Propel Holdings (TSX:PRL) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.
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Summary
Propel Holdings reported a record quarter with significant revenue growth of 26% year over year, reaching $179.6 million, and a 23% increase in ending Sealab to $639 million.
Strategic investments in expanding platforms and product offerings, such as Lending as a Service, which saw a 150% revenue increase, and geographical expansion contributed to this growth.
The company maintained stable credit performance with a provision for loan losses at 50% of revenue, supported by its AI-powered underwriting platform.
Propel Holdings increased its quarterly dividend by 6%, marking the 12th consecutive quarterly increase, and maintained a strong financial position with a debt-to-equity ratio of 1.2 times.
Management highlighted strong consumer demand, particularly in the underserved segment, and plans for further expansion into new states and product offerings, with an optimistic outlook for continued growth in the latter half of 2026.
Full Transcript
OPERATOR
Good morning, everyone. Welcome to Propel Holdings' Second Quarter 2026 Financial Results Conference Call. As a reminder, this conference call is being recorded on August 6, 2026. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for research analysts to queue up for questions. And now I will turn the call over to Devin Galani, Propel's Vice President, Capital Markets and Investor Relations.
Please go ahead, Devin.
Devin Galani, Vice President, Capital Markets and Investor Relations
Thank you, operator. Good morning, everyone, and thank you for joining us today. Propel's second quarter 2026 financial results were released yesterday after market close. The press release, financial statements, and MD&A are available on SEDAR+ as well as on the company's website, propelholdings.com. Before we begin, I would like to remind all participants that our statements and comments today may include forward-looking statements within the meaning of applicable securities laws.
The risks and considerations regarding forward-looking statements can be found in our Q2 2026 MD&A and Annual Information Form for the year ended December 31, 2025, both of which are available on SEDAR+. Additionally, during the call we may refer to non-IFRS measures. Participants are advised to review the section entitled Non-IFRS Financial Measures and Industry Metrics in the company's Q2 2026 MD&A for definitions of our non-IFRS measures and the reconciliation of these measures to the most comparable IFRS measure.
Lastly, all dollar amounts referenced during the call are in US dollars unless otherwise noted. I am joined on the call today by Clive Kinross, Founder and Chief Executive Officer, and Sheldon Saidakovsky, Co-Founder and Chief Financial Officer. Clive will provide an overview of our Q2 results and observations on our consumer segment and overall economic environment before Sheldon covers our financials in more detail. Before we open the call to questions, Clive will provide an update on Propel's growth strategy and outlook for the remainder of 2026.
With that, I'll pass the call over to Clive.
Clive Kinross, Chief Executive Officer and Founder
Thank you, Devin, and welcome, everyone, to our second quarter conference call. We delivered another record quarter, building on the strong momentum we established at the beginning of the year. Importantly, this quarter demonstrated that the strategic investments we've made over the past several quarters to expand our platform and serve more consumers across the credit spectrum are translating into measurable results. We expanded into new states, launched new products, and broadened our distribution channels, enabling us to reach more consumers than ever before.
Supported by strong consumer demand, new customer originations increased by 34% year over year, and if including Lending as a Service, new customer originations increased by 43%. The growth contributed to record ending Sealab of $639 million, up 23% from a year ago, and record revenue of $179.6 million, an increase of 26%. Our focus on disciplined execution resulted in a record quarterly adjusted EBITDA of $43.7 million and record quarterly adjusted net income of $24.8 million.
Importantly, we achieved this growth while maintaining another quarter of stable credit performance. Provision for loan losses and other liabilities represented 50% of revenue, reflecting both the strength of our AI-powered underwriting platform and the resiliency of the consumers we serve. Before turning the call over to Sheldon, I'd like to spend a few minutes discussing those consumers and what we're seeing across the broader economy. We often use the term underserved consumer, but today that group represents a much larger segment of the population than it did just a few years ago.
As we've discussed on previous calls, we continue to see a K-shaped economy emerge across our markets with the middle of the credit spectrum shrinking. While many consumers have benefited from rising asset prices and migrated into the super prime category, others, despite remaining employed and maintaining reasonable repayment histories, are finding it increasingly difficult to access traditional sources of credit. According to TransUnion, since 2022 the share of subprime consumers has increased by approximately 7%, rising from 13.8% to 14.8% of the population.
The lending market has changed for them. Many large financial institutions have tightened underwriting standards, leaving a growing number of consumers without access to the credit products they have historically relied upon. At the same time, demand for credit remains elevated as households continue to manage the impact of higher everyday living costs. In fact, the Federal Reserve recently reported that credit rejection rates reached 33% in 2025, the highest level in a decade.
Furthermore, in Q2 2026, the Federal Reserve Bank of New York found that consumer demand for credit reached its highest level since October 2021, and we see this dynamic in our own business with strong demand and stable credit performance. This is why our mission remains so relevant today. We believe our technology and AI-powered underwriting platform can responsibly expand access to credit by helping us better understand consumers who have been overlooked by traditional underwriting models.
At the core of our business is a simple belief: these consumers are often misunderstood. They are resilient, they're employed, they're actively managing their finances, and they're taking practical steps to navigate the macroeconomic environment. Our own data reinforces this. In a recent survey of Propel and our bank partners' customers, the majority of respondents told us they expect to spend more on essentials like gas and groceries this summer.
Rather than falling behind, the majority said they plan to reduce spending elsewhere. Looking more broadly across our markets, we continue to see an economic backdrop that is resilient. In the United States, unemployment remains low at 4.2%, with employment remaining strong across many of the industries where our customers work. Furthermore, our customers continue to benefit from steady wage gains, and consumer spending remains strong. In the United Kingdom, inflation has moderated towards the Bank of England's targets, while unemployment has remained relatively stable.
