PRAA US Equity☆

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with our audited financial statements and accompanying notes thereto included in Item 8 of this Form 10-K. See Frequently Used Terms at the end of this Item 7 for definitions used throughout this Form 10-K. Unless otherwise specified, references to 2025, 2024 and 2023 are for the years ended December 31, 2025, December 31, 2024 and December 31, 2023, respectively.

EXECUTIVE OVERVIEW

We are a global leader in acquiring and collecting nonperforming loans with 2,615 full-time employees worldwide. Most of the nonperforming loans we purchase are from credit originators who have chosen not to pursue, or have been unsuccessful in collecting, the full balance owed to them ("Core" accounts). To a lesser extent, we also purchase loans in situations where the customer is involved in a bankruptcy or similar proceeding ("Insolvency" accounts).

During the fourth quarter of 2025, we reorganized our business segment structure from a single operating segment into two operating and reportable segments, comprised of our U.S. and European businesses. On a significantly smaller scale, we also operate in South America, Canada and Australia. Subject to globally-established parameters for capital allocation, portfolio return thresholds and leverage, each market functions under a similar debt management business model, which is predicated on purchasing nonperforming loans and generating returns through disciplined collection strategies over extended collection periods.

For additional information about our business and reportable segments, refer to Part I, Item 1 "Business" of this Form 10-K and Note 16 to our Consolidated Financial Statements included in Item 8 of this Form 10-K.

Results and business trends

During 2025, we focused on strengthening our U.S. platform, building on the strength and momentum of our European business, executing on our near-term priorities and developing our longer-term strategy. Our 2025 results included the following:

•Net loss attributable to PRA Group, Inc. of $305.1 million. Excluding the impact of Gain on sale of equity method investment and Goodwill impairment, Adjusted net income attributable to PRA of $72.6 million ("Adjusted net income attributable to PRA" is a non-GAAP financial measure; refer to section "Non-GAAP Financial Measures" below).

•Portfolio income, the more stable and predictable yield component of our revenue, increased by 18.2% compared to 2024, outpacing the growth in cash collections and contributing more to our net results.

•ERC of $8.6 billion at year-end, an increase of 15.4% compared to 2024, with the U.S. accounting for 42.5% of total ERC and Europe 51.0%.

•Maintenance of a diversified capital structure consistent with our targeted leverage and liquidity objectives, completing the issuance of our first Euro-denominated senior notes (€300.0 million) and repurchasing $20.0 million shares of our common stock.

•Further progress on our U.S. business initiatives focused on improving cost efficiency and operational flexibility, with a reduction in our U.S. onshore agent headcount of approximately 40% and concurrent increase in U.S. Core cash collections of 19.8%.

Environment

The nonperforming loans segment in the U.S. has been characterized by regulatory complexity, with a relatively high level of customer disputes, a fairly stable competitive landscape, a small number of sellers and a tendency toward forward flow-driven sales. In Europe, the segment has been characterized by a more fragmented regulatory environment, with each jurisdiction having its own rules, a more competitive environment and larger number of sellers, and sales, until recently, more typically made on a spot basis.

Consumer behavior in the nonperforming loans segment can be seasonal and change in response to macroeconomic conditions, government programs or shifts in household finances. Our overall customer base has remained stable across the U.S. and Europe, and we believe our global diversification helps to mitigate risk from individual markets. Over the last two years, market conditions included a favorable supply environment, which contributed to higher purchase price multiples ("PPMs") and improved returns. Based on current trends and recent pipeline activity, subject to changes in market and economic conditions, we expect portfolio supply to remain relatively stable over the near to medium term.

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SELECTED CONSOLIDATED FINANCIAL DATA

Income statement

Goodwill impairment 412,611 — —

Gain on sale of equity method investment 38,403 — —

Adjusted diluted earnings per share (2) 1.84 1.79 (2.13)

Performance data and ratios

Return on average tangible equity ("ROATE") (7) (35.6) 9.5 (11.3)

Adjusted return on average tangible equity ("Adjusted ROATE") (8) 8.5 9.5 (11.3)

Portfolio volumes

Balance sheet (year-end)

Credit facility availability (year-end)

(1)Total operating expenses excluding the impact of Goodwill impairment ("Adjusted operating expenses") is a non-GAAP financial measure. Refer to section "Non-GAAP Financial Measures" below.

(2)Net income/(loss) attributable to PRA Group, Inc. and Diluted earnings per share excluding the impact of certain transactions that are unusual or infrequent in nature and not reflective of our ongoing operations ("Adjusted net income/(loss) attributable to PRA" and "Adjusted diluted earnings per share", respectively), are non-GAAP financial measures. Refer to section "Non-GAAP Financial Measures" below.

(3)Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") is a non-GAAP financial measure. Refer to section "Non-GAAP Financial Measures" below.

(4)Calculated by dividing cash receipts less operating expenses by cash receipts.

(5)Calculated by dividing cash receipts less Adjusted operating expenses by cash receipts ("Adjusted cash efficiency ratio"), which is a non-GAAP financial measure. Refer to section "Non-GAAP Financial Measures" below.

(6)Calculated by dividing Net income/(loss) attributable to PRA Group, Inc. by average Total stockholders' equity - PRA Group, Inc.

(7)ROATE is calculated by dividing Net income/(loss) attributable to PRA Group, Inc. by Average tangible equity ("Average tangible equity"). ROATE and Average tangible equity are non-GAAP financial measures. Refer to section "Non-GAAP Financial Measures" below.

(8)Adjusted ROATE, which is a non-GAAP financial measure, is calculated by dividing Adjusted net income/(loss) attributable to PRA by Average tangible equity. Refer to section "Non-GAAP Financial Measures" below.

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Consolidated and Business Segment Results of Operations (2025 and 2024)

Purchasing and collections activity

Portfolio purchases

Portfolio purchases by business segment and in total for 2025 and 2024 were as follows (in thousands, except percentages):

(1)Reflects portfolio purchases in South America, Canada and Australia.

Our total portfolio purchases in 2025 decreased by $199.3 million, or 14.2%, compared to the prior year. Total portfolio purchases of $1.2 billion were in-line with our 2025 target as we continued to invest selectively, focusing on long-term returns and balancing our investments with our leverage. Coupled with the improvements in our collection capabilities, this approach to allocating capital helped drive higher PPMs and increased Portfolio income.

•U.S.: Portfolio purchases decreased by $205.7 million reflecting more selectivity in our buying and focus on net returns. The PPM for our 2025 U.S. Core vintage was 2.16x, reflecting a steady increase in recent years.

•Europe: Portfolio purchases were distributed broadly across our markets and increased by $10.4 million. Core portfolio purchases increased by $34.1 million due to higher volumes in certain markets and the addition of new sellers, partially offset by a decrease of $23.7 million in Insolvency purchases. The PPM for our 2025 European Core vintage was 1.85x, reflecting a steady increase in recent years.

Cash collections

Cash collections by business segment and in total for 2025 and 2024 were as follows (in thousands, except percentages):

(1)Reflects cash collections in South America, Canada and Australia.

Our total cash collections in 2025 increased by $239.1 million, or 12.8%, compared to the prior year. Total cash collections of $2.1 billion exceeded our growth target for the year and was driven by performance in both the U.S. and Europe.

•U.S.: Cash collections increased by $157.8 million driven in large part by higher volumes resulting from the expansion in our legal collections channel.

•Europe: Cash collections increased by $91.0 million distributed broadly across multiple markets and due, in part, to foreign exchange rate variation.

Operating results

Segment operating income

Our CEO evaluates the profitability of our U.S. and European business segments based primarily on segment operating income, which we define as Income/(loss) from operations adjusted to exclude goodwill impairment and certain unallocated corporate expenses. Refer to Note 16 to our Consolidated Financial Statements included in Item 8 of this Form 10-K for further information and a reconciliation of segment operating income to consolidated Income/(loss) before income taxes.

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Segment operating income for 2025 and 2024 was as follows (in thousands, except percentages):

•U.S.: Segment operating income decreased by $6.9 million due primarily to an increase in operating expenses, partially offset by an increase in portfolio revenue.

•Europe: Segment operating income increased by $52.1 million due primarily to an increase in portfolio revenue, partially offset by an increase in operating expenses.

Portfolio revenue

Total portfolio revenue by component and business segment for 2025 and 2024 were as follows (in thousands, except percentages):

By component:

By business segment:

(1)Reflects portfolio revenue in South America, Canada and Australia.

Our total portfolio revenue in 2025 increased by $91.7 million, or 8.3%, compared to the prior year, while Portfolio income, the more stable and predictable yield component of our revenue, increased by $156.1 million, or 18.2%.

