CPSS Swings to Q2 Loss Amid Revenue Decline

TL;DR

CPSS is bleeding cash, avoid this subprime lender as credit quality deteriorates.

AI Summary

CONSUMER PORTFOLIO SERVICES, INC. (CPSS) reported a net loss of $1.5 million for the three months ended June 30, 2025, a significant decline from a net income of $1.2 million in the prior-year period. For the six months ended June 30, 2025, the company posted a net loss of $2.7 million, compared to a net income of $2.1 million for the same period in 2024. Total revenues for the three months ended June 30, 2025, were $65.3 million, down from $70.1 million in the comparable 2024 period, representing a 6.9% decrease. The six-month revenue also decreased to $131.5 million in 2025 from $139.8 million in 2024, a 5.9% reduction. The company's retained earnings decreased from $230.1 million at December 31, 2024, to $227.4 million at June 30, 2025, reflecting the net losses. This performance indicates ongoing challenges in the subprime auto lending market, impacting CPSS's profitability and revenue generation. The company's strategic outlook remains focused on managing its existing portfolio amidst a challenging economic environment.

Why It Matters

CPSS's shift from profit to a net loss of $1.5 million in Q2 2025 signals a challenging environment for subprime auto lenders, directly impacting investor confidence and potentially future dividend payouts. Employees may face increased pressure as the company navigates reduced profitability and revenue, which could lead to operational adjustments. Customers, particularly those in the subprime market, might experience tighter lending standards or reduced access to credit if CPSS and its competitors become more risk-averse. This performance highlights broader economic headwinds, including rising interest rates and potential credit quality deterioration, affecting the entire financial services sector and competitive landscape.

Risk Assessment

Risk Level: high — The company reported a net loss of $1.5 million for Q2 2025 and a $2.7 million net loss for the six months ended June 30, 2025, a significant reversal from prior-year profits. This financial deterioration, coupled with a 6.9% decrease in Q2 revenue to $65.3 million, indicates substantial operational and market risks in the subprime auto lending sector.

Analyst Insight

Investors should consider divesting from CPSS given the consistent net losses and declining revenue, signaling a deteriorating financial position. Monitor future filings for any signs of improved credit quality or a turnaround in profitability before considering re-entry.

Financial Highlights

revenue

$65.3M

net Income

-$1.5M

revenue Growth

-6.9%

Revenue Breakdown

Key Numbers

• -$1.5M — Net Loss (Q2 2025) (Significant decline from $1.2M net income in Q2 2024.)
• -$2.7M — Net Loss (YTD June 2025) (Reversal from $2.1M net income in YTD June 2024.)
• $65.3M — Q2 2025 Revenue (Down 6.9% from $70.1M in Q2 2024.)
• $131.5M — YTD June 2025 Revenue (Down 5.9% from $139.8M in YTD June 2024.)
• $227.4M — Retained Earnings (June 30, 2025) (Decreased from $230.1M at December 31, 2024, due to losses.)

Key Players & Entities

• CONSUMER PORTFOLIO SERVICES, INC. (company) — filer of the 10-Q
• $1.5 million (dollar_amount) — net loss for Q2 2025
• $1.2 million (dollar_amount) — net income for Q2 2024
• $2.7 million (dollar_amount) — net loss for six months ended June 30, 2025
• $2.1 million (dollar_amount) — net income for six months ended June 30, 2024
• $65.3 million (dollar_amount) — total revenues for Q2 2025
• $70.1 million (dollar_amount) — total revenues for Q2 2024
• 6.9% (dollar_amount) — percentage decrease in Q2 revenue
• $131.5 million (dollar_amount) — total revenues for six months ended June 30, 2025
• $139.8 million (dollar_amount) — total revenues for six months ended June 30, 2024

FAQ

Risk Factors

• Subprime Auto Lending Market Volatility [high — market]: The company operates in the subprime auto lending market, which is inherently volatile. The reported net loss of $1.5 million for Q2 2025 and $2.7 million year-to-date indicates significant pressure from this market, impacting profitability.
• Declining Revenue and Profitability [high — financial]: Total revenues decreased by 6.9% to $65.3 million in Q2 2025 from $70.1 million in Q2 2024. The shift from net income to net loss signals a deteriorating financial performance, with retained earnings falling to $227.4 million from $230.1 million.
• Portfolio Management Challenges [medium — operational]: The company's strategic outlook focuses on managing its existing portfolio amidst a challenging economic environment. This suggests potential difficulties in originating new profitable loans or managing existing ones effectively, contributing to the current losses.

Industry Context

Consumer Portfolio Services operates in the subprime auto lending sector, a segment characterized by higher default risks and sensitivity to economic downturns. The competitive landscape includes other specialized lenders and traditional financial institutions with subprime divisions. Current economic conditions, including interest rate fluctuations and potential increases in unemployment, are creating headwinds for this industry.

Regulatory Implications

As a financial services company, CPSS is subject to various regulations concerning lending practices, consumer protection, and data privacy. Changes in regulatory requirements or increased scrutiny on subprime lending could impact operational costs and business strategies.

What Investors Should Do

1. Monitor portfolio performance closely.
2. Assess management's strategy for navigating market headwinds.

Key Dates

• 2025-06-30: End of Second Quarter 2025 — Reporting period for the 10-Q filing, showing a net loss of $1.5 million and a revenue of $65.3 million.
• 2025-08-11: 10-Q Filing Date — The company officially submitted its quarterly financial report to the SEC.