Canada, which represents approximately 2% of our business, continues to experience a softer labor market than the United States. However, inflation remains relatively low, and despite ongoing trade uncertainty, the Canadian economy has remained more durable than many had anticipated. Overall, across the markets in which we operate, we continue to see healthy employment, moderating inflation, and resilient consumer demand. This is an environment we know well and one in which our AI-powered underwriting platform has consistently performed well.
To serve the increasing number of underserved consumers and strengthen our business, we spent the past several quarters investing in initiatives that expand both our addressable markets and our competitive advantages. These investments are increasingly contributing to our results. Lending as a Service generated record revenue of $11.1 million, an increase of 150% year over year. Propel UK continued its strong performance, with revenue increasing 53% year over year in Q2 2026 to a record $17.3 million, and Propel Bank continued expanding its operational capabilities, supporting lending and servicing activities in the U.S. while enhancing long-term strategic flexibility. Overall, we are proud of both our second quarter performance and the momentum we've built through the first half of the year. Reflecting this continued performance and strong financial position, our board approved another increase to our quarterly dividend to $1.02 per share, Canadian, on an annualized basis, representing a 6% increase and our 12th consecutive quarterly increase. I will speak more about our growth plans and the outlook for the rest of 2026, but first I will pass it over to Sheldon.
Sheldon Saidakovsky, Co-Founder and Chief Financial Officer
Thank you, Clive, and good morning, everyone. We continue to build on the strong momentum established earlier this year. Strong consumer demand, together with the continued expansion of our platform, supported another quarter of record results. Against this backdrop, total originations funded increased by 25% year over year to $243.4 million, representing another quarterly record. New customer origination growth was strong, increasing by approximately 34% year over year to a record $111 million, and if including Lending as a Service, new customer originations increased by 43% year over year.
The MoneyKey Bank Service Program in particular continued to experience significant growth during the quarter, with ending Sealab increasing by approximately 79% year over year and by 29% sequentially over Q1. New customer originations within this program increased by approximately 56% sequentially from Q1, driven by continued geographic expansion, the ongoing transition from legacy products, and the addition of new marketing partners and channels.
Lending as a Service also delivered another record quarter, with revenue increasing approximately 150% year over year to a record $11.1 million. In the UK, QuidMarket continued to grow significantly, delivering another quarter of record originations and revenue, with revenue increasing in excess of 50% year over year as the business further expanded its market presence. The strong performance across these businesses drove ending Sealab to a record $639.1 million, an increase of 23% year over year, and supported record quarterly revenue of $179.6 million, an increase of 26% year over year.
The annualized revenue yield increased to 117% in Q2 from 114% in the prior-year period. The increase primarily reflects the strong growth from new customer originations, the expansion of Lending as a Service, and the higher contribution from higher-yielding programs including QuidMarket and the Bank Service Program. Overall, we are pleased with the continued execution of our growth strategy during the quarter and the expansion of our platform across products, geographies, and customer segments.
Turning to provisioning and charge-offs, credit performance remained stable during the second quarter and was consistent with our expectations. Provision for loan losses and other liabilities represented 50% of revenue in Q2 2026, while net charge-offs as a percentage of average CWAB was 12%, both consistent with the prior-year period, reflecting the strength of our AI-powered underwriting platform, disciplined approach, consumer resiliency, and continued strong portfolio performance.
Notably, we achieved this performance while delivering overall record originations and growing ending Sealab by 23% year over year, demonstrating our ability to successfully balance significant growth with prudent risk management. Overall credit performance was in line with our expectations and remains in line as we move forward through Q3. Turning to profitability, our net income increased by 7% year over year to $16.2 million, while our adjusted net income increased 29% year over year to a record $24.8 million. Furthermore, diluted EPS increased by 7% to $0.38 while adjusted diluted EPS increased 28% to a record $0.58 per diluted share. Adjusted return on equity improved to 35% on an annualized basis compared to 32% in the prior year period, reflecting another quarter of strong earnings growth and efficient capital deployment.
As discussed earlier, the significant growth of the MoneyKey bank service program over Q1 resulted in a larger non-cash adjustment to net income during the quarter. This adjustment was driven by the increase in the bank service program liability relating to the increase in the off-balance sheet receivables associated with this program. In addition, the growth in the other programs and the corresponding increase in the Stage 1 expected credit loss allowance also contributed to the higher adjustment to net income during the quarter.
As a reminder, we believe that these adjustments, and consequently our non-IFRS metrics, provide a better representation of the portfolio's performance, particularly in a period of higher growth. Turning to operating expenses, we continue to invest in a number of strategic initiatives designed to support the company's long-term growth, including the ongoing buildout and expanded operations of Propel Bank, further scaling of our Lending as a Service platform, and ongoing investment in AI-powered capabilities, technology infrastructure, and customer acquisition initiatives.
At the same time, we realized operating leverage across several areas of the business. Salaries, wages and benefits declined to approximately 8% of revenue from 8.4% in the prior year period, while G&A declined to approximately 2% of revenue from 2.5%, reflecting the scalability of our platform as we continue to grow. Business acquisition and data expense increased to 14.5% of revenue during the quarter from 13% in the prior year period. Cost per funded origination increased to 11 cents from 10 cents, while cost per new customer funded origination increased to 24 cents from 22 cents.
As we've noted in prior quarters, the year-over-year increases reflect the continued investment in expanding and diversifying our customer acquisition platform through approximately 20 new marketing partners, together with broader investment across diversified marketing channels. In addition, the ongoing growth of QuidMarkets contributed to the increase as we continue investing to expand its customer base and market position. Underwriting and data costs per funded loan also contributed to this increase as application volumes grew even more significantly than originations, reflecting the disciplined approach maintained with our bank partners.