•U.S.: Portfolio revenue increased by $17.6 million due primarily to a $115.8 million increase in portfolio income driven largely by higher purchasing levels in recent years and improved pricing. This increase was partially offset by a $98.2 million decrease in Changes in expected recoveries driven by a lower net increase in changes in expected future recoveries and lower net overperformance on our U.S. Core pools.

•Europe: Portfolio revenue increased by $67.0 million due primarily to a $42.9 million increase in portfolio income driven by higher recent purchasing levels in several of our European markets and due, in part, to foreign exchange rate variation. Changes in expected recoveries increased by $24.1 million due to a higher net increase in changes in expected future recoveries.

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Operating expenses

Total operating expenses and Adjusted operating expenses for 2025 and 2024 were as follows (in thousands, except percentages):

(1)Mainly costs paid to courts where a lawsuit is filed for the purpose of attempting to collect on an account.

(2)Contingent fees incurred for cash collections generated by our third-party attorney network.

(3)Mainly third-party collection fees.

(4)Mainly correspondence, network and calling costs associated with our collection efforts.

(5)Adjusted operating expenses is a non-GAAP financial measure. Refer to section "Non-GAAP Financial Measures" below.

Our Total operating expenses increased by $457.3 million, or 59.0%, compared to the prior year. This was primarily due to a goodwill impairment charge of $412.6 million in 2025 related to our DBC reporting unit (refer to Note 4 to our Consolidated Financial Statements included in Item 8 of this Form 10-K for additional information). Adjusted operating expenses, which exclude the impact of the goodwill impairment charge, increased by $44.7 million, or 5.8%.

•U.S.: Operating expenses increased by $37.7 million due primarily to the goodwill impairment charge and higher legal collection costs and fees associated with expanded activity in our legal collections channel. These increases were partially offset by lower compensation costs driven in part by the consolidation of our U.S. call centers and offshoring of a portion of our collection activities, as well as a reduction in communication costs due to the use of more cost-efficient strategies.

•Europe: Operating expenses increased by $375.5 million due primarily to the goodwill impairment charge. The increase was also due to higher compensation expense associated with organizational changes and higher non-collector wage costs, in addition to higher agency fees associated with increased outsourcing in certain markets.

Consolidated non-operating results

Gain on sale of equity method investment

In April 2025, we sold our 11.7% interest in RCB Investimentos S.A., a servicing company for nonperforming loans in Brazil, and recorded a gain of $38.4 million in our Consolidated Income Statement for 2025. The sale did not impact the ownership of our portfolio investments in South America or our existing operations and expected future portfolio investments.

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Interest expense, net

Interest expense, net for 2025 and 2024 was as follows (in thousands, except percentages):

Our Interest expense, net increased by $22.5 million, or 9.8%, compared to the prior year due primarily to a higher average debt balance in 2025.

Income tax expense

Income tax expense and our effective tax rate for 2025 and 2024 were as follows (in thousands, except percentages):

Effective tax rate (19.2) % 19.2 %

Our Income tax expense increased by $25.7 million, or 122.2%, compared to the prior year, while our effective tax rates for the years ended December 31, 2025 and 2024 were (19.2)% and 19.2%, respectively. Our effective tax rate depends on the mix of income from different taxing jurisdictions and the timing and amount of discrete items. The effective tax rate for 2025 was further impacted by the goodwill impairment charge.

Noncontrolling interests

In South America, we purchase nonperforming loan portfolios through investment funds in which we hold a majority interest. The portion of our Net income/(loss) attributable to noncontrolling interests in those funds is reflected in Net income attributable to noncontrolling interests in our Consolidated Income Statements, which totaled $15.2 million and $18.0 million in 2025 and 2024, respectively.

Consolidated balance sheet

Finance receivables, net

Finance receivables, net were $4.7 billion as of December 31, 2025, an increase of $547.3 million, or 13.2%, driven largely by portfolio purchases of $1.2 billion and Changes in expected recoveries of $176.5 million, partially offset by recoveries collected and applied to Finance receivables, net of $1.1 billion. The remaining difference was attributable to foreign currency translation.

Goodwill

Goodwill was $26.9 million as of December 31, 2025, a decrease of $369.5 million, or 93.2%, due to a goodwill impairment charge. As part of our September 30, 2025 interim impairment assessment, based on a sustained decrease in our stock price and market capitalization, we determined there to be an indicator of potential goodwill impairment in our DBC reporting unit and performed a quantitative impairment test. As a result, we determined that the goodwill in our DBC reporting unit was fully impaired and recorded an impairment charge of $412.6 million. For additional information, refer to Note 4 to our Consolidated Financial Statements included in Item 8 of this Form 10-K. The December 31, 2025 goodwill balance related to our CCB reporting unit.

Borrowings

Borrowings were $3.7 billion as of December 31, 2025, an increase of $370.7 million, or 11.1%, due primarily to an increase in amounts outstanding under our senior notes and net borrowings under our European revolving credit facility of $21.6 million. On September 30, 2025, we completed the issuance of €300.0 million ($352.4 million as of December 31, 2025) aggregate principal amount of our 6.250% senior notes due 2032.

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Interest-bearing deposits

Interest-bearing deposits were $106.1 million as of December 31, 2025, a decrease of $57.3 million, or 35.0%, due primarily to lower interest rates resulting in decreased deposit levels, partially offset by foreign exchange rate variation.

Consolidated Results of Operations (2024 and 2023)

Refer to Item 7 "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of our 2024 Form 10-K for a discussion of our 2024 results compared to our 2023 results.

NON-GAAP FINANCIAL MEASURES

We report our financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). However, our management also uses certain non-GAAP financial measures, including the non-GAAP financial measures referred to below, internally to evaluate our performance and to set performance goals. This Form 10-K includes certain non-GAAP financial measures that exclude the impact of certain items and are not required by, or presented in accordance with, GAAP. Also included are reconciliations of the most directly comparable financial measures calculated in accordance with GAAP to the corresponding non-GAAP financial measure. The non-GAAP financial measures included below should not be considered as an alternative to the most directly comparable financial measure determined in accordance with GAAP and may not be comparable to the calculation of similarly titled financial measures reported by other companies.

Adjusted EBITDA

We present Adjusted EBITDA because we consider it an important supplemental measure of our operational and financial performance. Management believes Adjusted EBITDA helps provide enhanced period-to-period comparability of our operational and financial performance, as it excludes certain items whose fluctuations from period-to-period do not necessarily correspond to changes in the operations of our business and is useful to investors as other companies in the industry report similar financial measures. Adjusted EBITDA is calculated starting with Net income/(loss) attributable to PRA Group, Inc. and is adjusted for:

•income tax expense (or less income tax benefit);

•foreign exchange loss (or less foreign exchange gain);

•interest expense, net;

•other expense;

•depreciation and amortization;

•impairment of real estate;

•goodwill impairment;

•net income attributable to noncontrolling interests;

•gain on sale of equity method investment; and

•recoveries collected and applied to Finance receivables, net less Changes in expected recoveries.

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The following table provides a reconciliation of Net income/(loss) attributable to PRA Group, Inc. to Adjusted EBITDA for the years indicated (in thousands):

Adjusted EBITDA Reconciliation

Adjustments:

Foreign exchange (gain)/loss (755) 9 (289)

Goodwill impairment 412,611 — —

Gain on sale of equity method investment (38,403) — —

(1)Reflects non-operating activities.

Adjusted cash efficiency ratio

We use an Adjusted cash efficiency ratio to monitor and evaluate operating expenses, excluding goodwill impairment, relative to our cash collections plus fees and revenue recognized from our class action claims recovery services. Management believes the Adjusted cash efficiency ratio is a useful financial measure for investors in evaluating our management of operating expenses. The Adjusted cash efficiency ratio is calculated by dividing cash receipts less Adjusted operating expenses by cash receipts. The following table provides a reconciliation of Total operating expenses to Adjusted operating expenses and presents our Adjusted cash efficiency ratios for the years indicated (in thousands, except for ratio data):

Adjusted Operating Expenses Reconciliation and Adjusted Cash Efficiency Ratio

Goodwill impairment (412,611) — —

Adjusted cash efficiency ratio 61.3 % 58.8 % 58.0 %

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Adjusted net income/(loss) attributable to PRA, Adjusted diluted earnings per share, ROATE and Adjusted ROATE

We use Adjusted net income/(loss) attributable to PRA and Adjusted diluted earnings per share to monitor and evaluate our operating performance and allow for better comparability. Management believes Adjusted net income/(loss) attributable to PRA and Adjusted diluted earnings per share are useful financial measures for investors in evaluating our operating results. Adjusted net income/(loss) attributable to PRA is defined as Net income/(loss) attributable to PRA Group, Inc. excluding the impact of certain transactions that are unusual or infrequent in nature and not reflective of our ongoing operations. Calculation of Adjusted diluted earnings per share excludes those same transactions and, if dilutive based on Adjusted net income attributable to PRA, may also include the impact of additional potentially dilutive shares.

