Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 06, 2020 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Elevate Credit, Inc. | |
Entity Central Index Key | 0001651094 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Current Reporting Status | Yes | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 42,602,175 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | |
ASSETS | |||
Cash and cash equivalents | [1] | $ 101,429 | $ 88,913 |
Restricted cash | 2,190 | 2,294 | |
Loans receivable, net of allowance for loan losses of $81,816 and $86,996, respectively | [1] | 516,670 | 573,677 |
Prepaid expenses and other assets | [1] | 13,038 | 11,608 |
Operating lease right of use assets | 9,746 | 10,191 | |
Receivable from CSO lenders | 6,822 | 8,696 | |
Receivable from payment processors | [1] | 9,278 | 10,651 |
Deferred tax assets, net | 9,737 | 10,139 | |
Property and equipment, net | 49,905 | 49,989 | |
Goodwill, net | 6,776 | 16,027 | |
Intangible assets, net | 1,371 | 1,402 | |
Total assets | 726,962 | 783,587 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||
Accounts payable and accrued liabilities (See Note 14) | [1] | 41,179 | 45,596 |
Operating lease liabilities | 13,790 | 14,352 | |
Income taxes payable | 1,174 | 0 | |
Deferred revenue | [1] | 8,831 | 12,087 |
Notes payable, net (See Note 14) | [1] | 514,206 | 555,063 |
Total liabilities | 579,180 | 627,098 | |
COMMITMENTS, CONTINGENCIES AND GUARANTEES (Note 12) | |||
STOCKHOLDERS’ EQUITY | |||
Preferred stock; $0.0004 par value; 24,500,000 authorized shares; None issued and outstanding at March 31, 2020 and December 31, 2019. | 0 | 0 | |
Common stock; $0.0004 par value; 300,000,000 authorized shares; 44,508,834 and 44,445,736 issued; 43,000,499 and 43,676,826 outstanding, respectively | 18 | 18 | |
Additional paid-in capital | 195,471 | 193,061 | |
Treasury stock; at cost; 1,508,335 and 768,910 shares of common stock, respectively | (6,717) | (3,344) | |
Accumulated deficit | (40,083) | (34,342) | |
Accumulated other comprehensive (loss) income, net of tax benefit of $1,367 and $1,353, respectively | [1] | (907) | 1,096 |
Total stockholders’ equity | 147,782 | 156,489 | |
Total liabilities and stockholders’ equity | $ 726,962 | $ 783,587 | |
[1] | 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. For further information regarding the assets and liabilities included in our consolidated accounts, see Note 4—Variable Interest Entities. |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Loans receivable, allowance | $ 81,816 | $ 86,996 |
Preferred stock, par value (in usd per share) | $ 0.0004 | $ 0.0004 |
Preferred stock, shares authorized | 24,500,000 | 24,500,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.0004 | $ 0.0004 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 44,508,834 | 44,445,736 |
Common stock, shares outstanding | 43,000,499 | 43,676,826 |
AOCI tax benefit | $ 1,367 | $ 1,353 |
Treasury stock, common stock shares | 1,508,335 | 768,910 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Revenues | $ 177,455 | $ 189,504 |
Cost of sales: | ||
Provision for loan losses | 82,753 | 87,431 |
Direct marketing costs | 12,071 | 11,154 |
Other cost of sales | 8,330 | 5,060 |
Total cost of sales | 103,154 | 103,645 |
Gross profit | 74,301 | 85,859 |
Operating expenses: | ||
Compensation and benefits | 26,191 | 25,710 |
Professional services | 9,207 | 9,699 |
Selling and marketing | 1,424 | 1,846 |
Occupancy and equipment | 5,749 | 5,052 |
Depreciation and amortization | 4,797 | 4,266 |
Other | 1,251 | 1,307 |
Total operating expenses | 48,619 | 47,880 |
Operating income | 25,682 | 37,979 |
Other expense: | ||
Net interest expense (See Note 14) | (14,195) | (19,219) |
Foreign currency transaction (loss) gain | (812) | 613 |
Impairment loss | (9,251) | 0 |
Non-operating loss | (4,263) | 0 |
Total other expense | (28,521) | (18,606) |
(Loss) income before taxes | (2,839) | 19,373 |
Income tax expense | 2,072 | 6,015 |
Net (loss) income | $ (4,911) | $ 13,358 |
Basic (loss) earnings per share (in usd per share) | $ (0.11) | $ 0.31 |
Diluted (loss) earnings per share (in usd per share) | $ (0.11) | $ 0.30 |
Basic weighted average shares outstanding (in shares) | 43,161,716 | 43,348,249 |
Diluted weighted average shares outstanding (in shares) | 43,161,716 | 43,875,410 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net (loss) income | $ (4,911) | $ 13,358 |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency translation adjustment, net of tax of $(14) and $(2) for the three months ended 2020 and 2019, respectively | (2,003) | 665 |
Change in derivative valuation, net of tax of $0 and $(95) for the three months ended 2020 and 2019, respectively | 0 | (208) |
Total other comprehensive (loss) income, net of tax | (2,003) | 457 |
Total comprehensive (loss) income | $ (6,914) | $ 13,815 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Foreign currency translation adjustment, tax expense (tax benefit) | $ (14) | $ (2) |
Change in derivative valuation, tax expense (tax benefit) | $ 0 | $ (95) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Preferred Stock | Common Stock | Additional paid-in capital | Treasury Stock | Accumulated deficit | Accumulated other comprehensive income (loss) |
Balance at (in shares) at Dec. 31, 2018 | 0 | 43,329,262 | 0 | ||||
Balance at at Dec. 31, 2018 | $ 116,791 | $ 0 | $ 18 | $ 183,244 | $ 0 | $ (66,525) | $ 54 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Share-based compensation | 2,435 | 2,435 | |||||
Exercise of stock options (in shares) | 12,500 | ||||||
Exercise of stock options | 26 | 26 | |||||
Vesting of restricted stock units (in shares) | 16,034 | ||||||
Vesting of restricted stock units | (4) | (4) | |||||
Tax benefit of equity issuance costs | (2) | (2) | |||||
Comprehensive loss: | |||||||
Foreign currency translation adjustment net of tax benefit | 665 | 665 | |||||
Change in derivative valuation net of tax benefit of $95 | (208) | (208) | |||||
Net (loss) income | 13,358 | 13,358 | |||||
Balance at (in shares) at Mar. 31, 2019 | 0 | 43,357,796 | 0 | ||||
Balance at at Mar. 31, 2019 | 133,061 | $ 0 | $ 18 | 185,699 | $ 0 | (53,167) | 511 |
Balance at (in shares) at Dec. 31, 2019 | 0 | 43,676,826 | 768,910 | ||||
Balance at at Dec. 31, 2019 | 156,489 | $ 0 | $ 18 | 193,061 | $ (3,344) | (34,342) | 1,096 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Share-based compensation | 2,775 | 2,775 | |||||
Exercise of stock options (in shares) | 34,185 | ||||||
Exercise of stock options | (51) | (51) | |||||
Vesting of restricted stock units (in shares) | 28,913 | ||||||
Vesting of restricted stock units | (314) | (314) | |||||
Comprehensive loss: | |||||||
Foreign currency translation adjustment net of tax benefit | (2,003) | (2,003) | |||||
Treasury stock reissued for RSUs vesting (in shares) | 188,961 | 188,961 | |||||
Treasury stock reissued for RSUs vesting | 0 | $ 830 | (830) | ||||
Treasury stock acquired (in shares) | 928,386 | 928,386 | |||||
Treasury stock acquired | (4,203) | $ (4,203) | |||||
Net (loss) income | (4,911) | (4,911) | |||||
Balance at (in shares) at Mar. 31, 2020 | 0 | 43,000,499 | 1,508,335 | ||||
Balance at at Mar. 31, 2020 | $ 147,782 | $ 0 | $ 18 | $ 195,471 | $ (6,717) | $ (40,083) | $ (907) |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||
Foreign currency translation adjustment, tax benefit | $ 14 | $ 2 |
Change in derivative valuation, tax expense (tax benefit) | $ 0 | $ (95) |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net (loss) income | $ (4,911) | $ 13,358 | |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||
Depreciation and amortization | 4,797 | 4,266 | |
Provision for loan losses | 82,753 | 87,431 | |
Share-based compensation | 2,775 | 2,435 | |
Amortization of debt issuance costs | 174 | 180 | |
Amortization of loan premium | 1,523 | 1,553 | |
Amortization of derivative assets | 0 | 108 | |
Amortization of operating leases | (116) | 128 | |
Deferred income tax expense, net | 416 | 5,737 | |
Unrealized loss from foreign currency transactions | 812 | (613) | |
Impairment loss | 9,251 | 0 | |
Non-operating loss | 4,263 | 0 | |
Changes in operating assets and liabilities: | |||
Prepaid expenses and other assets | 836 | 1,657 | |
Income taxes payable | 1,639 | 0 | |
Receivables from payment processors | 1,239 | (2,285) | |
Receivables from CSO lenders | 1,875 | 4,482 | |
Interest receivable | (17,230) | (15,801) | |
State and other taxes payable | 0 | 394 | |
Deferred revenue | (2,811) | (5,434) | |
Accounts payable and accrued liabilities | (10,586) | 166 | |
Net cash provided by operating activities | 76,699 | 97,762 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Loans receivable originated or participations purchased | (250,227) | (272,169) | |
Principal collections and recoveries on loans receivable | 238,734 | 256,742 | |
Participation premium paid | (1,400) | (1,205) | |
Purchases of property and equipment | (5,565) | (7,105) | |
Net cash used in investing activities | (18,458) | (23,737) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from notes payable | 6,500 | 10,000 | |
Payments of notes payable | (46,939) | (43,000) | |
Debt issuance costs paid | (51) | (2,547) | |
Common stock repurchased | (4,203) | 0 | |
Proceeds from stock option exercises | 27 | 26 | |
Taxes paid related to net share settlement of equity awards | (314) | (4) | |
Net cash (used in) provided by financing activities | (44,980) | (35,525) | |
Effect of exchange rates on cash | (849) | 242 | |
Net increase in cash, cash equivalents and restricted cash | 12,412 | 38,742 | |
Cash and cash equivalents, beginning of period | 88,913 | [1] | 58,313 |
Restricted cash, beginning of period | 2,294 | 2,591 | |
Cash, cash equivalents and restricted cash, beginning of period | 91,207 | 60,904 | |
Cash and cash equivalents, end of period | 101,429 | [1] | 97,153 |
Restricted cash, end of period | 2,190 | 2,493 | |
Cash, cash equivalents and restricted cash, end of period | 103,619 | 99,646 | |
Supplemental cash flow information: | |||
Interest paid | 14,336 | 18,988 | |
Taxes paid | 85 | 0 | |
Non-cash activities: | |||
CSO fees charged-off included in Deferred revenues and Loans receivable | 423 | 2,326 | |
CSO fees on loans paid-off prior to maturity included in Receivable from CSO lenders and Deferred revenue | 21 | 90 | |
Annual membership fee included in Deferred revenues and Loans receivable | 1 | 0 | |
Reissuances of Treasury stock | 830 | 0 | |
Changes in fair value of interest rate caps | 0 | 304 | |
Tax benefit of equity issuance costs included in Additional paid-in capital | 0 | 2 | |
Leasehold improvements allowance included in Property and equipment, net | 0 | 134 | |
Operating lease right of use assets recognized | 0 | 12,289 | |
Operating lease liabilities recognized | $ 0 | $ 16,008 | |
[1] | 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. For further information regarding the assets and liabilities included in our consolidated accounts, see Note 4—Variable Interest Entities. |
Basis of Presentation and Accou
Basis of Presentation and Accounting Changes | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Accounting Changes | BASIS OF PRESENTATION AND ACCOUNTING CHANGES Business Operations Elevate Credit, Inc. (the “Company”) is a Delaware corporation. The Company provides technology-driven, progressive online credit solutions to non-prime consumers. The Company uses advanced technology and proprietary risk analytics to provide more convenient and more responsible financial options to its customers, who are not well-served by either banks or legacy non-prime lenders. The Company currently offers unsecured online installment loans, lines of credit and credit cards in the United States (the “US”) and the United Kingdom (the “UK”). The Company’s products, Rise, Elastic, Today Card and Sunny, reflect its mission of “Good Today, Better Tomorrow” and provide customers with access to competitively priced credit and services while helping them build a brighter financial future with credit building and financial wellness features. In the UK, the Company directly offers unsecured installment loans via the internet through its wholly owned subsidiary, Elevate Credit International (UK), Limited, (“ECI”) under the brand name of Sunny. Basis of Presentation The accompanying unaudited condensed consolidated financial statements as of March 31, 2020 and for the three -month periods ended March 31, 2020 and 2019 include the accounts of the Company, its wholly owned subsidiaries and variable interest entities ("VIEs") where the Company is the primary beneficiary. All significant intercompany transactions and accounts have been eliminated. The unaudited condensed consolidated financial information included in this report has been prepared in accordance with accounting principles generally accepted in the US (“US GAAP”) for interim financial information and Article 10 of Regulation S-X and conform, as applicable, to general practices within the finance company industry. The principles for interim financial information do not require the inclusion of all the information and footnotes required by US GAAP for complete financial statements. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2019 in the Company's Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission ("SEC") on February 14, 2020. In the opinion of the Company’s management, the unaudited condensed consolidated financial statements include all adjustments, all of which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods. Our business is seasonal in nature so the results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year. Reclassifications Certain amounts in the prior periods presented herein have been reclassified to conform to the current period financial statement presentation. The Company does not believe that these reclassifications have a material impact on the consolidated financial statements. The Company reclassified $605 thousand to Accounts payable and accrued liabilities with an offset to Income taxes payable related to December 31, 2019 state and other taxes payable. Use of Estimates The preparation of the unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include the valuation of the allowance for loan losses, goodwill, long-lived and intangible assets, deferred revenues, contingencies, the fair value of derivatives, the income tax provision, valuation of share-based compensation, operating lease right of use assets, operating lease liabilities and the valuation allowance against deferred tax assets. The Company bases its estimates on historical experience, current data and assumptions that are believed to be reasonable. Actual results in future periods could differ from those estimates. Revenue Recognition The Company recognizes consumer loan fees as revenues for each of the loan products it offers. Revenues on the Condensed Consolidated Statements of Operations include: finance charges, lines of credit fees, fees for services provided through CSO programs (“CSO fees”), and interest, as well as any other fees or charges permitted by applicable laws and pursuant to the agreement with the borrower. The Company also records revenues related to the sale of customer applications to unrelated third parties. These applications are sold with the customer’s consent in the event that the Company or its CSO lenders are unable to offer the customer a loan. Revenue is recognized at the time of the sale. Other revenues also include marketing and licensing fees received from the originating lender related to the Elastic product and Rise bank-originated loans and from CSO fees related to the Rise product. Revenues related to these fees are recognized when the service is performed. The Company accrues finance charges on installment loans on a constant yield basis over their terms. The Company accrues and defers fixed charges such as CSO fees and lines of credit fees when they are assessed and recognizes them to earnings as they are earned over the life of the loan. The Company accrues interest on credit cards based on the amount of the outstanding credit card balance and the related contractual interest rate. Credit card membership fees are amortized to revenue over the card membership period. Other credit card fees, such as late payment fees and returned payment fees, are accrued when assessed. The Company does not accrue finance charges and other fees on installment loans or lines of credit for which payment is greater than 60 days past due. Credit card interest charges are recognized based on the contractual provisions of the underlying arrangements and are not accrued when payment is past due by more than 90 days. Installment loans and lines of credit are considered past due if a grace period has not been requested and a scheduled payment is not paid on its due date. Credit cards have a grace period of 25 days and are considered delinquent after the grace period. Payments received on past due loans are applied against the loan and accrued interest balance to bring the loan current. Payments are generally first applied to accrued fees and interest and then to the principal loan balance. In March 2020, the outbreak of the novel coronavirus (“COVID-19”) was recognized as a pandemic by the World Health Organization, and the spread of COVID-19 has created a global public health crisis that has resulted in unprecedented disruption to businesses and economies. In response to the pandemic's effects, and in accordance with federal and state guidelines, the Company expanded its payment flexibility programs for its customers, including payment deferrals. This program allows for a deferral of payments for an initial period of 60 days, and up to a maximum of 180 days on a cumulative basis. A customer will return to the normal payment schedule after the end of the deferral period with the extension of the maturity date equivalent to the deferral period,which is not to exceed an additional 180 days. The finance charges will continue to accrue at a lower effective interest rate over the expected term of the loan as adjusted for the deferral period provided (not to exceed an amount greater than the amount at which the borrower could settle the loan) or placed on non-accrual status. The Company’s business is affected by seasonality, which can cause significant changes in portfolio size and profit margins from quarter to quarter. Although this seasonality does not impact the Company’s policies for revenue recognition, it does generally impact the Company’s results of operations by potentially causing an increase in its profit margins in the first quarter of the year and decreased margins in the second through fourth quarters. Installment Loans, Lines of Credit and Credit Cards Installment loans, lines of credit and credit cards, including receivables for finance charges, fees and interest, are unsecured and reported as Loans receivable, net of allowance for loan losses on the Condensed Consolidated Balance Sheets. Installment loans are multi-payment loans that require the pay-down of portions of the outstanding principal balance in multiple installments through the Rise and Sunny brands. Line of credit accounts include customer cash advances made through the Rise brand in two states and the Elastic brand. Credit cards represent credit card balances, uncollected billed interest and fees through the Today Card brand. All outstanding balances, allowance for loan losses, and revenues for the Today Card were immaterial in 2018 and 2019. The Company offers Rise installment and line of credit products and Sunny installment products directly to customers. Elastic lines of credit, Rise bank-originated installment loans and Today credit card receivables represent participation interests acquired from third-party lenders through a wholly owned subsidiary or by a VIE. Based on agreements with the third-party lenders, the VIEs pay a loan premium on the participation interests. The loan premium is amortized over the expected life of the outstanding loan amount. See Note 4—Variable Interest Entities for more information regarding these participation interests in Rise and Elastic receivables. The Company considers impaired loans as accounts over 60 days past due (for installment loans and lines of credit) or 120 days past due (for credit cards), or loans which become uncollectible based on information that the Company becomes aware of (e.g., receipt of customer bankruptcy notice). The impaired loans are charged-off at the time that they are deemed to be uncollectible. A modification of finance receivable terms is considered a troubled debt restructuring ("TDR") if the borrower is experiencing financial difficulty and the Company grants a concession it would not otherwise have considered to a borrower. The Company typically considers TDRs to include all installment and line of credit loans that were modified by granting principal and interest forgiveness or by extension of the maturity date for more than 60 days as a part of a loss mitigation strategy. On March 22, 2020, federal and state banking regulators issued a joint statement on working with customers affected by COVID-19 (the "Interagency Statement"). The Interagency Statement includes guidance on accounting for loan modifications. In accordance with the Interagency Statement, the Company has elected to not recognize modified loans as TDRs if the borrower was both not more than 30 days past due as of March 1, 2020 and the modification stems from the effects of the COVID-19 outbreak. The minor modifications offered by the Company to borrowers that meet both qualifications may include payment deferrals less than 6 months, interest or fee waivers, extensions of payment terms or delays in payment. If the borrower was not current at March 1, 2020, the Company offers similar modifications that are considered TDRs. This election is applicable from March 1, 2020 until the earlier of 60 days following the date the COVID-19 national emergency comes to an end or December 31, 2020. Property and Equipment, net Property and equipment are stated at cost, net of accumulated depreciation and amortization. The following table summarizes the components of net property and equipment. (Dollars in thousands) March 31, 2020 December 31, 2019 Property and equipment, gross $ 128,154 $ 124,148 Accumulated depreciation and amortization (78,249 ) (74,159 ) Property and equipment, net $ 49,905 $ 49,989 UK Research and Development Expenditure Credit During 2019, the Company adopted the UK Research and Development Expenditure Credit ("RDEC") for qualifying expenses incurred since January 1, 2017. The credits are grants from the UK government to promote research and development activities in the UK and are recognized against the underlying research and development expenses. An entity that qualifies for RDEC credits must use the credits to offset any outstanding tax liabilities to the UK government. To the extent that the credit is larger than the tax liability, this excess can be paid directly to the Company. The Company's qualifying expenditures mainly consist of employment and contractor costs of certain of the Company's developers. The Company has recorded gross RDEC credits of $90 thousand within the related expense category with an offsetting amount of $17 thousand within Income tax expense in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2020 . Goodwill and Indefinite Lived Intangible Assets Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. In accordance with Accounting Standards Codification ("ASC") 350-20-35, Goodwill— Subsequent Measurement, the Company performs a quantitative approach method impairment review of goodwill and intangible assets with an indefinite life annually at October 1 and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Prior to 2019, the Company performed this test at October 31. The Company completed its annual test as of October 1, 2019 and determined that there was no evidence of impairment of goodwill or indefinite lived intangible assets. As a result of the recent global economic impact and uncertainty due to COVID-19, the Company concluded a triggering event had occurred as of March 31, 2020 , and accordingly, performed interim impairment testing on the goodwill balances of its reporting units. The Company performed a detailed qualitative and quantitative assessment of each reporting unit and concluded that the goodwill associated with the UK reporting unit was impaired as the fair value of the UK reporting unit was less than its carrying amount. While there was a decline in the fair value of the Elastic reporting unit, there was no impairment identified during the quantitative assessment. The Company recognized an impairment of the UK reporting unit’s $9.3 million goodwill balance and the charge was recognized to Impairment loss on the Condensed Consolidated Statements of Operations. Following this impairment charge, the Company has $6.8 million of goodwill (all related to the Elastic reporting unit) remaining on the Condensed Consolidated Balance Sheets as of March 31, 2020 . Prior to the adoption of ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"), the Company’s impairment evaluation of goodwill was already based on comparing the fair value of the Company’s reporting units to their carrying value. The adoption of ASU 2017-04 as of January 1, 2020 had no impact on the Company's evaluation procedures. The fair value of the reporting units is determined based on a weighted average of the income and market approaches. The income approach establishes fair value based on estimated future cash flows of the reporting units, discounted by an estimated weighted-average cost of capital developed using the capital asset pricing model, which reflects the overall level of inherent risk of the reporting units. The income approach uses the Company’s projections of financial performance for a six - to nine -year period and includes assumptions about future revenues growth rates, operating margins and terminal values. The market approach establishes fair value by applying cash flow multiples to the reporting units’ operating performance. The multiples are derived from other publicly traded companies that are similar but not identical to the Company from an operational and economic standpoint. Leases The Company determines if an arrangement is a lease at inception. Operating leases are included in Operating lease right of use (“ROU”) assets and Operating lease liabilities on our Condensed Consolidated Balance Sheets. