Cash Converters Boosts Earnings with Franchise Expansion and Lending Shift

Franchise Expansion Drives Earnings Amid Lending Transition

Cash Converters International Limited (ASX:CCV) continues to reshape its business with a clear focus on sustainable growth through franchise acquisitions and a refined lending strategy. The company reported an 8% increase in revenue to $206.7 million for the half-year ended December 2025, supported by a growing core loan book and a luxury-focused retail expansion. Operating NPAT rose 9% to $13.2 million, reflecting disciplined capital allocation and improved portfolio quality.

The company’s strategic pivot towards longer-duration, lower-risk personal loans has seen net loss rates drop from around 20% to approximately 14%, with the core gross loan book growing to $173.9 million. This transition is complemented by a securitised funding structure and proprietary AI-driven credit decisioning, which together reduce customer acquisition costs and improve credit quality.

Cash Converters has aggressively expanded its corporate store network, acquiring 120 franchises across Australia and the UK since FY21. This move not only enhances earnings but also supports the company’s shift towards higher-margin luxury retail, capitalising on strong gold prices and growing demand for authenticated premium pre-owned goods. The luxury retail footprint is expanding across metropolitan areas, with inventory available both in-store and online.

Diversified Revenue Streams and International Footprint

The company now operates 656 stores across 15 countries, with a mix of corporate-owned and franchised outlets. Australia, the UK, and New Zealand remain core geographies, but Cash Converters also maintains a presence in Europe, Asia, and Southern Africa through master franchise partnerships and licensing arrangements. This geographic diversification contributes to more stable and scalable earnings, with international stores increasingly driving profitability.

Retail gross profit margins have expanded, driven by the luxury and electronics segments, while the integrated store and digital origination model supports strong cash generation. The company’s store network plays a vital role in customer acquisition for its lending business, particularly among sub-prime to near-prime borrowers who value physical store support alongside digital channels.

Cash Converters’ acquisition strategy remains a key growth driver. The recent acquisition of 29 Australian franchise stores, funded through a $25 million equity raise, is expected to be earnings accretive from day one, reinforcing the company’s corporate footprint and operational efficiency. This acquisition builds on prior franchise expansions and reflects the company’s commitment to scaling its store network strategically. The acquisition details and funding were outlined in previous announcements, including a fully underwritten entitlement offer and institutional placements that increased EZCORP’s stake to nearly 44% halted March share placement and $25M to acquire 29 stores.

Financial Strength Supports Growth and Dividends

Cash Converters ended 1H26 with $43.5 million in cash and equivalents and $74.3 million in undrawn facilities, including a $71.5 million securitisation facility and a revolving credit line. This strong liquidity position underpins the company’s growth ambitions and provides flexibility in managing its capital structure.

Shareholders were rewarded with a fully franked interim dividend of 1.0 cent per share, continuing a five-year track record of dividend payments. The company also reinstated its Dividend Reinvestment Plan earlier in the year, offering shareholders the option to reinvest dividends under favourable terms, which reflects confidence in ongoing earnings growth and cash flow stability Dividend Reinvestment Plan reinstated.

Looking ahead, Cash Converters aims to optimise its store network through a “hub-and-spoke” model to lower operating costs while continuing to grow its luxury retail mix. The company also plans to maintain capital discipline and diversify its funding sources further, targeting sustainable net profit after tax growth and enhanced shareholder returns.