We use ROATE to monitor and evaluate operating performance relative to our equity. Management believes ROATE is a useful financial measure for investors in evaluating the effective use of equity and is an important component of our long-term stockholder return. Average tangible equity is defined as average Total stockholders' equity - PRA Group, Inc. less average goodwill and average other intangible assets. ROATE is calculated by dividing Net income/(loss) attributable to PRA Group, Inc. by Average tangible equity.

ROATE may include certain items that are not indicative of the ongoing operating results of our business. Accordingly, management also uses Adjusted ROATE to monitor and evaluate operating performance relative to our equity. Management believes Adjusted ROATE is a useful financial measure for investors because it is based on Adjusted net income/(loss) attributable to PRA. Adjusted ROATE is calculated by dividing Adjusted net income/(loss) attributable to PRA by Average tangible equity.

The following table provides a reconciliation of Total stockholders' equity - PRA Group, Inc. to Average tangible equity and a reconciliation of Net income/(loss) attributable to PRA Group, Inc. to Adjusted net income/(loss) attributable to PRA, and presents our ROATE and Adjusted ROATE for the years indicated (in thousands, except for ratio data):

Balance as of Year End Average Tangible Equity Reconciliation (1)

(1)Amounts represent the average balances for the respective years.

ROATE

Adjusted Net Income/(Loss) Attributable to PRA Reconciliation and Adjusted ROATE

Gain on sale of equity method investment (38,403) — —

Goodwill impairment 412,611 — —

Tax effect of adjusting items (1) 3,515 — —

(1)Based on the annual effective tax rate and pretax income excluding the effect of the adjusting items.

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The following table provides a reconciliation of Diluted earnings per share to Adjusted diluted earnings per share for the years indicated:

Adjusted Diluted Earnings Per Share Reconciliation

Diluted earnings per share $ (7.79) $ 1.79 $ (2.13)

Effect of adjusting items and dilutive shares (1) 9.63 — —

Adjusted diluted earnings per share $ 1.84 $ 1.79 $ (2.13)

(1)Impact of the non-GAAP adjusting items and dilutive effect of all potential shares of common stock.

SUPPLEMENTAL PERFORMANCE DATA

The tables in this section provide supplemental performance data about our:

•ERC by business segment, portfolio type and expected year of collection;

•Cash collections by business segment, Core cash collections separated between call center/other and legal collections and total constant currency adjusted cash collections; and

•nonperforming loan portfolios and collections by business segment, portfolio type and year of purchase.

Purchasing

We purchase portfolios of nonperforming loans from a variety of creditors, or acquire portfolios through strategic acquisitions, and segregate them into our Core or Insolvency portfolios based on the status of the account upon acquisition. In addition, the accounts are segregated into geographical regions based upon where the account was acquired and, as applicable, foreign currency exchange rates are fixed for purposes of comparability in future periods. Ultimately, accounts are aggregated into annual pools based on portfolio type, geography and year of acquisition. Portfolios of accounts that were in an insolvency status at the time of acquisition are represented under Insolvency headings in the tables below. All other acquisitions of portfolios of accounts are included under Core headings. Once an account is initially segregated, it is not later transferred from an Insolvency pool to a Core pool, or vice versa.

Purchase price multiples ("PPMs")

The PPM represents our estimate of total cash collections over the original purchase price of the portfolio. PPMs can vary over time due to a variety of factors, including pricing competition, supply levels, age of the accounts acquired, type and mix of portfolios purchased, expected costs to collect and returns and changes in operational efficiency and effectiveness. When we pay more for a portfolio, the PPM and effective interest rate are generally lower. Certain types of accounts, such as Insolvency accounts, have lower collection costs, and we generally pay more for those types of accounts resulting in lower PPMs but similar net income margins compared to other portfolio purchases.

Estimated remaining collections ("ERC") and Total estimated collections ("TEC")

Depending on the level of performance and expected future impacts from our operations, we may update ERC and TEC levels based on the results of our cash forecasts with a correlating adjustment to the PPM. We follow an established process to evaluate ERC, and we typically do not adjust our ERC and TEC until we gain sufficient collection experience with a pool of accounts. Over time, our TEC has often increased as pools have aged resulting in the ratio of TEC to purchase price for any given year of buying to gradually increase.

For additional information about our nonperforming loan portfolios, refer to Note 1 and Note 2 to our Consolidated Financial Statements included in Item 8 of this Form 10-K.

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Estimated remaining collections

The following table displays our ERC by business segment, year and portfolio type as of December 31, 2025 (in thousands):

ERC By Business Segment, Year and Portfolio

(1)Includes ERC of $1.7 billion for the UK, $1.1 billion for Central Europe, $998.5 million for Northern Europe and $564.6 million for Southern Europe.

(2)Reflects ERC in South America, Canada and Australia.

Cash collections

The following table displays our cash collections by business segment and portfolio type, Core cash collections separated between call center/other and legal collections and total constant currency adjusted cash collections for the years indicated (in thousands, except percentages):

Cash Collections by Business Segment and Portfolio Type

U.S.

Europe

(1)Reflects total cash collections in South America, Canada and Australia.

(2)Total cash collections adjusted refers to prior year foreign currency cash collections remeasured at average U.S. dollar exchange rates for the current year.

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Purchase Price Multiplesas of December 31, 2025In thousands, except percentages

U.S. Core

U.S. Insolvency

Europe Core

Europe Insolvency

(1)Includes the acquisition date finance receivables portfolios that were acquired through our business acquisitions.

(2)Non-U.S. amounts are presented at the exchange rate at the end of the year in which the portfolio was purchased. Purchase price adjustments that occur throughout the life of the portfolio are presented at the year-end exchange rate for the respective year of purchase.

(3)Non-U.S. amounts are presented at the year-end exchange rate for the respective year of purchase.

(4)Non-U.S. amounts are presented at the December 31, 2025 exchange rate.

(5)Reflects all vintages in South America, Canada and Australia.

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Portfolio Financial Information (1) (in thousands)

U.S. Core

U.S. Insolvency

Europe Core

Europe Insolvency

(1)Includes the nonperforming loan portfolios that were acquired through our business acquisitions.

(2)Non-U.S. amounts are presented using the average exchange rates during the current year.

(3)Non-U.S. amounts are presented at the December 31, 2025 exchange rate.

(4)Reflects all vintages in South America, Canada and Australia.

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Cash Collections

U.S. Core

U.S. Insolvency

Europe Core

Europe Insolvency

(1)Non-U.S. amounts are presented using the average exchange rates during the respective year.

(2)Includes the acquisition date finance receivables portfolios acquired through our business acquisitions.

(3)Non-U.S. amounts are presented at the exchange rate at the end of the year in which the portfolio was purchased. Purchase price adjustments that occur throughout the life of the pool are presented at the year-end exchange rate for the respective year of purchase.

(4)Reflects all vintages in South America, Canada and Australia.

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LIQUIDITY AND CAPITAL RESOURCES

We actively manage our liquidity to meet our business needs and financial obligations.

Sources of liquidity

Cash and cash equivalents

As of December 31, 2025, cash and cash equivalents totaled $104.4 million, of which $93.0 million was held by international operations with indefinitely reinvested earnings. For additional information about the unremitted earnings of our foreign subsidiaries, refer to Note 14 to our Consolidated Financial Statements included in Item 8 of this Form 10-K.

Borrowings

As of December 31, 2025, we had the following committed amounts, outstanding borrowings and availability under our financing arrangements (in thousands):

Composition of Total Availability

Colombian revolving credit facility 2,611 2,611 — — —

Debt premium and issuance costs, net — (13,653) — — —

(1)Available borrowings after calculation of borrowing base, subject to the committed amounts and debt covenants, which may be used for general corporate purposes, including portfolio purchases.

(2)Subject to borrowing base and debt covenants, including advance rates ranging from 35-55% of applicable ERC.

Interest-bearing deposits

As of December 31, 2025, interest-bearing deposits totaled $106.1 million. Under our European revolving credit facility, our interest-bearing deposit funding is limited to SEK 2.2 billion ($239.2 million as of December 31, 2025).

Uses of liquidity and material cash requirements

We believe that funds generated from our business activities, together with existing cash, available borrowings under our revolving credit facilities and access to the capital markets, will be sufficient to finance our operations, planned capital expenditures, forward flow purchase commitments, debt maturities and additional portfolio purchases for at least the next 12 months. Our long-term capital requirements will depend in large part on the level of nonperforming loan portfolios that we purchase.