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. As most of our leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The operating lease ROU asset may also include initial direct costs incurred and excludes any lease payments made and lease incentives. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components. The lease and non-lease components are accounted for as a single lease component. Treasury Stock The Company evaluates each stock repurchase transaction in the period in which it is completed. If the repurchase transaction is significantly in excess of the current market price at purchase, the Company will identify whether the price paid included payment for other agreements, rights, and privileges. Repurchase transactions that do not contain these elements or are not significantly in excess of the current market price at purchase are accounted for using the cost method. The Company anticipates using its treasury stock to fulfill certain employee stock compensation grants and settlements. The Company has elected to use a first in, first out ("FIFO") method for assigning share cost at reissuance. Any gain or loss in the stock value will be credited or charged to paid in capital upon subsequent reissuance of the shares, with losses in excess of previously recognized gains charged to retained earnings. The Company is not obligated to purchase or reissue any shares at any time in accordance with its previously disclosed share repurchase plan. Recently Adopted Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 is intended to improve the reporting of leasing transactions to provide users of financial statements with more decision-useful information. ASU 2016-02 will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases (“ASU 2018-10”), which clarifies certain matters in the codification with the intention to correct unintended application of the guidance. Also in July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”), which provides entities with an additional (and optional) transition method whereby the entity applies the new lease standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Additionally, under the new transition method, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new lease standard will continue to be in accordance with current US GAAP (Topic 840, Leases). ASU 2016-02, as amended, is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company elected to adopt the transition method in ASU 2018-11 by applying the practical expedient prospectively at January 1, 2019. The Company also elected to apply the optional practical expedient package to not reassess existing or expired contracts for lease components, lease classification or initial direct costs. The adoption of ASU 2016-02, as amended, resulted in the recognition of approximately $11.5 million and $15.4 million additional right of use assets and liabilities for operating leases, respectively, but did not have a material impact on the Company's condensed consolidated statements of operations. In July 2019, the FASB issued Accounting Standards Update ("ASU") No. 2019-07, Codification Updates to SEC Sections ("ASU 2019-07"). The purpose of ASU 2019-07 is to amend various SEC paragraphs pursuant to the issuance of SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification , and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization . Among other revisions, the amendments reduce duplication and clarify the inclusion of comprehensive income. The Company has adopted all of the amendments of ASU 2019-07 as of July 2019 with no impact to the Company's condensed consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"). The purpose of ASU 2018-15 is to provide additional guidance on the accounting for costs of implementation activities performed in a cloud computing arrangement that is a service contract. This guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company elected to adopt this ASU prospectively as of January 1, 2020 and has implemented a control structure to identify cloud computing arrangements for appropriate accounting treatment similar to its procedures for right of use assets. ASU 2018-15 did not have a material impact on the Company's condensed consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"). The purpose of ASU 2018-13 is to modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement . This guidance is effective for public companies for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years and requires both a prospective and retrospective approach to adoption based on amendment specifications. Early adoption of any removed or modified disclosures is permitted. Additional disclosures may be delayed until their effective date. The adoption of ASU 2018-13 at January 1, 2020 did not have a material impact on the Company's condensed consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). The purpose of ASU 2017-04 is to simplify the subsequent measurement of goodwill. The amendments modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. This guidance is effective for public companies for goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company has adopted all of the amendments of ASU 2017-04 as of January 2020 with no impact to the Company's condensed consolidated financial statements. For the three months ended March 31, 2020, the Company recognized a $9.3 million impairment loss related to goodwill on the UK reporting unit. The Company used the simplified subsequent measurement requirements per ASU 2017-04 in its impairment analysis. In March 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted in response to COVID-19. Among other things, the CARES Act provides income tax relief inclusive of permitting NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The Company has reviewed the tax relief provisions of the CARES Act regarding its eligibility and determined that the impact is likely to be insignificant with regard to its effective tax rate. The Company continues to monitor and evaluate its eligibility for the CARES Act tax relief provisions to identify any that may become applicable in the future. Accounting Standards to be Adopted in Future Periods In March 2020, the FASB issued Accounting Standards Update ("ASU") No. 2020-03, Codification Improvements to Financial Instruments ("ASU 2020-03"). The purpose of ASU 2020-03 is to clarify, correct errors in or make minor improvements to the codification. Among other revisions, the amendments clarify that an entity should record an allowance for credit losses when an entity regains control of financial assets sold in accordance with Topic 326. ASU 2020-03 also clarifies disclosure requirements for debt securities under Topic 942 and affirms that all entities are required to provide the fair value option disclosures within paragraphs 825-10-50-24 through 50-32 of the codification. The amendments in this update are effective on the latter of the issuance of ASU 2020-03 or the effective date of their related topic. The Company does not anticipate the adoption of ASU 2020-03 to have a material impact on the Company's condensed consolidated financial statements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). The purpose of ASU 2020-04 is to provide optional guidance for a period of time related to accounting for reference rate reform on financial reporting. It is intended to reduce the potential burden of reviewing contract modifications related to discontinued rates. The amendments and expedients in this update are effective as of March 12, 2020 through December 31, 2022 and may be elected by topic. The Company is assessing the potential impact of electing all or portions of ASU 2020-04 on the Company's condensed consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). The purpose of ASU 2019-12 is to reduce complexity in the accounting standards for income taxes by removing certain exceptions as well as clarifying certain allocations. This update also addresses the split recognition of franchise taxes that are partially based on income between income-based tax and non-income-based tax. This guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The Company is still assessing the potential impact of ASU 2019-12 on the Company's condensed consolidated financial statements. In June 2016, the FASB issued ASU 2016-13. ASU 2016-13 is intended to replace the incurred loss impairment methodology in current US GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates to improve the quality of information available to financial statement users about expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments ("ASU 2019-04"). This amendment clarifies the guidance in ASU 2016-13. The guidance in ASU 2016-13 was further clarified by ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments ("ASU 2019-11") issued in November 2019. ASU 2019-11 provides transition relief such as permitting entities an accounting policy election regarding existing TDRs, among other things. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief ("ASU 2019-05"). The purpose of this amendment is to provide entities that have certain instruments within the scope of Subtopic 326-20, Financial Instruments-Credit Losses-Measured at Amortized Cost, with an option to irrevocably elect the fair value option in Subtopic 825-10, Financial Instruments-Overall , on an instrument-by-instrument basis. Election of this option is intended to increase comparability of financial statement information and reduce costs for certain entities to comply with ASU 2016-13. For public entities, ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates ("ASU 2019-10") . The purpose of this amendment is to create a two-tier rollout of major updates, staggering the effective dates between larger public companies and all other entities. This granted certain classes of companies, including Smaller Reporting Companies ("SRCs"), additional time to implement major FASB standards, including ASU 2016-13. Larger public companies will still have an effective date for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All other entities are permitted to defer adoption of ASU 2016-13, and its related amendments, until the earlier of fiscal periods beginning after December 15, 2022. In February 2020, the FASB issued ASU No. 2020-02, Financial Instruments - Credit Losses (Topic 326), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-12 ("ASU 2020-02") . ASU 2020-02 updates the SEC staff guidance related to ASU 2016-13 and all contingent amendments. Under the current SEC definitions, the Company meets the definition of an SRC as of the ASU 2019-10 issuance date and is adopting the deferral period for ASU 2016-13. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | EARNINGS PER SHARE Basic earnings per share ("EPS") is computed by dividing net (loss) income by the weighted average number of common shares outstanding ("WASO") during each period. Also, basic EPS includes any fully vested stock and unit awards that have not yet been issued as common stock. There are no unissued fully vested stock and unit awards at March 31, 2020 and 2019 . Diluted EPS is computed by dividing net (loss) income by the WASO during each period plus any unvested stock option awards granted, vested unexercised stock options and unvested restricted stock units ("RSUs") using the treasury stock method but only to the extent that these instruments dilute earnings per share. The computation of earnings per share was as follows for three months ended March 31, 2020 and 2019 : Three Months Ended (Dollars in thousands, except share and per share amounts) 2020 2019 Numerator (basic): Net (loss) income $ (4,911 ) $ 13,358 Numerator (diluted): Net (loss) income $ (4,911 ) $ 13,358 Denominator (basic): Basic weighted average number of shares outstanding 43,161,716 43,348,249 Denominator (diluted): Basic weighted average number of shares outstanding 43,161,716 43,348,249 Effect of potentially dilutive securities: Employee share plans (options, RSUs and ESPP) — 527,161 Diluted weighted average number of shares outstanding 43,161,716 43,875,410 Basic and diluted (loss) earnings per share: Basic (loss) earnings per share $ (0.11 ) $ 0.31 Diluted (loss) earnings per share $ (0.11 ) $ 0.30 For the three months ended March 31, 2020 and 2019 , the Company excluded the following potential common shares from its diluted (loss) earnings per share calculation because including these shares would be anti-dilutive: • 1,862,170 and 1,457,296 common shares issuable upon exercise of the Company's stock options; and • 3,584,019 and 113,114 common shares issuable upon vesting of the Company's RSUs. ASC Topic 260, “Earnings Per Share” (“ASC Topic 260”) requires companies with participating securities to utilize a two-class method for the computation of net (loss) income per share attributable to the Company. The two-class method requires a portion of net (loss) income attributable to the Company to be allocated to participating securities. Net losses are not allocated to participating securities unless those securities are obligated to participate in losses. The Company did not have any participating securities for the three -month periods ended March 31, 2020 and 2019 . |
Loans Receivable and Revenue
Loans Receivable and Revenue | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Loans Receivable and Revenue | LOANS RECEIVABLE AND REVENUE Revenues generated from the Company’s consumer loans for the three months ended March 31, 2020 and 2019 were as follows: Three Months Ended March 31, (Dollars in thousands) 2020 2019 Finance charges $ 111,135 $ 110,548 CSO fees 7,341 13,708 Lines of credit fees 58,573 64,733 Other 406 515 Total revenues $ 177,455 $ 189,504 The Company's portfolio consists of both installment loans and lines of credit, which are considered the portfolio segments for all periods presented. The Rise product is primarily installment loans in the US with lines of credit offered in two states. The Sunny product is an installment loan product offered in the UK. The Elastic product is a line of credit product in the US. In November of 2018, the Company expanded a test launch of the Today Card, a credit card product offered in the US. Balances and activity for the Today Card as of and for the three months ended March 31, 2020 and 2019 were not material. The following reflects the credit quality of the Company’s loans receivable as of March 31, 2020 and December 31, 2019 as delinquency status has been identified as the primary credit quality indicator. The Company classifies its loans as either current or past due. A customer in good standing may request up to a 16 -day grace period when or before a payment becomes due and, if granted, the loan is considered current during the grace period. In response to the COVID-19 pandemic, the Company, along with the banks it supports, has also expanded existing payment flexibility programs to provide temporary payment relief to certain customers who meet the program’s qualifications. These programs allow for a deferral of payments for an initial period of 60 days, which the Company may extend for an additional 60 days, for a maximum of 180 days on a cumulative basis. A customer will return to the normal payment schedule after the end of the deferral period, with the extension of the maturity date equivalent to the deferral period, which is not to exceed an additional 180 days. Customers that were 30 days past due or less as of March 1, 2020 or the date the customer requested the deferral are considered current. Customers more than 30 days past due as of March 1, 2020 or the date the customer requested the deferral are considered delinquent. As of March 31, 2020, 4.7% of customers have been provided relief through a COVID-19 payment deferral program for a total of $26.4 million in loans with deferred payments . As of April 30, 2020, 10.8% of customers have been provided relief through a COVID-19 payment deferral program for a total of $53.4 million in loans with deferred payments . We believe the Allowance for loan losses is adequate to absorb the losses inherent in the portfolio as of March 31, 2020 . Installment loans, lines of credit and credit cards not impacted by COVID are considered past due if a grace period has not been requested and a scheduled payment is not paid on its due date. All impaired loans that were not accounted for as a TDR as of March 31, 2020 and December 31, 2019 have been charged off. March 31, 2020 (Dollars in thousands) Rise and Sunny Elastic(1) Total Current loans $ 309,139 $ 218,408 $ 527,547 Past due loans 49,084 19,803 68,887 Total loans receivable 358,223 238,211 596,434 Net unamortized loan premium 215 1,837 2,052 Less: Allowance for loan losses (55,763 ) (26,053 ) (81,816 ) Loans receivable, net $ 302,675 $ 213,995 $ 516,670 December 31, 2019 (Dollars in thousands) Rise and Sunny Elastic(1) Total Current loans $ 339,816 $ 243,380 $ 583,196 Past due loans 52,664 22,395 75,059 Total loans receivable 392,480 265,775 658,255 Net unamortized loan premium 290 2,128 2,418 Less: Allowance for loan losses (57,103 ) (29,893 ) (86,996 ) Loans receivable, net $ 335,667 $ 238,010 $ 573,677 (1) Includes immaterial balances related to the Today Card, which expanded its test launch in November 2018. Total loans receivable includes approximately $16.9 million and $8.9 million of loans in a non-accrual status at March 31, 2020 and December 31, 2019 , respectively. Additionally, total loans receivable includes approximately $34.0 million and $38.1 million of interest receivable at March 31, 2020 and December 31, 2019 , respectively. The carrying value for Loans receivable, net of the allowance for loan losses approximates the fair value due to the short-term nature of the loans receivable. The changes in the allowance for loan losses for the three months ended March 31, 2020 and 2019 are as follows: Three Months Ended March 31, 2020 (Dollars in thousands) Rise and Sunny Elastic(1) Total Balance beginning of period $ 59,182 $ 29,893 $ 89,075 Provision for loan losses 58,747 24,006 82,753 Charge-offs (65,878 ) (30,314 ) (96,192 ) Recoveries of prior charge-offs 5,660 2,468 8,128 Effect of changes in foreign currency rates (377 ) — (377 ) Total 57,334 26,053 83,387 Accrual for CSO lender owned loans (1,571 ) — (1,571 ) Balance end of period $ 55,763 $ 26,053 $ 81,816 Three Months Ended March 31, 2019 (Dollars in thousands) Rise and Sunny Elastic(1) Total Balance beginning of period $ 60,002 $ 36,050 $ 96,052 Provision for loan losses 57,869 29,562 87,431 Charge-offs (72,135 ) (39,559 ) (111,694 ) Recoveries of prior charge-offs 5,421 2,288 7,709 Effect of changes in foreign currency rates 201 — 201 Total 51,358 28,341 79,699 Accrual for CSO lender owned loans (3,242 ) — (3,242 ) Balance end of period $ 48,116 $ 28,341 $ 76,457 (1) Includes immaterial balances related to the Today Card, which expanded its test launch in November 2018. As of March 31, 2020 and December 31, 2019 , estimated losses of approximately $1.6 million and $2.1 million for the CSO owned loans receivable guaranteed by the Company of approximately $14.3 million and $19.6 million , respectively, are initially recorded at fair value and are included in Accounts payable and accrued liabilities in the Condensed Consolidated Balance Sheets. Troubled Debt Restructurings In certain circumstances, the Company modifies the terms of its finance receivables for borrowers experiencing financial difficulties. Modifications may include principal and/or interest forgiveness. A modification of finance receivable terms is considered a TDR if the Company grants a concession to a borrower for economic or legal reasons related to the borrower’s financial difficulties that would not otherwise have been considered. Management considers TDRs to include all installment and line of credit loans that were granted principal and interest forgiveness as a part of a loss mitigation strategy for Rise, Elastic and Sunny, unless excluded by policy. Once a loan has been classified as a TDR, it is assessed for impairment based on the present value of expected future cash flows discounted at the loan's original effective interest rate considering all available evidence. The following table summarizes the financial effects, excluding impacts related to credit loss allowance and impairment, of TDRs for the three months ended March 31, 2020 and 2019 : Three Months Ended March 31, (Dollars in thousands) 2020 2019 Outstanding recorded investment before TDR $ 7,546 $ 12,725 Outstanding recorded investment after TDR 7,228 11,355 Total principal and interest forgiveness included in charge-offs within the Allowance for loan losses $ 318 $ 1,370 A loan that has been classified as a TDR remains classified as a TDR until it is liquidated through payoff or charge-off. The table below presents the Company's average outstanding recorded investment and interest income recognized on TDR loans for the three months ended March 31, 2020 and 2019 : Three Months Ended March 31, (Dollars in thousands) 2020 2019 Average outstanding recorded investment(1) $ 17,714 $ 14,917 Interest income recognized $ 3,730 $ 1,925 1. Simple average as of March 31, 2020 and 2019, respectively. The table below presents the Company's loans modified as TDRs as of March 31, 2020 and December 31, 2019 : (Dollars in thousands) 2020 2019 Current outstanding investment $ 10,306 $ 11,559 Delinquent outstanding investment 6,290 7,273 Outstanding recorded investment 16,596 18,832 Less: Impairment included in Allowance for loan losses (4,326 ) (5,238 ) Outstanding recorded investment, net of impairment $ 12,270 $ 13,594 A TDR is considered to have defaulted upon charge-off when it is over 60 days past due or earlier if deemed uncollectible. There were loan restructurings accounted for as TDRs that subsequently defaulted of approximately $7.6 million and $4.5 million for the three months ended March 31, 2020 and 2019 , respectively. The Company had commitments to lend additional funds of approximately $2.7 million to customers with available and unfunded lines of credit as of March 31, 2020 . |