Effectively, we and our bank partners are evaluating more applications relative to each funded origination. Importantly, both cost per funded origination and cost per new customer funded origination improved sequentially for the first quarter of 2026, reflecting early benefits from our expanding marketing platform and continued optimization of our acquisition strategy. We believe these investments support long-term growth while maintaining disciplined underwriting and stable credit performance.
Processing, technology, and program servicing expense increased primarily due to the ongoing scaling of our Lending as a Service platform, which, as we mentioned, grew by 150% year over year. As a reminder, these expenses include customer acquisition and servicing costs associated with our Lending as a Service programs. Notably, Lending as a Service costs declined to 62% of Lending as a Service revenue from 76% in the prior year, demonstrating improving unit economics and operating leverage as the program scales.
Our overall cost of debt also continued to improve, declining to 10.2% from 11.4% in the prior year period, reflecting enhanced credit facility pricing together with lower benchmark interest rates. Lower funding costs further enhance the earnings power of the business while providing additional flexibility to support future growth in the shares. Overall, we delivered record adjusted net income and adjusted diluted EPS while continuing to invest in strategic initiatives across the business.
Strong profitability was supported by record revenue, stable credit performance, and disciplined execution. Our investments are delivering results and will continue delivering attractive long-term revenue and earnings growth and returns on equity. Turning to Propel's capitalization, we continue to maintain a strong financial position supporting the ongoing growth of our lending programs and strategic initiatives. At quarter end, we had approximately $97 million of undrawn credit commitment capacity across our credit facility with a debt to equity ratio of 1.2 times, providing significant liquidity and financial flexibility.
Even though ending CLAB grew by approximately $50 million since year end, our outstanding debt balance remained essentially unchanged at $332 million. This reflects the strong earnings and cash flow profile of the business, which enabled us to fund meaningful portfolio growth, an increasing quarterly dividend, and continued investment in our strategic initiatives without increasing our outstanding debt. We believe our strong financial position, growing earnings profile, and disciplined capital management position us well to continue funding future growth while delivering attractive long-term returns for shareholders.
I'll now turn the call back to Clive.
Clive Kinross, Chief Executive Officer and Founder
Thank you, Sheldon. As we look ahead to the second half of 2026, we continue to see strong momentum across the business. Demand remains strong, credit performance remains in line with our expectations, and the investments we've made are translating into measurable results. In the U.S., we continue to expand our addressable market by introducing new products like Freshline, entering additional states, and adding new marketing and distribution partners.
As our business grows, our marketing strategy is evolving alongside it. In addition to expanding our partner network, we're investing further up the marketing funnel through connected television, online video, and AI-optimized digital content to build awareness, strengthen our brand, and support customer acquisition. We're equally encouraged by the momentum we're seeing in Lending as a Service and expect strong growth going forward, supported by committed, long-term capital partners as the program continues to scale.
Lending as a Service is becoming an increasingly meaningful contributor to Propel's revenue and profitability while expanding our capital-light, fee-based business segment, allowing us to serve more consumers and generate attractive recurring revenue. Internationally, almost two years since the acquisition of QuidMarkets, we continue to grow the business while leveraging Propel's expertise and infrastructure. Growth has been strong, and we expect it to continue.
Supporting many of these initiatives is a continued operationalization of Propel Bank. I'm pretty sure I said that wrong, but you know what I mean. Which provides long-term strategic flexibility as we scale. A banking license expands our capabilities and creates additional options for growth over time. As with every aspect of our business, that flexibility is supported by a strong commitment to regulatory compliance and disciplined risk management.
Finally, I'd like to touch on AI. We've been an early investor in artificial intelligence, developing our AI-powered underwriting platform in 2015, well before AI became central to most business conversations. Today, we're applying the same philosophy across the entire organization. For example, AI supports our customer service representatives during live customer interactions, helping to drive efficiency and enable agents to serve more consumers in a day, with loans originated per customer service representative reaching an all-time high this quarter, up roughly 30% year over year.
Our technology and engineering teams are also using AI to enhance Propel's proprietary platform more efficiently, with AI contributing to almost 50% of net new code written during the quarter. The next phase of our AI strategy is focused on automating core operational, technology, and finance processes. This work is already underway. Ultimately, our objective is simple: to ensure every estimate we make in AI translates into greater efficiency and stronger execution and supports long-term, profitable growth.
Although these initiatives span different parts of our business, they are all designed to achieve the same objectives: expanding our platform, increasing our competitive advantages, and creating long-term shareholder value. In September, Propel will celebrate its 15th anniversary. Reaching that milestone reflects 15 years of disciplined execution, continuous innovation, and the ability to successfully navigate multiple economic cycles, where we have grown every year since our inception, including our revenue and adjusted EPS CAGR of 43% and 64% respectively since 2019.
It's also a testament to the extraordinary team we have built. The team's dedication, tenacity, and relentless focus on execution have transformed Propel from a single-product fintech company into the global fintech platform we are today. While the business has evolved significantly, our mission has remained constant: expanding access to credit while delivering sustainable, profitable growth for our shareholders. The opportunities in front of us today are greater than at any point in our history.
More consumers than ever are locked out of the credit market, and we have built the platform to meet that need. With the strength of our platform, the resilience of the consumers we serve, and the exceptional team we've built, I believe Propel is exceptionally well positioned for the quarters and years ahead. With that, operator, you may now open the line for questions.
OPERATOR
Thank you, ladies and gentlemen. We will now begin the question-and-answer session. Should you have a question, please press star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. And your first question comes from the line of Matthew Lee of Calicard. Please go ahead.
Matthew Lee, Analyst at Calicard
Hi guys. Thanks for my question. Really nice quarter here. Just a couple items I want to touch on. Maybe we can start with this geographical expansion that you talked about. Can you frame that opportunity in terms of what states you're going into, the size of the addressable market, and maybe just context it with where was your addressable market last year versus now, and maybe where do you expect it to be in a couple years as Propel Bank ramps? Thanks.