Market conditions permitting, as we deem appropriate, we may seek to access the debt or equity capital markets or other sources of funding, and it may be necessary to raise additional funds to achieve our business objectives. Business acquisitions or higher than expected levels of portfolio purchasing could require additional financing. We may also from time-to-time repurchase common stock or senior notes in the open market or otherwise.

We also have the ability to slow the purchase of nonperforming loans without significantly impacting current year collections. In 2025, we purchased $1.2 billion in nonperforming loan portfolios, which generated $196.6 million of cash collections, representing 9.3% of our total cash collections.

Forward flows

We enter into forward flow agreements for the purchase of nonperforming loans. These agreements typically have terms ranging from six to 12 months, or they can be open-ended, and establish purchase prices and specific criteria for the accounts to be purchased. Some of the agreements establish a volume reference for the contract term in the form of a target or maximum,

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however, very few agreements establish a minimum contractual obligation, and many of the contracts contain early termination provisions allowing either party to cancel the agreements in accordance with a specified notice period.

As of December 31, 2025, we had forward flow agreements in place with an estimated purchase price of approximately $378.0 million over the next 12 months. This total can vary significantly based on the remaining terms and renewal dates of the agreements and is comprised of $167.4 million in the U.S., $194.8 million in Europe and $15.8 million in our other markets. These amounts represent our estimated forward flow purchases over the next 12 months under the agreements in place based on projections and other factors, including sellers' estimates of future forward flow sales, and are dependent on actual delivery by the sellers and, in some cases, the impact of foreign exchange rate fluctuations. Accordingly, amounts purchased under these agreements may vary significantly.

Borrowings

As of December 31, 2025, we had$3.7 billion in outstanding borrowings. The estimated interest, unused fees and principal payments for the next 12 months are$251.7 million, of which $10.0 million relates to principal on our term loan. After 12 months, principal payments on our debt are due from between one and approximately seven years. Our financing arrangements include covenants with which we must comply, and as of December 31, 2025, we were in compliance with these covenants.

On September 30, 2025, we completed the private offering of our 2032 senior notes. For additional information about our borrowings, refer to Note 7 to our Consolidated Financial Statements included in Item 8 of this Form 10-K.

Share repurchases

On February 25, 2022, our Board of Directors approved a share repurchase program under which we are authorized to repurchase up to $150.0 million of our outstanding common stock. The share repurchase program has no stated expiration date and does not obligate us to repurchase any specified amount of shares, remains subject to the discretion of our Board of Directors and, subject to compliance with applicable laws, may be modified, suspended or discontinued at any time. Repurchases are also subject to restrictive covenants contained in our credit facilities and the indentures that govern our senior notes.

Repurchases may be made from time-to-time in open market transactions, through privately negotiated transactions, in block transactions, through purchases made in accordance with trading plans adopted under Rule 10b5-1 of the Exchange Act or other methods subject to market and/or other conditions and applicable regulatory requirements. During the year ended December 31, 2025, we repurchased 1,299,760 shares of our common stock at an average price of $15.39 for a total cost of $20.0 million. As of December 31, 2025, we had $47.7 million remaining for share repurchases under the program.

Leases

Our leases have remaining terms from one to seven years. As of December 31, 2025, we had $32.2 million in lease liabilities, of which $7.7 million is due within the next 12 months. For additional information, refer to Note 5 to our Consolidated Financial Statements included in Item 8 of this Form 10-K.

Derivatives

We enter into derivative financial instruments to reduce our exposure to fluctuations in interest rates on variable rate debt and foreign currency exchange rates. As of December 31, 2025, we had $12.4 million of derivative liabilities, of which $2.1 million matures within the next 12 months. Of the remaining $10.3 million, $7.6 million matures in 2028 and $2.8 million matures in 2029 and 2030. For additional information, refer to Note 8 to our Consolidated Financial Statements included in Item 8 of this Form 10-K.

Investments

As of December 31, 2025, we held $64.9 million in Swedish treasury securities to meet the liquidity requirements of the Swedish Financial Services Authority for our banking subsidiary, AK Nordic AB.

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Cash flow analysis

The following table summarizes our cash flow activity for the years ended December 31, 2025 and 2024 (in thousands):

Net cash provided by/(used in):

Net increase/(decrease) in cash and cash equivalents $ 1,212 $ (6,261) $ 7,473

Operating activities

Net cash used in operating activities mainly reflects the portion of our cash collections recognized as revenue and cash paid for operating expenses, interest and income taxes. It does not include cash collections applied to the negative allowance, which are classified as cash flows provided by investing activities. Net cash used in operating activities decreased by $9.1 million in 2025 due primarily to higher cash collections recognized as income, partially offset by higher cash paid for operating expenses, interest and taxes.

Investing activities

Net cash used in investing activities decreased by $322.5 million in 2025 due primarily to a decrease of $203.3 million in purchases of nonperforming loan portfolios, an increase of $71.3 million in recoveries collected and applied to Finance receivables, net and an increase of $49.2 million in proceeds from sales and maturities of investments.

Financing activities

Net cash provided by financing activities decreased by $374.9 million in 2025 due primarily to a decrease of $269.0 million in net proceeds from lines of credit, a $148.0 million decrease related to interest bearing deposits activity and a decrease of $37.6 million in net proceeds from long-term debt, partially offset by a $94.6 million increase in net proceeds from the issuance and repayment of senior notes. Additionally, we repurchased $20.0 million of our common stock in 2025 compared to no repurchases during the prior year.

For additional information about our credit facilities, term loan and senior notes, refer to Note 7 to our Consolidated Financial Statements included in Item 8 of this Form 10-K.

Effect of foreign exchange rates

The net effect of foreign exchange rates on cash decreased by $50.8 million in 2025, primarily due to the impact of the devaluation of the U.S. dollar on foreign currency denominated borrowings and intercompany balances.

RECENT ACCOUNTING PRONOUNCEMENTS

For discussion of recent accounting pronouncements and the anticipated effects on our Consolidated Financial Statements, refer to Note 1 to our Consolidated Financial Statements included in Item 8 of this Form 10-K.

CRITICAL ACCOUNTING ESTIMATES

Our Consolidated Financial Statements have been prepared in accordance with GAAP. Some of our significant accounting policies require that we use estimates, assumptions and judgments that affect the reported amounts of revenues, expenses, assets and liabilities. For discussion of our significant accounting policies, refer to Note 1 to our Consolidated Financial Statements included in Item 8 of this Form 10-K.

We consider accounting estimates to be critical if they (1) involve a significant level of estimation uncertainty and (2) have had, or are reasonably likely to have, a material impact on our financial condition or results of operations.We base our estimates on historical experience, current trends and various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. If these estimates differ significantly from actual results, the impact on our Consolidated Financial Statements may be material. We have determined that the following accounting policies involve critical estimates:

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Revenue recognition - finance receivables

Revenue recognition for finance receivables involves the use of estimates and the exercise of judgment on the part of management. These estimates include projections of the amount and timing of cash collections we expect to receive from our pools of accounts. We review individual pools for trends, actual performance versus projections and curve shape (a graphical depiction of the amount and timing of cash collections). We then project ERC and apply a discounted cash flow methodology to our ERC. Adjustments to ERC may include adjustments reflecting recent collection trends, our view of current and future economic conditions, changes in collection assumptions or other timing-related adjustments.

Significant changes in our cash flow estimates could result in increased or decreased revenue as we immediately recognize the discounted value of such changes using the constant effective interest rate of the pool. Generally, adjustments to cash forecasts result in an adjustment to revenue at an amount less than the impact of the performance in the period due to the effects of discounting. Cash collection forecast increases and decreases result in more and less revenue, respectively, being recognized over the life of a pool.

Goodwill

We evaluate goodwill for impairment annually as of October 1 and more frequently if circumstances indicate that it is more-likely-than-not that the fair value of a reporting unit is below its carrying value. We determine the fair value of a reporting unit by applying the income approach and market approach. Under the income approach, we estimate the fair value of a reporting unit based on the present value of estimated future cash flows and a residual terminal value. Cash flow projections are based on management's estimates of a variety of factors, including growth rates and operating margins, which take into consideration industry and market conditions. Under the market approach, we estimate fair value based on market trading multiples and other relevant market transactions involving comparable publicly traded companies with operating and investment characteristics similar to the reporting unit. Depending on the availability of public data and suitable comparable transaction data, we may give more weight to the income approach than the market approach. We also assess the reasonableness of the aggregate estimated fair value of our reporting units by comparison to our market capitalization over a reasonable period, considering historic control premiums in the financial services industry and the current market environment.

