FirstCash (FCFS) Q4 2025 earnings review
Record Quarter: Pawn Momentum Eclipses AFF Headwinds
FirstCash delivered a standout quarter, crossing $1 billion in quarterly revenue for the first time (+20% YoY) and growing Adjusted EPS by 25%. The core pawn business is firing on all cylinders: U.S. same-store receivables grew double-digits for the 10th consecutive quarter, and the newly acquired U.K. segment is immediately accretive. While the AFF segment continues to shrink due to partner bankruptcies (-15% revenue), aggressive cost cutting preserved profitability. With pawn operations now contributing ~90% of segment income, the company is effectively insulating itself from the volatility in its POS finance arm.
🐂 Bull Case
The macro environment remains perfect for pawn. Inflation and tighter credit access drove U.S. same-store pawn receivables up 12% and LatAm up 23% (constant currency). Management expects this momentum to persist with 'low double-digit' fee growth guided for U.S. pawn in 2026.
The H&T acquisition is outperforming early. In its first full quarter, the U.K. segment generated $35M in pre-tax operating income with a robust 36% margin. Receivables grew 25%, validating the thesis that H&T was under-managed and ripe for FirstCash's operational playbook.
🐻 Bear Case
The Retail POS segment (AFF) remains a weight on top-line growth. Revenue fell 15% in Q4, and guidance predicts a further 10-15% drop in H1 2026 due to the runoff of American Freight and Conn's portfolios. While profitable, this segment is shrinking while the rest of the company expands.
The Mexican Peso remains a wild card. While recent rates were favorable, the FY25 average rate depreciated 5%. With significant operations in LatAm, FX swings can mute reported USD growth, as seen in the spread between reported (+10%) and constant currency (+14%) LatAm revenue for the full year.
⚖️ Verdict: 🟢🟢
Strong Buy. FirstCash is executing perfectly in its core business. The acceleration in revenue and earnings, driven by organic pawn demand and the H&T integration, far outweighs the contained weakness at AFF. The 2026 outlook suggests continued double-digit compounding.
Key Themes
Pawn Receivables: The Growth Engine
Pawn receivables—the leading indicator for future fees—are surging globally. U.S. same-store growth hit 12%, marking ten straight quarters of double-digit gains. LatAm accelerated to 23% growth (CC), and the U.K. posted 25% growth. This broad-based demand confirms that the core consumer is structurally relying on pawn services.
Operating Leverage in LatAm
LatAm profitability is accelerating faster than sales. While Q4 revenue grew 27% (USD), segment pre-tax operating income jumped 36%. Margins expanded as the store base matures and the company leverages its scale. With 11 new stores in Q4 and a guidance for mid-teen fee growth in 2026, this region remains a high-ROI growth vector.
AFF: Shrinking to Health
The narrative for AFF is stabilization, not growth. Partner bankruptcies (Conn's, American Freight) caused a 15% revenue contraction in Q4. However, management slashed operating expenses by 32%, maintaining a $33M profit contribution. The guide implies the segment won't return to growth until H2 2026, making it a temporary drag on consolidated comparisons.
Rising Expense Base
Inflation is impacting the cost structure. LatAm operating expenses are guided to rise 8-10% in 2026, driven partly by a 12% minimum wage hike in Mexico. While revenue growth is currently outpacing these costs, persistent wage inflation could pressure margins if top-line momentum slows.
Other KPIs
Stable/Improving. Up from 26.4% in 24Q4. Despite inflationary pressures, the U.S. business maintained excellent profitability, driven by higher yields and strong retail margins (43%).
Record generation, up 9% YoY. This robust cash flow funded $475M in acquisitions (including H&T), $62M in real estate purchases, and $186M in shareholder returns, while ending the year with $125M in cash.
Healthy. The leverage ratio remains well within the target range, even after funding the significant U.K. acquisition. The company has $1.5B in fixed-rate notes with favorable rates (4.6% - 6.9%), insulating it from rate volatility.
Guidance
Stable. Consistent with the 10-12% growth seen throughout 2025. Indicates management sees no sign of the credit-constrained consumer environment easing.
Reversing. The decline is front-loaded (-10% to -15% in H1) due to the bankruptcy runoff, with a pivot to growth expected in H2 as new originations (+5-10% guided) layer in.
Accelerating. Implies strong contribution from the new segment. For context, Q4 annualized was ~$140M, but Q4 is seasonally the strongest (30% of year). The guidance aligns with sustaining the current high performance levels.
Stable. Consistent with the 2025 effective rate, showing no expected major tax headwinds across jurisdictions.
Key Questions
AFF Stabilization Timing
You guided for AFF originations to grow 5-10% in 2026. Can you walk us through the cadence of this recovery? Specifically, when do you expect the 'bankruptcy drag' to fully wash out of the year-over-year comparisons?
U.K. Synergies
H&T margins were impressive at 36% in Q4. As you integrate their operations onto FirstCash platforms, what specific efficiency levers are left to pull, and is there upside to this margin profile?
LatAm Wage Inflation
With a 12% minimum wage hike in Mexico for 2026, how much pricing power do you have to offset this? Are you relying solely on loan growth to cover the increased expense base?