Clive Kinross, Chief Executive Officer and Founder
Yeah, so Matt, first of all, thank you. Thank you so much for the kind words. We're also very, very pleased with the quarter. You know, I think it was an incredibly strong quarter and, as I mentioned in my prepared remarks, we've really gone from a one-product company in one market to now, you know, a global fintech powerhouse operating in the U.S., the U.K., and Canada: our own balance sheet program, our off-balance-sheet program, lending as a service.
So all of that has created lots of different growth drivers, and we're seeing that starting to really accelerate and will continue to accelerate over the course of the year, and it is also diversifying not only the growth drivers but also the risk profile across the business. As you mentioned, the additional geographies are also furthering that growth. We're in states today as a combination of our partnership with Columbank out of California with the launch of Propel Global Bank.
It's allowed us to operate in new jurisdictions that, even 12 months ago, we weren't operating in. And that geographic expansion is also fueling lots of the growth. By the way, expect more states to be added as we continue to roll out the bank service program and as we also continue to expand Propel Global Bank's servicing across the platform. All of which is to say our addressable market is increasing for two reasons. Number one, as I mentioned, the subprime segment has increased 7% since 2022.
That alone, on a macro perspective, is increasing the market. But we're expanding into new geographies and new products, which is why you saw roughly 43% new customer growth, including lending as a service, for the most recent quarter, dramatically outperforming the natural growth in the market. We expect, if anything, growth to accelerate in Q3 and Q4 relative to the first half of the year.
Matthew Lee, Analyst at Calicard
That's really helpful. And then maybe on the cost side, I'm just trying to think about how margins should improve as it continues to grow. So can you just talk about maybe how much your current costs relate to the ramping of Propel Bank and lending as a service versus what you consider to be kind of core operating expenses. Just to get an idea of how much you think about margins as the business scales.
Sheldon Saidakovsky, Co-Founder and Chief Financial Officer
Hey, hey, Matt, thanks a lot for the question and for the kind words, as you referenced. Obviously, there's a lot of initiatives that we've been rolling out and investing in over the last, I would say, two to three quarters that are actually paying off quite a lot right now. We started saying back in Q3 last year that we started investing deliberately in expanding our acquisition channels. You started to see the uptick in our acquisition costs in Q4, continued into Q1.
And I will note that, as I said in my prepared remarks, our acquisition costs per new-customer dollar funding actually ticked down in Q2 from Q1 sequentially. So we're seeing some of that benefit already, even on the cost side. But most importantly, those investments are generating all this significant growth and the increase in the application volume that's driving the sizable growth that you're seeing not only in Q1, now in Q2 as well. That's frankly outpacing expectations.
So those investments are paying off. As Clive said, we're making deliberate investments in rolling out Propel Bank, which is right on schedule. And it's helping to fuel the geographic expansion across the U.S. and product expansion ultimately as well. The relationship with Columbank that we invested in is leading to a lot of growth on the lending-as-a-service side and into new states. So all of these investments are starting really to pay off. I think, from a margin perspective, as you know, we have a seasonal business.
So expect the margins in the second half of the year to be a little bit lower than what you saw in the first half of the year this year. But with that said, they will be better than what we saw in the second half of last year. As you may recall, we slowed down growth as a result of several factors last year in Q3—some additional upticks in delinquency that we saw back then—and, coupled with starting to make the investments that I just spoke about, compressed some margins.
So absolutely expect margin expansion in the second half of this year relative to last year.
Matthew Lee, Analyst at Calicard
That's great color, guys. And congrats on the quarter and again, congrats on the 15 years of growth.
Clive Kinross, Chief Executive Officer and Founder
Thanks so much, Matt. Thank you.
OPERATOR
And your next question comes from the line of Rob Goss of Ventum. Your line is now open.
Rob Goss, Analyst
Good morning. And let me echo Matt's comments in terms of congratulations on the quarter and the 15 years behind it. Very well done. It's commendable.
Clive Kinross, Chief Executive Officer and Founder
Thank you so much. Really appreciate it. Time flies, man. It's amazing. It's been 15 years, and I was reflecting yesterday—amazing. It's been almost five years since we've been a public company. I think this is the 20th time we're doing this.
Rob Goss, Analyst
I thought you guys were both teenagers when you started this. Right, sorry, bad joke. More seriously, can you discuss the pacing and the evolution of the MoneyKey direct-to-bank services? You know, how do you see the states transitioning across the year and, where you have transitioned, what have you seen in terms of the impact on loan growth, yield, you know, COA and quality of credit?
Clive Kinross, Chief Executive Officer and Founder
Yeah, so it's a great question. And just to take a step back, overview: transitioning from the MoneyKey states to the MoneyKey service program. The MoneyKey states are the legacy states that we started all the way back, going back to our inception. And to a large degree, those were some of the states where we weren't seeing a lot of growth. They were a smaller part of the business and, frankly, they weren't getting the TLC that they otherwise might have gotten if they'd been a larger share of our business.
And what we consciously decided to do as a result was transition them across to the MoneyKey service program, where ultimately we have a lot more distribution channels, marketing partners, and where there's a lot more focus from a risk perspective. That has turned out to be obviously a really good move, not only from our perspective, but also from the many, many more consumers that we're able to now serve. As a result, the impact has been twofold.
First of all, on aggregate, we've grown the volumes in those states close to 2x across the board. Some states a little bit more than that, some states a little bit less than that. But in those states you're seeing significant growth. And obviously that's one of the things that's really propelling the growth of the MoneyKey Bank Service Program. At the same time, because it's getting even more attention by us and our bank partner there as well, it's getting access to what I would call even better enhanced risk models.