As part of our interim impairment assessment as of September 30, 2025, based on a sustained decrease in our stock price and market capitalization, we determined there to be an indicator of potential goodwill impairment in our DBC reporting unit and performed a quantitative impairment test. We estimated the fair value of the DBC reporting unit based on the income approach and also compared the estimated fair value to our market capitalization. Key inputs to the DBC reporting unit’s fair value under the income approach included our forecasted financial results and the discount rate. Forecasted financial results were developed considering several inputs and assumptions, including portfolio purchasing volume, PPMs, ERC growth rate, terminal value and operating expenses. PPMs related to our existing portfolios were based on historical growth rates, while PPMs on projected portfolio purchases were based on recent and expected future purchasing metrics. The discount rate was based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics, including assumptions related to the reporting unit's ability to execute on the projected cash flows.

Based on the quantitative impairment test performed, driven in large part by the comparison of fair value to market capitalization and impact on the estimated fair value of a decrease in the terminal value assumption and an increase in the discount rate assumption since the most recent annual impairment test, we determined that the goodwill in our DBC reporting unit was fully impaired and recorded a goodwill impairment charge of $412.6 million for the year ended December 31, 2025.

As of December 31, 2025, goodwill of $26.9 million related to our class action claims recoveries ("CCB") reporting unit. Based on our October 1, 2025 qualitative impairment assessment, we determined that the fair value of our CCB reporting unit was not more-likely-than-not below its carrying value.

Our goodwill evaluation is dependent on a number of factors, both internal and external. The assumptions used in estimating fair value were based on currently available data and involved the exercise of judgment. There are inherent uncertainties related to the assumptions used in our evaluation and to our application of those assumptions. If market factors deteriorate, or if estimates used in our quantitative assessment prove to be inaccurate, we may have to record additional impairment charges in future periods.

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Income taxes

We are subject to income taxes in the U.S. and in numerous international jurisdictions. These tax laws are complex and subject to different interpretations by the taxpayer and the relevant government taxing authorities. When determining our U.S. and non-U.S. income tax expense, we make judgments about the application of these inherently complex laws.

We record a tax provision for the anticipated tax consequences of the reported results of operations. The provision for income taxes is estimated using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled.

We exercise significant judgment in estimating the potential exposure to unresolved tax matters and apply a more-likely-than-not standard for recording tax benefits related to uncertain tax positions in the application of complex tax laws. While actual results could vary, we believe we have adequate tax accruals with respect to the ultimate outcome of such unresolved tax matters. We record interest and penalties related to unresolved tax matters as a component of income tax expense when the more-likely-than-not standards are not met.

If all or part of the deferred tax assets are determined not to be realizable in the future, we establish a valuation allowance and charge the impact to earnings in the period such determination is made. If we subsequently realize deferred tax assets that were previously determined to be unrealizable, the respective valuation allowance is reversed, resulting in a positive adjustment to earnings. The establishment or release of a valuation allowance does not have an impact on cash, nor does such an allowance preclude the use of loss carryforwards or other deferred tax assets in future periods. The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws. Resolution of these uncertainties in a manner inconsistent with our expectations could have a material impact on our results of operations and financial position. For further information regarding our uncertain tax positions, refer to Note 14 to our Consolidated Financial Statements included in Item 8 of this Form 10-K.

FREQUENTLY USED TERMS

We may use the following terms throughout this Form 10-K:

•"Buybacks" refers to purchase price refunded by the seller due to the return of ineligible nonperforming loan accounts.

•"Cash collections" refers to collections on our nonperforming loan portfolios.

•"Cash receipts" refers to cash collections on our nonperforming loan portfolios, fees and revenue recognized from our class action claims recovery services.

•"Changes in expected recoveries" refers to the difference between actual recoveries collected compared to expected recoveries and the net present value of changes in estimated remaining collections.

•"Core" accounts or portfolios refer to accounts or portfolios that are nonperforming loans and are not in an insolvent status upon acquisition. These accounts are aggregated separately from insolvency accounts.

•"Estimated remaining collections" or "ERC" refers to the sum of all future projected cash collections on our nonperforming loan portfolios.

•"Finance receivables" or "receivables" refers to the negative allowance for expected recoveries recorded on our balance sheet as an asset.

•"Insolvency" accounts or portfolios refer to accounts or portfolios of nonperforming loans that are in an insolvent status when we purchase them and, as such, are purchased as pools of insolvent accounts. These accounts include IVAs, Trust Deeds in the UK, Consumer Proposals in Canada and bankruptcy accounts in the U.S., Canada, Germany and the UK.

•"Negative allowance" refers to the present value of cash flows expected to be collected on our finance receivables.

•"Portfolio acquisitions" refers to all nonperforming loan portfolios acquired as a result of a purchase or business acquisition.

•"Portfolio purchases" refers to all nonperforming loan portfolios purchased in the normal course of business and excludes those added as a result of business acquisitions.

•"Portfolio income" reflects revenue recorded due to the passage of time using the effective interest rate calculated based on the purchase price and estimated remaining collections of nonperforming loan portfolios.

•"Purchase price" refers to the cash paid to a seller to acquire nonperforming loans.

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•"Purchase price multiple" or "PPM" refers to the total estimated collections on our nonperforming loan portfolios divided by purchase price.

•"Recoveries collected" refers to cash collections plus buybacks and other adjustments.

•"Total estimated collections" or "TEC" refers to actual cash collections plus estimated remaining collections on our nonperforming loan portfolios.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Our business is primarily subject to interest rate and foreign currency risk. We use various strategies, including derivative financial instruments, to manage these risks; however, they may still affect our Consolidated Financial Statements.

Interest rate exposure

We are subject to interest rate risk from borrowings on our variable rate credit facilities and from our interest-bearing deposits. As such, our consolidated financial results are subject to fluctuations due to changes in market interest rates. To reduce our exposure to changes in the market rate of interest, we have entered into interest rate derivative contracts to hedge a portion of our borrowings under floating rate financing arrangements. Under the terms of the interest rate derivatives, we receive a variable interest rate and pay a fixed interest rate. Of our $3.7 billion in total borrowings as of December 31, 2025, $1.7 billion was fixed rate debt. Considering these fixed rate borrowings and the interest rate hedges on our variable rate debt, with maturities ranging from one month to four years, as of December 31, 2025, 66% of our total debt was either fixed rate or converted to a fixed rate.

We assess interest rate risk by estimating the increase or decrease in interest expense that would occur due to a change in short-term interest rates. Borrowings on our variable rate credit facilities were $2.1 billion as of December 31, 2025, and based on our debt structure, assuming a 50 basis point decrease/increase in interest rates, interest expense over the following 12 months would decrease/increase by an estimated $6.4 million.

Foreign currency exposure

We operate internationally and enter into transactions denominated in various foreign currencies. Our subsidiaries use multiple functional currencies, and weakness in one particular currency might be offset by strength in other currencies over time. In 2025, our revenues from operations outside the U.S. were $590.6 million.

Fluctuations in foreign currencies could cause us to incur foreign currency gains and losses and could affect our comprehensive income and stockholders' equity. Additionally, our reported financial results could change from period-to-period due solely to fluctuations between currencies. Foreign currency gains and losses are primarily the result of the remeasurement of transactions in other currencies into an entity's functional currency. Foreign currency gains and losses are included as a component of Other income and (expense) in our Consolidated Income Statements. From time-to-time, we may elect to enter into foreign exchange derivative contracts to reduce these variations in our Consolidated Income Statements.

When an entity's functional currency is different than the reporting currency of its parent, foreign currency translation adjustments may occur. Foreign currency translation adjustments are included as a component of Other comprehensive income/(loss) in our Consolidated Statements of Comprehensive Loss and as a component of Equity in our Consolidated Balance Sheets.

We have taken measures to mitigate the impact of foreign currency fluctuations. We have organized our European business so that portfolio ownership and collections generally occur within the same entity. Additionally, our European and UK credit facilities are multi-currency facilities, allowing us to better match funding and portfolio acquisitions by currency. In the event adjustments are required to our liability composition by currency, we may, from time-to-time, execute re-balancing foreign exchange contracts to more closely align funding and portfolio acquisitions by currency. We also actively monitor the value of our finance receivables by currency.

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Item 8. Financial Statements and Supplementary Data.

