Elevate Credit (ELVT) 8-K Elevate Credit Announces Fourth Quarter & Full Year 2018 Results

ELEVATE CREDIT ANNOUNCES FOURTH QUARTER & FULL YEAR 2018 RESULTS

Announces Record Annual Revenues and Net Income

FORT WORTH, TX - February 11, 2019 - Elevate Credit, Inc. (NYSE: ELVT) (“Elevate” or the “Company”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced results for the fourth quarter and full year ended December 31, 2018.

“We finished 2018 having delivered $12.5 million in net income on $787 million in revenue for the year.  This was a significant improvement over 2017—a 17% increase in revenue and more than double the adjusted net income,” said Elevate CEO Ken Rees. “We will continue to be conservative about top-line growth while we focus on execution and earnings in 2019. With today’s announcement of an expanded, billion dollar credit facility with Victory Park Capital, which lowers our cost of capital significantly, and with the continued demand for our products, we remain confident about the core strength of our business and our huge market opportunity to serve the New Middle Class.”

Fourth Quarter 2018 Financial Highlights¹ 

• Net income: Net income for the three months ended December 31, 2018 totaled $4.1 million, or $0.09 per diluted share, compared to a net loss of $12.2 million, or $(0.29) per diluted share, in the fourth quarter of 2017, which included a $12.5 million charge associated with the change in federal tax law in 2017. Excluding the impact from the tax law change, adjusted net income for the fourth quarter of 2017 would have been $0.3 million, or $0.01 per diluted share.

• Revenue growth: Revenues increased 7.2% for the fourth quarter of 2018 totaling $207.3 million compared with $193.4 million for the fourth quarter of 2017.

• Combined loans receivable - principal: Combined loans receivable - principal totaled $648.5 million, an increase of $30.2 million, or 4.9%, from $618.4 million for the prior-year quarter.

• Customer acquisition cost: The average customer acquisition cost was $202 in the fourth quarter of 2018, below the targeted range of $250-$300 and lower than $231 for the prior-year quarter. The total number of new customer loans decreased from approximately 95,000 in the fourth quarter of 2017 to 67,000 in the fourth quarter of 2018.

• Adjusted EBITDA margin: Adjusted EBITDA increased to $31.9 million, up 27.7% from $25.0 million in the fourth quarter of 2017. The Adjusted EBITDA margin for the fourth quarter of 2018 was 15.4%, an increase from 12.9% in the prior year quarter.

__________________________

¹ Adjusted EBITDA, Adjusted EBITDA margin, combined loans receivable - principal, combined loans receivable and adjusted net income are non-GAAP financial measures. These terms are defined elsewhere in this release. Please see the schedules appearing later in this release for reconciliations of these non-GAAP measures to the most directly comparable GAAP measures.

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Fiscal Year 2018 Financial Highlights

• Net income: Net income for the year ended December 31, 2018 totaled $12.5 million, or $0.28 per diluted share, compared to a net loss of $6.9 million, or $(0.20) per diluted share, in the prior year, which included a $12.5 million charge associated with the change in federal tax law in 2017. Excluding the impact of the federal tax law, adjusted net income for the full year 2017 would have been $5.5 million, or $0.16 per diluted share.

• Revenue growth: Revenues increased 16.9% for the year ended December 31, 2018, totaling $786.7 million compared to $673.1 million for the prior-year period.

• Adjusted EBITDA margin: Adjusted EBITDA increased to $116.1 million from $87.5 million in the prior year. The Adjusted EBITDA margin for the year ended December 31, 2018 was 14.8%, an increase from 13.0% in the prior year.

• Customer acquisition cost: The number of new customer loans for the year ended December 31, 2018 totaled approximately 316,000, an increase of 3.6% from 305,000 for the prior year period. The average customer acquisition cost was $245 in 2018, below the targeted range of $250-$300 but slightly higher than $237 for the prior year.

Liquidity and Capital Resources

There were no material changes from a liquidity and funding standpoint during the fourth quarter of 2018.

Recent Business Highlights

• Elevate Announces Amended Credit Facility. Today, Elevate announced a billion dollar credit agreement with Victory Park Capital which will significantly lower the Company’s cost of capital. The new agreement encompasses all four of Elevate’s products. See press release for more information.

• Elevate’s Rise Product Expansion. In the fourth quarter of 2018, the Company licensed the Rise brand to FinWise Bank ("FinWise") to originate loans in an additional 16 states. The FinWise portfolio originated $31 million of loans in the fourth quarter since its launch in October 2018.