So the dramatic acceleration you're seeing on the demand side over there is leading to even better relative credit performance than otherwise would have been the case. And as you know, Rob, that said, it's early stages of transition. In fact, there's a couple more states still to transition across. So we expect, if anything, that to fuel more growth on a go-forward basis. At the same time, the other thing fueling the bank service program is the addition of new states that we're in today that we weren't in as recently, even as 12 months ago.
That's fueling tremendous growth on top of the transition of MoneyKey to the MoneyKey Bank Service Program. And, if anything, expect that also to continue to accelerate and new states to be added to that program as well on a go-forward basis. So we feel really good about our ability to continue to grow that program on a go-forward basis. And it's one of the reasons that I'm confident in saying that we expect the growth of the business to accelerate in Q3 and even further in Q4 of this year relative to last year.
Rob Goss, Analyst
Thank you. Very good. If I could have a follow up for Sheldon. You had mentioned the strength in applications. Can you talk to the growth you were seeing in applications or inbounds and where your current screening parameters are?
Sheldon Saidakovsky, Co-Founder and Chief Financial Officer
Yeah, hey Rob, thanks for the question. You know, we're looking at an excess of 100,000 applications every single day right now. And if you follow kind of what we've been saying and reporting, that's been growing quite significantly month over month, quarter over quarter. And it's getting to a very high rate over here as we continue to expand the marketing channels, enter new states, and just overall enhance our existing programs and new products, et cetera.
So we're benefiting a lot from the increases in application volume, and the investments are absolutely paying off on the marketing side. And what that enables us to do, Rob, as we've talked about—right? We're kind of opening up the top of the funnel. We're seeing a lot more applications, and because of that, we can originate more while keeping the same prudent underwriting posture. So if you kind of triangulate that—if we're seeing a lot more application volumes, maintaining kind of the same risk parameters—our acceptance rate, all else being equal, actually comes down a little bit.
So, you know, if you look at where we are today, our acceptance rate is probably in the 6% to 7% range, which is not too dissimilar from what we saw in Q1, probably ticked down slightly. But, you know, week over week, month over month, as we're expanding across these different programs, we're seeing the application volume increase. That's why right now we're not giving the specific number on the application volume and actually saying it's well in excess of 100,000 a day right now.
Clive Kinross, Chief Executive Officer and Founder
We spent, we actually, let me just layer onto that a little bit. We actually spent quite a bit of time discussing where we should position that number and ultimately said we're going to go with in excess of 100,000 applications a day. But, Rob, if I were to take a step back and say what's driving such healthy demand? I mentioned it in my prepared remarks, but it's worthwhile mentioning again because the fundamentals of what's driving this growth in our industry with stable credit performance, I think, are set in for certainly the medium term over here, if not the long term.
As I mentioned, the subprime segment of the market, in this K-shaped economy, has grown by about 7% since 2022, which is significant growth in this otherwise stable economy from 30.7% to 14.7%. So that's one of the tailwinds, and we're capitalizing on that even more by adding more products and more geographies. So that's number one. Number two is you saw the strongest rejection rate last year in 2025, I think over a decade. That's what the Fed came out with in 2025.
And we've been expressing that on calls as well, that there's tightening ahead of us. And I think those two data points go hand in hand. They're not inconsistent with one another. And finally, in Q2 alone, I think we saw the strongest demand from a credit perspective. The New York Fed came up with that data point since Q3 of 2021. All of that is fueling incredibly strong demand across the board with stable credit performance. I think yesterday, Bank of America came out and said not only do we all know the unemployment rate is really low, but they came out yesterday and said that income levels of what I would call generally lower income consumers has actually risen faster than the general population. So all of those dynamics are leading to strong demand, stable credit performance. And because there's such strong demand, if anything we could be really, we and our bank partners can be really selective with the loans that we originate while fueling tremendous growth as well as stable credit performance. If anything, as we're heading to Q3, which typically has higher delinquencies, say, than Q2 and Q1, our and our bank partners' orientation has been to tighten that underwriting more so, let's say, than Q1 and Q2.
So the growth that you're seeing heading into Q3 and continuing into Q3 is being achieved because of those variables and from our personal perspective, a tighter underwriting posture.
Rob Goss, Analyst
Very good. Thank you very much.
OPERATOR
And your next question comes from the line of Sudan Sukumar of Stifel, please go ahead.
Sudan Sukumar, Analyst at Stifel
Good morning, gents, and congrats on a very solid earnings print. For my first question, I want to touch on revenue yields, obviously an impressive lift both sequentially and year over year. Is this reflecting really more near-term benefits which we should expect to normalize, or is this more reflective of more of a longer-term structural improvement given the evolving mix of the business?
Sheldon Saidakovsky, Co-Founder and Chief Financial Officer
Thanks for the question, Sudan. This is something that we've been messaging for the last couple quarters. It's a result of a number of different factors. Number one, we're doing more new customer originations now than we were doing previously. You're seeing that our new customer proportion of total originations has increased. So when we're originating more new customers, they, generally speaking, have higher yields. Lending as a service is growing significantly and now becoming quite meaningful.
That contributes to the higher revenue yield. Our MoneyKey bank service program serves a higher-yielding segment of consumers, so that's driving the yield up. And QuidMarket also, which is continuing to demonstrate outpaced growth, has higher yields as well. So all of those factors together are driving the yield up. I think last quarter I said that expect yields to be in excess of 115%. The fact that we hit 117, frankly we beat our expectations, and that's in large part obviously due to the growth and all the other factors that I just mentioned.
This will continue, Sudan, as these programs continue to show outpaced growth on a go-forward basis. I think Clive mentioned expect accelerated growth in lending as a service going forward. In the coming quarters, accelerated growth on the QuidMarket UK side, and we, you know, given the way risk is performing right now and the way the portfolio is composed, we continue to expect to generate a higher proportion of new customer origination. So if you put all of that together, I would expect revenue yields to be somewhere between 115 and 120 for the remainder of the year.