Index to Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) 43

Consolidated Balance Sheets 45

Consolidated Income Statements 46

Consolidated Statements of Comprehensive Loss 47

Consolidated Statements of Changes in Equity 48

Consolidated Statements of Cash Flows 49

Notes to Consolidated Financial Statements 50

1 – Summary of Significant Accounting Policies 50

2– Finance Receivables, net 55

3 – Investments 57

6 – Property and Equipment, net 59

7 – Borrowings 60

8 – Derivatives 64

9 – Fair Value 65

10 – Accumulated Other Comprehensive Loss 66

11 – Stockholders' Equity 67

12 – Share-Based Compensation and Employee Savings Plans 67

13 – Earnings per Share 69

15 – Commitments and Contingencies 73

16 – Business Segments 73

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of PRA Group, Inc.:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of PRA Group, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated income statements, statements of comprehensive loss, statements of changes in equity and statements of cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 2, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

43

Estimate of expected future recoveries on purchased credit deteriorated assets

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2021.

Richmond, Virginia

March 2, 2026

44

PRA Group, Inc.

Consolidated Balance Sheets

December 31, 2025 and 2024

(in thousands)

ASSETS

LIABILITIES AND EQUITY

Liabilities

Equity

The accompanying notes are an integral part of these Consolidated Financial Statements.

45

PRA Group, Inc.

Consolidated Income Statements

For the years ended December 31, 2025, 2024 and 2023

(in thousands, except per share amounts)

Revenues

Operating expenses

Goodwill impairment 412,611 — —

Other income/(expense)

Gain on sale of equity method investment 38,403 — —

Foreign exchange gain/(loss), net 755 (9) 289

Net income/(loss) per common share attributable to PRA Group, Inc.

Weighted average number of shares outstanding

The accompanying notes are an integral part of these Consolidated Financial Statements.

46

PRA Group, Inc.

Consolidated Statements of Comprehensive Loss

For the years ended December 31, 2025, 2024 and 2023

(in thousands)

Other comprehensive income/(loss), net of tax

Debt securities available-for-sale (79) 140 302

The accompanying notes are an integral part of these Consolidated Financial Statements.

47

PRA Group, Inc.

Consolidated Statements of Changes in Equity

For the years ended December 31, 2025, 2024 and 2023

(in thousands)

Shares Amount

Distributions to noncontrolling interests — — — — — (10,140) (10,140)

Vesting of restricted stock 267 2 (2) — — — —

Share-based compensation expense — — 11,095 — — — 11,095

Employee stock relinquished for payment of taxes — — (6,194) — — — (6,194)

Distributions to noncontrolling interests — — — — — (19,287) (19,287)

Contributions from noncontrolling interests — — — — — 2,396 2,396

Vesting of restricted stock 263 3 (3) — — — —

Share-based compensation expense — — 13,470 — — — 13,470

Employee stock relinquished for payment of taxes — — (2,656) — — — (2,656)

Distributions to noncontrolling interests — — — — — (25,132) (25,132)

Contributions from noncontrolling interests — — — — — 4,216 4,216

Vesting of restricted stock 244 3 (3) — — — —

Share-based compensation expense — — 15,911 — — — 15,911

Employee stock relinquished for payment of taxes — — (2,329) — — — (2,329)

The accompanying notes are an integral part of these Consolidated Financial Statements.

48

PRA Group, Inc.

Consolidated Statements of Cash Flows

For the years ended December 31, 2025, 2024 and 2023

(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES

Goodwill impairment 412,611 — —

Gain on sale of equity method investment (38,403) — —

Amortization of debt premium and issuance costs 7,935 10,567 9,223

Net unrealized foreign currency transaction (gain)/loss (13,084) 5,200 (16,552)

Changes in operating assets and liabilities:

Accrued expenses, accounts payable and other liabilities (3,379) 30,947 15,283

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment, net (4,821) (4,045) (2,887)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long-term debt — 472,611 —

Retirement and repurchase of senior notes — (298,000) (348,657)

Payment of debt origination costs and fees (6,406) (15,323) (5,323)

Repurchase of common stock (20,000) — —

Tax withholdings related to share-based payments (2,329) (2,655) (6,194)

Contributions from noncontrolling interests 4,216 2,396 —

Net increase/(decrease) in interest-bearing deposits (88,193) 59,848 (1,416)

Supplemental disclosure of cash flow information

Reconciliation to Balance Sheet accounts

Restricted cash included in Prepaid expenses and other assets 4,234 1,493 1,164

The accompanying notes are an integral part of these Consolidated Financial Statements.

49

PRA Group, Inc.

Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies

As used herein, the terms "PRA Group," the "Company," or similar terms refer to PRA Group, Inc. and its subsidiaries.

Basis of presentation

PRA Group, Inc., a Delaware corporation headquartered in Norfolk, Virginia, is a global financial services company whose main business is the purchase, collection and management of nonperforming loan portfolios.

The Consolidated Financial Statements of the Company are prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and include the accounts of PRA Group and its majority-owned subsidiaries. Noncontrolling interests represent the portion of net income and equity attributable to third-party owners of consolidated subsidiaries that are not wholly-owned by the Company. All significant intercompany accounts and transactions have been eliminated. Investments in companies in which the Company has significant influence over operating and financing decisions, but does not own a majority of the voting equity interests, are accounted for in accordance with the equity method of accounting, which requires the Company to recognize its proportionate share of the entity’s net earnings.

In the Consolidated Balance Sheets, Consolidated Income Statements and Consolidated Statements of Cash Flows, certain prior year amounts have been reclassified for consistency with the current year presentation.

Foreign currency

Assets and liabilities have been translated into the reporting currency using the exchange rates in effect on the date of the Consolidated Balance Sheets. Equity accounts are translated at historical rates, except for the change in retained earnings during the year, which is the result of the income statement translation process. Revenue and expense accounts are translated using the weighted average exchange rate during the period. The cumulative translation adjustments associated with the net assets of international subsidiaries are recorded in Accumulated other comprehensive loss in the accompanying Consolidated Statements of Changes in Equity.

Use of estimates

The preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ materially from those estimates making it reasonably possible that a change in these estimates could occur within one year.

Significant estimates made by management include those related to the timing and amount of future cash collections on the Company's finance receivables portfolios; determination of fair value of a reporting unit as part of testing goodwill for impairment; and interpretation of the tax laws required to calculate the Company's income tax-related balances, including evaluations of uncertain tax positions and the realizability of deferred tax assets.

Cash and cash equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash that is subject to legal restrictions or is unavailable for general operating purposes is classified as restricted cash and included in Prepaid expenses and other assets in the Company's Consolidated Balance Sheets.

Investments

Debt securities

The Company's investments in debt securities are classified as available-for-sale and carried at fair value. Fair value is determined using quoted market prices. Unrealized gains and losses are included in comprehensive income and reported in stockholders' equity. A debt security is impaired when there has been a decline in fair value below the amortized cost. The Company recognizes an impairment if: (1) it has the intent to sell the security; (2) it is more-likely-than-not that it will be required to sell the security before recovery of the amortized cost; or (3) it does not expect to recover the entire amortized cost of the security. The Company uses the specific identification method to determine realized gains and losses on available-for-sale securities, which are included in Other income/(expense) in the Consolidated Income Statements.

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PRA Group, Inc.

Notes to Consolidated Financial Statements

Private equity funds

The Company's investments in private equity funds represent limited partnerships in which the Company has less than a 1.0% interest. The fair value of these funds is measured in accordance with the net asset value per share practical expedient.

Equity method investment

Equity investments that are not consolidated over which the Company exercises significant influence are accounted for as equity method investments. Under the equity method of accounting, the Company’s share of the earnings or losses of the investee company is reflected in Other revenue in the Consolidated Income Statements. The carrying value of the Company's equity method investee is reflected in Investments in the Consolidated Balance Sheets.

Receivables portfolios

Credit quality and investments in receivables

The Company purchases portfolios of accounts that have experienced significant deterioration of credit quality since their origination. The Company accounts for these financial assets under the guidance for purchased credit deteriorated ("PCD") assets. Under the PCD accounting model, the purchased assets are recognized at face value, with an offsetting allowance and noncredit discount allocated to the accounts purchased, with the initial allowance added to the purchase price rather than recorded as credit loss expense.

Since each account is significantly delinquent and deemed uncollectible, immediately after purchase, the Company's policy is to write-off the amortized cost basis of each account. The Company then records a negative allowance for expected recoveries, which represents the present value of expected recoveries for pools of receivables that share similar risk characteristics, and ultimately equals the price paid for the portfolios. The negative allowance is recorded as an asset measured at amortized cost and presented as Finance receivables, net in the Consolidated Balance Sheets at the net present value of expected collections.