• New Chief Credit Officer. Elevate promoted Company veteran David Petersonas Chief Credit Officer. Mr. Peterson has over 15 years of leadership experience in risk management and operations. He served as Senior Vice President of Risk Management and also held various previous leadership roles including positions at Americredit Financial and Washington Mutual.

Financial Outlook

The Company expects revenue growth to be relatively flat during the first half of 2019 with annualized revenue growth of 5% to 10% during the second half of 2019. For the full year 2019, the Company expects total revenue of $811 million to $834 million, net income of $25 million to $30 million, or $0.55 to $0.65 in diluted earnings per share, and Adjusted EBITDA of $130 million to $140 million.

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Conference Call

The Company will host a conference call to discuss its fourth quarter and full-year 2018 financial results on Monday, February 11th at 4:00pm Central Time / 5:00pm Eastern Time. Interested parties may access the conference call live over the phone by dialing 1-877-407-0792 (domestic) or 1-201-689-8263 (international) and requesting the Elevate Fourth Quarter 2018 Earnings Conference Call. Participants are asked to dial in a few minutes prior to the call to register for the event. The conference call will also be webcast live through Elevate’s website at http://www.elevate.com/investors.

An audio replay of the conference call will be available approximately three hours after the conference call until 11:59 pm ET on February 25, 2019, and can be accessed by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international), and providing the passcode 13686658, or by accessing Elevate’s website.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements contain words such as "may," "will," "might," "expect," "believe," "anticipate," "could," "would," "estimate," "continue," "pursue," or the negative thereof or comparable terminology, and may include (without limitation) information regarding the Company's expectations, goals or intentions regarding future performance. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “likely” and other words and terms of similar meaning. The forward-looking statements include statements regarding: our future financial performance including our outlook for full fiscal year 2019 (including all statements under the heading "Financial Outlook"); our plan to continue to be conservative about growth while we focus on execution and earnings growth in 2019; our beliefs about the core strength of our business and our huge market opportunity to serve the New Middle Class, including in light of the expanded billion dollar credit facility with Victory Park Capital, which lowers our cost of capital significantly, and the continued demand for our products; and the Company’s targeted customer acquisition cost range of $250-$300. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. These risks and uncertainties include, but are not limited to: the Company’s limited operating history in an evolving industry; new laws and regulations in the consumer lending industry in many jurisdictions that could restrict the consumer lending products and services the Company offers, impose additional compliance costs on the Company, render the Company’s current operations unprofitable or even prohibit the Company’s current operations; scrutiny by regulators and payment processors of certain online lenders’ access to the Automated Clearing House system to disburse and collect loan proceeds and repayments; a lack of sufficient debt financing at acceptable prices or disruptions in the credit markets; the impact of competition in our industry and innovation by our competitors; our ability to prevent security breaches, disruption in service and comparable events that could compromise the personal and confidential information held in our data systems, reduce the attractiveness of our platform or adversely impact our ability to service loans; and other risks related to litigation, compliance and regulation. Additional factors that could cause actual results to differ are discussed under the heading "Risk Factors" and in other sections of the Company's most recent Annual Report on Form 10-K, and in the Company's other current and periodic reports filed from time to time with the SEC. All forward-looking statements in this press release are made as of the date hereof, based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement.

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About Elevate

Elevate (NYSE: ELVT), together with its bank partners, has originated $6.7 billion in non-prime credit to more than 2.2 million non-prime consumers to date and has saved its customers more than $4.8 billion versus the cost of payday loans. Its responsible, tech-enabled online credit solutions provide immediate relief to customers today and help them build a brighter financial future. The company is committed to rewarding borrowers’ good financial behavior with features like interest rates that can go down over time, free financial training and free credit monitoring. Elevate’s suite of groundbreaking credit products includes RISE, Elastic, Sunny and Today Card. For more information, please visit http://www.elevate.com.

Investor Relations:

Solebury Communications

Sloan Bohlen, (817) 928-1646

investors@elevate.com

or

Media Inquiries:

Vested

Ishviene Arora, (917) 765-8720

elevate@fullyvested.com

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Elevate Credit, Inc. and Subsidiaries

Condensed Statements of Operations

(Unaudited)