And I'm probably being a bit conservative on the low-end side. Given we're at 117% right now, I expect that to tick up a little bit as we go forward.
Sudan Sukumar, Analyst at Stifel
Great, perfect. Thanks for that color. My second question, I wanted to touch on debt capacity. What we're seeing here is a sustaining pace of strong originations activity. You guys increasing your dividend consistently. From a balance sheet perspective, do you guys have sufficient funding room to support continued loan book growth?
Sheldon Saidakovsky, Co-Founder and Chief Financial Officer
Yeah, the answer to the question is absolutely. I mean, you touched on a couple of really key points over there. I don't think they're lost on the investor community. I think they're actually quite well understood. But let me just repeat that the debt balance since the end of the year has actually not grown. Notwithstanding the significant growth we've seen in our sealab, the significant growth we've seen in our revenues and an ever-increasing dividend, we actually haven't increased our debt balance.
If anything, our liquidity has improved since then. We've already mentioned we expect the growth top and bottom line, certainly relative to 2025, to accelerate relative to the impressive growth we've already seen year to date. And we could do all of that and largely maintain the debt balance where it is. So from a liquidity perspective, we have more than enough liquidity, including growing liquidity. Actually that might be helpful in the event that there's any M&A opportunities on a go-forward basis.
Obviously I think we've got just shy of $100 million of liquidity at the moment. So from that perspective, there certainly is a cap if we were to do an acquisition on how large that acquisition could be without needing some form of additional liquidity. But that's the only scenario that we currently contemplate where we would potentially need additional liquid.
Sudan Sukumar, Analyst at Stifel
Okay, okay, great. Thank you for that color. And if I could just squeeze in one more. Guys, on lending as a service, can you speak to the level of demand, interest from investors from a forward flow perspective? You're seeing strong growth here. And you guys have telegraphed a 10% target for lending-as-a-service revenues this year. But is there room to potentially accelerate that, given some of this momentum that you're seeing here?
Clive Kinross, Chief Executive Officer and Founder
So let me start off by saying that, yeah, we continue to expect lending as a service to be approaching 10% of our revenues by the end of the year. And let me also emphasize that the overall growth of our business is going to accelerate between now and the end of the year. I've made that point a couple of times on this call. So when we say that we expect it to start approaching 10% by the end of the year, that's of a growing business. So the 150% lending-as-a-service growth that we saw in Q2, as impressive as that is, we expect that growth to also accelerate on a go-forward basis.
I know we've made that point a few times. And to your question, that's largely being fueled by the blue-chip quality of the institutional investors who now are part of that forward flow purchasing arrangement. And they're coming on board enthusiastically because they were getting the returns that we represented to them they would get if they did this. As you can appreciate in the earlier days, and I think we're certainly still in our earlier days in this initiative, but even in the earlier days, what we were telling investors they could expect over here, they trusted us based on our track record and credibility.
But they didn't have the data themselves. They now have the data themselves. They're now seeing what the returns are. And on the back of that, there's really strong demand not only from our existing cohort of investors, but from new investors as well who'd like to get on board and be part of our forward flow. So the constraints which we had previously of onboarding new capital partners is no longer there. We feel like we now have really solid long-term investors from that perspective, which makes it much easier for us to forecast what that growth will be on a go-forward basis.
If you said to me why do we expect the growth to accelerate, it's not necessarily because of new capital partners, because we've got more than enough as far as that's concerned. The reason it's going to accelerate is we're opening up new marketing channels, number one. Number two, we're opening up in additional states, we're opening up with additional products as well. And finally, not only are we doing all of that which will fuel the growth, we're just getting better as a business in terms of optimizing that particular segment of the business.
So not only are we doing all of that to fuel the growth of the business, but at the same time, as we've already demonstrated, there has been margin expansion in that business and we expect there to be even more margin expansion on a go-forward basis. I could tell you that I looked at the numbers yesterday for lending as a service in July and was really, really pleased to see the continued growth that we demonstrated in Q2, if anything, as I've already said, accelerating into Q3.
Sudan Sukumar, Analyst at Stifel
Okay, great. That's an excellent update, guys. Congrats again on the quarter and thanks for taking my questions. I'll pass.
Clive Kinross, Chief Executive Officer and Founder
Thanks so much, Hanson. I appreciate it.
OPERATOR
And your next question comes from the line of Stephen Poland of Raymond James. Please go ahead.
Stephen Poland, Analyst at Raymond James
Thanks, guys. Good morning. Just, you know, when I look at QuidMarket, lending as a service, through your, I guess, more recent product expansions, you know, approaching, you know, by the end of the year, maybe 20% of your business, you know, outside of kind of like the core lending businesses that you had, I mean is there a, I'm not sure if there's a right word here, but a concentration, anything that you know, you're fine for to go to 20, to go to 25 to 30, is there, there's a point here.
And Clive, you mentioned a number of things. New investors wanted to come in, forward flow expansion, more states, like this. Seems these two businesses seem, because of their growth and like that, they may end up dominating—dominating, but becoming a very, very significant part of your businesses over the next two years. Is that a fair comment?
Clive Kinross, Chief Executive Officer and Founder
It's a very fair comment. No, I think it's a very fair comment and it's a, you know, I hadn't thought about some of that. The way you framed it up, that on a combined basis those will be about 20% of our business by the end of the year. I'm trying to do the quick math in my head over here. It might even exceed 20% of our business. But I think 20 is a good way to think about it. And these are businesses that didn't even exist from a Propel perspective a couple years ago.
Which goes back to my earlier comments about us building a real global platform over here with more growth drivers for the business on the one hand and, on the other hand, diversification of credit risk as we expand into more markets. Steve, I'll tell you how we think about it. We have got an exceptional team over here at Propel. Fifteen years later, the four co-founders are all intact. We've got a 20-plus person executive team over here who I could tell you is more motivated and more focused than ever, and obviously the support of probably another 650 other incredible team members across Canada, Puerto Rico and the UK.