Variable Interest Entities
Variable Interest Entities | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entities | VARIABLE INTEREST ENTITIES The Company is involved with five entities that are deemed to be a VIE: Elastic SPV, Ltd., EF SPV, Ltd. and three Credit Services Organization ("CSO") lenders. Under ASC 810-10-15, Variable Interest Entities , a VIE is an entity that: (1) has an insufficient amount of equity investment at risk to permit the entity to finance its activities without additional subordinated financial support by other parties; (2) the equity investors are unable to make significant decisions about the entity’s activities through voting rights or similar rights; or (3) the equity investors do not have the obligation to absorb expected losses or the right to receive residual returns of the entity. The Company is required to consolidate a VIE if it is determined to be the primary beneficiary, that is, the enterprise has both (1) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (2) the obligation to absorb losses of the entity that could potentially be significant to the VIE. The Company evaluates its relationships with VIEs to determine whether it is the primary beneficiary of a VIE at the time it becomes involved with the entity and it re-evaluates that conclusion each reporting period. Elastic SPV, Ltd. On July 1, 2015, the Company entered into several agreements with a third-party lender and Elastic SPV, Ltd. (“ESPV”), an entity formed by third-party investors for the purpose of purchasing loan participations from the third-party lender. Per the terms of the agreements, the Company provides customer acquisition services to generate loan applications submitted to the third-party lender. In addition, the Company licenses loan underwriting software and provides services to the third-party lender to evaluate the credit quality of those loan applications in accordance with the third-party lender’s credit policies. ESPV accounts for the loan participations acquired in accordance with ASC 860-10-40, Transfers and Services, Derecognition , as the lines of credit acquired meet the criteria of a participation interest. Once the third-party lender originates the loan, ESPV has the right, but not the obligation, to purchase a 90% interest in each Elastic line of credit. Victory Park Management, LLC (“VPC”) entered into an agreement (the "ESPV Facility") under which it loans ESPV all funds necessary up to a maximum borrowing amount to purchase such participation interests in exchange for a fixed return (see Note 5—Notes Payable—ESPV Facility). The Company entered into a separate credit default protection agreement with ESPV whereby the Company agreed to provide credit protection to the investors in ESPV against Elastic loan losses in return for a credit premium. The Company does not hold a direct ownership interest in ESPV, however, as a result of the credit default protection agreement, ESPV was determined to be a VIE and the Company qualifies as the primary beneficiary. The following table summarizes the assets and liabilities of the VIE that are included within the Company’s Condensed Consolidated Balance Sheets at March 31, 2020 and December 31, 2019 : (Dollars in thousands) March 31, December 31, ASSETS Cash and cash equivalents $ 44,439 $ 26,245 Loans receivable, net of allowance for loan losses of $25,145 and $28,852, respectively 209,499 234,504 Prepaid expenses and other assets 2 — Receivable from payment processors 4,713 6,363 Total assets $ 258,653 $ 267,112 LIABILITIES AND SHAREHOLDER’S EQUITY Accounts payable and accrued liabilities ($9,199 and $7,690, respectively, eliminates upon consolidation) $ 14,522 $ 15,902 Deferred revenue 3,562 4,280 Reserve deposit liability ($23,150 and $23,150, respectively, eliminates upon consolidation) 23,150 23,150 Notes payable, net 217,419 223,780 Accumulated other comprehensive income — — Total liabilities and shareholder’s equity $ 258,653 $ 267,112 EF SPV, Ltd. On October 15, 2018, the Company entered into several agreements with a third-party lender and EF SPV, Ltd. (“EF SPV”), an entity formed by third-party investors for the purpose of purchasing loan participations from the third-party lender. Per the terms of the agreements, the Company provides customer acquisition services to generate loan applications submitted to the third-party lender. In addition, the Company licenses loan underwriting software and provides services to the third-party lender to evaluate the credit quality of those loan applications in accordance with the third-party lender’s credit policies. EF SPV accounts for the loan participations acquired in accordance with ASC 860-10-40, Transfers and Services, Derecognition , as the installment loans acquired meet the criteria of a participation interest. Once the third-party lender originates the loan, EF SPV has the right, but not the obligation, to purchase an interest in each Rise bank originated installment loan. Prior to August 1, 2019, FinWise Bank retained 5% of the balances and sold a 95% participation to EF SPV. On August 1, 2019, EF SPV purchased an additional 1% participation in the outstanding portfolio with the participation percentage revised going forward to 96% . VPC lends EF SPV all funds necessary up to a maximum borrowing amount to purchase such participation interests in exchange for a fixed return (see Note 5—Notes Payable—EF SPV Facility). The Company entered into a separate credit default protection agreement with EF SPV whereby the Company agreed to provide credit protection to the investors in EF SPV against Rise bank originated loan losses in return for a credit premium. The Company does not hold a direct ownership interest in EF SPV, however, as a result of the credit default protection agreement, EF SPV was determined to be a VIE and the Company qualifies as the primary beneficiary. The following table summarizes the assets and liabilities of the VIE that are included within the Company’s Condensed Consolidated Balance Sheets at March 31, 2020 and December 31, 2019 : (Dollars in thousands) March 31, December 31, ASSETS Cash and cash equivalents $ 13,436 $ 7,541 Loans receivable, net of allowance for loan losses of $21,558 and $17,436, respectively 117,998 111,281 Receivable from payment processors ($322 and $0 eliminates upon consolidation) 837 681 Total assets $ 132,271 $ 119,503 LIABILITIES AND SHAREHOLDER’S EQUITY Accounts payable and accrued liabilities ($13,461 and $7,114, respectively, eliminates upon consolidation) $ 14,842 $ 8,576 Reserve deposit liability ($8,950 and $8,950, respectively, eliminates upon consolidation) 8,950 8,950 Notes payable, net 108,479 101,977 Total liabilities and shareholder’s equity $ 132,271 $ 119,503 CSO Lenders The three CSO lenders are considered VIE's of the Company; however, the Company does not have any ownership interest in the CSO lenders, does not exercise control over them, and is not the primary beneficiary, and therefore, does not consolidate the CSO lenders’ results with its results. |
Notes Payable, Net
Notes Payable, Net | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Notes Payable, Net | NOTES PAYABLE, NET The Company has three debt facilities with VPC. The Rise SPV, LLC credit facility (the "VPC Facility"), the EF SPV Facility, and the ESPV Facility. The facilities were modified effective February 1, 2019 to the following terms. VPC Facility The VPC Facility is primarily used to fund the Rise and Sunny loan portfolio with a subordinated debt component used for general corporate purposes. It provides the following term notes: • A maximum borrowing amount of $350 million used to fund the Rise loan portfolio (“US Term Note”). Prior to the February 1, 2019 amendment, the interest rate paid on this facility was a base rate (defined as the 3-month LIBOR, with a 1% floor) plus 11% . Upon the February 1, 2019 amendment date, the interest rate on the debt outstanding as of the amendment date was fixed through the January 1, 2024 maturity date at 10.23% (base rate of 2.73% plus 7.5% ). At both December 31, 2019 and March 31, 2020 , the weighted average base rate on the outstanding balance was 2.73% and the overall interest rate was 10.23% . All future borrowings under this facility will bear an interest rate at a base rate (defined as the greater of 3-month LIBOR, the five-year LIBOR swap rate or 1% ) plus 7.5% at the borrowing date. • A maximum borrowing amount of $124 million used to fund the UK Sunny loan portfolio (“UK Term Note”). Prior to the February 1, 2019 amendment, the interest rate paid on this facility was a base rate (defined as the 3-month LIBOR) plus 14% . Upon the February 1, 2019 amendment date, the interest rate on the debt outstanding as of the amendment date was fixed through the January 1, 2024 maturity date at 10.23% (base rate of 2.73% plus 7.5% ). At both December 31, 2019 and March 31, 2020 , the weighted average base rate on the outstanding balance at was 2.73% and the overall interest rate was 10.23% . All future borrowings under this facility will bear an interest rate at a base rate (defined as the greater of 3-month LIBOR, the five-year LIBOR swap rate or 1% ) plus 7.5% at the borrowing date. • A maximum borrowing amount of $18 million used to fund working capital, and prior to February 1, 2019, at a base rate (defined as the 3-month LIBOR, with a 1% floor) plus 13% (“4 th Tranche Term Note”). Upon the February 1, 2019 amendment date, the interest rate was fixed through the February 1, 2021 maturity date at a base rate of 2.73% plus 13% . The interest rate at both March 31, 2020 and December 31, 2019 was 15.73% . There was no change in the interest rate spread on this facility upon the February 1, 2019 amendment. • Revolving feature providing the option to pay down up to 20% of the outstanding balance, excluding the 4 th Tranche Term Note, once per year during the first quarter. Amounts paid down may be drawn again at a later date prior to maturity. The 4 th Tranche Term Note matures on February 1, 2021. The US Term Note and the UK Term Note both mature on January 1, 2024. There are no principal payments due or scheduled until the respective maturity dates. All assets of the Company are pledged as collateral to secure the VPC Facility. The VPC Facility contains certain covenants for the Company such as minimum cash requirements and a minimum book value of equity requirement. There are also certain covenants for the product portfolio underlying the facility including, among other things, excess spread requirements, maximum roll rate and charge-off rate levels, and maximum loan-to-value ratios. The Company was in compliance with all covenants related to the VPC Facility as of March 31, 2020 and December 31, 2019 . EF SPV Facility The EF SPV Facility has a maximum borrowing amount of $150 million used to purchase loan participations from a third-party lender. Prior to execution of the agreement with VPC effective February 1, 2019, EF SPV was a borrower on the US Term Note under the VPC Facility and the interest rate paid on this facility was a base rate (defined as 3-month LIBOR, with a 1% floor) plus 11% . Upon the February 1, 2019 amendment date, $43 million was re-allocated into the EF SPV Facility and the interest rate on the debt outstanding as of the amendment date was fixed through the January 1, 2024 maturity date at 10.23% (base rate of 2.73% plus 7.5% ). The weighted average base rate on the outstanding balance at December 31, 2019 was 2.49% and the overall interest rate was 9.99% . The weighted average base rate on the outstanding balance at March 31, 2020 was 2.45% and the overall interest rate was 9.95% . All future borrowings under this facility will bear an interest rate at a base rate (defined as the greater of 3-month LIBOR, the five-year LIBOR swap rate or 1% ) plus 7.5% at the borrowing date. The EF SPV Term Note has a revolving feature providing the option to pay down up to 20% of the outstanding balance once per year during the first quarter. Amounts paid down may be drawn again at a later date prior to maturity. The EF SPV Term Note matures on January 1, 2024. There are no principal payments due or scheduled until the maturity date. All assets of the Company and EF SPV are pledged as collateral to secure the EF SPV Facility. The EF SPV Facility contains certain covenants for the Company such as minimum cash requirements and a minimum book value of equity requirement. There are also certain covenants for the product portfolio underlying the facility including, among other things, excess spread requirements, maximum roll rate and charge-off rate levels, and maximum loan-to-value ratios. The Company was in compliance with all covenants related to the EF SPV Facility as of March 31, 2020 and December 31, 2019 . ESPV Facility The ESPV Facility has a maximum borrowing amount of $350 million used to purchase loan participations from a third-party lender. Prior to the February 1, 2019 amendment, the interest rate paid on this facility was a base rate (defined as the greater of the 3-month LIBOR rate or 1% per annum) plus 13% for the outstanding balance up to $50 million , plus 12% for the outstanding balance greater than $50 million up to $100 million , plus 13.5% for any amounts greater than $100 million up to $150 million , and plus 12.75% for borrowing amounts greater than $150 million . Upon the February 1, 2019 amendment date, the interest rate on the debt outstanding as of the amendment date was fixed at 15.48% (base rate of 2.73% plus 12.75% ). Effective July 1, 2019, the interest rate on the debt outstanding as of the amendment date was set at 10.23% (base rate of 2.73% plus 7.50% ). At both December 31, 2019 and March 31, 2020 , the weighted average base rate on the outstanding balance was 2.72% and the overall interest rate was 10.22% . All future borrowings under this facility after July 1, 2019 will bear an interest rate at a base rate (defined as the greater of 3-month LIBOR, the five-year LIBOR swap rate or 1% ) plus 7.5% at the borrowing date. The ESPV Term Note has a revolving feature providing the option to pay down up to 20% of the outstanding balance once per year during the first quarter. Amounts paid down may be drawn again at a later date prior to maturity. There are no principal payments due or scheduled until the maturity date. All assets of the Company and ESPV are pledged as collateral to secure the ESPV Facility. The ESPV Facility contains certain covenants for the Company such as minimum cash requirements and a minimum book value of equity requirement. There are also certain covenants for the product portfolio underlying the facility including, among other things, excess spread requirements, maximum roll rate and charge-off rate levels, and maximum loan-to-value ratios. The Company was in compliance with all covenants related to the ESPV Facility as of March 31, 2020 and December 31, 2019 . VPC, EF SPV and ESPV Facilities: The outstanding balances of Notes payable, net of debt issuance costs, are as follows: (Dollars in thousands) March 31, December 31, US Term Note bearing interest at the base rate + 7.5% $ 154,500 $ 182,000 UK Term Note bearing interest at the base rate + 7.5% 16,154 29,635 4 th Tranche Term Note bearing interest at the base rate + 13% 18,050 18,050 EF SPV Term Note bearing interest at the base rate + 7.5% 108,500 102,000 ESPV Term Note bearing interest at the base rate + 7.5% 219,500 226,000 Debt issuance costs (2,498 ) (2,622 ) Total $ 514,206 $ 555,063 The change in the facility balances includes the following: • US Term Note - Paydown of $27.5 million under the revolver component of the facility; • UK Term Note - Paydown of $12.9 million under the revolver component of the facility; • EF SPV Term note - Draw of $6.5 million ; and • ESPV Term Note - Paydown of $6.5 million under the revolver component of the facility. The Company paid a $2.4 million amendment fee on the ESPV Facility during the first quarter of 2019 that is included in deferred debt issuance costs and will be amortized into interest expense over the remaining life of the facility (through January 1, 2024). The Company has evaluated the interest rates for its debt and believes they represent market rates based on the Company’s size, industry, operations and recent amendments. As a result, the carrying value for the debt approximates the fair value. Future debt maturities as of March 31, 2020 are as follows: Year (dollars in thousands) March 31, 2020 Remainder of 2020 $ — 2021 18,050 2022 — 2023 — 2024 498,654 Thereafter — Total $ 516,704 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | GOODWILL AND INTANGIBLE ASSETS The Company’s goodwill represents the excess purchase price over the estimated fair market value of the net assets acquired by the predecessor parent company, Think Finance, Inc. (“Think Finance”) related to the Elastic and UK reporting units. As a result of the recent global economic impact and uncertainty due to the COVID-19 pandemic, the Company concluded a triggering event had occurred as of March 31, 2020 , and accordingly, performed interim impairment testing on the goodwill balances of its reporting units. The Company performed a detailed qualitative and quantitative assessment of each reporting unit and concluded that the goodwill associated with the UK reporting unit was impaired as the fair value of the UK reporting unit was less than its carrying amount. While there was a decline in the fair value of the Elastic reporting unit, there was no impairment identified during the quantitative assessment. The Company recognized an impairment of the UK reporting unit’s $9.3 million goodwill balance and the charge was recognized to Impairment loss on the Condensed Consolidated Statements of Operations. Following this impairment charge, the Company has $6.8 million of goodwill (all related to the Elastic reporting unit) remaining on the Condensed Consolidated Balance Sheets as of March 31, 2020 . At December 31, 2019 , the carrying value of goodwill was approximately $16 million . Of the total goodwill balance, approximately $0.4 million is deductible for tax purposes. As quoted market prices are not available for these reporting units, the Company used the income approach to estimate the fair value of its reporting units. In prior valuations, the Company weighted the results of the income method most heavily in the overall determination of fair value. The income approach estimates the fair value by discounting each unit’s estimated future cash flows using the Company’s estimate of the discount rate, or expected return, that a market participant would have required as of the valuation date. Some of the more significant assumptions inherent in the income approach include the estimated future net annual cash flows for each reporting unit and the discount rate. The Company selected the assumptions used in the discounted cash flow projections using historical data supplemented by current and anticipated market conditions. The Company’s estimates are based upon assumptions believed to be reasonable. However, given the inherent uncertainty in determining the assumptions underlying a discounted cash flow analysis, particularly in the current volatile market, actual results may differ from those used in these valuations which could result in additional impairment charges in the future. The discount rates used to value the Company’s reporting units were between 19% and 20.4% . Assuming all other assumptions and inputs used in each of the respective discounted cash flow analysis were held constant, a 50-basis point increase or decrease in the discount rate assumptions would have changed the fair value of the two reporting units, on average, by less than 3% . The carrying value of acquired intangible assets as of March 31, 2020 is presented in the table below: (Dollars in thousands) Cost Accumulated Amortization Net Assets subject to amortization: Acquired technology $ 946 $ (946 ) $ — Non-compete 3,404 (2,713 ) 691 Customers 126 (126 ) — Assets not subject to amortization: Domain names 680 0 680 Total $ 5,156 $ (3,785 ) $ 1,371 The carrying value of acquired intangible assets as of December 31, 2019 is presented in the table below: (Dollars in thousands) Cost Accumulated Amortization Net Assets subject to amortization: Acquired technology $ 946 $ (946 ) $ — Non-compete 3,404 (2,682 ) 722 Customers 126 (126 ) — Assets not subject to amortization: Domain names 680 — 680 Total $ 5,156 $ (3,754 ) $ 1,402 Total amortization expense recognized for the three months ended March 31, 2020 and 2019 was approximately $30 thousand and $144 thousand , respectively. The weighted average remaining amortization period for the intangible assets was 5.8 years at March 31, 2020 . Estimated amortization expense relating to intangible assets subject to amortization for each of the five succeeding fiscal years is as follows: Year (dollars in thousands) Amount 2021 $ 120 2022 120 2023 120 2024 120 2025 120 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases | LEASES The Company has non-cancelable operating leases for facility space and equipment with varying terms. All of the leases for facility space qualified for capitalization under FASB ASC 842, Leases . These leases have remaining lease terms of three years to seven years, and some may include options to extend the leases for up to ten years. The extension terms are not recognized as part of the right-of-use assets. The Company has elected not to capitalize leases with terms equal to or less than one year. As of March 31, 2020 and December 31, 2019 , net assets recorded under operating leases were $9.7 million and $10.2 million , respectively, and net lease liabilities were $13.8 million and $14.4 million , respectively. The Company analyzes contracts above certain thresholds to identify leases and lease components. Lease and non-lease components are not separated for facility space leases. The Company uses its contractual borrowing rate to determine lease discount rates when an implicit rate is not available. Total lease cost for the three months ended March 31, 2020 , included in Occupancy and equipment in the Condensed Consolidated Statements of Operations, is detailed in the table below: Three Months Ended March 31, Lease cost (dollars in thousands) 2020 2019 Operating lease cost $ 808 $ 1,148 Short-term lease cost 346 11 Total lease cost $ 1,154 $ 1,159 Further information related to leases is as follows: Three Months Ended March 31, Supplemental cash flows information (dollars in thousands) 2020 2019 Cash paid for amounts included in the measurement of lease liabilities $ 924 $ 1,020 Right-of-use assets obtained in exchange for lease obligations $ — $ — Weighted average remaining lease term 4.2 years 4.7 years Weighted average discount rate 10.23 % 10.23 % Future minimum lease payments as of March 31, 2020 are as follows: Year (dollars in thousands) Operating Leases 2020 $ 2,835 2021 3,876 2022 3,984 2023 3,486 2024 1,438 Thereafter 1,893 Total future minimum lease payments $ 17,512 Less: Imputed interest (3,722 ) Operating lease liabilities $ 13,790 |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | SHARE-BASED COMPENSATION Share-based compensation expense recognized for the three months ended March 31, 2020 and 2019 totaled approximately $2.8 million and $2.4 million , respectively. 