	Three Months Ended   December 31,						Years Ended   December 31,
(dollars in thousands, except share and per share amounts)	2018			2017			2018			2017
Revenues	$	207,288		$	193,443		$	786,682		$	673,132
Cost of sales:
Provision for loan losses	117,343			106,281			411,979			357,574
Direct marketing costs	13,450			21,900			77,605			72,222
Other cost of sales	5,467			6,169			26,359			20,536
Total cost of sales	136,260			134,350			515,943			450,332
Gross profit	71,028			59,093			270,739			222,800
Operating expenses:
Compensation and benefits	24,195			21,115			94,382			81,969
Professional services	9,389			7,803			35,864			32,848
Selling and marketing	1,910			1,691			9,435			8,353
Occupancy and equipment	4,245			3,892			17,547			13,895
Depreciation and amortization	3,821			2,615			12,988			10,272
Other	1,631			1,505			5,649			4,600
Total operating expenses	45,191			38,621			175,865			151,937
Operating income	25,837			20,472			94,874			70,863
Other income (expense):
Net interest expense	(20,912		)	(18,441		)	(79,198		)	(73,043		)
Foreign currency transaction gain (loss)	(609		)	80			(1,409		)	2,900
Non-operating income (loss)	(312		)	(112		)	(350		)	2,295
Total other expense	(21,833		)	(18,473		)	(80,957		)	(67,848		)
Income before taxes	4,004			1,999			13,917			3,015
Income tax expense (benefit)	(128		)	14,193			1,408			9,931
Net income (loss)	$	4,132		$	(12,194	)	$	12,509		$	(6,916	)
Basic income (loss) per share	$	0.10		$	(0.29	)	$	0.29		$	(0.20	)
Diluted income (loss) per share	$	0.09		$	(0.29	)	$	0.28		$	(0.20	)
Basic weighted average shares outstanding	43,197,914			41,897,080			42,791,061			33,911,520
Diluted weighted average shares outstanding	43,838,128			41,897,080			44,299,304			33,911,520

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Elevate Credit, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

(dollars in thousands)	December 31, 2018			December 31, 2017
ASSETS
Cash and cash equivalents*	$	58,313		$	41,142
Restricted cash	2,591			1,595
Loans receivable, net of allowance for loan losses of $91,608 and $87,946, respectively*	561,694			524,619
Prepaid expenses and other assets*	11,418			10,306
Receivable from CSO lenders	16,183			22,811
Receivable from payment processors*	21,716			21,126
Deferred tax assets, net	21,628			23,545
Property and equipment, net	41,579			24,249
Goodwill	16,027			16,027
Intangible assets, net	1,712			2,123
Derivative assets, net*	412			—
Total assets	$	753,273		$	687,543
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued liabilities *	$	44,950		$	42,213
State and other taxes payable	681			884
Deferred revenue	28,261			33,023
Notes payable, net*	562,590			513,295
Derivative liability	—			1,972
Total liabilities	636,482			591,387
COMMITMENTS, CONTINGENCIES AND GUARANTEES
STOCKHOLDERS’ EQUITY
Preferred stock	—			—
Common stock	18			17
Additional paid-in capital	183,244			174,090
Accumulated deficit	(66,525		)	(79,954)
Accumulated other comprehensive income	54			2,003
Total stockholders’ equity	116,791			96,156
Total liabilities and stockholders’ equity	$	753,273		$	687,543

* These balances include certain assets and liabilities of variable interest entities (“VIEs”) that can only be used to settle the liabilities of that respective VIE. All assets of the Company are pledged as security for the Company’s outstanding debt, including debt held by the VIEs.

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Non-GAAP Financial Measures

This press release and the attached financial tables contain certain non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA margin, combined loans receivable - principal, combined loans receivable and adjusted net income.

Adjusted EBITDA and Adjusted EBITDA margin

In addition to net income (loss) determined in accordance with GAAP, Elevate uses certain non-GAAP measures such as “Adjusted EBITDA” and "Adjusted EBITDA margin" in assessing its operating performance. Elevate believes these non-GAAP measures are appropriate measures to be used in evaluating the performance of its business.

Elevate defines Adjusted EBITDA as net income (loss) excluding the impact of income tax benefit or expense, non-operating income or expense, foreign currency transaction gain or loss associated with our UK operations, net interest expense, share-based compensation expense and depreciation and amortization expense. Elevate defines Adjusted EBITDA margin as Adjusted EBITDA divided by revenue.

Management believes that Adjusted EBITDA and Adjusted EBITDA margin are useful supplemental measures to assist management and investors in analyzing the operating performance of the business and provide greater transparency into the results of operations of our core business. Management uses this non-GAAP financial measure frequently in its decision-making because it provides supplemental information that facilitates internal comparisons to the historical operating performance of prior periods and gives an additional indication of Elevate’s core operating performance. Elevate includes this non-GAAP financial measure in its earnings announcement in order to provide transparency to its investors and enable investors to better compare its operating performance with the operating performance of its competitors.