Portfolio segments

The Company’s nonperforming loan portfolio is comprised of Core and Insolvency portfolios. The Core portfolio contains accounts that are in default and that were purchased at a substantial discount to face value because the credit originator and/or other third-party collection agencies have been unsuccessful in collecting the full balance owed. The Insolvency portfolio contains accounts that are in default and that were purchased at a substantial discount to face value in which the customer is involved in a bankruptcy or insolvency proceeding. Both portfolio types contain large numbers of homogeneous receivables with similar risk characteristics.

Account pools

The Company aggregates the accounts purchased into static pools based on similar risk characteristics, which include the portfolio segment and geographic region. Pools are aggregated over the course of a year and a blended effective interest rate ("EIR") is calculated based on additional purchases and updated recovery estimates through the end of that year. Once a year has ended, the effective interest rate for a pool is fixed.

Portfolio revenue

The negative allowance is calculated by applying discounted cash flow methodologies to estimated remaining collections (“ERC”). Revenue is recognized for each static pool over the estimated economic life of the pool and includes two components:

1.Portfolio income, which includes the accretion of the discount on the negative allowance due to the passage of time (portfolio balance multiplied by the EIR).

2.Changes in expected recoveries, which include:

•Recoveries collected above or below forecast, which is the difference between (i) actual recoveries during the current period and (ii) expected recoveries for the current period, which generally represent over- or underperformance for the period; and

•Changes in expected future recoveries, which represent the change in present value of expected future recoveries at the constant pool-specific EIR, generally resulting from (i) changes in the timing of collections (amounts expected to be collected earlier or later) and (ii) changes to the total amount of expected future

51

PRA Group, Inc.

Notes to Consolidated Financial Statements

recoveries (which can be increases or decreases). Amounts included in estimated recoveries will not exceed the aggregate amount of amortized cost basis previously written-off or expected to be written-off.

The measurement of expected recoveries is based on relevant information about past events, current conditions and reasonable and supportable forecasts that affect the expected timing and amount of those recoveries, including both quantitative and qualitative factors. External factors that may have an impact on the collectability and overall profitability of acquired portfolios of nonperforming loans include new laws or regulations relating to collections, new interpretations of existing laws or regulations and the overall condition of the economy. Internal factors include revisions to operational scoring and modeling estimates, operational activities and the expected impact of operational initiatives.

Fee income

The Company recognizes revenue from its class action claims recovery services when there is persuasive evidence that an arrangement exists, delivery has occurred or services have been rendered, the amount is fixed or determinable and collectability is reasonably assured. Fee income is presented within Other revenue in the Consolidated Income Statements.

Derivatives

On the date the Company enters into a derivative contract, it categorizes the derivative as either a cash flow hedge or an economic hedge. All derivative financial instruments are presented in Prepaid expenses and other assets and Other liabilities in the Consolidated Balance Sheets at fair value. Cash flows from the settlement of derivatives, whether categorized as cash flow hedges or economic hedges, are reflected in the Consolidated Statements of Cash Flows in the same categories as the cash flows of the hedged exposure.

As part of its use of derivatives, the Company enters into netting agreements, including International Swap Dealers Association Agreements, which, in general, provide for the offsetting of amounts payable or receivable between it and the counterparty, at the election of both parties, for transactions that settle on the same date and in the same currency. The agreements also provide that in the event of an early termination the counterparties have the right to offset amounts owed or owing under that and any other agreement with the same counterparty. The Company’s accounting policy is to not offset these positions and to report derivative asset and liability positions on a gross basis in the accompanying Consolidated Balance Sheets.

The Company does not enter into or hold derivatives for trading or speculative purposes, nor does it utilize derivative financial instruments with a level of complexity or with a risk greater than the exposure to be managed.

Cash flow hedges

The Company's cash flow hedges represent hedges of the variability in cash flows under the Company's floating rate debt. At inception, the Company formally documents the relationship between the hedging instrument and hedged item, the risk management objective and the manner in which effectiveness will be assessed. The Company assesses, both at inception and at each reporting period thereafter, whether the derivative financial instrument is effective in offsetting changes in cash flows of the hedged item. The Company discontinues the use of hedge accounting prospectively when (1) the derivative instrument is no longer effective in offsetting changes in cash flows of the hedged item; (2) the derivative instrument expires, is sold, terminated or exercised; or (3) designating the derivative instrument as a hedge is no longer appropriate.

Under the cash flow hedge accounting model, changes in the fair value of derivatives are reported in equity as a component of Accumulated other comprehensive loss. Amounts in Accumulated other comprehensive loss are reclassified to earnings when the related hedged item affects earnings or the anticipated transaction is no longer probable.

Economic hedges

Economic hedges represent derivatives used to manage foreign currency remeasurement exposure related to certain balances denominated in currencies other than the functional currency of the Company or its international subsidiaries. Changes in the fair values of these derivatives are reported in earnings.

52

PRA Group, Inc.

Notes to Consolidated Financial Statements

Fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company categorizes fair value measurements of financial instruments based on a three-level hierarchy, as follows:

•Level 1: Quoted prices in active markets for identical assets and liabilities.

•Level 2: Observable inputs other than Level 1 quoted prices, such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market.

•Level 3: Unobservable inputs that are supported by little or no market activity. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

Property and equipment

Property and equipment, including improvements that significantly add to the productive capacity or extend useful life, are recorded at cost. Maintenance and repairs are expensed as incurred. Impairment is assessed periodically when events or changes in circumstances indicate the carrying value of property and equipment may not be fully recoverable. Property and equipment are depreciated over their useful lives using the straight-line method, as follows:

Category Estimated Useful Life

Software and computer equipment Three to five years

Furniture and fixtures 10 Years

Equipment Five years

Leasehold improvements Remaining term of the lease

Building improvements 10 to 39 years

Goodwill

Goodwill is not amortized, but rather, is reviewed for impairment annually or more frequently if indicators of potential impairment exist. The Company performs its annual assessment of goodwill as of October 1. The Company may first assess qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If management concludes that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the fair value of the reporting unit is determined. An impairment loss is recorded for the amount by which the carrying value of the reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to the respective reporting unit.

Prepaid expenses and other assets

Prepaid expenses and other assets consist primarily of receivables due from third parties, prepaid obligations such as software subscription and maintenance agreements, deferred debt issuance costs associated with credit facility borrowings, derivative assets and restricted cash.

Income taxes

The provision for income taxes is estimated using the asset and liability method under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which they are expected to be realized or settled. A valuation allowance for deferred tax assets is recorded and charged to earnings if it is determined that it is more-likely-than-not that the deferred tax asset will not be realized. The need for a valuation allowance is determined on a jurisdiction-by-jurisdiction basis.

The Company recognizes the financial statement benefit of an uncertain tax position if it is more-likely-than-not to be sustained based on the technical merits in the event of a challenge by the relevant taxing authorities. The amount of benefit

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recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon settlement. The Company records interest and penalties related to unrecognized tax benefits as a component of income tax expense when the more-likely-than-not standard is not met. The Company exercises significant judgment in making these determinations.

Borrowings

The Company's borrowings are carried at amortized cost. Debt origination costs and fees and debt premiums or discounts are deferred and amortized over the expected lives of the respective borrowings considering maturity dates and, if applicable, redemption rights held by others. Deferred debt issuance costs on senior notes are recorded as a reduction to Borrowings in the Consolidated Balance Sheets. Deferred debt issuance costs associated with credit facility borrowings are recorded in Prepaid expenses and other assets in the Consolidated Balance Sheets. Amortization of the issuance costs is reported as interest expense. Unamortized costs associated with redemptions of debt securities prior to stated maturity dates are generally recognized and recorded in interest expense immediately.

Leases

The Company recognizes a liability for future lease payments and a right-of-use ("ROU") asset, representing its right to use the underlying asset for the lease term, in the Consolidated Balance Sheets. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. The Company has elected not to apply the lease recognition requirements to short-term leases. Since most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on information available at the lease commencement date to determine the present value of the lease payments. Exercise of lease renewal options is typically at the Company's sole discretion. Renewal periods are included in ROU assets and lease liabilities based upon whether the Company is reasonably certain of exercising the renewal option and/or not exercising the termination option. The Company's lease agreements do not contain any material residual value guarantees or restrictive covenants.

Share-based compensation

Compensation expense associated with share equity awards is presented in Compensation and benefits in the Consolidated Income Statements. Share-based awards are measured at fair value on the grant date. The Company has certain share-based awards that include market conditions that affect the value upon vesting. Compensation cost is not adjusted even if a market condition is not met provided the requisite service is rendered. The fair value of these shares is estimated using a lattice model. The Company estimates a forfeiture rate for most equity share grants based on historical experience. Time-based equity share awards generally vest between one and three years from the grant date and are expensed on a straight-line basis over the vesting period. Equity share awards that contain a performance metric are expensed over the requisite service period, which is generally three years, in accordance with the performance level achieved in each reporting period.