2016 Omnibus Incentive Plan The 2016 Omnibus Incentive Plan ("2016 Plan") was adopted by the Company’s Board of Directors on January 5, 2016 and approved by the Company’s stockholders thereafter. The 2016 Plan became effective on June 23, 2016. The 2016 Plan provides for the grant of incentive stock options to the Company’s employees, and for the grant of non-qualified stock options, stock appreciation rights, restricted stock, RSUs, dividend equivalent rights, cash-based awards (including annual cash incentives and long-term cash incentives), and any combination thereof to the Company’s employees, directors and consultants. In connection with the 2016 Plan, the Company has reserved but not issued 8,837,203 shares of common stock, which includes shares that would otherwise return to the 2014 Equity Incentive Plan (the "2014 Plan") as a result of forfeiture, termination, or expiration of awards previously granted under the 2014 Plan and outstanding when the 2016 Plan became effective. The 2016 Plan will automatically terminate 10 years following the date it became effective, unless the Company terminates it sooner. In addition, the Company’s Board of Directors has the authority to amend, suspend or terminate the 2016 Plan provided such action does not impair the rights under any outstanding award. As of March 31, 2020 , the total number of shares available for future grants under the 2016 Plan was 2,356,682 shares. The Company has in the past and may in the future make grants of share-based compensation as inducement awards to new employees who are outside the 2016 Plan. The Company's board may rely on the employment inducement exception under NYSE Rule 303A.08 in order to approve the grants. 2014 Equity Incentive Plan The Company adopted the 2014 Plan on May 1, 2014. The 2014 Plan permitted the grant of incentive stock options, nonstatutory stock options, and restricted stock. On April 27, 2017, the Company's Board of Directors terminated the 2014 Plan as to future awards and confirmed that underlying shares corresponding to awards under the 2014 Plan that were outstanding at the time the 2016 Plan became effective, that are forfeited, terminated or expired, will become available for issuance under the 2016 Plan. For the three months ended March 31, 2020 , the Company had the following activity related to outstanding share-based awards: Stock Options Stock options are awarded to encourage ownership of the Company's common stock by employees and to provide increased incentive for employees to render services and to exert maximum effort for the success of the Company. The Company's stock options generally permit net-share settlement upon exercise. The option exercise price, vesting schedule and exercise period are determined for each grant by the administrator of the applicable plan. The Company's stock options generally have a 10 -year contractual term and vest over a 4 -year period. A summary of stock option activity as of and for the three months ended March 31, 2020 is presented below: Stock Options Shares Weighted Average Weighted Average Remaining Contractual Life (in years) Outstanding at December 31, 2019 2,269,178 $ 4.58 Granted 55,161 3.39 Exercised (87,500 ) 2.13 Forfeited (30,386 ) 4.05 Outstanding at March 31, 2020 2,206,453 4.65 3.86 Options exercisable at March 31, 2020 2,091,700 $ 4.69 3.56 At March 31, 2020 , there was approximately $148 thousand of unrecognized compensation cost related to unvested stock options which is expected to be recognized over a weighted average period of 2.4 years. The total intrinsic value of options exercised for the three months ended March 31, 2020 was $216 thousand . Restricted Stock Units RSUs are awarded to serve as a key retention tool for the Company to retain its executives and key employees. RSUs will transfer value to the holder even if the Company’s stock price falls below the price on the date of grant, provided that the recipient provides the requisite service during the period required for the award to “vest.” The weighted-average grant-date fair value for RSUs granted under the 2016 Plan during the three months ended March 31, 2020 was $2.10 . These RSUs primarily vest 25% on the first anniversary of the effective date, and 25% each year thereafter, until full vesting on the fourth anniversary of the effective date. A summary of RSU activity as of and for the three months ended March 31, 2020 is presented below: RSUs Shares Weighted Average Nonvested at December 31, 2019 4,161,862 $ 6.10 Granted 415,313 2.10 Vested (297,442 ) 4.81 Forfeited (5,668 ) 4.41 Nonvested at March 31, 2020 4,274,065 5.80 Expected to vest at March 31, 2020 3,413,006 $ 6.00 At March 31, 2020 , there was approximately $13.4 million of unrecognized compensation cost related to unvested RSUs which is expected to be recognized over a weighted average period of 2.3 years. During the three months ended March 31, 2020 , the total intrinsic of RSUs that vested during the period was approximately $1.2 million . As of March 31, 2020 , the aggregate intrinsic value of the vested and expected to vest RSUs was approximately $3.5 million . Employee Stock Purchase Plan The Company offers an Employee Stock Purchase Plan ("ESPP") to eligible US employees. There are currently 1,816,716 shares authorized and 1,233,182 reserved for the ESPP. There have been no shares purchased under the ESPP for the three months ended March 31, 2020 . Within share-based compensation expense for the three months ended March 31, 2020 and 2019 , $141 thousand and $193 thousand , respectively, relates to the ESPP. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS The accounting guidance on fair value measurements establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The Company groups its assets and liabilities measured at fair value in three levels of the fair value hierarchy, based on the fair value measurement technique, as described below: Level 1—Valuation is based upon quoted prices (unadjusted) for identical assets and liabilities in active exchange markets that the Company has the ability to access at the measurement date. Level 2—Valuation is based upon 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 with significant assumptions and inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Level 3—Valuation is derived from model-based techniques that use inputs and significant assumptions that are supported by little or no observable market data. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include the use of pricing models, discounted cash flow models and similar techniques. The Company monitors the market conditions and evaluates the fair value hierarchy levels at least quarterly. For any transfers in and out of the levels of the fair value hierarchy, the Company discloses the fair value measurement at the beginning of the reporting period during which the transfer occurred. For the three month periods ended March 31, 2020 and 2019 , there were no significant transfers between levels. The level of fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest-level input that is most significant to the fair value measurement in its entirety. In the determination of the classification of assets and liabilities in Level 2 or Level 3 of the fair value hierarchy, the Company considers all available information, including observable market data, indications of market conditions, and its understanding of the valuation techniques and significant inputs used. Based upon the specific facts and circumstances, judgments are made regarding the significance of the Level 3 inputs to the fair value measurements of the respective assets and liabilities in their entirety. If the valuation techniques that are most significant to the fair value measurements are principally derived from assumptions and inputs that are corroborated by little or no observable market data, the asset or liability is classified as Level 3. Financial Assets and Liabilities Not Measured at Fair Value The Company has evaluated Loans receivable, net of allowance for loan losses, Receivable from CSO lenders, Receivable from payment processors and Accounts payable and accrued expenses, and believes the carrying value approximates the fair value due to the short-term nature of these balances. The Company has also evaluated the interest rates for Notes payable, net and believes they represent market rates based on the Company’s size, industry, operations and recent amendments. As a result, the carrying value for Notes payable, net approximates the fair value. The Company classifies its fair value measurement techniques for the fair value disclosures associated with Loans receivable, net of allowance for loan losses, Receivable from CSO lenders, Receivable from payment processors, Accounts payable and accrued liabilities and Notes payable, net as Level 3 in accordance with ASC 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”). Fair Value Measurements on a Recurring Basis On January 11, 2018, the Company and ESPV each entered into one interest rate cap transaction with a counterparty to mitigate the floating rate interest risk on a portion of the debt under the VPC Facility and the ESPV Facility, respectively. On January 16, 2018, the Company and ESPV paid fixed premiums of $719 thousand and $648 thousand for the interest rate caps on the US Term Note (under the VPC Facility) and the ESPV Facility, respectively. The interest rate caps matured on February 1, 2019. The interest rate caps qualified for hedge accounting as cash flow hedges. Gains and losses on the interest rate caps were recognized in Accumulated other comprehensive (loss) income in the period incurred and subsequently reclassified to Interest expense when the hedged expenses were recorded. There were no gains or losses recognized in Accumulated other comprehensive (loss) income for the three months ended March 31, 2020 and 2019 . The Company used model-derived valuations that discounted the future expected cash receipts that would occur if variable interest rates rose above the strike price of the caps. The variable interest rates used in the calculation of projected receipts on the caps were based on an expectation of future interest rates derived from observable market interest rate curves and volatilities in active markets (Level 2). The following table summarizes these interest rate caps for the three months ended March 31, 2020 and 2019 (dollars in thousands): Gains recognized in Interest expense Three Months Ended Three Months Ended US Term Note interest rate cap $ — $ 159 ESPV Facility interest rate cap — 144 $ — $ 303 |
Derivatives
Derivatives | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | DERIVATIVES The Company and ESPV have periodically used hedging programs to manage interest rate risk associated with future interest payments. The Company and ESPV entered into two interest rate cap instruments on January 11, 2018, which matured on February 1, 2019. The Company had no outstanding derivative instruments as of March 31, 2020 and 2019 and December 31, 2019 . Cash Flow Hedges The Company and ESPV utilized interest rate caps to offset interest rate fluctuations in the Company's and ESPV's future interest payments on certain of their Notes payable. The financial instruments were designated and accounted for as cash flow hedges, and the Company and ESPV measured the effectiveness of the hedges at least quarterly. Effective gains or losses related to these cash flow hedges were reported in Accumulated other comprehensive (loss) income and reclassified into earnings, through interest expense, in the period or periods in which the hedged transactions affected earnings. See Note 9—Fair Value for additional information on these cash flow hedges. The following table summarizes the activity that was recorded in Accumulated other comprehensive (loss) income in addition to reclassifications from Accumulated other comprehensive (loss) income into earnings related to each of the Company's and ESPV's interest rate caps during the three months ended March 31, 2020 and 2019 . Three Months Ended Three Months Ended (Dollars in thousands) US Term Note ESPV Facility US Term Note ESPV Facility Beginning unrealized gains in Accumulated other comprehensive (loss) income $ — $ — $ 159 $ 144 Gross gains recognized in Accumulated other comprehensive (loss) income — — — — Gains reclassified to (loss) income through Interest expense — — (159 ) (144 ) Ending unrealized gains in Accumulated other comprehensive (loss) income $ — $ — $ — $ — |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES Income tax expense for the three months ended March 31, 2020 and 2019 consists of the following: Three Months Ended March 31, (Dollars in thousands) 2020 2019 Current income tax expense (benefit): Federal $ 1,152 $ — State 487 278 Foreign 17 — Total current income tax expense 1,656 278 Deferred income tax expense (benefit): Federal 73 4,339 State 343 1,398 Total deferred income tax expense 416 5,737 Total income tax expense $ 2,072 $ 6,015 No material penalties or interest related to taxes were recognized for the three months ended March 31, 2020 and 2019 . The Company’s consolidated effective tax rates for the three months ended March 31, 2020 and 2019 , including discrete items, were (73.0)% and 31% , respectively, while the US effective tax rates were 20.6% and 35% , respectively. For the three months ended March 31, 2020 and 2019 , the Company’s consolidated effective tax rate was unfavorably impacted by the goodwill impairment charge, while the US effective tax rate differed from the standard corporate federal income tax rate of 21% primarily due to its permanent non-deductible items, corporate state tax obligations in the states where it has lending activities and the impact of the Global Intangible Low-Taxed Income ("GILTI") provision of the Tax Cuts and Jobs Act of 2017. The Company's US cash effective tax rate was approximately 3.03% . On March 27, 2020 the CARES Act was signed into law. The Company has reviewed the tax relief provisions of the CARES Act, including the Company's eligibility for such provisions, and determined that the impact is likely to be insignificant with regard to our effective tax rate. We are continuing to monitor and evaluate our eligibility of the CARES Act tax relief provisions to identify any that may become applicable in the future. The Company's tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, the Company would make a cumulative adjustment in that quarter. For purposes of evaluating the need for a deferred tax valuation allowance, significant weight is given to evidence that can be objectively verified. The following provides an overview of the assessment that was performed for both the domestic and foreign deferred tax assets, net. US deferred tax assets, net At March 31, 2020 and December 31, 2019 , the Company did not establish a valuation allowance for its US deferred tax assets (“DTA”) based on management’s expectation of generating sufficient taxable income in a look forward period over the next one to three years. The Federal net operating loss ("NOL") carryforward from US operations at December 31, 2019 was approximately $42.0 million and the results from operations in 2019 fully utilized this NOL carryforward, leaving no remaining Federal NOL at March 31, 2020 . The remaining NOL carryforward relates to certain states and is immaterial at March 31, 2020 . The research and development credit expires beginning in 2036. The ultimate realization of the resulting deferred tax asset is dependent upon generating sufficient taxable income prior to the expiration of this carryforward. The Company considered the following factors when making their assessment regarding the ultimate realizability of the deferred tax assets. Significant positive factors included the following: • In 2019, the Company continued to grow its operating income (from $71 million in 2017 to $95 million in 2018 to $111 million in 2019). The US-only pre-tax earnings improved from a US-only pre-tax income of $14.1 million in 2018 to US-only pre-tax income of $38.4 million in 2019, a 172% improvement from prior year. The primary driver for the increase in operating income is related to our continued margin expansion provided by direct marketing and operating expense while improving credit quality in the loan portfolio during the past year. • The Company is in a three -year cumulative pre-tax income position in 2019. Additionally, the Company expects full utilization of its NOL carryforward in 2019 as well as approximately 20% of its research and development credits. • Due to the short-term nature of the loan portfolio and the other material items that comprise the US deferred tax assets, net, the Company estimates that the majority of these deferred tax items will reverse within one to three years. The Company has given due consideration to all the factors and has concluded that the US deferred tax asset is expected to be realized based on management’s expectation of generating sufficient taxable income and the reversal of tax timing differences in a look-forward period over the next one to three years. Although realization is not assured, management believes it is more likely than not that all of the recorded deferred tax assets will be realized. The amount of the deferred tax assets considered realizable, however, could be adjusted in the future if estimates of future taxable income change. As a result, as of March 31, 2020 and December 31, 2019 , the Company did not establish a valuation allowance for the US DTA. UK deferred tax assets, net At March 31, 2020 and December 31, 2019 , the Company recognized a full valuation allowance for its foreign deferred tax assets due to the lack of sufficient objective evidence regarding the realization of these assets in the foreseeable future due to the regulatory uncertainty in the UK. The Company assesses the UK deferred tax assets on a quarterly basis and, as a result, there have been no changes as of March 31, 2020 . Regardless of the deferred tax valuation allowance recognized at March 31, 2020 and December 31, 2019 , the Company continues to retain NOL carryforwards for foreign income tax purposes of approximately $57.2 million , available to offset future foreign taxable income. To the extent that the Company generates taxable income in the future to utilize the tax benefits of the related deferred tax assets, subject to certain potential limitations, it may be able to reduce its effective tax rate by reducing the valuation allowance. The Company’s foreign NOL carryforward can be carried forward indefinitely. |
Commitments, Contingencies and
Commitments, Contingencies and Guarantees | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies and Guarantees | COMMITMENTS, CONTINGENCIES AND GUARANTEES Contingencies Currently and from time to time, the Company may become a defendant in various legal and regulatory actions that arise in the ordinary course of business. The Company generally cannot predict the eventual outcome, the timing of the resolution or the potential losses, fines or penalties of such legal and regulatory actions. Actual outcomes or losses may differ materially from the Company's current assessments and estimates, which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition or cash flows. In accordance with applicable accounting guidance, the Company establishes an accrued liability for litigation, regulatory matters and other legal proceedings when those matters present material loss contingencies that are both probable and reasonably estimable. Even when an accrual is recorded, the Company may be exposed to loss in excess of any amounts accrued. UK Claims Accrual: During the second half of 2018, the Company's UK business began to receive an increased number of customer complaints initiated by claims management companies ("CMCs") related to the affordability assessment of certain loans. If the Company's evidence supports the affordability assessment and the Company rejects the claim, the customer has the right to take the complaint to the Financial Ombudsman Service for further adjudication. The CMCs' campaign against the high cost lending industry increased significantly during the second half of 2018 resulting in a significant increase in affordability claims against all companies in the industry during this period. The Company believes that many of the increased claims against it are without merit and reflect the use of abusive and deceptive tactics by the CMCs. The Financial Conduct Authority, a regulator in the UK financial services industry, began regulating the CMCs in April 2019 in order to ensure that the methods used by the CMCs are in the best interests of the consumer and the industry. As of March 31, 2020 and December 31, 2019 , the Company accrued approximately $2.7 million and $2.3 million , respectively, for the claims that were determined to be probable and reasonably estimable based on the Company's historical loss rates related to these claims. This accrual is recognized as Other cost of sales in the Condensed Consolidated Statements of Operations and as Accounts payable and accrued liabilities on the Condensed Consolidated Balance Sheets. The Company accrued $1.1 million at March 31, 2019 . The outcomes of the adjudication of these claims may differ from the Company's estimates, and as a result, the Company's estimates may change in the near term and the effect of any such change could be material to the financial statements. The Company continues to monitor the matters for further developments that could affect the amount of the loss contingency recognized. The following table presents a rollforward of the amounts accrued for the three months ended March 31, 2020 and 2019 . Three Months Ended March 31, (Dollars in thousands) 2020 2019 Beginning balance $ 2,334 $ 925 Accruals 2,294 1,124 Payments (2,017 ) (922 ) Effects of changes in foreign currency rates 66 2 Ending balance $ 2,677 $ 1,129 On October 25, 2019, the Company's UK subsidiary, ECI, entered into an agreement with the Financial Conduct Authority ("FCA") (the "Agreement") to not make any payments greater than £1.0 million outside of the normal course of business without obtaining prior approval from the FCA. The Company believes this Agreement will not have a material impact on ECI's ability to continue to serve its customers and meet its obligations. Other Matters: The Company is cooperating with the Consumer Financial Protection Bureau (the "CFPB") related to a civil investigative demand ("CID") received by Think Finance, Inc. ("TFI") requesting information about the operations of TFI prior to the spin-off. In November 2017, the CFPB sued TFI in Montana District Court. Elevate is not a party to this lawsuit. The CFPB and TFI have settled all claims and have received final court approval in the United States Bankruptcy Court for the Northern District of Texas. While no TFI related litigation has been filed directly against Elevate, and we can provide no assurance that there will not be any future TFI related litigation filed against the Company. In October 2019, Elevate entered into tolling agreements with the Think Finance Creditors' Committee and class claimants in regard to any potential future claims against Elevate. These tolling agreements have been extended. In December 2019, the TFI bankruptcy plan was confirmed, and any claims from the TFI Creditors' Committee were assigned to the Think Finance Litigation Trust (“TFLT”). Elevate and the TFLT have commenced mediation in an attempt to resolve, prior to any litigation being filed, any potential claims that the TFLT may have against Elevate including, among other things, whether or not the spin-off of Elevate from