Adjusted EBITDA and Adjusted EBITDA margin should not be considered as alternatives to net income (loss) or any other performance measure derived in accordance with GAAP. Management's use of Adjusted EBITDA and Adjusted EBITDA margin has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of these limitations are:

• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect expected cash capital expenditure requirements for such replacements or for new capital assets;

• Adjusted EBITDA does not reflect changes in, or cash requirements for, the Company's working capital needs; and

• Adjusted EBITDA does not reflect interest associated with notes payable used for funding customer loans, for other corporate purposes or tax payments that may represent a reduction in cash available to the Company.

Additionally, Elevate’s definition of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

The Company’s Adjusted EBITDA guidance does not include certain charges and costs. The adjustments in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior periods.   The Company is not able to provide a reconciliation of the Company’s non-GAAP financial guidance to the corresponding GAAP measure without unreasonable effort because of the uncertainty and variability of the nature and amount of these future charges and costs.

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The following table presents a reconciliation of Adjusted EBITDA and Adjusted EBITDA margin to Elevate’s net income (loss) for the three and twelve months ended December 31, 2018 and 2017:

	Three Months Ended December 31,						Years Ended December 31,
(dollars in thousands)	2018			2017			2018			2017
Net income (loss)	$	4,132		$	(12,194	)	$	12,509		$	(6,916	)
Adjustments:
Net interest expense	20,912			18,441			79,198			73,043
Share-based compensation	2,228			1,882			8,233			6,318
Foreign currency transaction (gains) losses	609			(80		)	1,409			(2,900		)
Depreciation and amortization	3,821			2,615			12,988			10,272
Non-operating (income) loss	312			112			350			(2,295		)
Income tax expense (benefit)	(128		)	14,193			1,408			9,931
Adjusted EBITDA	$	31,886		$	24,969		$	116,095		$	87,453
Adjusted EBITDA margin	15.4		%	12.9		%	14.8		%	13.0		%

Adjusted net income, adjusted diluted income per share and adjusted diluted weighted average shares outstanding

The Tax Cuts and Jobs Act was enacted on December 22, 2017. U.S. GAAP requires the remeasurement of all U.S. deferred income tax assets and liabilities for temporary differences from the previously enacted tax rate of 35% to the new corporate tax rate of 21%. The cumulative adjustment of $12.5 million was recognized in income tax expense in 2017, which included the enactment date. The following table presents a reconciliation of net income (loss) and diluted income (loss) per share to adjusted net income and adjusted diluted income per share, which excludes the impact of the tax reform.

	Three Months Ended December 31,					Years Ended December 31,
(dollars in thousands except per share amounts)	2018		2017			2018			2017
Net income (loss)	$	4,132	$	(12,194	)	$	12,509		$	(6,916	)
Impact of tax reform	—		12,462			(50		)	12,462
Adjusted net income	$	4,132	$	268		$	12,459		$	5,546
Diluted income (loss) per share	$	0.09	$	(0.29	)	$	0.28		$	(0.20	)
Impact of tax reform	—		0.30			—			0.36
Adjusted diluted income per share	$	0.09	$	0.01		$	0.28		$	0.16
Diluted weighted average shares outstanding	43,838,128		41,897,080			44,299,304			33,911,520
Effects of potentially dilutive shares outstanding(1)	—		1,438,086			—			1,446,611
Adjusted diluted weighted average shares outstanding	43,838,128		43,335,166			44,299,304			35,358,131

(1) Represents potentially dilutive shares that had not been included in the Company's quarter or year-ended December 31, 2017 diluted weighted average shares outstanding as the Company is in a net loss position under U.S. GAAP. Including these shares would have been anti-dilutive when in a net loss position.

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Supplemental Schedules

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Revenue by Product

	Three Months Ended December 31, 2018
(dollars in thousands)	Rise (US)(1)			Elastic (US)(2)			Total Domestic			Sunny (UK)			Total
Average combined loans receivable – principal(3)	$	301,085		$	288,917		$	590,002		$	50,886		$	640,888
Effective APR	138		%	97		%	118		%	243		%	128		%
Finance charges	$	104,513		$	70,684		$	175,197		$	31,208		$	206,405
Other	517			320			837			46			883
Total revenue	$	105,030		$	71,004		$	176,034		$	31,254		$	207,288
	Three Months Ended December 31, 2017
(dollars in thousands)	Rise (US)(1)			Elastic (US)			Total Domestic			Sunny (UK)			Total
Average combined loans receivable – principal(3)	$	301,941		$	236,728		$	538,669		$	44,427		$	583,096
Effective APR	141		%	97		%	121		%	242		%	130		%
Finance charges	$	106,954		$	57,751		$	164,705		$	27,046		$	191,751
Other	1,080			541			1,621			71			1,692
Total revenue	$	108,034		$	58,292		$	166,326		$	27,117		$	193,443

(1) Includes loans originated by third-party lenders through the CSO programs, which are not included in the Company's condensed consolidated financial statements.

