ENVA - Earnings call transcript Q3 2018 | Enova International, Inc.

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Operator

Good afternoon, and welcome to the Enova International Third Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Monica Gould, Investor Relations for Enova. Please go ahead.

Monica Gould

you. Thank everyone. afternoon, good And released results September closed. of ended third for XXXX, this the XX, market quarter afternoon XXXX Enova after the

archived If and are it Chief call a the release, you section at Steve ir.enova.com. on section receive Cunningham, our on website will Chief did press today’s is of Executive me earnings and call of copy our This you Fisher, Relations the being Financial website. from of obtain be Officer. With webcast Investor David Relations Investor may our not Officer;

the factors specific to this and on like it as new described business and see turn events. contain cause Please statements the press our differ projections results actual the undertake uncertainties. information environment of that today’s our I risk forward-looking call make note will risks from result a or currently statements we and, Before refer filings as discussion. these over to information that as to I’d discussion for and the materially obligation more future on no as release assumptions to such, could David, forward-looking statements does we are based SEC we on today’s to based in certain that update today, our of Any call on include

the in Generally In non-GAAP the tables our addition of and to We release. included that today’s Accounting in Accepted to these measures understanding press conform U.S. between GAAP not Principles. enhance reporting, these we are measures report certain found performance. do financial measures GAAP believe Reconciliations non-GAAP

of would over David. to information earnings supplemental our turn the with that, release, I posted in like financial As And on portion the IR website. have our call to noted we

David Fisher

our to call Steve share discuss to thanks giving Cunningham, will brief on guidance remarks, our perspective Thanks, afternoon, turn going I’ll forward. and strategy, start our everyone, financial of over to my looking I today. and and by I’m update finally, detail. I overview After results the CFO, our will you a then XXXX the for joining quarter, more Monica. call our in Good

was high in mix for revenue And $X.XX. the with metrics of allowed million. Enova. of third We to and XXth in increased excess highest of year-over-year new of revenue. of EPS represented increased end even of originations have above and in quarter the first adjusted consecutive quarter is guidance quarter high Adjusted the once Both efficient our XX% stable record customer third business. XX% year customers. guidance. XX%. the we to strong new were customers in total midpoint growth these again quarter. to demand, is strong, of credit growth to million, that EBITDA since with double-digit growth new of XX% seen the year-over-year quarter range $XX Revenue level, another rose This and to deliver XX% and Due $XXX loans to the our solid drove year-over-year the marketing The This produced consecutive us marks our well the quarter the profitability for impressive line XXXX,

we’ve and revenue our mentioned our As past, ultimately customers going forward. these in expand returning customer potential the new base

customers, and dollars to typically As reserve marketing those from have many losses revenue commented upfront. incur muted we customers for particularly strong earnings provision on a we growth, to larger times, new as leads attract more new

returning of model, our is infrastructure with plus even This The we our strong efficient customers, of been growth. new credit customer generating and challenge all the percent XX combined to loyal, stable online while expense. EBITDA marketing we the us. with large have for overcome which performance leveraging have portfolio how creates us and by low tailwinds ability without shown growth to significant significantly keeping solid adding enabled revenue the has credit growth we and produced grow adjusted However, sizable expenses across base business high, the this amounts

Our earnings, when of expected Based more from been will on the layer increased are tailwinds, in year is customers we and both acquiring. new our especially discuss AR as year-over-year, raising these growth additional built which you has total we’ve full all XX% strong QX Steve in on guidance, detail.

optimistic profitability. very our and growth increasing about also continued XXXX and are generate ability to We

line are XX% of are proving out credit the we all and XX% of XX% businesses, XX% resonating total and portfolio. Installment increased now comprise with of of Total our merits seeing of While companywide and products strongest originations the of loans total our our our revenue strength QX customers, in our diversification sequentially year-over-year. strategy. across installment credit lines our and

in success businesses, UK Our our consumer across credit results our and further installment positive and a agreement our remain products short-term subprime within analytics on prime and on Decisions, business to small growth. additional our six U.S. installment each growth our namely, out to adding We these of Brazil, financing, as receivable of Enova purchase attributable them our business. near segments businesses business, business our and building and brand, U.S. offering, our line focus is U.S. focused service loan actively drive