TFI was a fraudulent conveyance and any other avoidance actions associated with the spin-off. Although we do not anticipate liability for any obligations not expressly assumed by us pursuant to the separation and distribution agreement, it is possible that we could be required to assume responsibility for certain obligations retained by TFI should TFI fail to pay or perform its retained obligations. If it were determined that the spin-off constituted a fraudulent conveyance or that there were other avoidance actions associated with the spin-off, then the spin-off could be deemed void and there could be a number of different remedies imposed against Elevate, including without limitation, the requirement that Elevate has to pay money damages in an amount equal to the difference between the consideration received by TFI in the spin-off and the fair market value of Elevate at the time of the spin-off. We can provide no assurances as to how long the mediation proceedings may take, or the outcome of such proceedings. Because no claims have been filed against Elevate, no reasonable estimate of possible loss, if any, can be made at this time. We believe any future claims are without merit, and we intend to defend ourselves vigorously. In addition, on January 9, 2020, the District of Columbia's Attorney General, Karl A. Racine, issued a subpoena to Elevate alleging that Elevate may have violated the District of Columbia's Consumer Protection Procedures Act in connection with loans issued by banks in the District of Columbia. The documents requested are related to the Rise and Elastic bank-originated loans in the District of Columbia. Elevate has engaged counsel and initiated discussions with the Attorney General’s office and is working to address any potential issues and provide certain documents as requested. Elevate disagrees that it has violated the above referenced law and it intends to vigorously defend its position. In addition, on January 27, 2020, an Elevate wholly-owned subsidiary and other non-affiliated service providers to banks were sued in a class action lawsuit in Washington state. The Plaintiff in the case claims that Elevate and the other non-affiliated service providers to banks are engaged in “predatory lending practices that target financially vulnerable consumers” and have violated Washington’s Consumer Protection Act by engaging in unfair or deceptive practices. Elevate disagrees that it has violated the above referenced law and it intends to vigorously defend its position. In California, two separate actions have been filed seeking damages and public injunctive relief and alleging unconscionable interest rates on Rise loans - one lawsuit in the Superior Court of California, and one demand for arbitration. The Plaintiffs in these actions assert claims under the “unlawful,” “unfair,” and “fraudulent” prongs of the California Unfair Competition Law (“UCL”) and for breach of contract and civil conspiracy. The “unlawful” UCL claims are premised upon alleged violations of (a) the California Financing Law’s prohibition on unconscionable loans and (b) the California False Advertising Law. Elevate disagrees that it has violated the above referenced law and it intends to vigorously defend its position. Commitments The Elastic product, which offers lines of credit to consumers, had approximately $266.6 million and $251.2 million in available and unfunded credit lines at March 31, 2020 and December 31, 2019 , respectively. In May 2017, the Rise product began offering lines of credit to consumers in certain states and had approximately $8.9 million and $8.3 million in available and unfunded credit lines at March 31, 2020 and December 31, 2019 , respectively. The Today Card, which expanded its test launch in November 2018, had approximately $3.1 million and $0.6 million in available and unfunded credit lines as of March 31, 2020 and December 31, 2019 , respectively. While these amounts represented the total available unused credit lines, the Company has not experienced and does not anticipate that all line of credit customers will access their entire available credit lines at any given point in time. The Company has not recorded a loan loss reserve for unfunded credit lines as the Company has the ability to cancel commitments within a relatively short timeframe. Effective June 2017, the Company entered into a seven -year lease agreement for office space in California. Upon the commencement of the lease, the Company was required to provide the lessor with an irrevocable and unconditional $500 thousand letter of credit. Provided the Company is not in default of any terms of the lease agreement, the outstanding required balance of the letter of credit will be reduced by $100 thousand per year beginning on the second anniversary of the lease commencement and ending on the fifth anniversary of the lease agreement. The minimum balance of the letter of credit will be at least $100 thousand throughout the duration of the lease. At both March 31, 2020 and December 31, 2019 , the Company had $400 thousand , respectively, of cash balances securing the letter of credit which is included in Restricted cash within the Condensed Consolidated Balance Sheets. Guarantees In connection with its CSO programs, the Company guarantees consumer loan payment obligations to CSO lenders and is required to purchase any defaulted loans it has guaranteed. The guarantee represents an obligation to purchase specific loans that go into default. Indemnifications and contingent loss accrual In the ordinary course of business, the Company may indemnify customers, vendors, lessors, investors, and other parties for certain matters subject to various terms and scopes. For example, the Company may indemnify certain parties for losses due to the Company's breach of certain agreements or due to certain services it provides. As the Company has previously disclosed, the Company has also entered into separate indemnification agreements with the Company’s directors and executive officers, in addition to the indemnification provided for in the Company’s amended and restated bylaws. These agreements, among other things, provide that the Company will indemnify its directors and executive officers for certain expenses, including attorneys’ fees, judgments, penalties, fines and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of their services as one of the Company’s or, where applicable, TFI’s directors or executive officers, or any of the Company’s subsidiaries or any other company or enterprise to which the person provides services at the Company’s request. The indemnification agreements also set forth certain procedures that will apply in the event of a claim for indemnification thereunder. At March 31, 2020 , the Company accrued a contingent loss related to a legal matter in the amount of $4.3 million . The accrual is recognized as Non-operating loss in the Condensed Consolidated Statements of Operations and as Accounts payable and accrued liabilities on the Condensed Consolidated Balance Sheets. This contingent loss is based on a probable settlement composed of both cash and certain amounts that are subject to valuation adjustments until the final settlement. The table below presents a rollforward of the amounts accrued for the three months ended March 31, 2020 . Three Months Ended March 31, (Dollars in thousands) 2020 Beginning balance $ — Expected loss 4,263 Net contingent loss related to a legal matter $ 4,263 |
Operating Segment Information
Operating Segment Information | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Operating Segment Information | OPERATING SEGMENT INFORMATION The Company determines operating segments based on how its chief operating decision-maker manages the business, including making operating decisions, deciding how to allocate resources and evaluating operating performance. The Company's chief operating decision-maker is its Chief Executive Officer, who reviews the Company's operating results monthly on a consolidated basis. The Company has one reportable segment, which provides online financial services for subprime consumers, which is composed of the Company’s operations in the United States and the United Kingdom. The Company has aggregated all components of its business into a single reportable segment based on the similarities of the economic characteristics, the nature of the products and services, the distribution methods, the type of customers, and the nature of the regulatory environments. Information related to each reportable segment is outlined below. Segment revenue is used to measure performance because management believes that this information is the most relevant in evaluating the results of the respective segments relative to other entities that operate in the same industry. The following tables summarize the allocation of net revenues and long-lived assets based on geography. The geographic presentation of the Company's segment assets was based on the geographic location of the asset and revenue by the Company's country of domicile. Three Months Ended March 31, (Dollars in thousands) 2020 2019 Revenues United States $ 162,467 $ 160,066 United Kingdom 14,988 29,438 Total $ 177,455 $ 189,504 March 31, December 31, Long-lived assets United States $ 54,091 $ 54,313 United Kingdom 13,707 23,296 Total $ 67,798 $ 77,609 |
Related Parties
Related Parties | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Parties | RELATED PARTIES Expenses related to our board of directors, including board fees, travel reimbursements, share-based compensation and a consulting arrangement with a related party for the three months ended March 31, 2020 and 2019 are included in Professional services within the Condensed Consolidated Statements of Operations and were as follows: Three Months Ended March 31, (Dollars in thousands) 2020 2019 Fees and travel expenses $ 183 $ 131 Stock compensation 1,006 366 Consulting 114 75 Total board related expenses $ 1,303 $ 572 During the year ended December 31, 2017, a member of the board of directors entered into a direct investment of $800 thousand in the VPC Facility. For the three months ended March 31, 2020 and 2019 , the interest payments on this loan were $20 thousand and $22 thousand , respectively. At March 31, 2020 and December 31, 2019 , the Company had approximate ly $122 thousand and $123 thousand , respectively, due to board members related to the above expenses, which is included in Accounts payable and accrued liabilities within the Condensed Consolidated Balance Sheets. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS The Company evaluated subsequent events as of the date these financial statements are made available and determined there has been no material subsequent events that required recognition or additional disclosure in these condensed consolidated financial statements, except as follows: The Company made a $20 million debt paydown against the ESPV Facility subsequent to March 31, 2020 . For the period from April 1, 2020 to May 7, 2020, the Company repurchased 1,191,153 shares of its common stock on the open market for a total purchase price of $1.9 million , including any fees or commissions. |
Basis of Presentation and Acc_2
Basis of Presentation and Accounting Changes (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements as of March 31, 2020 and for the three -month periods ended March 31, 2020 and 2019 include the accounts of the Company, its wholly owned subsidiaries and variable interest entities ("VIEs") where the Company is the primary beneficiary. All significant intercompany transactions and accounts have been eliminated. The unaudited condensed consolidated financial information included in this report has been prepared in accordance with accounting principles generally accepted in the US (“US GAAP”) for interim financial information and Article 10 of Regulation S-X and conform, as applicable, to general practices within the finance company industry. The principles for interim financial information do not require the inclusion of all the information and footnotes required by US GAAP for complete financial statements. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2019 in the Company's Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission ("SEC") on February 14, 2020. In the opinion of the Company’s management, the unaudited condensed consolidated financial statements include all adjustments, all of which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods. Our business is seasonal in nature so the results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year. |
Reclassifications | Reclassifications Certain amounts in the prior periods presented herein have been reclassified to conform to the current period financial statement presentation. The Company does not believe that these reclassifications have a material impact on the consolidated financial statements. The Company reclassified $605 thousand to Accounts payable and accrued liabilities with an offset to Income taxes payable related to December 31, 2019 state and other taxes payable. |
Use of Estimates | Use of Estimates The preparation of the unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include the valuation of the allowance for loan losses, goodwill, long-lived and intangible assets, deferred revenues, contingencies, the fair value of derivatives, the income tax provision, valuation of share-based compensation, operating lease right of use assets, operating lease liabilities and the valuation allowance against deferred tax assets. The Company bases its estimates on historical experience, current data and assumptions that are believed to be reasonable. Actual results in future periods could differ from those estimates. |
Revenue Recognition | Revenue Recognition The Company recognizes consumer loan fees as revenues for each of the loan products it offers. Revenues on the Condensed Consolidated Statements of Operations include: finance charges, lines of credit fees, fees for services provided through CSO programs (“CSO fees”), and interest, as well as any other fees or charges permitted by applicable laws and pursuant to the agreement with the borrower. The Company also records revenues related to the sale of customer applications to unrelated third parties. These applications are sold with the customer’s consent in the event that the Company or its CSO lenders are unable to offer the customer a loan. Revenue is recognized at the time of the sale. Other revenues also include marketing and licensing fees received from the originating lender related to the Elastic product and Rise bank-originated loans and from CSO fees related to the Rise product. Revenues related to these fees are recognized when the service is performed. The Company accrues finance charges on installment loans on a constant yield basis over their terms. The Company accrues and defers fixed charges such as CSO fees and lines of credit fees when they are assessed and recognizes them to earnings as they are earned over the life of the loan. The Company accrues interest on credit cards based on the amount of the outstanding credit card balance and the related contractual interest rate. Credit card membership fees are amortized to revenue over the card membership period. Other credit card fees, such as late payment fees and returned payment fees, are accrued when assessed. The Company does not accrue finance charges and other fees on installment loans or lines of credit for which payment is greater than 60 days past due. Credit card interest charges are recognized based on the contractual provisions of the underlying arrangements and are not accrued when payment is past due by more than 90 days. Installment loans and lines of credit are considered past due if a grace period has not been requested and a scheduled payment is not paid on its due date. Credit cards have a grace period of 25 days and are considered delinquent after the grace period. Payments received on past due loans are applied against the loan and accrued interest balance to bring the loan current. Payments are generally first applied to accrued fees and interest and then to the principal loan balance. In March 2020, the outbreak of the novel coronavirus (“COVID-19”) was recognized as a pandemic by the World Health Organization, and the spread of COVID-19 has created a global public health crisis that has resulted in unprecedented disruption to businesses and economies. In response to the pandemic's effects, and in accordance with federal and state guidelines, the Company expanded its payment flexibility programs for its customers, including payment deferrals. This program allows for a deferral of payments for an initial period of 60 days, and up to a maximum of 180 days on a cumulative basis. A customer will return to the normal payment schedule after the end of the deferral period with the extension of the maturity date equivalent to the deferral period,which is not to exceed an additional 180 days. The finance charges will continue to accrue at a lower effective interest rate over the expected term of the loan as adjusted for the deferral period provided (not to exceed an amount greater than the amount at which the borrower could settle the loan) or placed on non-accrual status. The Company’s business is affected by seasonality, which can cause significant changes in portfolio size and profit margins from quarter to quarter. Although this seasonality does not impact the Company’s policies for revenue recognition, it does generally impact the Company’s results of operations by potentially causing an increase in its profit margins in the first quarter of the year and decreased margins in the second through fourth quarters. |
Installment Loans, Lines of Credit and Credit Cards | Installment Loans, Lines of Credit and Credit Cards Installment loans, lines of credit and credit cards, including receivables for finance charges, fees and interest, are unsecured and reported as Loans receivable, net of allowance for loan losses on the Condensed Consolidated Balance Sheets. Installment loans are multi-payment loans that require the pay-down of portions of the outstanding principal balance in multiple installments through the Rise and Sunny brands. Line of credit accounts include customer cash advances made through the Rise brand in two states and the Elastic brand. Credit cards represent credit card balances, uncollected billed interest and fees through the Today Card brand. All outstanding balances, allowance for loan losses, and revenues for the Today Card were immaterial in 2018 and 2019. The Company offers Rise installment and line of credit products and Sunny installment products directly to customers. Elastic lines of credit, Rise bank-originated installment loans and Today credit card receivables represent participation interests acquired from third-party lenders through a wholly owned subsidiary or by a VIE. Based on agreements with the third-party lenders, the VIEs pay a loan premium on the participation interests. The loan premium is amortized over the expected life of the outstanding loan amount. See Note 4—Variable Interest Entities for more information regarding these participation interests in Rise and Elastic receivables. The Company considers impaired loans as accounts over 60 days past due (for installment loans and lines of credit) or 120 days past due (for credit cards), or loans which become uncollectible based on information that the Company becomes aware of (e.g., receipt of customer bankruptcy notice). The impaired loans are charged-off at the time that they are deemed to be uncollectible. A modification of finance receivable terms is considered a troubled debt restructuring ("TDR") if the borrower is experiencing financial difficulty and the Company grants a concession it would not otherwise have considered to a borrower. The Company typically considers TDRs to include all installment and line of credit loans that were modified by granting principal and interest forgiveness or by extension of the maturity date for more than 60 days as a part of a loss mitigation strategy. On March 22, 2020, federal and state banking regulators issued a joint statement on working with customers affected by COVID-19 (the "Interagency Statement"). The Interagency Statement includes guidance on accounting for loan modifications. In accordance with the Interagency Statement, the Company has elected to not recognize modified loans as TDRs if the borrower was both not more than 30 days past due as of March 1, 2020 and the modification stems from the effects of the COVID-19 outbreak. The minor modifications offered by the Company to borrowers that meet both qualifications may include payment deferrals less than 6 months, interest or fee waivers, extensions of payment terms or delays in payment. If the borrower was not current at March 1, 2020, the Company offers similar modifications that are considered TDRs. This election is applicable from March 1, 2020 until the earlier of 60 days following the date the COVID-19 national emergency comes to an end or December 31, 2020. |
Property and Equipment, net | Property and Equipment, net Property and equipment are stated at cost, net of accumulated depreciation and amortization. |
UK Research and Development Expenditure Credit | UK Research and Development Expenditure Credit During 2019, the Company adopted the UK Research and Development Expenditure Credit ("RDEC") for qualifying expenses incurred since January 1, 2017. The credits are grants from the UK government to promote research and development activities in the UK and are recognized against the underlying research and development expenses. An entity that qualifies for RDEC credits must use the credits to offset any outstanding tax liabilities to the UK government. To the extent that the credit is larger than the tax liability, this excess can be paid directly to the Company. The Company's qualifying expenditures mainly consist of employment and contractor costs of certain of the Company's developers. |
Goodwill and Indefinite Lived Intangible Assets | Goodwill and Indefinite Lived Intangible Assets Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. In accordance with Accounting Standards Codification ("ASC") 350-20-35, Goodwill— Subsequent Measurement, the Company performs a quantitative approach method impairment review of goodwill and intangible assets with an indefinite life annually at October 1 and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Prior to 2019, the Company performed this test at October 31. The Company completed its annual test as of October 1, 2019 and determined that there was no evidence of impairment of goodwill or indefinite lived intangible assets. As a result of the recent global economic impact and uncertainty due to COVID-19, the Company concluded a triggering event had occurred as of March 31, 2020 , and accordingly, performed interim impairment testing on the goodwill balances of its reporting units. The Company performed a detailed qualitative and quantitative assessment of each reporting unit and concluded that the goodwill associated with the UK reporting unit was impaired as the fair value of the UK reporting unit was less than its carrying amount. While there was a decline in the fair value of the Elastic reporting unit, there was no impairment identified during the quantitative assessment. The Company recognized an impairment of the UK reporting unit’s $9.3 million goodwill balance and the charge was recognized to Impairment loss on the Condensed Consolidated Statements of Operations. Following this impairment charge, the Company has $6.8 million of goodwill (all related to the Elastic reporting unit) remaining on the Condensed Consolidated Balance Sheets as of March 31, 2020 . Prior to the adoption of ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"), the Company’s impairment evaluation of goodwill was already based on comparing the fair value of the Company’s reporting units to their carrying value. The adoption of ASU 2017-04 as of January 1, 2020 had no impact on the Company's evaluation procedures. The fair value of the reporting units is determined based on a weighted average of the income and market approaches. The income approach establishes fair value based on estimated future cash flows of the reporting units, discounted by an estimated weighted-average cost of capital developed using the capital asset pricing model, which reflects the overall level of inherent risk of the reporting units. The income approach uses the Company’s projections of financial performance for a six - to nine -year period and includes assumptions about future revenues growth rates, operating margins and terminal values. The market approach establishes fair value by applying cash flow multiples to the reporting units’ operating performance. The multiples are derived from other publicly traded companies that are similar but not identical to the Company from an operational and economic standpoint. |