(2) Includes immaterial balances related to the Today Card, which expanded its test launch in November 2018.

(3) Average combined loans receivable - principal is calculated using daily principal balances. See the "Combined Loan Information" section for a reconciliation of this non-GAAP measure to the most comparable GAAP measure.

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Revenue by Product (continued)

	Year ended December 31, 2018
(dollars in thousands)	Rise (US)(1)			Elastic (US)(2)			Total Domestic			Sunny (UK)			Total
Average combined loans receivable – principal(3)	$	293,413		$	262,537		$	555,950		$	51,793		$	607,743
Effective APR	138		%	97		%	119		%	237		%	129		%
Finance charges	$	405,224		$	254,561		$	659,785		$	122,688		$	782,473
Other	2,187			1,745			3,932			277			4,209
Total revenue	$	407,411		$	256,306		$	663,717		$	122,965		$	786,682
	Year ended December 31, 2017
(dollars in thousands)	Rise (US)(1)			Elastic (US)			Total Domestic			Sunny (UK)			Total
Average combined loans receivable – principal(3)	$	261,101		$	202,530		$	463,631		$	43,297		$	506,928
Effective APR	141		%	97		%	122		%	237		%	131		%
Finance charges	$	368,453		$	195,592		$	564,045		$	102,509		$	666,554
Other	4,345			1,926			6,271			307			6,578
Total revenue	$	372,798		$	197,518		$	570,316		$	102,816		$	673,132

(1) Includes loans originated by third-party lenders through the CSO programs, which are not included in the Company's condensed consolidated financial statements.

(2) Includes immaterial balances related to the Today Card, which expanded its test launch in November 2018.

(3) Average combined loans receivable - principal is calculated using daily principal balances. See the "Combined Loan Information" section for a reconciliation of this non-GAAP measure to the most comparable GAAP measure.

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Loan Loss Reserve by Product

	Three Months Ended December 31, 2018
(dollars in thousands)	Rise (US)			Elastic (US)(1)			Total Domestic			Sunny (UK)			Total
Combined loan loss reserve(2):
Beginning balance	$	48,522		$	34,534		$	83,056		$	10,876		$	93,932
Net charge-offs	(61,638		)	(40,441		)	(102,079		)	(12,938		)	(115,017		)
Provision for loan losses	63,713			41,957			105,670			11,673			117,343
Effect of foreign currency	—			—			—			(206		)	(206		)
Ending balance	$	50,597		$	36,050		$	86,647		$	9,405		$	96,052
Combined loans receivable(2)(3)	$	333,001		$	303,418		$	636,419		$	56,709		$	693,128
Combined loan loss reserve as a percentage of ending combined loans receivable	15		%	12		%	14		%	17		%	14		%
Net charge-offs as a percentage of revenues	59		%	57		%	58		%	41		%	55		%
Provision for loan losses as a percentage of revenues	61		%	59		%	60		%	37		%	57		%

	Three Months Ended December 31, 2017
(dollars in thousands)	Rise (US)			Elastic (US)			Total Domestic			Sunny (UK)			Total
Combined loan loss reserve(2):
Beginning balance	$	49,756		$	27,802		$	77,558		$	8,511		$	86,069
Net charge-offs	(60,024		)	(30,653		)	(90,677		)	(7,941		)	(98,618		)
Provision for loan losses	66,135			31,721			97,856			8,425			106,281
Effect of foreign currency	—			—			—			57			57
Ending balance	$	55,867		$	28,870		$	84,737		$	9,052		$	93,789
Combined loans receivable(2)(3)	$	342,652		$	261,222		$	603,874		$	54,156		$	658,030
Combined loan loss reserve as a percentage of ending combined loans receivable	16		%	11		%	14		%	17		%	14		%
Net charge-offs as a percentage of revenues	56		%	53		%	55		%	29		%	51		%
Provision for loan losses as a percentage of revenues	61		%	54		%	59		%	31		%	55		%

(1) Includes immaterial balances related to the Today Card, which expanded its test launch in November 2018.

(2) Not a financial measure prepared in accordance with GAAP. See the "Combined Loan Information" section for a reconciliation of this non-GAAP measure to the most comparable GAAP measure.