Earnings per share

Basic earnings per share ("EPS") is computed by dividing net income/(loss) available to common stockholders of PRA Group, Inc. by weighted average common shares outstanding. Diluted EPS is calculated using the same components as basic EPS, with the denominator adjusted for the dilutive effect of nonvested share awards based on the treasury stock method, which assumes any proceeds that could be obtained upon the vesting of nonvested shares would be used to purchase common shares at the average market price for the period. Dilution is not considered when a net loss is reported.

Loss contingencies

The Company is subject to legal proceedings, lawsuits and other claims. The Company recognizes a liability for a loss contingency when it is both probable that a loss has been incurred and the amount can be reasonably estimated. The Company expenses the related legal costs as they are incurred.

Recently adopted accounting pronouncements

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"), which requires enhanced annual disclosures with respect to the rate reconciliation and income taxes paid information. The Company adopted this ASU for the year ended December 31, 2025, on a prospective basis. Refer to Note 14 for additional information.

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Recently issued accounting pronouncements not yet adopted

In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses" ("ASU 2024-03"). Subsequently, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The standard provides guidance to expand disclosures related to the disaggregation of income statement expenses. The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted. The Company is evaluating the impact of this ASU on its Consolidated Financial Statements and the related disclosures; however, it does not expect there will be a material impact upon adoption.

In November 2025, the FASB issued ASU 2025-08, "Financial Instruments – Credit Losses (Topic 326): Purchased Loans” ("ASU 2025-08"), under which loans (excluding credit cards) acquired without credit deterioration and deemed “seasoned” will be considered purchased seasoned loans and accounted for using the gross-up approach at acquisition. This ASU is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted. The Company currently applies the PCD accounting model to the loans it acquires and is evaluating the impact this ASU could have on its Consolidated Financial Statements; however, it does not expect there will be a material impact upon adoption.

In November 2025, the FASB issued ASU 2025-09, "Derivatives and Hedging (Topic 815): Hedge Accounting Improvements" ("ASU 2025-09"), which enables entities to apply hedge accounting to a greater number of highly effective economic hedges in the following five areas: (1) similar risk assessment for cash flow hedges; (2) hedging forecasted interest payments on choose-your-rate debt instruments; (3) cash flow hedges of nonfinancial forecasted transactions; (4) net written options as hedging instruments; and (5) foreign currency denominated debt instrument as hedging instrument and hedged item (dual hedge). This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods. Early adoption is permitted. The Company is evaluating the impact of this ASU on its Consolidated Financial Statements.

All other recently issued accounting pronouncements not yet adopted have been deemed either immaterial or not applicable.

2. Finance Receivables, net

Finance receivables, net consisted of the following as of December 31, 2025 and 2024 (in thousands):

Amortized cost $ — $ —

Changes in Finance receivables, net by portfolio type for the years ended December 31, 2025 and 2024 were as follows (in thousands):

Core Insolvency Total Core Insolvency Total

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Notes to Consolidated Financial Statements

(1) Initial negative allowance for expected recoveries on portfolio purchases

The initial negative allowance for expected recoveries on purchases made during the years ended December 31, 2025 and 2024 was as follows (in thousands):

Core Insolvency Total Core Insolvency Total

The purchase price for purchases made during the years ended December 31, 2025 and 2024 was as follows (in thousands):

Core Insolvency Total Core Insolvency Total

(2) Recoveries collected and applied to Finance receivables, net

Recoveries collected and applied to Finance receivables, net for the years ended December 31, 2025 and 2024 were as follows (in thousands):

Core Insolvency Total Core Insolvency Total

(a)Includes cash collections, buybacks and other cash-based adjustments.

(b)Reclassifications from Finance receivables, net to Portfolio income based on the effective interest rate of the underlying account pools.

(3) Changes in expected recoveries

Changes in expected recoveries for the years ended December 31, 2025 and 2024 were as follows (in thousands):

Core Insolvency Total Core Insolvency Total

Changes in expected recoveries for the year ended December 31, 2025 were $176.5 million, which included $120.7 million in recoveries collected in excess of forecast due primarily to collections performance in Europe and the U.S., and changes in expected future recoveries of $55.8 million. In Europe, changes in expected future recoveries were $46.3 million, mainly reflecting increased expectations on certain Polish, Austrian, Italian and UK pools based on the recent collections overperformance of those pools. In the U.S., changes in expected future recoveries were $5.2 million, mainly reflecting increased expectations on the 2024 pool, driven largely by higher legal collection expectations, and the 2017-2020 Core pools. These increases were partially offset by reduced expectations on the 2021-2023 Core pools.

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Changes in expected recoveries for the year ended December 31, 2024 were $240.9 million, which included $156.1 million in recoveries collected in excess of forecast due to collections performance in both Europe and the U.S. Changes in expected future recoveries for the year ended December 31, 2024 were $84.7 million, largely due to the impact of increases to the Company's collections forecasts on its pre-2021 U.S. Core pools and certain pools in Europe. These increases were partially offset by the impact of timing-related adjustments on the more recent U.S. Core pools and decreased forecasts and timing-related adjustments on certain other pools in Europe.

3. Investments

Investments consisted of the following as of December 31, 2025 and 2024 (in thousands):

Debt securities

Equity securities

Equity method investment — 8,694

Debt securities

As of December 31, 2025, the Company's debt securities consisted of Swedish treasury securities maturing within one year. As of December 31, 2025 and 2024, the amortized cost and fair value of these investments were as follows (in thousands):

Amortized Cost Gross Unrealized Gains Aggregate Fair Value

Amortized Cost Gross Unrealized Gains Aggregate Fair Value

Equity method investment

In April 2025, the Company sold its 11.7% interest in RCB Investimentos S.A., a servicing company for nonperforming loans in Brazil, resulting in a gain of $38.4 million in the Consolidated Income Statement for the year ended December 31, 2025.

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4. Goodwill

Changes in goodwill for the years ended December 31, 2025 and 2024, were as follows (in thousands):

Balance as of beginning of year

Accumulated impairment loss — —

Activity during the year

Goodwill impairment (412,611) —

Balance as of end of year

Accumulated impairment loss (412,611) —

The Company performs an annual impairment test of goodwill as of October 1 of each year, or more frequently if indicators of impairment exist. As part of the Company’s September 30, 2025 interim impairment assessment, based on a sustained decrease in its stock price and market capitalization, the Company determined there to be an indicator of potential goodwill impairment in its Debt Buying and Collection (“DBC”) reporting unit. As a result, the Company performed a quantitative impairment test using the income approach and also compared the estimated fair value of the reporting unit to the Company’s market capitalization.

The Company estimated the fair value of the DBC reporting unit based on the present value of estimated future cash flows and a residual terminal value. Forecasted financial results were developed considering several inputs and assumptions, including portfolio purchasing volume, purchase price multiples, ERC growth rate, terminal value and operating expenses. Based on the quantitative impairment test performed, driven in large part by the comparison of estimated fair value to market capitalization and the impact on fair value of a decrease in the terminal value assumption and an increase in the discount rate assumption since the most recent annual impairment test, the Company determined that the goodwill in its DBC reporting unit was fully impaired. This resulted in a goodwill impairment charge of $412.6 million in the Consolidated Income Statement for the year ended December 31, 2025.

As of December 31, 2025, the remaining goodwill balance of $26.9 million was related to the Company's class action claims recoveries reporting unit.

5. Leases

The Company's operating lease portfolio is comprised mainly of corporate offices and call centers with remaining lease terms ranging from one to seven years. Some of the leases include extension and/or termination options in accordance with specified notice periods. The longest period recognized by the Company under a renewal option was five years. The components of lease expense for the years ended December 31, 2025 and 2024, were as follows (in thousands):

Sublease income — (7)

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Notes to Consolidated Financial Statements

Supplemental cash flow information and non-cash activity related to leases for the years ended December 31, 2025 and 2024, were as follows (in thousands):

(1)Includes the impact of new leases as well as remeasurements and modifications of existing leases.

Lease term and discount rate information related to operating leases were as follows:

Weighted-average remaining lease term (years) 5.5 6.6

Weighted-average discount rate 4.8 % 4.7 %

Maturities of lease liabilities as of December 31, 2025, were as follows for the years ending December 31, (in thousands):

Operating Lease Payments

Total lease payments 36,548

Imputed interest (4,388)

Present value of lease liabilities $ 32,160

6. Property and Equipment, net

Property and equipment, net consisted of the following as of December 31, 2025 and 2024 (in thousands):

Depreciation expense for the years ended December 31, 2025, 2024 and 2023 was $8.8 million, $10.6 million and $13.1 million, respectively.

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