Leases | Leases The Company determines if an arrangement is a lease at inception. Operating leases are included in Operating lease right of use (“ROU”) assets and Operating lease liabilities on our Condensed Consolidated Balance Sheets. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. As most of our leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The operating lease ROU asset may also include initial direct costs incurred and excludes any lease payments made and lease incentives. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components. The lease and non-lease components are accounted for as a single lease component. |
Treasury Stock | Treasury Stock The Company evaluates each stock repurchase transaction in the period in which it is completed. If the repurchase transaction is significantly in excess of the current market price at purchase, the Company will identify whether the price paid included payment for other agreements, rights, and privileges. Repurchase transactions that do not contain these elements or are not significantly in excess of the current market price at purchase are accounted for using the cost method. The Company anticipates using its treasury stock to fulfill certain employee stock compensation grants and settlements. The Company has elected to use a first in, first out ("FIFO") method for assigning share cost at reissuance. Any gain or loss in the stock value will be credited or charged to paid in capital upon subsequent reissuance of the shares, with losses in excess of previously recognized gains charged to retained earnings. The Company is not obligated to purchase or reissue any shares at any time in accordance with its previously disclosed share repurchase plan. |
Recently Adopted and to be Adopted Accounting Standards | Recently Adopted Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 is intended to improve the reporting of leasing transactions to provide users of financial statements with more decision-useful information. ASU 2016-02 will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases (“ASU 2018-10”), which clarifies certain matters in the codification with the intention to correct unintended application of the guidance. Also in July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”), which provides entities with an additional (and optional) transition method whereby the entity applies the new lease standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Additionally, under the new transition method, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new lease standard will continue to be in accordance with current US GAAP (Topic 840, Leases). ASU 2016-02, as amended, is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company elected to adopt the transition method in ASU 2018-11 by applying the practical expedient prospectively at January 1, 2019. The Company also elected to apply the optional practical expedient package to not reassess existing or expired contracts for lease components, lease classification or initial direct costs. The adoption of ASU 2016-02, as amended, resulted in the recognition of approximately $11.5 million and $15.4 million additional right of use assets and liabilities for operating leases, respectively, but did not have a material impact on the Company's condensed consolidated statements of operations. In July 2019, the FASB issued Accounting Standards Update ("ASU") No. 2019-07, Codification Updates to SEC Sections ("ASU 2019-07"). The purpose of ASU 2019-07 is to amend various SEC paragraphs pursuant to the issuance of SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification , and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization . Among other revisions, the amendments reduce duplication and clarify the inclusion of comprehensive income. The Company has adopted all of the amendments of ASU 2019-07 as of July 2019 with no impact to the Company's condensed consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"). The purpose of ASU 2018-15 is to provide additional guidance on the accounting for costs of implementation activities performed in a cloud computing arrangement that is a service contract. This guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company elected to adopt this ASU prospectively as of January 1, 2020 and has implemented a control structure to identify cloud computing arrangements for appropriate accounting treatment similar to its procedures for right of use assets. ASU 2018-15 did not have a material impact on the Company's condensed consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"). The purpose of ASU 2018-13 is to modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement . This guidance is effective for public companies for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years and requires both a prospective and retrospective approach to adoption based on amendment specifications. Early adoption of any removed or modified disclosures is permitted. Additional disclosures may be delayed until their effective date. The adoption of ASU 2018-13 at January 1, 2020 did not have a material impact on the Company's condensed consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). The purpose of ASU 2017-04 is to simplify the subsequent measurement of goodwill. The amendments modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. This guidance is effective for public companies for goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company has adopted all of the amendments of ASU 2017-04 as of January 2020 with no impact to the Company's condensed consolidated financial statements. For the three months ended March 31, 2020, the Company recognized a $9.3 million impairment loss related to goodwill on the UK reporting unit. The Company used the simplified subsequent measurement requirements per ASU 2017-04 in its impairment analysis. In March 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted in response to COVID-19. Among other things, the CARES Act provides income tax relief inclusive of permitting NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The Company has reviewed the tax relief provisions of the CARES Act regarding its eligibility and determined that the impact is likely to be insignificant with regard to its effective tax rate. The Company continues to monitor and evaluate its eligibility for the CARES Act tax relief provisions to identify any that may become applicable in the future. Accounting Standards to be Adopted in Future Periods In March 2020, the FASB issued Accounting Standards Update ("ASU") No. 2020-03, Codification Improvements to Financial Instruments ("ASU 2020-03"). The purpose of ASU 2020-03 is to clarify, correct errors in or make minor improvements to the codification. Among other revisions, the amendments clarify that an entity should record an allowance for credit losses when an entity regains control of financial assets sold in accordance with Topic 326. ASU 2020-03 also clarifies disclosure requirements for debt securities under Topic 942 and affirms that all entities are required to provide the fair value option disclosures within paragraphs 825-10-50-24 through 50-32 of the codification. The amendments in this update are effective on the latter of the issuance of ASU 2020-03 or the effective date of their related topic. The Company does not anticipate the adoption of ASU 2020-03 to have a material impact on the Company's condensed consolidated financial statements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). The purpose of ASU 2020-04 is to provide optional guidance for a period of time related to accounting for reference rate reform on financial reporting. It is intended to reduce the potential burden of reviewing contract modifications related to discontinued rates. The amendments and expedients in this update are effective as of March 12, 2020 through December 31, 2022 and may be elected by topic. The Company is assessing the potential impact of electing all or portions of ASU 2020-04 on the Company's condensed consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). The purpose of ASU 2019-12 is to reduce complexity in the accounting standards for income taxes by removing certain exceptions as well as clarifying certain allocations. This update also addresses the split recognition of franchise taxes that are partially based on income between income-based tax and non-income-based tax. This guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The Company is still assessing the potential impact of ASU 2019-12 on the Company's condensed consolidated financial statements. In June 2016, the FASB issued ASU 2016-13. ASU 2016-13 is intended to replace the incurred loss impairment methodology in current US GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates to improve the quality of information available to financial statement users about expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments ("ASU 2019-04"). This amendment clarifies the guidance in ASU 2016-13. The guidance in ASU 2016-13 was further clarified by ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments ("ASU 2019-11") issued in November 2019. ASU 2019-11 provides transition relief such as permitting entities an accounting policy election regarding existing TDRs, among other things. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief ("ASU 2019-05"). The purpose of this amendment is to provide entities that have certain instruments within the scope of Subtopic 326-20, Financial Instruments-Credit Losses-Measured at Amortized Cost, with an option to irrevocably elect the fair value option in Subtopic 825-10, Financial Instruments-Overall , on an instrument-by-instrument basis. Election of this option is intended to increase comparability of financial statement information and reduce costs for certain entities to comply with ASU 2016-13. For public entities, ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates ("ASU 2019-10") . The purpose of this amendment is to create a two-tier rollout of major updates, staggering the effective dates between larger public companies and all other entities. This granted certain classes of companies, including Smaller Reporting Companies ("SRCs"), additional time to implement major FASB standards, including ASU 2016-13. Larger public companies will still have an effective date for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All other entities are permitted to defer adoption of ASU 2016-13, and its related amendments, until the earlier of fiscal periods beginning after December 15, 2022. In February 2020, the FASB issued ASU No. 2020-02, Financial Instruments - Credit Losses (Topic 326), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-12 ("ASU 2020-02") . ASU 2020-02 updates the SEC staff guidance related to ASU 2016-13 and all contingent amendments. Under the current SEC definitions, the Company meets the definition of an SRC as of the ASU 2019-10 issuance date and is adopting the deferral period for ASU 2016-13. |
Basis of Presentation and Acc_3
Basis of Presentation and Accounting Changes (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Property, Plant and Equipment | The following table summarizes the components of net property and equipment. (Dollars in thousands) March 31, 2020 December 31, 2019 Property and equipment, gross $ 128,154 $ 124,148 Accumulated depreciation and amortization (78,249 ) (74,159 ) Property and equipment, net $ 49,905 $ 49,989 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Computation of earnings (loss) per share | The computation of earnings per share was as follows for three months ended March 31, 2020 and 2019 : Three Months Ended (Dollars in thousands, except share and per share amounts) 2020 2019 Numerator (basic): Net (loss) income $ (4,911 ) $ 13,358 Numerator (diluted): Net (loss) income $ (4,911 ) $ 13,358 Denominator (basic): Basic weighted average number of shares outstanding 43,161,716 43,348,249 Denominator (diluted): Basic weighted average number of shares outstanding 43,161,716 43,348,249 Effect of potentially dilutive securities: Employee share plans (options, RSUs and ESPP) — 527,161 Diluted weighted average number of shares outstanding 43,161,716 43,875,410 Basic and diluted (loss) earnings per share: Basic (loss) earnings per share $ (0.11 ) $ 0.31 Diluted (loss) earnings per share $ (0.11 ) $ 0.30 |
Loans Receivable and Revenue (T
Loans Receivable and Revenue (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Revenue from consumer loans | Revenues generated from the Company’s consumer loans for the three months ended March 31, 2020 and 2019 were as follows: Three Months Ended March 31, (Dollars in thousands) 2020 2019 Finance charges $ 111,135 $ 110,548 CSO fees 7,341 13,708 Lines of credit fees 58,573 64,733 Other 406 515 Total revenues $ 177,455 $ 189,504 |
Schedule of loans receivable | The following reflects the credit quality of the Company’s loans receivable as of March 31, 2020 and December 31, 2019 as delinquency status has been identified as the primary credit quality indicator. The Company classifies its loans as either current or past due. A customer in good standing may request up to a 16 -day grace period when or before a payment becomes due and, if granted, the loan is considered current during the grace period. In response to the COVID-19 pandemic, the Company, along with the banks it supports, has also expanded existing payment flexibility programs to provide temporary payment relief to certain customers who meet the program’s qualifications. These programs allow for a deferral of payments for an initial period of 60 days, which the Company may extend for an additional 60 days, for a maximum of 180 days on a cumulative basis. A customer will return to the normal payment schedule after the end of the deferral period, with the extension of the maturity date equivalent to the deferral period, which is not to exceed an additional 180 days. Customers that were 30 days past due or less as of March 1, 2020 or the date the customer requested the deferral are considered current. Customers more than 30 days past due as of March 1, 2020 or the date the customer requested the deferral are considered delinquent. As of March 31, 2020, 4.7% of customers have been provided relief through a COVID-19 payment deferral program for a total of $26.4 million in loans with deferred payments . As of April 30, 2020, 10.8% of customers have been provided relief through a COVID-19 payment deferral program for a total of $53.4 million in loans with deferred payments . We believe the Allowance for loan losses is adequate to absorb the losses inherent in the portfolio as of March 31, 2020 . Installment loans, lines of credit and credit cards not impacted by COVID are considered past due if a grace period has not been requested and a scheduled payment is not paid on its due date. All impaired loans that were not accounted for as a TDR as of March 31, 2020 and December 31, 2019 have been charged off. March 31, 2020 (Dollars in thousands) Rise and Sunny Elastic(1) Total Current loans $ 309,139 $ 218,408 $ 527,547 Past due loans 49,084 19,803 68,887 Total loans receivable 358,223 238,211 596,434 Net unamortized loan premium 215 1,837 2,052 Less: Allowance for loan losses (55,763 ) (26,053 ) (81,816 ) Loans receivable, net $ 302,675 $ 213,995 $ 516,670 December 31, 2019 (Dollars in thousands) Rise and Sunny Elastic(1) Total Current loans $ 339,816 $ 243,380 $ 583,196 Past due loans 52,664 22,395 75,059 Total loans receivable 392,480 265,775 658,255 Net unamortized loan premium 290 2,128 2,418 Less: Allowance for loan losses (57,103 ) (29,893 ) (86,996 ) Loans receivable, net $ 335,667 $ 238,010 $ 573,677 (1) Includes immaterial balances related to the Today Card, which expanded its test launch in November 2018. |
Changes in the allowance for loan losses | The changes in the allowance for loan losses for the three months ended March 31, 2020 and 2019 are as follows: Three Months Ended March 31, 2020 (Dollars in thousands) Rise and Sunny Elastic(1) Total Balance beginning of period $ 59,182 $ 29,893 $ 89,075 Provision for loan losses 58,747 24,006 82,753 Charge-offs (65,878 ) (30,314 ) (96,192 ) Recoveries of prior charge-offs 5,660 2,468 8,128 Effect of changes in foreign currency rates (377 ) — (377 ) Total 57,334 26,053 83,387 Accrual for CSO lender owned loans (1,571 ) — (1,571 ) Balance end of period $ 55,763 $ 26,053 $ 81,816 Three Months Ended March 31, 2019 (Dollars in thousands) Rise and Sunny Elastic(1) Total Balance beginning of period $ 60,002 $ 36,050 $ 96,052 Provision for loan losses 57,869 29,562 87,431 Charge-offs (72,135 ) (39,559 ) (111,694 ) Recoveries of prior charge-offs 5,421 2,288 7,709 Effect of changes in foreign currency rates 201 — 201 Total 51,358 28,341 79,699 Accrual for CSO lender owned loans (3,242 ) — (3,242 ) Balance end of period $ 48,116 $ 28,341 $ 76,457 (1) Includes immaterial balances related to the Today Card, which expanded its test launch in November 2018. |
Troubled debt restructurings | The following table summarizes the financial effects, excluding impacts related to credit loss allowance and impairment, of TDRs for the three months ended March 31, 2020 and 2019 : Three Months Ended March 31, (Dollars in thousands) 2020 2019 Outstanding recorded investment before TDR $ 7,546 $ 12,725 Outstanding recorded investment after TDR 7,228 11,355 Total principal and interest forgiveness included in charge-offs within the Allowance for loan losses $ 318 $ 1,370 The table below presents the Company's loans modified as TDRs as of March 31, 2020 and December 31, 2019 : (Dollars in thousands) 2020 2019 Current outstanding investment $ 10,306 $ 11,559 Delinquent outstanding investment 6,290 7,273 Outstanding recorded investment 16,596 18,832 Less: Impairment included in Allowance for loan losses (4,326 ) (5,238 ) Outstanding recorded investment, net of impairment $ 12,270 $ 13,594 The table below presents the Company's average outstanding recorded investment and interest income recognized on TDR loans for the three months ended March 31, 2020 and 2019 : Three Months Ended March 31, (Dollars in thousands) 2020 2019 Average outstanding recorded investment(1) $ 17,714 $ 14,917 Interest income recognized $ 3,730 $ 1,925 1. Simple average as of March 31, 2020 and 2019, respectively. |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of the assets and liabilities of the VIE | The following table summarizes the assets and liabilities of the VIE that are included within the Company’s Condensed Consolidated Balance Sheets at March 31, 2020 and December 31, 2019 : (Dollars in thousands) March 31, December 31, ASSETS Cash and cash equivalents $ 44,439 $ 26,245 Loans receivable, net of allowance for loan losses of $25,145 and $28,852, respectively 209,499 234,504 Prepaid expenses and other assets 2 — Receivable from payment processors 4,713 6,363 Total assets $ 258,653 $ 267,112 LIABILITIES AND SHAREHOLDER’S EQUITY Accounts payable and accrued liabilities ($9,199 and $7,690, respectively, eliminates upon consolidation) $ 14,522 $ 15,902 Deferred revenue 3,562 4,280 Reserve deposit liability ($23,150 and $23,150, respectively, eliminates upon consolidation) 23,150 23,150 Notes payable, net 217,419 223,780 Accumulated other comprehensive income — — Total liabilities and shareholder’s equity $ 258,653 $ 267,112 The following table summarizes the assets and liabilities of the VIE that are included within the Company’s Condensed Consolidated Balance Sheets at March 31, 2020 and December 31, 2019 : (Dollars in thousands) March 31, December 31, ASSETS Cash and cash equivalents $ 13,436 $ 7,541 Loans receivable, net of allowance for loan losses of $21,558 and $17,436, respectively 117,998 111,281 Receivable from payment processors ($322 and $0 eliminates upon consolidation) 837 681 Total assets $ 132,271 $ 119,503 LIABILITIES AND SHAREHOLDER’S EQUITY Accounts payable and accrued liabilities ($13,461 and $7,114, respectively, eliminates upon consolidation) $ 14,842 $ 8,576 Reserve deposit liability ($8,950 and $8,950, respectively, eliminates upon consolidation) 8,950 8,950 Notes payable, net 108,479 101,977 Total liabilities and shareholder’s equity $ 132,271 $ 119,503 |
Notes Payable, Net (Tables)
Notes Payable, Net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Outstanding balance of notes payable, net of debt issuance costs | The outstanding balances of Notes payable, net of debt issuance costs, are as follows: (Dollars in thousands) March 31, December 31, US Term Note bearing interest at the base rate + 7.5% $ 154,500 $ 182,000 UK Term Note bearing interest at the base rate + 7.5% 16,154 29,635 4 th Tranche Term Note bearing interest at the base rate + 13% 18,050 18,050 EF SPV Term Note bearing interest at the base rate + 7.5% 108,500 102,000 ESPV Term Note bearing interest at the base rate + 7.5% 219,500 226,000 Debt issuance costs (2,498 ) (2,622 ) Total $ 514,206 $ 555,063 |
Future debt maturities | Future debt maturities as of March 31, 2020 are as follows: Year (dollars in thousands) March 31, 2020 Remainder of 2020 $ — 2021 18,050 2022 — 2023 — 2024 498,654 Thereafter — Total $ 516,704 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Carrying value of acquired finite-lived intangible assets | The carrying value of acquired intangible assets as of March 31, 2020 is presented in the table below: (Dollars in thousands) Cost Accumulated Amortization Net Assets subject to amortization: Acquired technology $ 946 $ (946 ) $ — Non-compete 3,404 (2,713 ) 691 Customers 126 (126 ) — Assets not subject to amortization: Domain names 680 0 680 Total $ 5,156 $ (3,785 ) $ 1,371 The carrying value of acquired intangible assets as of December 31, 2019 is presented in the table below: (Dollars in thousands) Cost Accumulated Amortization Net Assets subject to amortization: Acquired technology $ 946 $ (946 ) $ — Non-compete 3,404 (2,682 ) 722 Customers 126 (126 ) — Assets not subject to amortization: Domain names 680 — 680 Total $ 5,156 $ (3,754 ) $ 1,402 |
Carrying value of acquired indefinite-lived intangible assets | The carrying value of acquired intangible assets as of March 31, 2020 is presented in the table below: (Dollars in thousands) Cost Accumulated Amortization Net Assets subject to amortization: Acquired technology $ 946 $ (946 ) $ — Non-compete 3,404 (2,713 ) 691 Customers 126 (126 ) — Assets not subject to amortization: Domain names 680 0 680 Total $ 5,156 $ (3,785 ) $ 1,371 The carrying value of acquired intangible assets as of December 31, 2019 is presented in the table below: (Dollars in thousands) Cost Accumulated Amortization Net Assets subject to amortization: Acquired technology $ 946 $ (946 ) $ — Non-compete 3,404 (2,682 ) 722 Customers 126 (126 ) — Assets not subject to amortization: Domain names 680 — 680 Total $ 5,156 $ (3,754 ) $ 1,402 |