(3) Includes loans originated by third-party lenders through the CSO programs, which are not included in the Company's consolidated financial statements.

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Loan Loss Reserve by Product (continued)

	Year ended December 31, 2018
(dollars in thousands)	Rise (US)			Elastic (US)(1)			Total Domestic			Sunny (UK)			Total
Combined loan loss reserve(2):
Beginning balance	$	55,867		$	28,870		$	84,737		$	9,052		$	93,789
Net charge-offs	(228,569		)	(131,719		)	(360,288		)	(48,872		)	(409,160		)
Provision for loan losses	223,299			138,899			362,198			49,781			411,979
Effect of foreign currency	—			—			—			(556		)	(556		)
Ending balance	$	50,597		$	36,050		$	86,647		$	9,405		$	96,052
Combined loans receivable(2)(3)	$	333,001		$	303,418		$	636,419		$	56,709		$	693,128
Combined loan loss reserve as a percentage of ending combined loans receivable	15		%	12		%	14		%	17		%	14		%
Net charge-offs as a percentage of revenues	56		%	51		%	54		%	40		%	52		%
Provision for loan losses as a percentage of revenues	55		%	54		%	55		%	40		%	52		%

	Year ended December 31, 2017
(dollars in thousands)	Rise (US)			Elastic (US)			Total Domestic			Sunny (UK)			Total
Combined loan loss reserve(2):
Beginning balance	$	53,336		$	19,389		$	72,725		$	9,651		$	82,376
Net charge-offs	(209,533		)	(99,283		)	(308,816		)	(38,194		)	(347,010		)
Provision for loan losses	212,064			108,764			320,828			36,746			357,574
Effect of foreign currency	—			—			—			849			849
Ending balance	$	55,867		$	28,870		$	84,737		$	9,052		$	93,789
Combined loans receivable(2)(3)	$	342,652		$	261,222		$	603,874		$	54,156		$	658,030
Combined loan loss reserve as a percentage of ending combined loans receivable	16		%	11		%	14		%	17		%	14		%
Net charge-offs as a percentage of revenues	56		%	50		%	54		%	37		%	52		%
Provision for loan losses as a percentage of revenues	57		%	55		%	56		%	36		%	53		%

(1) Includes immaterial balances related to the Today Card, which expanded its test launch in November 2018.

(2) Not a financial measure prepared in accordance with GAAP. See the "Combined Loan Information" section for a reconciliation of this non-GAAP measure to the most comparable GAAP measure.

(3) Includes loans originated by third-party lenders through the CSO programs, which are not included in the Company's consolidated financial statements.

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Customer Loan Data by Product

	Three Months Ended December 31, 2018
	Rise (US)			Elastic (US)(1)			Total Domestic			Sunny (UK)			Total
Beginning number of combined loans outstanding	140,218			167,045			307,263			94,173			401,436
New customer loans originated	28,838			18,388			47,226			19,450			66,676
Former customer loans originated	24,645			140			24,785			—			24,785
Attrition	(50,943		)	(19,176		)	(70,119		)	(24,174		)	(94,293		)
Ending number of combined loans outstanding	142,758			166,397			309,155			89,449			398,604
Customer acquisition cost	$	216		$	253		$	231		$	132		$	202
Average customer loan balance	$	2,167		$	1,746		$	1,940		$	544		$	1,627

	Three Months Ended December 31, 2017
	Rise (US)			Elastic (US)			Total Domestic			Sunny (UK)			Total
Beginning number of combined loans outstanding	123,978			126,677			250,655			74,924			325,579
New customer loans originated	41,856			30,986			72,842			21,822			94,664
Former customer loans originated	18,871			—			18,871			—			18,871
Attrition	(43,915		)	(16,991		)	(60,906		)	(16,236		)	(77,142		)
Ending number of combined loans outstanding	140,790			140,672			281,462			80,510			361,972
Customer acquisition cost	$	243		$	222		$	234		$	223		$	231
Average customer loan balance	$	2,276		$	1,784		$	2,030		$	584		$	1,708

(1) Includes immaterial balances related to the Today Card, which expanded its test launch in November 2018.