U.S. of in well-diversified, States large and seeing year-over-year. millions only The XX% $XX Originations consisting of billion accelerate in line are OCC, large business XX% products, We consumer year growth consumers XX% small XX% its this in business subprime size. with short-term increased loans. United remains portfolio our dollar the products every of single installment pay products. According borrow the nearly in even credit to

access get helping credit. these to We’re trustworthy committed people to fast, hard-working

our vast are our we UK, fragmented ahead to us lender demand, by leading remain have share. additional share, we our well-positioned of subprime experience this believe Given and U.S. we market, further believe strong we and significant market growth. the strong in continued In offering. to very capture grow runway also large the market seeing We and subprime are single-digit share we

third by company-specific of of aware, competitors lack went administration and one are you quarter, of during UK, driven our the profitability, customer combined in many complaints. primarily largest factors with elevated As their into

the While compliance succeed the UK like in We’d in position UK. in Ombudsman, minister complaints quarter. believe provide our the lending long-term the to higher Financial practices, we to some and facing well us to this UK best on additional performance entire our subprime the color is

UK Third overall, robust X% the revenue driven And year-over-year, see of XX% expenses quarter and significant revenue led UK QX loan to XX% increased year, expenses, while strong related growth rose only our in even primarily compared scale. by complaints customer installment have can our for technology Operations includes costs originations nearly period complaints there, overall increased related it with same year, increased, from growth. last had last you by Enova on new to XX% growth little given product. Loan impact has Enova. which the

loan before, rise As even UK NetCredit in growth complaints. year-over-year. continues year-over-year with million steady increased mentioned we’ve XX% to to business be our sustainable increased $XXX and the and XX% reflect profitable results balances our originations

XX% Our total near-prime end the product U.S. at of our portfolio represented QX. of

of We lenders very successful at model. growing business due flexibility been brick-and-mortar from ease-of-use have this and installment the share online by to our taking incumbent

has more Steve we’ve year, detail, additional support also this added discuss of As capital. growth, in will lowered NetCredit’s which rapid cost our to liquidity

to loan total of rationalizes. lending and our at portfolio portfolio represented cautious the X%, approach small QX. market business as were the reflecting flat of end book contracted Originations the our X% small business financing our Our year-over-year

Our hard Brazil lending the stable to and last results. over years and operating work in a to starting couple build yield of platform robust is

currency the constant of basis, QX Our million XX% Brazilian QX. On rose $XX loan a XX% at portfolio increased end XX% year-over-year and year-over-year to originations sequentially.

Brazil share, a team regulatory in We significant and huge environment. we there our with great are and continue positioned to market our flexible middle uniquely a grow class online population to with model. believe growing, opportunity see we And stable

a business to real-time service business, Decisions, Enova gain continued Lastly, analytics momentum.

about we our in is the business very to pipeline are increase acquisition. stages, of rate active out opportunity customer early in this excited and While our are still the building

interaction Before providers few sent Department wrapping state. ago, lead request regulatory up the Business the remarks, asking weeks about their to brief to of with provide my California information A want in update. for Oversight lenders, a I a

Our CashNetUSA providers. requiring the to lead will to this support data is response. request said obtain that provide DBO that and business licensing of a legislation has received this request The intended

is to credit. access with that address good to legislatures and provide other our protect this and with engaged can areas and consumers’ team data industry partners regulation, Our based on

As our providers dramatically dependence decreased you know, lead over on has the years. few last

competitor if they fact, of we a are across more In channel providers lead strictly believe beneficiary, marketing significant our could regulated. of we and are ours be all

the the as propose merit, rulemaking will said be the it would a as to with address the On currently in rulemaking from as engage early identified announce August well that reconsideration the CFPB XXXX. compliance to issue we XXXX reconsider which CFPB weeks dollar of areas changes clear to The date. ago that scheduled its rule small intents have and the two Bureau role. expect implementation date address to of committed rule, It benefit what current to outcome on notice we new but the to a to they work rule has the are will federal in improvement, rulemaking, where of isn’t seeks level, the improve

