Credit Acceptance signals ~65% forecasted collection rate for 2025-2026 vintages while expanding dealer network

Earnings Call Insights: Credit Acceptance Corporation (CACC) Q3 2026

Management view

• CEO Vinayak Hegde said, “our third quarter results show meaningful progress,” highlighting “consumer loan assignment unit volume increased 38% year-over-year,” “loan dollar volume increased 51%,” and that “active dealers reached a record more than 12,000,” alongside “the first quarter of year-on-year growth since the fourth quarter of 2024.”

• Hegde described a strategic push to become “a deeply data-informed AI-enabled company,” and said the company “adjusted and strengthened our methodology for forecasting future net cash flows from our loan portfolio, which reduced forecasted collection rates from consumer loans assigned from 2022 through 2026,” attributing the change to “additional seasoning, performance history and more granular segmentation.”

• Hegde tied near-term growth to distribution and underwriting changes, saying, “our current growth is driven by stronger commercial execution, expanded aggregator distribution and a new scorecard,” and added, “we began rolling out our new scorecard late in the second quarter and enhanced it throughout the third quarter.”

• Hegde cited product/channel initiatives, including that “we’re also making it easier for dealers to do business with us by integrating directly into the aggregator platforms they already use,” and that “the light structural damaged vehicle offering we launched last quarter continues to add incremental volume and adoption is increasing as it scales nationally.”

• Hegde outlined leadership changes: “we brought in Jeetu Mirchandani as Chief Technology Officer,” and “during the quarter, we welcomed the additions of Sid Lal as Chief Marketing Officer; Jeetu Mirchandani as Chief Technology Officer; and Shannon Wilson as Chief Human Resources Officer.”

• CFO Joseph Billante said, “we incurred a GAAP net loss of $56.6 million or negative $5.43 per diluted share,” while “adjusted net income was $135.5 million or $13.01 per diluted share,” and that origination growth accelerated with “dollar volume increased 51% to $1.4 billion.”

Outlook

• Management did not provide quarterly or annual EPS or revenue guidance in the prepared remarks or Q&A.

• On portfolio expectations, Billante said, “the revised view of our forecasted collection rate for 2025 and 2026 loan vintages is approximately 65%,” and added that “the impact on adjusted earnings and economic profit will be realized over the life of these vintages.”

• Hegde emphasized ongoing uncertainty and iteration, saying, “forecasting will never be static, particularly in a dynamic non-prime credit environment,” and that the company will “continue to advance our models so we can refine pricing and implement decisions with greater speed and precision.”

Financial results

• Billante reported “economic profit for the quarter was $50.7 million,” and that “forecasted net cash flows declined by 2.5% or $291 million during the quarter,” versus “a decline of 0.5% or $59 million in the third quarter of 2025,” attributing the change largely to “more granular analytics capabilities” and underperformance “more pronounced among consumer loans and lower scorecard bands.”

• Billante said market share improved, stating, “for the first 2 months of Q3, according to current Velocity data, market share in our core segment of used vehicles financed by sub-prime consumers was 5.4%, up from 4.5% for the same period of 2025.”

• On capital allocation and funding, Billante said, “we repurchased 269,150 shares for $161.6 million,” ended the quarter with “$1.2 billion of liquidity,” and “completed a $600 million securitization,” adding it achieved “our lowest credit spreads since late 2021.”

• On expenses and staffing, Billante said, “operating expenses decreased $14.2 million or 10% year-over-year,” and “we reduced our team member base by approximately 6%,” following “a similarly sized reduction discussed on our first quarter earnings call.”

Q&A

• Moshe Orenbuch, TD Cowen: “none of this write-down had anything to do with the litigation, correct?” CEO Vinayak Hegde: “none of this write-down had to do anything with the litigation.”

• Orenbuch, TD Cowen: asked whether adjusted metrics would mechanically step down via a lower future “adjusted yield.” CFO Joseph Billante said the forecast adjustment “spreads it over the life,” and added, “I don’t think that’s the right way for you to think through it,” emphasizing mix effects as “lower performing vintages fall off and… better performing vintages come in.”

• Orenbuch, TD Cowen: asked how dealer/customer experience improvements may affect “originations” or “market share.” CEO Hegde pointed to aggregator strategy, saying, “a significant portion of the growth that we are seeing is actually coming from that,” and added that even dealers using CAPS “are also growing.”

• Robert Wildhack, Autonomous Research: asked for color on where underperformance drove the “big adjustment.” CEO Hegde said, “we saw underperformance in some of the lowest scoring risk bands within our portfolio,” and CFO Billante added, “prepayments… were not a material contributor to the Q3 adjustment.”

• Wildhack, Autonomous Research: pressed on confidence that “the scorecard is now right this time.” CEO Hegde responded, “forecasting will never be static,” and said the company can “fine-tune it more and more now, understand the risks at a much finer grain level than we ever had before.”

Sentiment analysis

• Analysts’ tone was slightly negative to skeptical, with repeated challenges on the forecast revision and modeling implications, including “a lot to digest here,” and questions about whether prior stability messaging fit the magnitude of the adjustment.

• Management’s tone was neutral to slightly positive, stressing process changes and control points, including “we feel very good about that forecast adjustment,” and repeated framing that impacts are recognized “over the life” of vintages rather than immediately.

• Versus Q2 2026, the Q3 exchange showed more tension around forecasting precision and cohort performance; in Q2, Q&A centered more on prepayments and gradual volume improvement, while Q3 focused on the larger forecasted net cash flow revision and how to model yields going forward.

Quarter-over-quarter comparison

• Q3 shifted from Q2’s message of stabilization to a more explicit reset of lifetime expectations: CFO Billante said Q3 “reduced forecasted collection rates for consumer loans assigned from 2022 through 2026,” and quantified the change as “2.5% or $291 million,” while Q2 described forecasted net cash flows down “$39.1 million or 0.3%.”

• Origination momentum improved sharply: Q3 featured “unit volume… increased 38% year-over-year,” versus Q2’s “unit volume declined 1% year-over-year,” with Q3 management attributing acceleration to aggregator integrations and the new scorecard rollout.

• Analyst focus rotated from Q2’s prepayment headwind discussion to Q3’s deeper scrutiny of forecast methodology, internal risk-band underperformance, and whether adjusted metrics/“adjusted yield” should be modeled differently after the write-down.

Risks and concerns

• Management identified portfolio underperformance concentrated in “lower scorecard bands” and said it drove reduced collection expectations for 2022–2026 cohorts; CEO Hegde cautioned, “these loans remain relatively unseasoned, and we need additional performance history before drawing firm conclusions.”

• Regulatory matters were addressed as resolved: Hegde said, “we reached agreements resolving the New York and multistate matters,” and added, “we do not expect agreements to have a material effect on our growth strategy or the way we operate the business.”

• Execution risk around model changes remained explicit, with Hegde stating, “we will not get every decision right,” and framing the mitigation as faster testing and “identify what is not working early.”

Final takeaway

Management framed Q3 as a quarter of sharply improved origination growth and dealer expansion alongside a significant, methodology-driven reduction in expected lifetime collections for 2022–2026 cohorts. Leadership emphasized that growth is being driven by aggregator distribution and a newly rolled-out scorecard, while the forecast reset reflects deeper segmentation and seasoning insights—paired with continued share repurchases, securitization access, and cost actions intended to support “disciplined profitable growth” over time.

Read the full Earnings Call Transcript

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