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Customer Loan Data by Product (continued)

	Year ended December 31, 2018
	Rise (US)			Elastic (US)(1)			Total Domestic			Sunny (UK)			Total
Beginning number of combined loans outstanding	140,790			140,672			281,462			80,510			361,972
New customer loans originated	111,860			99,820			211,680			104,803			316,483
Former customer loans originated	86,278			746			87,024			—			87,024
Attrition	(196,170		)	(74,841		)	(271,011		)	(95,864		)	(366,875		)
Ending number of combined loans outstanding	142,758			166,397			309,155			89,449			398,604
Customer acquisition cost	$	275		$	240		$	259		$	218		$	245
Average customer loan balance	$	2,167		$	1,746		$	1,940		$	544		$	1,627

	Year ended December 31, 2017
	Rise (US)			Elastic (US)			Total Domestic			Sunny (UK)			Total
Beginning number of combined loans outstanding	121,996			89,153			211,149			78,044			289,193
New customer loans originated	116,030			110,145			226,175			79,011			305,186
Former customer loans originated	71,109			—			71,109			—			71,109
Attrition	(168,345		)	(58,626		)	(226,971		)	(76,545		)	(303,516		)
Ending number of combined loans outstanding	140,790			140,672			281,462			80,510			361,972
Customer acquisition cost	$	281		$	182		$	233		$	249		$	237
Average customer loan balance	$	2,276		$	1,784		$	2,030		$	584		$	1,708

(1) Includes immaterial balances related to the Today Card, which expanded its test launch in November 2018.

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Combined Loan Information

The Elastic line of credit product is originated by a third party lender, Republic Bank, which initially provides all of the funding for that product. Republic Bank retains 10% of the balances of all of the loans originated and sells a 90% loan participation in the Elastic lines of credit to a third party SPV, Elastic SPV, Ltd. Elevate is required to consolidate Elastic SPV, Ltd. as a variable interest entity under GAAP and the consolidated financial statements include revenue, losses and loans receivable related to the 90% of Elastic lines of credit originated by Republic Bank and sold to Elastic SPV, Ltd.

Beginning in the fourth quarter of 2018, the Company also licenses its Rise installment loan brand to a third party lender, FinWise Bank, which originates Rise installment loans in sixteen states. FinWise Bank initially provides all of the funding and retains 5% of the balances of all of the loans originated and sells a 95% loan participation in those Rise installment loans to a third party SPV, EF SPV, Ltd. Elevate is required to consolidate EF SPV, Ltd. as a variable interest entity under GAAP and the consolidated financial statements include revenue, losses and loans receivable related to the 95% of Rise installment loans originated by FinWise Bank and sold to EF SPV, Ltd.

Elevate defines combined loans receivable - principal as loans owned by the Company plus loans originated and owned by third-party lenders pursuant to our CSO programs. In Texas and Ohio, the Company does not make Rise loans directly, but rather act as a Credit Services Organization (which is also known as a Credit Access Business in Texas), or, collectively, “CSO,” and the loans are originated by an unaffiliated third party. Elevate defines combined loan loss reserve as the loan loss reserve for loans owned by the Company plus the loan loss reserve for loans originated and owned by third-party lenders and guaranteed by the Company. The information presented in the tables below on a combined basis are non-GAAP measures based on a combined portfolio of loans, which includes the total amount of outstanding loans receivable that the Company owns and that are on the Company's consolidated balance sheets plus outstanding loans receivable originated and owned by third parties that the Company guarantees pursuant to CSO programs in which the Company participates.

The Company believes these non-GAAP measures provide investors with important information needed to evaluate the magnitude of potential loan losses and the opportunity for revenue performance of the combined loan portfolio on an aggregate basis. The Company also believes that the comparison of the combined amounts from period to period is more meaningful than comparing only the amounts reflected on the Company's consolidated balance sheets since both revenues and cost of sales as reflected in the Company's consolidated financial statements are impacted by the aggregate amount of loans the Company owns and those CSO loans the Company guarantees.

The Company's use of total combined loans and fees receivable has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of these limitations are:

• Rise CSO loans are originated and owned by a third party lender; and

• Rise CSO loans are funded by a third party lender and are not part of the VPC Facility.

As of each of the period ends indicated, the following table presents a reconciliation of:

• Loans receivable, net, Company owned (which reconciles to the Company's consolidated balance sheets included elsewhere in this press release);

• Loans receivable, net, guaranteed by the Company;

• Combined loans receivable (which the Company uses as a non-GAAP measure); and

• Combined loan loss reserve (which the Company uses as a non-GAAP measure).