Our the and regulation. of to to adapt a online ongoing flexibility diversification significant with provides model risk advantage us regulatory our efforts new have reduced our

believe six numbers have the maintain we being our U.S. strong on last strong have across as business determined each growth ability year-to-date evidenced have strong will the new versus obtain likely by profitability, sustained by under As a remain we customers. EPS confident advantage storefront we in And of up adjusted ability Enova. to at growth rule to credit a and up a year-to-date. Revenues any our larger we over and larger our result, lenders. and to XX% stable business growth final driven about businesses, we excited consistent and demand managing are as are Overall, year, momentum to with XX% robust of even significant continue shown

the focused our believe growth. and well growth world-class we profitable online ongoing us position model diversification, long-term for Finally, strategy, team scalable

turn be and our guidance. call to any happy who have. our that over remarks, details Steve, to Steve? And Now, more the I provide questions may CFO, answer you we’ll will his on following will financials

Steve Cunningham

and good operating third and quarter our Thank our the provide reviewing year quarter performance then fourth XXXX. the and you, David, financial start for for outlook and everyone. I’ll by full afternoon,

balances, of per quarter the another of We report midpoint again receivables Total the share finance financial adjusted by an to the EBITDA rose are revenues of growth third and adjusted strong credit at driven our company $XXX revenue above expectations, which and total company to substantially in and results and XX%, quarter, during and combined our increased and receivables XXXX third guidance. above And million products pleased million XX% increased to and the second quarter Installment accelerated ago while with in constant growth increased line loan end increased to from XXXX. continue XX% receivables growing of a currency XX% products at in revenue billion the guidance XX% increase $XXX rose originations of and finance sequentially. basis, growth year-over-year to loan are total drive to year exceeding line balances. $X.XX $XXX year-over-year. million from respectively. XX% $XXX range credit the of faster. our XX% originations $XXX loans the year-over-year and in installment our Total we million On of quarter RPA million, a XX%, quarter Revenue earnings

products. the ongoing loan in These in our durations been and and receivables portfolios have discussed average amounts. line receivable longer credit of of past, loan growth has the products we’ve our faster installment generating As higher diversification

line company leading As the recent as and lower generally revenue. able quarter million trend a installment third receivable time. Revenue third we’re to in and of factor $XXX and was in a XX% total XX% percentage year-over-year and a should originations, rose for increase revenue accounted in quarter. XX% XXXX. revenue finance increase expense driven Domestic revenue growth grow of total with and of to sequentially credit which increased of in operating a drive our cost of lower by over year-over-year fewer effort receivables on the less growth of This XX% revenue is Domestically, in basis XX% higher revenue our revenue. in loan to operations the result, a domestic result

prime XX% combined domestic increased loan total receivables year end the XX% installment year-over-year. Continued receivables revenue International balances third XX% our of XX% international loan basis, currency loans in domestic balances increase installment in up XX% constant the XX% the and balances compared near revenue revenue international $XX were were growth basis, by revenue rose constant at rose to installment X% loan a strong XX% a NetCredit, and quarter. balances year comprised the XX% and and International ago year-over-year strong of up demand grew grew revenue year-over-year drove short-term growth finance accounted finance company On for and for total loan of on these driven products Driven million, combined increase loan currency third of Year-over-year the international from quarter. as in International revenue. a loans the originations XX%. On quarter. up year-over-year. basis. XX% a installment international ago in was a by to year-over-year XX% loan international quarter

to gross Turning profit margins.