And what we're doing constantly is trying to maximize the growth, taking into account risk, of all of the different business units. We're watering all of them because I've learned what you water will grow. And if you said to me, do we have some kind of artificial line in the sand as to how big we want any of those business units to be, I think the answer to that question is no we don't. We all want them to be as big and large as they possibly can be and to serve as many consumers as we can.
The great news about where we are is, as impressive as the growth has been, we're still a tiny portion of the overall market in all of the markets that we operate. So you're right to point out that two of our nascent businesses, lending as a service as well as Propel UK, have got even faster growth than other areas of the business. But rest assured, all areas of our business have got significant growth lined up ahead and you will continue to see that on a go-forward basis.
Stephen Poland, Analyst at Raymond James
And I don't want to beat this yield discussion to death because, you know, it's very optimistic on the new products like lending as a service and QuidMarket. You did mention some graduation, but, you know, the 115 to the 120 again for 2026, that seems pretty achievable. But again you have these businesses, the high margin ones, growing. Like what stops this from going north of 120 next year or getting to 125? Is it, especially with the QuidMarket?
I mean, I don't know what the cap on lending as a service, I can't remember, but certainly these two businesses may be your highest margin, I'm guessing. But what's stopping the 2027 number from getting well over 120?
Sheldon Saidakovsky, Co-Founder and Chief Financial Officer
It could, Steve, you know, at the rate of growth that we're going at and the higher proportion of the overall revenues that these programs are representing and growing into. Just keep in mind also that this quarter, actually Q2, our new customer proportion, which carries higher yields, was, you know, its highest proportion since Q4 of 2024. So we're doing a lot more new customer originations right now. And those ultimately, when they start at the top—we have a very important component of our portfolios, our graduation—so those consumers will ultimately start graduating and the ones in our existing portfolio will continue to graduate to better and better products. Ultimately our goal, as we've specified across all of our programs, is to provide the right risk-adjusted price product to each and every underserved consumer. That's the ultimate goal, to be present across the underserved credit spectrum. So expect additional risk-based pricing. So when you look at risk-based pricing and graduation, that's kind of the counter to all of these higher-yielding pieces. But we're not ready to give guidance yet for 2027.
But it certainly can exceed 120, I'll kind of put it that way. And as we get closer to year end we'll put out more concrete guidance on that. But we're very excited. It's a great development and obviously generating both growth and margin expansion as we move forward. Maybe I get a— Steve,
Clive Kinross, Chief Executive Officer and Founder
If I could just add something to what Sheldon said. And we made a conscious decision that we're going to just let one person speak on our side over here, but only later on when it's an important point. But I do want to just tell you what's going on kind of beneath the surface over here. When we started in this industry, if you were an underbanked or underserved consumer, you qualified for one product and that was the product that you qualified for.
More and more what we've done, and I think we've led the industry in this initiative, is we've introduced risk-based pricing with our bank partners for these underbanked and underserved consumers. What you don't necessarily see and what we don't speak about as much on this call is the expansion of our product set. And I could tell you that once you get into more of the details, the products or the customers that we're serving, the range of APRs is larger than it's ever been.
We're expanding the product set, call it at yields quite a bit below what our average yield is. And that product set and those consumers and that segment of the market has grown a lot, either on the lending as a service side or, alternatively, the stuff that's included in our C Lab. And, by the same token, we've also expanded that product set for customers that are north of our average yield. And I'm not now speaking about the contribution of lending as a service nor Propel UK, I'm speaking about everything else.
So there's way more consumers, there's a much wider range, and we're doing much more risk-based pricing. The MoneyKey bank service program, where you saw a significant amount of growth this quarter and, in fact, year to date for many of the reasons that I already mentioned—generally speaking, the consumers who qualify for those loans have slightly more bruised credit profiles than, say, the consumers who qualify for CreditFresh. As a result of that, the APRs and the corresponding revenue yields tend to be higher.
And as already mentioned, that's a much faster growing segment of our US business right now, which is also going to contribute to higher revenue yields on a go-forward basis.
Stephen Poland, Analyst at Raymond James
Okay, thanks guys. I'll take the rest offline. Thanks so much.
OPERATOR
Thank you. And your next question comes from the line of Michael McHugh of TD Securities. Please go ahead.
Michael McHugh, Analyst at TD Securities
Hi guys, good morning. Good to be here for the first time on the call. Just wondering, with the very remarkable last—growth, quarter over quarter, year on year. Are you able to provide any color on how much of that has come from the Freshline rollout in particular versus products that were already existing within the LAS ecosystem prior to 2026?
Sheldon Saidakovsky, Co-Founder and Chief Financial Officer
Hey Michael, great to have you on. And on a go-forward basis we're really excited to have TD as part of the team over here. It's coming from across the board, Michael. That's the quick explanation. I mean, our existing lending as a service programs are scaling significantly. We have adequate capital right now, as Clive outlined, and we're just optimizing across the board, investing in new marketing channels, as we've discussed, and expanding geographically as we add new states.
And you've got Freshline, which, you know, frankly has surpassed our expectations at rollout. So that's, I mean, again, that's something we just started earlier this year. So it's pretty remarkable how well that's performed. You know, in the future we may provide a little bit more color on the difference between the two, but really we look at it as one overall lending as a service program and they're both going really, really well. And I'd say Freshline is ahead of expectations for sure.
Michael McHugh, Analyst at TD Securities
Okay, great, thank you. And then another growth driver, just with QuidMarket—obviously very solid year-over-year growth as well and strong credit performance. We've previously discussed the sort of fragmented market in the UK and just wondering what, if any, constraints on further growth in the UK, what the competitive landscape looks like, and maybe a potential outlook there for the next year and a half or so.