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	2016			2017												2018
(dollars in thousands)	December 31			March 31			June 30			September 30			December 31			March 31			June 30			September 30			December 31
Company Owned Loans:
Loans receivable – principal, current, company owned	$	387,142		$	367,744		$	403,944		$	450,891		$	514,147		$	471,996		$	493,908		$	525,717		$	543,405
Loans receivable – principal, past due, company owned	57,342			48,007			45,839			61,040			61,856			60,876			58,949			69,934			68,251
Loans receivable – principal, total, company owned	444,484			415,751			449,783			511,931			576,003			532,872			552,857			595,651			611,656
Loans receivable – finance charges, company owned	25,630			21,359			21,866			27,625			36,562			31,181			31,519			36,747			41,646
Loans receivable – company owned	470,114			437,110			471,649			539,556			612,565			564,053			584,376			632,398			653,302
Allowance for loan losses on loans receivable, company owned	(77,451		)	(69,798		)	(66,030		)	(80,972		)	(87,946		)	(80,497		)	(76,575		)	(89,422		)	(91,608		)
Loans receivable, net, company owned	$	392,663		$	367,312		$	405,619		$	458,584		$	524,619		$	483,556		$	507,801		$	542,976		$	561,694
Third Party Loans Guaranteed by the Company:
Loans receivable – principal, current, guaranteed by company	$	34,466		$	27,841		$	30,210		$	35,690		$	41,220		$	33,469		$	35,114		$	36,649		$	35,529
Loans receivable – principal, past due, guaranteed by company	2,260			957			1,066			1,267			1,152			1,123			1,494			1,661			1,353
Loans receivable – principal, total, guaranteed by company(1)	36,726			28,798			31,276			36,957			42,372			34,592			36,608			38,310			36,882
Loans receivable – finance charges, guaranteed by company(2)	3,772			2,754			2,365			2,751			3,093			2,612			2,777			3,103			2,944
Loans receivable – guaranteed by company	40,498			31,552			33,641			39,708			45,465			37,204			39,385			41,413			39,826
Liability for losses on loans receivable, guaranteed by company	(4,925		)	(3,565		)	(3,810		)	(5,097		)	(5,843		)	(3,749		)	(3,956		)	(4,510		)	(4,444		)
Loans receivable, net, guaranteed by company(3)	$	35,573		$	27,987		$	29,831		$	34,611		$	39,622		$	33,455		$	35,429		$	36,903		$	35,382
Combined Loans Receivable(3):
Combined loans receivable – principal, current	$	421,608		$	395,585		$	434,154		$	486,581		$	555,367		$	505,465		$	529,022		$	562,366		$	578,934
Combined loans receivable – principal, past due	59,602			48,964			46,905			62,307			63,008			61,999			60,443			71,595			69,604
Combined loans receivable – principal	481,210			444,549			481,059			548,888			618,375			567,464			589,465			633,961			648,538
Combined loans receivable – finance charges	29,402			24,113			24,231			30,376			39,655			33,793			34,296			39,850			44,590
Combined loans receivable	$	510,612		$	468,662		$	505,290		$	579,264		$	658,030		$	601,257		$	623,761		$	673,811		$	693,128

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	2016			2017												2018
(dollars in thousands)	December 31			March 31			June 30			September 30			December 31			March 31			June 30			September 30			December 31
Combined Loan Loss Reserve(3):
Allowance for loan losses on loans receivable, company owned	$	(77,451	)	$	(69,798	)	$	(66,030	)	$	(80,972	)	$	(87,946	)	$	(80,497	)	$	(76,575	)	$	(89,422	)	$	(91,608	)
Liability for losses on loans receivable, guaranteed by company	(4,925		)	(3,565		)	(3,810		)	(5,097		)	(5,843		)	(3,749		)	(3,956		)	(4,510		)	(4,444		)
Combined loan loss reserve	$	(82,376	)	$	(73,363	)	$	(69,840	)	$	(86,069	)	$	(93,789	)	$	(84,246	)	$	(80,531	)	$	(93,932	)	$	(96,052	)
Combined loans receivable – principal, past due(3)	$	59,602		$	48,964		$	46,905		$	62,307		$	63,008		$	61,999		$	60,443		$	71,595		$	69,604
Combined loans receivable – principal(3)	481,210			444,549			481,059			548,888			618,375			567,464			589,465			633,961			648,538
Percentage past due	12		%	11		%	10		%	11		%	10		%	11		%	10		%	11		%	11		%
Combined loan loss reserve as a percentage of combined loans receivable(3)	16		%	16		%	14		%	15		%	14		%	14		%	13		%	14		%	14		%
Allowance for loan losses as a percentage of loans receivable – company owned	16		%	16		%	14		%	15		%	14		%	14		%	13		%	14		%	14		%

(1) Represents loans originated by third-party lenders through the CSO programs, which are not included in the Company's consolidated financial statements.

(2) Represents finance charges earned by third-party lenders through the CSO programs, which are not included in the Company's consolidated financial statements.

(3) Non-GAAP measure.

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