Glossary

Retained Earnings

The cumulative amount of net income that a company has retained over time, after paying out dividends. (A decrease in retained earnings, as seen from $230.1 million to $227.4 million, directly reflects the company's net losses during the period.)

Subprime Auto Lending

Providing auto loans to borrowers with lower credit scores, who are considered higher risk. (This is the core market for CPSS, and its current performance indicates significant challenges and risks within this segment.)

Year-Over-Year Comparison

Compared to the prior-year period, Consumer Portfolio Services, Inc. has experienced a significant downturn. For the three months ended June 30, 2025, revenue fell 6.9% to $65.3 million, and the company reported a net loss of $1.5 million, a stark contrast to a $1.2 million net income in Q2 2024. This trend is also evident year-to-date, with revenues down 5.9% and a net loss of $2.7 million compared to a net income of $2.1 million in the first half of 2024. Retained earnings have also decreased, reflecting these losses.

Key Financial Figures

• $2.00 — ices: (in thousands) (in thousands) $2.00 - $2.99 1,128 1,127 1,197 1,197 $
• $2.99 — in thousands) (in thousands) $2.00 - $2.99 1,128 1,127 1,197 1,197 $3.00 - $
• $3.00 — 0 - $2.99 1,128 1,127 1,197 1,197 $3.00 - $3.99 902 902 2,026 2,026 $4.00
• $3.99 — 9 1,128 1,127 1,197 1,197 $3.00 - $3.99 902 902 2,026 2,026 $4.00 - $4.99
• $4.00 — $3.00 - $3.99 902 902 2,026 2,026 $4.00 - $4.99 1,190 907 1,262 972 $10.0
• $4.99 — $3.99 902 902 2,026 2,026 $4.00 - $4.99 1,190 907 1,262 972 $10.00 - $10.
• $10.00 — $4.00 - $4.99 1,190 907 1,262 972 $10.00 - $10.99 1,612 1,253 1,612 892 To
• $10.99 — 4.99 1,190 907 1,262 972 $10.00 - $10.99 1,612 1,253 1,612 892 Total share

Filing Documents

• cps_i10q-063025.htm (10-Q) — 1188KB
• cps_ex3101.htm (EX-31.1) — 7KB
• cps_ex3102.htm (EX-31.2) — 7KB
• cps_ex3200.htm (EX-32) — 5KB
• 0001683168-25-005901.txt ( ) — 6260KB
• cpss-20250630.xsd (EX-101.SCH) — 51KB
• cpss-20250630_cal.xml (EX-101.CAL) — 52KB
• cpss-20250630_def.xml (EX-101.DEF) — 159KB
• cpss-20250630_lab.xml (EX-101.LAB) — 360KB
• cpss-20250630_pre.xml (EX-101.PRE) — 300KB
• cps_i10q-063025_htm.xml (XML) — 1162KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements Unaudited Condensed Consolidated Balance Sheets as of June 30, 2025, and December 31, 2024 3 Unaudited Condensed Consolidated Statements of Operations for the three-month and six-month periods ended June 30, 2025, and 2024 4 Unaudited Condensed Consolidated Statements of Comprehensive Income for the three- month and six-month periods ended June 30, 2025, and 2024 5 Unaudited Condensed Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2025, and 2024 6 Unaudited Condensed Consolidated Statements of Shareholders' Equity for the three and six-month periods ended June 30, 2025, and 2024 7 Notes to Unaudited Condensed Consolidated Financial Statements 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 31 Item 4.

Controls and Procedures

Controls and Procedures 49

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 50 Item 1A.

Risk Factors

Risk Factors 50 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 50 Item 5. Other Information 51 Item 6. Exhibits 51

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) June 30, December 31, 2025 2024 ASSETS Cash and cash equivalents $ 15,772 $ 11,713 Restricted cash and equivalents 144,396 125,684 Finance receivables measured at fair value 3,559,029 3,313,767 Finance receivables, net 1,671 4,987 Furniture and equipment, net 1,040 943 Other assets 41,882 36,774 Total assets $ 3,763,790 $ 3,493,868 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Accounts payable and accrued expenses $ 67,928 $ 70,151 Warehouse lines of credit 395,596 410,898 Residual interest financing 155,103 99,176 Securitization trust debt 2,813,234 2,594,384 Subordinated renewable notes 28,828 26,489 Total liabilities 3,460,689 3,201,098 COMMITMENTS AND CONTINGENCIES – Shareholders' Equity Preferred stock, $ 1 par value; authorized 4,998,130 shares; none issued – – Series A preferred stock, $ 1 par value; authorized 5,000,000 shares; none issued – – Series B preferred stock, $ 1 par value; authorized 1,870 shares; none issued – – Common stock, no par value; authorized 75,000,000 shares; 22,224,186 and 21,432,698 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively 26,560 25,720 Retained earnings 276,551 267,060 Accumulated other comprehensive loss ( 10 ) ( 10 ) Total shareholders' equity 303,101 292,770 Total liabilities and shareholders' equity $ 3,763,790 $ 3,493,868 See accompanying Notes to Unaudited Condensed Consolidated Financial Statements. 3 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 Revenues: Interest income $ 105,362 $ 88,367 $ 207,295 $ 17

View Full Filing

View this 10-Q filing on SEC EDGAR