.4 million associated with the Conn’s portfolio purchase compared to the three months ended MarchJune 31,30, 2025, partially offset by $7.9$7.1 million in net operating income associated with the Bluestem portfolio purchase with no net operating income for Bluestem in the threecomparative monthsperiod ended March 31,in 2025. Net operating income as a percentage of total revenues was 40.7%40.9% in the three months ended MarchJune 31,30, 2026 compared to 58.0%57.6% in MarchJune 31,30, 2025.

Portfolio revenue increased $4.9$0.3 million or 108.6%4.1% in the three months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025 primarily due to an increase in deployment volumes.

Servicing revenue increased $1.9$2.6 million or 32.5%41.3% in the three months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025 due to increased third party servicing.

Salaries and benefits increased $0.7$0.4 million or 18.8%9.8% in the three months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025 primarily due to higher employee salary and benefit costs.

Servicing expenses increaseddecreased $0.9$0.2 million or 30.7% 4.0% in the three months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025 primarily due to increasedcost collections.control initiatives.

Overall net operating income increased by $0.6$2.8 million or 9.8%82.4% in the three months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025 due to portfoliohigher revenuedeployments growth.and increased third party servicing. Net operating income as a percentage of total revenues was 60.0%37.3% in the three months ended MarchJune 31,30, 2026 compared to 65.5%24.8% in MarchJune 31,30, 2025.