Estimated amortization expense relating to intangible assets subject to amortization | Estimated amortization expense relating to intangible assets subject to amortization for each of the five succeeding fiscal years is as follows: Year (dollars in thousands) Amount 2021 $ 120 2022 120 2023 120 2024 120 2025 120 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Summary of total lease cost and supplemental cash flow information | Total lease cost for the three months ended March 31, 2020 , included in Occupancy and equipment in the Condensed Consolidated Statements of Operations, is detailed in the table below: Three Months Ended March 31, Lease cost (dollars in thousands) 2020 2019 Operating lease cost $ 808 $ 1,148 Short-term lease cost 346 11 Total lease cost $ 1,154 $ 1,159 Further information related to leases is as follows: Three Months Ended March 31, Supplemental cash flows information (dollars in thousands) 2020 2019 Cash paid for amounts included in the measurement of lease liabilities $ 924 $ 1,020 Right-of-use assets obtained in exchange for lease obligations $ — $ — Weighted average remaining lease term 4.2 years 4.7 years Weighted average discount rate 10.23 % 10.23 % |
Summary of future lease payments | Future minimum lease payments as of March 31, 2020 are as follows: Year (dollars in thousands) Operating Leases 2020 $ 2,835 2021 3,876 2022 3,984 2023 3,486 2024 1,438 Thereafter 1,893 Total future minimum lease payments $ 17,512 Less: Imputed interest (3,722 ) Operating lease liabilities $ 13,790 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of stock option activity | A summary of stock option activity as of and for the three months ended March 31, 2020 is presented below: Stock Options Shares Weighted Average Weighted Average Remaining Contractual Life (in years) Outstanding at December 31, 2019 2,269,178 $ 4.58 Granted 55,161 3.39 Exercised (87,500 ) 2.13 Forfeited (30,386 ) 4.05 Outstanding at March 31, 2020 2,206,453 4.65 3.86 Options exercisable at March 31, 2020 2,091,700 $ 4.69 3.56 |
Summary of RSU activity | A summary of RSU activity as of and for the three months ended March 31, 2020 is presented below: RSUs Shares Weighted Average Nonvested at December 31, 2019 4,161,862 $ 6.10 Granted 415,313 2.10 Vested (297,442 ) 4.81 Forfeited (5,668 ) 4.41 Nonvested at March 31, 2020 4,274,065 5.80 Expected to vest at March 31, 2020 3,413,006 $ 6.00 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of interest rate caps | The following table summarizes these interest rate caps for the three months ended March 31, 2020 and 2019 (dollars in thousands): Gains recognized in Interest expense Three Months Ended Three Months Ended US Term Note interest rate cap $ — $ 159 ESPV Facility interest rate cap — 144 $ — $ 303 |
Derivatives (Tables)
Derivatives (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of activity recorded in Accumulated other comprehensive income and reclassifications into earnings | The following table summarizes the activity that was recorded in Accumulated other comprehensive (loss) income in addition to reclassifications from Accumulated other comprehensive (loss) income into earnings related to each of the Company's and ESPV's interest rate caps during the three months ended March 31, 2020 and 2019 . Three Months Ended Three Months Ended (Dollars in thousands) US Term Note ESPV Facility US Term Note ESPV Facility Beginning unrealized gains in Accumulated other comprehensive (loss) income $ — $ — $ 159 $ 144 Gross gains recognized in Accumulated other comprehensive (loss) income — — — — Gains reclassified to (loss) income through Interest expense — — (159 ) (144 ) Ending unrealized gains in Accumulated other comprehensive (loss) income $ — $ — $ — $ — |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax expense | Income tax expense for the three months ended March 31, 2020 and 2019 consists of the following: Three Months Ended March 31, (Dollars in thousands) 2020 2019 Current income tax expense (benefit): Federal $ 1,152 $ — State 487 278 Foreign 17 — Total current income tax expense 1,656 278 Deferred income tax expense (benefit): Federal 73 4,339 State 343 1,398 Total deferred income tax expense 416 5,737 Total income tax expense $ 2,072 $ 6,015 |
Commitments, Contingencies an_2
Commitments, Contingencies and Guarantees (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Rollforward of amounts accrued | The following table presents a rollforward of the amounts accrued for the three months ended March 31, 2020 and 2019 . Three Months Ended March 31, (Dollars in thousands) 2020 2019 Beginning balance $ 2,334 $ 925 Accruals 2,294 1,124 Payments (2,017 ) (922 ) Effects of changes in foreign currency rates 66 2 Ending balance $ 2,677 $ 1,129 The table below presents a rollforward of the amounts accrued for the three months ended March 31, 2020 . Three Months Ended March 31, (Dollars in thousands) 2020 Beginning balance $ — Expected loss 4,263 Net contingent loss related to a legal matter $ 4,263 |
Operating Segment Information (
Operating Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Summary of the allocation of net revenues and long-lived assets based on geography | The following tables summarize the allocation of net revenues and long-lived assets based on geography. The geographic presentation of the Company's segment assets was based on the geographic location of the asset and revenue by the Company's country of domicile. Three Months Ended March 31, (Dollars in thousands) 2020 2019 Revenues United States $ 162,467 $ 160,066 United Kingdom 14,988 29,438 Total $ 177,455 $ 189,504 March 31, December 31, Long-lived assets United States $ 54,091 $ 54,313 United Kingdom 13,707 23,296 Total $ 67,798 $ 77,609 |
Related Parties (Tables)
Related Parties (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Expenses related to board of directors | Expenses related to our board of directors, including board fees, travel reimbursements, share-based compensation and a consulting arrangement with a related party for the three months ended March 31, 2020 and 2019 are included in Professional services within the Condensed Consolidated Statements of Operations and were as follows: Three Months Ended March 31, (Dollars in thousands) 2020 2019 Fees and travel expenses $ 183 $ 131 Stock compensation 1,006 366 Consulting 114 75 Total board related expenses $ 1,303 $ 572 |
Basis of Presentation and Acc_4
Basis of Presentation and Accounting Changes - Schedule of Property, Plant, and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Property and equipment, gross | $ 128,154 | $ 124,148 |
Accumulated depreciation and amortization | (78,249) | (74,159) |
Property and equipment, net | $ 49,905 | $ 49,989 |
Basis of Presentation and Acc_5
Basis of Presentation and Accounting Changes (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||||
Mar. 31, 2020USD ($)state | Mar. 31, 2020USD ($)state | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($)state | Jan. 01, 2019USD ($) | ||
Class of Stock [Line Items] | ||||||
Accounts payable and accrued liabilities | [1] | $ 41,179 | $ 41,179 | $ 45,596 | ||
Income taxes payable | $ 1,174 | $ 1,174 | 0 | |||
Loans, grace period before past due | 16 days | |||||
Deferral period | 60 days | 60 days | ||||
Impairment of goodwill | $ 9,251 | $ 0 | ||||
Goodwill, net | $ 6,776 | 6,776 | 16,027 | |||
Operating lease right of use assets | 9,746 | 9,746 | 10,191 | |||
Operating lease liabilities | $ 13,790 | 13,790 | $ 14,352 | |||
Accounting Standards Update 2016-02 | ||||||
Class of Stock [Line Items] | ||||||
Operating lease right of use assets | $ 11,500 | |||||
Operating lease liabilities | $ 15,400 | |||||
Operating Expense | ||||||
Class of Stock [Line Items] | ||||||
UK research and development expenditure credit | 90 | |||||
Income Tax Expense (Benefit) | ||||||
Class of Stock [Line Items] | ||||||
UK research and development expenditure credit | $ 17 | |||||
Installment Loans and Lines of Credit | ||||||
Class of Stock [Line Items] | ||||||
Minimum period past due for nonaccrual, installment loans and lies of credit | 60 days | |||||
Period past due for loans to be classified as troubled debt restructuring (greater then) | 60 days | |||||
Loan modifications not recognized as troubled debt restructuring, deferral period | 6 months | |||||
Credit Card Receivable | ||||||
Class of Stock [Line Items] | ||||||
Minimum period past due for nonaccrual, installment loans and lies of credit | 90 days | |||||
Loans, grace period before past due | 25 days | |||||
Minimum period past due for nonaccrual, credit cards | 120 days | |||||
Maximum | ||||||
Class of Stock [Line Items] | ||||||
Deferral period | 180 days | 180 days | ||||
Projection period of financial performance used in income approach for fair value of reporting unit | 9 years | |||||
Minimum | ||||||
Class of Stock [Line Items] | ||||||
Projection period of financial performance used in income approach for fair value of reporting unit | 6 years | |||||
Elastic Reporting Unit | ||||||
Class of Stock [Line Items] | ||||||
Impairment of goodwill | $ 0 | |||||
UK Reporting Unit | ||||||
Class of Stock [Line Items] | ||||||
Impairment of goodwill | 9,300 | |||||
Restatement Adjustment | ||||||
Class of Stock [Line Items] | ||||||
Accounts payable and accrued liabilities | $ 605 | 605 | ||||
Income taxes payable | $ (605) | $ (605) | ||||
Rise Product, Lines of Credit | ||||||
Class of Stock [Line Items] | ||||||
Number of states, rise product, lines of credit offered | state | 2 | 2 | 2 | |||
[1] | 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. For further information regarding the assets and liabilities included in our consolidated accounts, see Note 4—Variable Interest Entities. |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stock options | ||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Antidilutive shares | 1,862,170 | 1,457,296 |
RSUs | ||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Antidilutive shares | 3,584,019 | 113,114 |
Earnings Per Share - Computatio
Earnings Per Share - Computation of Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator (basic): | ||
Net (loss) income | $ (4,911) | $ 13,358 |
Numerator (diluted): | ||
Net (loss) income | $ (4,911) | $ 13,358 |
Denominator (basic): | ||
Basic weighted average number of shares outstanding (in shares) | 43,161,716 | 43,348,249 |
Denominator (diluted): | ||
Basic weighted average number of shares outstanding (in shares) | 43,161,716 | 43,348,249 |
Effect of potentially dilutive securities: | ||
Employee share plans (options, RSUs and ESPP) (in shares) | 0 | 527,161 |
Diluted weighted average number of shares outstanding (in shares) | 43,161,716 | 43,875,410 |
Basic and diluted (loss) earnings per share: | ||
Basic (loss) earnings per share (in usd per share) | $ (0.11) | $ 0.31 |
Diluted (loss) earnings per share (in usd per share) | $ (0.11) | $ 0.30 |
Loans Receivable and Revenue -
Loans Receivable and Revenue - Revenue from Consumer Loans (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total revenues | $ 177,455 | $ 189,504 |
Finance charges | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | 111,135 | 110,548 |
CSO fees | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | 7,341 | 13,708 |
Lines of credit fees | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | 58,573 | 64,733 |
Other | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total revenues | $ 406 | $ 515 |
Loans Receivable and Revenue _2
Loans Receivable and Revenue - Schedule of Receivables (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | |||
Apr. 30, 2020USD ($) | Mar. 31, 2020USD ($)state | Mar. 31, 2020USD ($)state | Dec. 31, 2019USD ($)state | ||
Financing Receivable, Past Due [Line Items] | |||||
Loans, grace period before past due | 16 days | ||||
Loans, deferral period | 60 days | 60 days | |||
Loans, deferral period, additional extension period | 60 days | ||||
Loans, threshold period before past due | 30 days | ||||
Loans, threshold period past due (more than) | 30 days | 30 days | |||
Percentage of customers provided relief through payment deferral program | 4.70% | ||||
Loans on deferred payment | $ 26,400 | $ 26,400 | |||
Current loans | 527,547 | 527,547 | $ 583,196 | ||
Past due loans | 68,887 | 68,887 | 75,059 | ||
Total loans receivable | 596,434 | 596,434 | 658,255 | ||
Net unamortized loan premium | 2,052 | 2,052 | 2,418 | ||
Less: Allowance for loan losses | (81,816) | (81,816) | (86,996) | ||
Loans receivable, net | [1] | 516,670 | 516,670 | 573,677 | |
Loans in a non-accrual status | 16,900 | 16,900 | 8,900 | ||
Interest receivable | 34,000 | 34,000 | 38,100 | ||
Rise and Sunny | |||||
Financing Receivable, Past Due [Line Items] | |||||
Current loans | 309,139 | 309,139 | 339,816 | ||
Past due loans | 49,084 | 49,084 | 52,664 | ||
Total loans receivable | 358,223 | 358,223 | 392,480 | ||
Net unamortized loan premium | 215 | 215 | 290 | ||
Less: Allowance for loan losses | (55,763) | (55,763) | (57,103) | ||
Loans receivable, net | 302,675 | 302,675 | 335,667 | ||
Elastic | |||||
Financing Receivable, Past Due [Line Items] | |||||
Current loans | 218,408 | 218,408 | 243,380 | ||
Past due loans | 19,803 | 19,803 | 22,395 | ||
Total loans receivable | 238,211 | 238,211 | 265,775 | ||
Net unamortized loan premium | 1,837 | 1,837 | 2,128 | ||
Less: Allowance for loan losses | (26,053) | (26,053) | (29,893) | ||
Loans receivable, net | $ 213,995 | $ 213,995 | $ 238,010 | ||
Rise Product, Lines of Credit | |||||
Financing Receivable, Past Due [Line Items] | |||||
Number of states, rise product, lines of credit offered | state | 2 | 2 | 2 | ||
Maximum | |||||
Financing Receivable, Past Due [Line Items] | |||||
Loans, deferral period | 180 days | 180 days | |||
Subsequent Event | |||||
Financing Receivable, Past Due [Line Items] | |||||
Percentage of customers provided relief through payment deferral program | 10.80% | ||||
Loans on deferred payment | $ 53,400 | ||||
[1] | 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. For further information regarding the assets and liabilities included in our consolidated accounts, see Note 4—Variable Interest Entities. |
Loans Receivable and Revenue _3
Loans Receivable and Revenue - Allowance for Loan Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | |||||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||||
Balance beginning of period | $ 89,075 | $ 96,052 | ||||
Provision for loan losses | 82,753 | 87,431 | ||||
Charge-offs | (96,192) | (111,694) | ||||
Recoveries of prior charge-offs | 8,128 | 7,709 | ||||
Effect of changes in foreign currency rates | 377 | 201 | ||||
Total | $ 83,387 | $ 79,699 | ||||
Accrual for CSO lender owned loans | (1,571) | (3,242) | ||||
Balance end of period | 81,816 | 76,457 | ||||
Estimated losses | 81,816 | 76,457 | 81,816 | $ 89,075 | 76,457 | |
Lines of credit to customers | [1] | 516,670 | 573,677 | |||
Rise and Sunny | ||||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||||
Balance beginning of period | 59,182 | 60,002 | ||||
Provision for loan losses | 58,747 | 57,869 | ||||
Charge-offs | (65,878) | (72,135) | ||||
Recoveries of prior charge-offs | 5,660 | 5,421 | ||||
Effect of changes in foreign currency rates | 377 | 201 | ||||
Total | 57,334 | 51,358 | ||||
Accrual for CSO lender owned loans | (1,571) | (3,242) | ||||
Balance end of period | 55,763 | 48,116 | ||||
Estimated losses | 55,763 | 48,116 | 55,763 | 59,182 | 48,116 | |
Lines of credit to customers | 302,675 | 335,667 | ||||
Elastic | ||||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||||
Balance beginning of period | 29,893 | 36,050 | ||||
Provision for loan losses | 24,006 | 29,562 | ||||
Charge-offs | (30,314) | (39,559) | ||||
Recoveries of prior charge-offs | 2,468 | 2,288 | ||||
Effect of changes in foreign currency rates | 0 | 0 | ||||
Total | 26,053 | 28,341 | ||||
Accrual for CSO lender owned loans | 0 | 0 | ||||
Balance end of period | 26,053 | 28,341 | ||||
Estimated losses | 26,053 | $ 28,341 | 26,053 | 29,893 | $ 28,341 | |
Lines of credit to customers | 213,995 | 238,010 | ||||
CSO fees | ||||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||||
Balance beginning of period | 2,100 | |||||
Balance end of period | 1,600 | |||||
Estimated losses | $ 1,600 | 1,600 | 2,100 | |||
Lines of credit to customers | $ 14,300 | $ 19,600 | ||||
[1] | 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. For further information regarding the assets and liabilities included in our consolidated accounts, see Note 4—Variable Interest Entities. |
Loans Receivable and Revenue _4
Loans Receivable and Revenue - Troubled Debt Restructurings (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Receivables [Abstract] | |||
Outstanding recorded investment before TDR | $ 7,546 | $ 12,725 | |
Outstanding recorded investment after TDR | 7,228 | 11,355 | |
Total principal and interest forgiveness included in charge-offs within the Allowance for loan losses | 318 | 1,370 | |
Average outstanding recorded investment | 17,714 | 14,917 | |
Interest income recognized | 3,730 | 1,925 | |
Current outstanding investment | 10,306 | $ 11,559 | |
Delinquent outstanding investment | 6,290 | 7,273 | |
Outstanding recorded investment | 16,596 | 18,832 | |
Less: Impairment included in Allowance for loan losses | (4,326) | (5,238) | |
Outstanding recorded investment, net of impairment | $ 12,270 | $ 13,594 | |
Threshold period past due for write-off | 60 days | ||
Troubled debt restructurings, subsequently defaulted during the year | $ 7,600 | $ 4,500 | |
Troubled debt restructurings, commitments to lend funds | $ 2,700 |
Variable Interest Entities - Na
Variable Interest Entities - Narrative (Details) - entity | Aug. 01, 2019 | Jul. 31, 2019 | Mar. 31, 2020 |
Variable Interest Entity [Line Items] | |||
Variable interest entity, number of entities | 5 | ||
Credit Services Organization Lenders | |||
Variable Interest Entity [Line Items] | |||
Variable interest entity, number of entities | 3 | ||
Variable Interest Entity, Primary Beneficiary | Elastic SPV, Ltd. | |||
Variable Interest Entity [Line Items] | |||
Loan purchase right percentage | 90.00% | ||
Variable Interest Entity, Primary Beneficiary | EF SPV, Ltd. | |||
Variable Interest Entity [Line Items] | |||
Loan purchase right percentage | 96.00% | 95.00% | |
Loan purchase right percentage, additional purchased | 1.00% | ||
Variable Interest Entity, Primary Beneficiary | FinWise Bank | |||
Variable Interest Entity [Line Items] | |||
Loan purchase right percentage | 5.00% |
Variable Interest Entities - Su
Variable Interest Entities - Summary of Assets and Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | |||
ASSETS | |||||||
Cash and cash equivalents | $ 101,429 | [1] | $ 88,913 | [1] | $ 97,153 | $ 58,313 | |
Loans receivable, net of allowance for loan losses | [1] | 516,670 | 573,677 | ||||
Loans receivable, allowance | 81,816 | 86,996 | |||||
Prepaid expenses and other assets | [1] | 13,038 | 11,608 | ||||
Receivable from payment processors | [1] | 9,278 | 10,651 | ||||
Total assets | 726,962 | 783,587 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Accounts payable and accrued liabilities | [1] | 41,179 | 45,596 | ||||
Deferred revenue | [1] | 8,831 | 12,087 | ||||
Notes payable, net (See Note 14) | [1] | 514,206 | 555,063 | ||||
Accumulated other comprehensive income | [1] | (907) | 1,096 | ||||
Total liabilities and stockholders’ equity | 726,962 | 783,587 | |||||
Variable Interest Entity, Primary Beneficiary | Elastic SPV, Ltd. | |||||||
ASSETS | |||||||
Cash and cash equivalents | 44,439 | 26,245 | |||||
Loans receivable, net of allowance for loan losses | 209,499 | 234,504 | |||||
Loans receivable, allowance | 25,145 | 28,852 | |||||
Prepaid expenses and other assets | 2 | 0 | |||||
Receivable from payment processors | 4,713 | 6,363 | |||||
Total assets | 258,653 | 267,112 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Accounts payable and accrued liabilities | 14,522 | 15,902 | |||||
Deferred revenue | 3,562 | 4,280 | |||||
Reserve deposit liability | 23,150 | 23,150 | |||||
Notes payable, net (See Note 14) | 217,419 | 223,780 | |||||
Accumulated other comprehensive income | 0 | 0 | |||||
Total liabilities and stockholders’ equity | 258,653 | 267,112 | |||||
Variable Interest Entity, Primary Beneficiary | Elastic SPV, Ltd. | Consolidation, Eliminations | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Accounts payable and accrued liabilities | 9,199 | 7,690 | |||||
Reserve deposit liability | 23,150 | 23,150 | |||||
Variable Interest Entity, Primary Beneficiary | EF SPV, Ltd. | |||||||
ASSETS | |||||||
Cash and cash equivalents | 13,436 | 7,541 | |||||
Loans receivable, net of allowance for loan losses | 117,998 | 111,281 | |||||
Loans receivable, allowance | 21,558 | 17,436 | |||||
Receivable from payment processors | 837 | 681 | |||||
Total assets | 132,271 | 119,503 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Accounts payable and accrued liabilities | 14,842 | 8,576 | |||||
Reserve deposit liability | 8,950 | 8,950 | |||||
Notes payable, net (See Note 14) | 108,479 | 101,977 | |||||
Total liabilities and stockholders’ equity | 132,271 | 119,503 | |||||
Variable Interest Entity, Primary Beneficiary | EF SPV, Ltd. | Consolidation, Eliminations | |||||||
ASSETS | |||||||
Receivable from payment processors | 322 | 0 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Accounts payable and accrued liabilities | 13,461 | 7,114 | |||||
Reserve deposit liability | $ 8,950 | $ 8,950 | |||||
[1] | 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. For further information regarding the assets and liabilities included in our consolidated accounts, see Note 4—Variable Interest Entities. |
Notes Payable, Net - Narrative
Notes Payable, Net - Narrative (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2020debt_facility | Mar. 31, 2019USD ($) | |
VPC | ||
Debt Instrument [Line Items] | ||
Number of debt facilities | debt_facility | 3 | |
Line of Credit | ESPV Term Note | ||
Debt Instrument [Line Items] | ||
Amendment fee | $ | $ 2.4 |
Notes Payable, Net - VPC Facili
Notes Payable, Net - VPC Facility (Details) - Line of Credit - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
US Term Note | Greater of 3-month London Interbank Offered Rate (LIBOR) or Five-Year LIBOR Swap Rate | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 7.50% | ||
US Term Note | Term Notes | |||
Debt Instrument [Line Items] | |||
Maximum borrowing amount | $ 350,000,000 | ||
Blended interest rate | 10.23% | 10.23% | |
US Term Note | Term Notes | 3-month LIBOR | |||
Debt Instrument [Line Items] | |||
Basis rate, floor | 1.00% | ||
Basis spread on variable rate | 11.00% | ||
US Term Note | Term Notes | Base Rate | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2.73% | ||
US Term Note | Term Notes | Greater of 3-month London Interbank Offered Rate (LIBOR) or Five-Year LIBOR Swap Rate | |||
Debt Instrument [Line Items] | |||
Basis rate, floor | 1.00% | ||
Basis spread on variable rate | 7.50% | ||
UK Term Note | Greater of 3-month London Interbank Offered Rate (LIBOR) or Five-Year LIBOR Swap Rate | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 7.50% | ||
UK Term Note | Term Notes | |||
Debt Instrument [Line Items] | |||
Maximum borrowing amount | $ 123,750,000 | ||
Blended interest rate | 10.23% | 10.23% | |
UK Term Note | Term Notes | 3-month LIBOR | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 14.00% | ||
UK Term Note | Term Notes | Base Rate | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2.73% | ||
UK Term Note | Term Notes | Greater of 3-month London Interbank Offered Rate (LIBOR) or Five-Year LIBOR Swap Rate | |||
Debt Instrument [Line Items] | |||
Basis rate, floor | 1.00% | ||
Basis spread on variable rate | 7.50% | ||
4th Tranche Term Note | 3-month LIBOR | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 13.00% | ||
4th Tranche Term Note | Term Notes | |||
Debt Instrument [Line Items] | |||