Sheldon Saidakovsky, Co-Founder and Chief Financial Officer
Yeah, at this stage there's no real constraints outside of just our self-imposed constraints. I would say the market is very big and it's growing. The competitive landscape—there hasn't been any major entrance over there. There's no dominant player. We are able to hit these growth rates while maintaining very prudent underwriting. On balance, as we've talked about before, the risk-adjusted kind of spread over in the UK at this point is a little bit better because we're just able to keep really tight underwriting and cherry-pick the very best consumers over there.
There are shifts in the market overall and we're growing with them. You know, very much like North America, we're expanding our acquisition channels and investing on the marketing side. Part of that's being reflected in our higher acquisition costs in the UK, but that's yielding a lot of benefits. And I think, you know, year over year, certainly in Q3 and Q4, I expect our revenues to accelerate when you're looking at it relative to last year. So, if anything, I think the growth in the UK, given all the infrastructure that we built and invested in, expect the rate of growth to increase.
So that's really good. And I think, you know, what we've also started kicking off over there is our full kind of technology and underwriting analytics and platform integration. And once we get that fully integrated, which is really the last piece of the full integration—the integration so far since acquisition has been just excellent and ahead of schedule—this is the last piece that we've expected to integrate starting in the second half of this year.
We're on pace to doing that and that should fuel a step up in growth next year as well. So we're very excited about the UK market and everything's coming.
Michael McHugh, Analyst at TD Securities
That's helpful. That's all for me.
Sheldon Saidakovsky, Co-Founder and Chief Financial Officer
Thanks, Michael.
Clive Kinross, Chief Executive Officer and Founder
Thanks, Michael. Thank you, Michael. Michael, great to have you on the call. I didn't address any of your questions, but I know it's your first time over here and we're delighted to have you guys as part of the research team over here. Thanks so much.
OPERATOR
And your next question comes from the line of Jeff Fenwick of ATB Capital Markets. Your line is now open.
Jeff Fenwick, Analyst at ATB Capital Markets
Hi. Good morning, everyone. I'll try to keep it brief here. I know we're late in the call. I wanted to circle back on the commentary around the application growth. I mean, it's obviously a real positive to have that continued growth there that you spoke to. We're certainly seeing the expense associated with that, and I know you're working to optimize it, but just wondering what you're thinking strategically about this year. If you're generating more apps but your acceptance rate is sort of falling, one perspective might be that that's an inefficient spend.
I think the other—maybe the flip side, and Clive, I think you may have spoken to this—is maybe changing your risk-based pricing and taking a bit more risk in the way the product you're offering out to the consumer. How do you think about that balance versus, you know, tweaking the approach to generating those applications versus the opportunity to capture more of them into the business?
Sheldon Saidakovsky, Co-Founder and Chief Financial Officer
Yeah, it's all really kind of very insightful questions. I think first and foremost we speak about profitable growth. We don't just speak about growth. So we always have an eye on profitable growth. And I think, and I hope if our investor community understands one thing, it's that we won't just grow for the sake of growth. We need to see, we do need to see the right kind of credit performance. And as I've mentioned a couple of times, as we move into the back half of the year, particularly Q3, the early parts of Q4, there is, generally speaking, a little bit of elevated risk as our consumers are spending more with back-to-school, summer vacations, all of that kind of stuff. So we wanted to be proactive in tightening our underwriting and, fortunately, because of the strong demand that we're seeing, we can be more selective as far as that's concerned. Just bear with me, just bear with me for a second over here. I just lost my train of thought in the middle of that conversation. Just bear with me over here.
Chad, Analyst
And I guess the question was really around, are you generating more than you need? Right. You're not targeting the right customers.
Sheldon Saidakovsky, Co-Founder and Chief Financial Officer
Maybe with some of the— Oh, sorry, sorry, sorry. I remember the second part of what I wanted to say. You're right. Insofar as marketing costs, as a result of that, you are probably spending a little bit more on underwriting than what otherwise would be the case, say the acceptance rate would remain constant. That said, if you look at our cost per acquisition on a new customer, it has actually declined quarter over quarter and we expect it to continue to be refined.
Part of that is because of exactly what I'm talking about, the refining of the underwriting. The other part of it is we've added 20 new marketing and distribution channels this year. That's an incredible amount of hard work by the marketing team in onboarding 20 new distribution channels. All of these distribution channels come on board, they need to be optimized both from a marketing perspective and risk perspective as well. So when you go a level deeper, that's also happening.
So what that will probably translate to—not necessarily this quarter, but over the medium term—what it will probably translate to is higher acceptance rates as we get more familiar with these new marketing channels and even more optimization and more refinement on the cost per acquisition on a go-forward basis. All of which is to say I think that we've got lots of choices, and when you have lots of choice, particularly in this industry, you can be more selective, which is critical in driving profitable growth.
Chad, Analyst
Okay, thank you for that color. I'll leave it there.
Sheldon Saidakovsky, Co-Founder and Chief Financial Officer
Thank you.
OPERATOR
Thanks, Chad. And there are no further questions at this time. I will now turn the call over to Clive Kinross for the closing remarks. Please continue.
Clive Kinross, Chief Executive Officer and Founder
I think we've just broken a record today for our longest earnings call, so certainly want to thank you all for attending our call this morning. I'd also like to thank our investors and our partners for their continued support of our vision of building a new world of financial opportunity. And as always, I would like to extend a really, really big thank you to the Propel team in Canada, the UK, and Puerto Rico for delivering these outstanding record results and achievements.
On that note, have an excellent day and operator, you may end the call.
OPERATOR
Ladies and gentlemen, this concludes today's conference call. Thank you everyone for joining. You may now disconnect.
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