Enova International, Inc. Q4 FY2024 earnings call

• Fourth quarter results were in line or better than expectations with over 20% growth in revenue, originations, adjusted EBITDA, and adjusted EPS compared to 2023. 2024 was Enova's best year with record levels of revenue, originations, and EPS.
• Small business products had originations of over $1 billion for the second consecutive quarter, driven by consumer spending and small business optimism. The fourth iteration of the small business cash flow trend report was released in November, showing small businesses are increasingly optimistic about future growth and bypassing traditional banks in favor of alternative lenders like Enova.
• Consumer business demand and credit are driven by jobs and wage growth, serving a segment underserved by mainstream financial institutions due to proprietary technology and analytics. The labor market remains strong, benefiting the target consumer demographic.
• The company has a disciplined approach balancing risk and growth based on sophisticated unit economics framework, and its online-only business model provides operating leverage.

In the fourth quarter, small business products accounted for 62% of the total portfolio and consumer products 38%. Fourth quarter SMB revenue was $286 million, a 36% year-over-year increase and 6% sequential increase. Consumer revenue was $434 million, a 19% year-over-year increase and 6% sequential increase. Combined loan and finance receivables reached a record $4 billion, up 21% year-over-year.

• For the first quarter of 2025, total company revenue is expected to be flat to slightly higher sequentially, with year-over-year revenue growth around 20%. The net revenue margin is expected to be flat sequentially, offsetting lower sequential consolidated originations by sequential improvement in the net charge off rate.
• For the full year 2025, assuming a stable macroeconomic environment, origination growth is expected to increase by around 15% compared to 2024. This should lead to revenue growth slightly faster than origination growth and adjusted EPS growth of around 25%. The cost of funds is expected to decline approximately 50 basis points from 2024's rate, resulting in interest expense as a percentage of revenue for 2025 of around 10% to 10.25%.

• Potential changes in the macro environment could impact the business.
• Competitive pressures, though transient and small, could affect the business.
• CFPB rules such as the 1071 small business disclosure rule and the small dollar rule payment provisions could require some work to implement and tweak algorithms, though not expected to have significant impact currently.

Q: Could you talk a little bit about the competitive environment in both consumer and small business and how you're seeing it any changes?

A: Yes, as seen from strong Q4 origination growth, there haven't been negative impacts from competition. People may poke in and out, but impacts are small and fleeting.

Q: Regarding the mix of new and recurring customers in both portfolios, has that shifted and where do you see growth opportunity?

A: The mix of new and recurring customers has been remarkably stable around 40% for both portfolios. Focus will continue on attracting new customers with unit economics and efficient marketing approach, and serving returning customers.

Q: Walk us through what you're seeing on tax refunds and potential implications for guidance?

A: It's a little early for the refund season, but it's considered in the first quarter guide and seasonality for the consumer business, with no expected difference for the SMB business.