Maximum borrowing amount | $ 18,050,000 | ||
Blended interest rate | 15.73% | 15.73% | |
4th Tranche Term Note | Term Notes | 3-month LIBOR | |||
Debt Instrument [Line Items] | |||
Basis rate, floor | 1.00% | ||
Basis spread on variable rate | 13.00% | ||
4th Tranche Term Note | Term Notes | Base Rate | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2.73% | ||
US Term Note and UK Term Note | Term Notes | |||
Debt Instrument [Line Items] | |||
Option to pay down amount outstanding, percentage (up to) | 20.00% | ||
Weighted Average | US Term Note | Term Notes | Base Rate | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2.73% | 2.73% | |
Weighted Average | UK Term Note | Term Notes | Base Rate | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2.73% | 2.73% |
Notes Payable, Net - EF SPV Fac
Notes Payable, Net - EF SPV Facility (Details) - Line of Credit - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
EF SPV Facility | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing amount | $ 150,000,000 | ||
Amount outstanding, re-allocated | $ 43,000,000 | ||
Stated interest rate | 10.23% | ||
Blended interest rate | 9.95% | 9.99% | |
Option to pay down amount outstanding, percentage (up to) | 20.00% | ||
Base Rate | EF SPV Facility | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 2.73% | ||
Greater of 3-month London Interbank Offered Rate (LIBOR) or Five-Year LIBOR Swap Rate | EF SPV Facility | |||
Line of Credit Facility [Line Items] | |||
Basis rate, floor | 1.00% | ||
Basis spread on variable rate | 7.50% | ||
Greater of 3-month London Interbank Offered Rate (LIBOR) or Five-Year LIBOR Swap Rate | US Term Note | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 7.50% | ||
Term Notes | US Term Note | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing amount | $ 350,000,000 | ||
Blended interest rate | 10.23% | 10.23% | |
Term Notes | 3-month LIBOR | US Term Note | |||
Line of Credit Facility [Line Items] | |||
Basis rate, floor | 1.00% | ||
Basis spread on variable rate | 11.00% | ||
Term Notes | Base Rate | US Term Note | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 2.73% | ||
Term Notes | Greater of 3-month London Interbank Offered Rate (LIBOR) or Five-Year LIBOR Swap Rate | US Term Note | |||
Line of Credit Facility [Line Items] | |||
Basis rate, floor | 1.00% | ||
Basis spread on variable rate | 7.50% | ||
Weighted Average | Base Rate | EF SPV Facility | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 2.45% | 2.49% | |
Weighted Average | Term Notes | Base Rate | US Term Note | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 2.73% | 2.73% |
Notes Payable, Net - ESPV Facil
Notes Payable, Net - ESPV Facility (Details) - Line of Credit - ESPV Term Note - USD ($) | Jul. 01, 2019 | Feb. 01, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | |||||
Maximum borrowing amount | $ 350,000,000 | ||||
Blended interest rate | 10.23% | 15.48% | 10.22% | 10.22% | |
Option to pay down amount outstanding, percentage (up to) | 20.00% | ||||
Base Rate | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.73% | 2.73% | |||
Greater of 3-month London Interbank Offered Rate (LIBOR) or Five-Year LIBOR Swap Rate | |||||
Debt Instrument [Line Items] | |||||
Basis rate, floor | 1.00% | ||||
Basis spread on variable rate | 7.50% | 12.75% | 7.50% | ||
3-month LIBOR | |||||
Debt Instrument [Line Items] | |||||
Basis rate, floor | 1.00% | ||||
Debt Instrument, interest Rate, Tranche One | |||||
Debt Instrument [Line Items] | |||||
Outstanding balance | $ 50,000,000 | ||||
Debt Instrument, interest Rate, Tranche One | 3-month LIBOR | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 13.00% | ||||
Debt Instrument, interest Rate, Tranche Two | 3-month LIBOR | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 12.00% | ||||
Debt Instrument, interest Rate, Tranche Three | 3-month LIBOR | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 13.50% | ||||
Minimum | Debt Instrument, interest Rate, Tranche Two | |||||
Debt Instrument [Line Items] | |||||
Outstanding balance | $ 50,000,000 | ||||
Minimum | Debt Instrument, interest Rate, Tranche Three | |||||
Debt Instrument [Line Items] | |||||
Outstanding balance | 100,000,000 | ||||
Maximum | Debt Instrument, interest Rate, Tranche Two | |||||
Debt Instrument [Line Items] | |||||
Outstanding balance | 100,000,000 | ||||
Maximum | Debt Instrument, interest Rate, Tranche Three | |||||
Debt Instrument [Line Items] | |||||
Outstanding balance | $ 150,000,000 | ||||
Maximum | Debt Instrument, interest Rate, Tranche Four | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 12.75% | ||||
Outstanding balance | $ 150,000,000 | ||||
Weighted Average | Base Rate | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.72% | 2.72% |
Notes Payable, Net - Schedule o
Notes Payable, Net - Schedule of Debt (Details) - USD ($) $ in Thousands | Jul. 01, 2019 | Feb. 01, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | ||||||
Long term debt | $ 516,704 | |||||
Debt issuance costs | (2,498) | $ (2,622) | ||||
Total | [1] | 514,206 | 555,063 | |||
Repayments of debt | 46,939 | $ 43,000 | ||||
Proceeds from notes payable | 6,500 | $ 10,000 | ||||
Line of Credit | US Term Note | ||||||
Debt Instrument [Line Items] | ||||||
Long term debt | 154,500 | 182,000 | ||||
Repayments of debt | $ 27,500 | |||||
Line of Credit | US Term Note | Greater of 3-month London Interbank Offered Rate (LIBOR) or Five-Year LIBOR Swap Rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 7.50% | |||||
Line of Credit | UK Term Note | ||||||
Debt Instrument [Line Items] | ||||||
Long term debt | $ 16,154 | 29,635 | ||||
Repayments of debt | $ 12,900 | |||||
Line of Credit | UK Term Note | Greater of 3-month London Interbank Offered Rate (LIBOR) or Five-Year LIBOR Swap Rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 7.50% | |||||
Line of Credit | 4th Tranche Term Note | ||||||
Debt Instrument [Line Items] | ||||||
Long term debt | $ 18,050 | 18,050 | ||||
Line of Credit | 4th Tranche Term Note | 3-month LIBOR | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 13.00% | |||||
Line of Credit | EF SPV Facility | ||||||
Debt Instrument [Line Items] | ||||||
Long term debt | $ 108,500 | 102,000 | ||||
Proceeds from notes payable | $ 6,500 | |||||
Line of Credit | EF SPV Facility | Greater of 3-month London Interbank Offered Rate (LIBOR) or Five-Year LIBOR Swap Rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 7.50% | |||||
Line of Credit | ESPV Term Note | ||||||
Debt Instrument [Line Items] | ||||||
Long term debt | $ 219,500 | $ 226,000 | ||||
Repayments of debt | $ 6,500 | |||||
Line of Credit | ESPV Term Note | Greater of 3-month London Interbank Offered Rate (LIBOR) or Five-Year LIBOR Swap Rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 7.50% | 12.75% | 7.50% | |||
[1] | 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. For further information regarding the assets and liabilities included in our consolidated accounts, see Note 4—Variable Interest Entities. |
Notes Payable, Net - Future Deb
Notes Payable, Net - Future Debt Maturities (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Maturities of Long-term Debt [Abstract] | |
Remainder of 2020 | $ 0 |
2021 | 18,050 |
2022 | 0 |
2023 | 0 |
2024 | 498,654 |
Thereafter | 0 |
Total | $ 516,704 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Narrative (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020USD ($)reporting_unit | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Goodwill [Line Items] | |||
Goodwill, net | $ 6,776 | $ 16,027 | |
Impairment of goodwill | 9,251 | $ 0 | |
Goodwill deductible for tax purposes | $ 400 | ||
Number of reporting units | reporting_unit | 2 | ||
Amortization expense | $ 30 | $ 144 | |
Weighted average remaining amortization period for the intangible assets | 5 years 9 months | ||
Impact of 50 basis point increase or decrease of discount rate on goodwill | 3.00% | ||
Elastic Reporting Unit | |||
Goodwill [Line Items] | |||
Impairment of goodwill | $ 0 | ||
UK Reporting Unit | |||
Goodwill [Line Items] | |||
Impairment of goodwill | $ 9,300 | ||
Minimum | Valuation Technique, Discounted Cash Flow | Measurement Input, Discount Rate | |||
Goodwill [Line Items] | |||
Discount rate used to value reporting units under discounted cash flow analysis | 0.19 | ||
Maximum | Valuation Technique, Discounted Cash Flow | Measurement Input, Discount Rate | |||
Goodwill [Line Items] | |||
Discount rate used to value reporting units under discounted cash flow analysis | 0.204 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, accumulated amortization | $ (3,785) | $ (3,754) |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Intangible assets, cost | 5,156 | 5,156 |
Intangible assets, net | 1,371 | 1,402 |
Domain names | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 680 | 680 |
Acquired technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, cost | 946 | 946 |
Finite-lived intangible assets, accumulated amortization | (946) | (946) |
Finite-lived intangible assets, net | 0 | 0 |
Non-compete | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, cost | 3,404 | 3,404 |
Finite-lived intangible assets, accumulated amortization | (2,713) | (2,682) |
Finite-lived intangible assets, net | 691 | 722 |
Customers | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, cost | 126 | 126 |
Finite-lived intangible assets, accumulated amortization | (126) | (126) |
Finite-lived intangible assets, net | $ 0 | $ 0 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Future Amortization Expense (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2021 | $ 120 |
2022 | 120 |
2023 | 120 |
2024 | 120 |
2025 | $ 120 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Lessee, Lease, Description [Line Items] | ||
Term of option to extend | 10 years | |
Operating lease right of use assets | $ 9,746 | $ 10,191 |
Operating lease liabilities | $ 13,790 | $ 14,352 |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Remaining lease term | 3 years | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Remaining lease term | 7 years |
Leases - Summary of Total Lease
Leases - Summary of Total Lease Cost and Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases [Abstract] | ||
Operating lease cost | $ 808 | $ 1,148 |
Short-term lease cost | 346 | 11 |
Total lease cost | 1,154 | 1,159 |
Cash paid for amounts included in the measurement of lease liabilities | 924 | 1,020 |
Right-of-use assets obtained in exchange for lease obligations | $ 0 | $ 0 |
Weighted average remaining lease term | 4 years 2 months 26 days | 4 years 8 months 14 days |
Weighted average discount rate | 10.23% | 10.23% |
Leases - Summary of Future Leas
Leases - Summary of Future Lease Payments (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
2020 | $ 2,835 | |
2021 | 3,876 | |
2022 | 3,984 | |
2023 | 3,486 | |
2024 | 1,438 | |
Thereafter | 1,893 | |
Total future minimum lease payments | 17,512 | |
Less: Imputed interest | (3,722) | |
Operating lease liabilities | $ 13,790 | $ 14,352 |
Share-Based Compensation - Narr
Share-Based Compensation - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock based compensation expense | $ 2.8 | $ 2.4 |
2016 Omnibus Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares reserved for issuance (in shares) | 8,837,203 | |
Plan expiration period | 10 years | |
Shares available for grant (in shares) | 2,356,682 |
Share-Based Compensation - Stoc
Share-Based Compensation - Stock Option Activity (Details) - Stock Option $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock compensation contractual term | P10Y |
Vesting period | 4 years |
Stock Option Activity | |
Options outstanding (in shares) | shares | 2,269,178 |
Options granted (in shares) | shares | 55,161 |
Options exercised (in shares) | shares | (87,500) |
Options forfeited (in shares) | shares | (30,386) |
Options outstanding (in shares) | shares | 2,206,453 |
Options exercisable at (in shares) | shares | 2,091,700 |
Stock Options, Weighted Average Exercise Price | |
Options Outstanding, Weighted Average Exercise Price (in usd per share) | $ / shares | $ 4.58 |
Options Granted, Weighted Average Exercise Price (in usd per share) | $ / shares | 3.39 |
Options Exercised, Weighted Average Exercise Price (in usd per share) | $ / shares | 2.13 |
Options Forfeited, Weighted Average Exercise Price (in usd per share) | $ / shares | 4.05 |
Options Outstanding, Weighted Average Exercise Price (in usd per share) | $ / shares | 4.65 |
Options exercisable, Weighted Average Exercise Price (in usd per share) | $ / shares | $ 4.69 |
Options Outstanding, Weighted Average Remaining Contractual Life | 3 years 10 months 10 days |
Options exercisable, Weighted Average Remaining Contractual Life | 3 years 6 months 22 days |
Unrecognized compensation cost related to non-vested stock | $ | $ 148 |
Unrecognized compensation, weighted average period for recognition | 2 years 4 months 23 days |
Total intrinsic value of options exercised | $ | $ 216 |
Share-Based Compensation - RSU
Share-Based Compensation - RSU Activity (Details) - RSUs $ / shares in Units, $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Weighted-average grant-date fair value (in usd per share) | $ 2.10 |
Nonvested Restricted Stock Unit Activity | |
Nonvested (in shares) | shares | 4,161,862 |
Granted (in shares) | shares | 415,313 |
Vested (in shares) | shares | (297,442) |
Forfeited (in shares) | shares | (5,668) |
Nonvested (in shares) | shares | 4,274,065 |
Expected to vest (in shares) | shares | 3,413,006 |
Weighted Average Grant Date Fair Value | |
Nonvested, Weighted Average Grant Date Fair Value (in usd per share) | $ 6.10 |
Granted, Weighted Average Grant Date Fair Value (in usd per share) | 2.10 |
Vested, Weighted Average Grant Date Fair Value (in usd per share) | 4.81 |
Forfeited, Weighted Average Grant Date Fair Value (in usd per share) | 4.41 |
Nonvested, Weighted Average Grant Date Fair Value (in usd per share) | 5.80 |
Expected to vest (in usd per share) | $ 6 |
Unrecognized compensation | $ | $ 13.4 |
Unrecognized compensation, weighted average period for recognition | 2 years 3 months 20 days |
Total intrinsic value of vested RSUs | $ | $ 1.2 |
Aggregate intrinsic value of the vested and expected to vest RSUs | $ | $ 3.5 |
2016 Omnibus Incentive Plan | Vesting as of first anniversary | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting percentage | 25.00% |
2016 Omnibus Incentive Plan | Vesting each year after first anniversary date | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting percentage | 25.00% |
Share-Based Compensation - Empl
Share-Based Compensation - Employee Stock Purchase Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock based compensation expense | $ 2,800 | $ 2,400 |
Employee Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized and reserved for the Employee Stock Purchase Plan (in shares) | 1,816,716 | |
Number of shares reserved for the Employee Stock Purchase Plan (in shares) | 1,233,182 | |
Number of shares purchased under the Employee Stock Purchase Plan (in shares) | 0 | |
Stock based compensation expense | $ 141 | $ 193 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - Interest Rate Cap - USD ($) | Jan. 16, 2018 | Mar. 31, 2020 | Mar. 31, 2019 |
US Term Note | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Cost of derivative hedge fixed premiums | $ 719,000 | ||
ESPV Facility | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Cost of derivative hedge fixed premiums | $ 648,000 | ||
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Gross gains recognized in Accumulated other comprehensive (loss) income | $ 0 | $ 0 | |
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | US Term Note | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Gross gains recognized in Accumulated other comprehensive (loss) income | 0 | 0 | |
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | ESPV Facility | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Gross gains recognized in Accumulated other comprehensive (loss) income | $ 0 | $ 0 |
Fair Value Measurements - Inter
Fair Value Measurements - Interest Rate Caps (Details) - Interest Rate Cap - Interest expense - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Derivative [Line Items] | ||
Gains recognized in Interest expense | $ 0 | $ 303 |
US Term Note | ||
Derivative [Line Items] | ||
Gains recognized in Interest expense | 0 | 159 |
ESPV Facility | ||
Derivative [Line Items] | ||
Gains recognized in Interest expense | $ 0 | $ 144 |
Derivatives (Details)
Derivatives (Details) | 3 Months Ended | ||
Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Jan. 11, 2018derivative | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at | $ 156,489,000 | $ 116,791,000 | |
Balance at | 147,782,000 | 133,061,000 | |
Interest Rate Cap | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Number of derivative instruments held | derivative | 2 | ||
Interest Rate Cap | Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Gross gains recognized in Accumulated other comprehensive (loss) income | 0 | 0 | |
Interest Rate Cap | US Term Note | Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at | 0 | 159,000 | |
Gross gains recognized in Accumulated other comprehensive (loss) income | 0 | 0 | |
Gains reclassified to (loss) income through Interest expense | 0 | (159,000) | |
Balance at | 0 | 0 | |
Interest Rate Cap | ESPV Facility | Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at | 0 | 144,000 | |
Gross gains recognized in Accumulated other comprehensive (loss) income | 0 | 0 | |
Gains reclassified to (loss) income through Interest expense | 0 | (144,000) | |
Balance at | $ 0 | $ 0 |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Current income tax expense (benefit): | ||
Federal | $ 1,152 | $ 0 |
State | 487 | 278 |
Foreign | 17 | 0 |
Total current income tax expense | 1,656 | 278 |
Deferred income tax expense (benefit): | ||
Federal | 73 | 4,339 |
State | 343 | 1,398 |
Total deferred income tax expense | 416 | 5,737 |
Total income tax expense | $ 2,072 | $ 6,015 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating Loss Carryforwards [Line Items] | |||||
Effective tax rates | (73.00%) | 31.00% | |||
Cash effective tax rate | 3.03% | ||||
Operating income (loss) | $ 25,682,000 | $ 37,979,000 | $ 111,000,000 | $ 95,000,000 | $ 71,000,000 |
Period of cumulative pre-tax income position | 3 years | ||||
Utilization of research and development credit | 20.00% | ||||
Minimum | |||||
Operating Loss Carryforwards [Line Items] | |||||
Look forward period | 1 year | ||||
Maximum | |||||
Operating Loss Carryforwards [Line Items] | |||||
Look forward period | 3 years | ||||
Domestic Tax Authority | |||||
Operating Loss Carryforwards [Line Items] | |||||
Effective tax rates | 20.60% | 35.00% | |||
Operating loss carryforwards | $ 0 | $ 42,000,000 | |||
Operating income (loss) | $ 38,400,000 | $ 14,100,000 | |||
Percentage of improvement of operating income (loss) over prior period | (172.00%) | ||||
Foreign Tax Authority | |||||
Operating Loss Carryforwards [Line Items] | |||||
Operating loss carryforwards | $ 57,200,000 |
Commitments, Contingencies an_3
Commitments, Contingencies and Guarantees (Details) £ in Millions | 3 Months Ended | ||||||
Mar. 31, 2020USD ($)lawsuit | Dec. 31, 2019USD ($) | Oct. 25, 2019GBP (£) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Jun. 30, 2017USD ($) | ||
Loans and Leases Receivable Disclosure [Line Items] | |||||||
Amount accrued for claims determined to be payable and reasonably estimable based on historical loss related to these claims | $ 2,700,000 | $ 2,300,000 | $ 1,100,000 | ||||
Lines of credit to customers | [1] | 516,670,000 | 573,677,000 | ||||
Lease agreement term | 7 years | ||||||
Lease, letter of credit | $ 500,000 | ||||||
Lease, annual reduction of letter credit | 100,000 | ||||||
Lessee, letter of credit, minimum balance | $ 100,000 | ||||||
Cash balance securing letter of credit | 2,190,000 | 2,294,000 | $ 2,493,000 | $ 2,591,000 | |||
Letter of Credit | |||||||
Loans and Leases Receivable Disclosure [Line Items] | |||||||
Cash balance securing letter of credit | 400,000 | 400,000 | |||||
Indemnification Agreement | |||||||
Loans and Leases Receivable Disclosure [Line Items] | |||||||
Loss contingency accrual | 4,263,000 | 0 | |||||
Elastic Product | Unfunded Credit Lines | |||||||
Loans and Leases Receivable Disclosure [Line Items] | |||||||
Lines of credit to customers | 266,600,000 | 251,200,000 | |||||
Rise Product | Unfunded Credit Lines | |||||||
Loans and Leases Receivable Disclosure [Line Items] | |||||||
Lines of credit to customers | 8,900,000 | 8,300,000 | |||||
Today Card | Unfunded Credit Lines | |||||||
Loans and Leases Receivable Disclosure [Line Items] | |||||||
Lines of credit to customers | $ 3,100,000 | $ 600,000 | |||||
Financial Conduct Authority | |||||||
Loans and Leases Receivable Disclosure [Line Items] | |||||||
Outside of normal course of business payment subject to approval (greater than) | £ | £ 1 | ||||||
California Rise Loans | |||||||
Loans and Leases Receivable Disclosure [Line Items] | |||||||
Number of lawsuits filed | lawsuit | 2 | ||||||
[1] | 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. For further information regarding the assets and liabilities included in our consolidated accounts, see Note 4—Variable Interest Entities. |
Commitments, Contingencies an_4
Commitments, Contingencies and Guarantees - UK Claims Accrual (Details) - UK Claims - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Loss Contingency Accrual [Roll Forward] | ||
Beginning balance | $ 2,334 | $ 925 |
Accruals | 2,294 | 1,124 |
Payments | (2,017) | (922) |
Effects of changes in foreign currency rates | 66 | 2 |
Ending balance | $ 2,677 | $ 1,129 |
Commitments, Contingencies an_5
Commitments, Contingencies and Guarantees - Amounts Accrued for Contingent Loss under Indemnification Agreement (Details) - Indemnification Agreement $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Loss Contingency Accrual [Roll Forward] | |
Beginning balance | $ 0 |
Expected loss | 4,263 |
Ending balance | $ 4,263 |
Operating Segment Information_2
Operating Segment Information (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Segment Reporting [Abstract] | |||
Number of reportable segments | segment | 1 | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenues | $ 177,455 | $ 189,504 | |
Long-lived assets | 67,798 | $ 77,609 | |
United States | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenues | 162,467 | 160,066 | |
Long-lived assets | 54,091 | 54,313 | |
United Kingdom | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenues | 14,988 | $ 29,438 | |
Long-lived assets | $ 13,707 | $ 23,296 |
Related Parties (Details)
Related Parties (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | ||||
Accounts payable to related parties | $ 122 | $ 123 | ||
Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Operating expenses | 1,303 | $ 572 | ||
Affiliated Entity | Fees and travel expenses | ||||
Related Party Transaction [Line Items] | ||||
Operating expenses | 183 | 131 | ||
Affiliated Entity | Stock compensation | ||||
Related Party Transaction [Line Items] | ||||
Operating expenses | 1,006 | 366 | ||
Affiliated Entity | Consulting | ||||
Related Party Transaction [Line Items] | ||||
Operating expenses | 114 | 75 | ||
Line of Credit | VPC Facility | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Direct investments in VPC Facility | $ 800 | |||
Interest payments on loan | $ 20 | $ 22 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
May 08, 2020 | May 07, 2020 | Mar. 31, 2020 | |
Subsequent Event [Line Items] | |||
Common stock repurchased | $ 4,203 | ||
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Common stock repurchased (in shares) | 1,191,153 | ||
Common stock repurchased | $ 1,900 | ||
Line of Credit | EF SPV Facility | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Debt paydown | $ 20,000 |