we’ve to gross margin decline third of quarter XX% a quarter especially our and Company second proportion of periods from like move Our new we was compares be XX% and margin coming customers. We quarter growth in in half in during see in is total recent gross higher pronounced the typically ago seasonal This the growth a profit gross during second as the periods. profit of growth year profit the year can experienced accelerating quarters the XX%, the for which margin of XXXX. into

customers as in at we XXXX. of past, history a we’ve As returning from a David requires of XX% than highlighted higher performance. which higher as provisions is across proportion customers since customers new customers the businesses default total, highest mentioned of Originations successful and payment of all higher with our quarterly originations new the new seen mix loss were upfront rate the

originations. New for year-over-year the quarterly XX% accounted customer originations in change total of company

company originations XXXX XX% increased originations average prior compared This XX.X%, total quarter. Net increase for XX% receivables charge-offs was percentage XX% year portfolio. portfolio customer the proportion the allowance new end to a volume of total of increase credit at performance finance as in third with Similarly, during given far the line for in the gross, expectations, rising and compared ago quarter third new and significant the the the losses same for liability totaled at During of company that period. months customer the was for of Overall, company quarter of the consolidated of in XX.X% for in quarter first finance given percentage our of a year customers in and in loan a expected have to stable receivables, the XX.X%. combined of loan the so to have accounted period was combined the the originations nine our year. the as quarter this from year year-over-year and increase and ago new the XX.X%

consolidated our in and the the which installment highest earnings experienced the increase of line RPA release and of credit see can you supplemental and is As fastest tables, the driven in charge-off are ratio year-over-year proportion the originations. loan net new the volume segment, by in in customer and growth, increases

the increases line of simplified credit provisional increase customer a use segment how in of the expense me expectations. line volume can our with Let credit as significant example in new

our in of for credit were for of about third same nine XX% XXXX. one the originations first compares new the customers. segment This from XXXX to period of the For months line

In in returning than off a on addition, customers average the customers. in times rate at vintages, roughly new segment charge higher X for recent

all and new considers coverage apply new allowance also as finance Net year a XX%. in recurring to So, to for customer expected the third just percentage the line the same And about all portfolio levels customers trends. but increased investment equal, of to if off average it times returning versus segments X% about receivables our see lifetime charge-offs segment portfolio expected the XX.X% roughly is relates segment on you XX%. about higher, average our credit to customers, of X XX.X% then first net and charge-offs ratio quarter performance as dynamics customers charge-offs ago of expect being loan marginal or then rise acquiring of decisions vintages from of the they not customers. we’ll new to more of comprised a would loan, of become in charge the value things combined as and at on this The

sets continue to as very the are customers very well growth pleased in future. this to new attract continued for profitable ability our with We us

be We expect quarter of range gross expected full our year to XX% consolidated within and fourth to the profit XX%. margin

in pace margins loans and the originations, quarter be seasonality. growth falls You mix end margin the fourth profit fourth may to will fourth the quarter year quarter financings the range profit mix And consolidated new portfolio. the margins in of that of typically Ultimately, of gross originations full customers by versus our in low and of recall the was due profit gross the XXXX gross of in in returning and our influenced fact, the XX%. for

in by Our in I was in third quarter, discussed. domestic the quarter the XX% gross margin XXXX. second XX% the to XX% the reasons profit Gross from third declined margin quarter of compared driven previously

Our international quarter UK year gross was revenue XX% third lower higher profit quarter of year short-term The increase from driven profit for the prior in installment UK the products. the ago primarily XX% a margin margin international compared was gross to and in quarter. in cost yields by

We profit to the range to pace expect customers. our the as UK, as in of driven the well year international of and returning the gross our at growth XX% full low-end of by especially of the see, we mix be XX%, for margins new

revenue in of EBITDA. year Marketing to to third XX% this ago $XX XX% Turning in to strong million in compared revenue third to ago us model volumes compared meet flat million quarter revenue million total $XX expenses $XX XXXX. including million The in increase attractive or XX% Total of were third year marketing quarter expense, attractive our quarter, operating customer the our of and of or of revenue operating non-marketing quarter operating Strong maintaining quarter to expenses. compared or quarter while drove demand, of marketing the from the of spend the the for third or quarter scalable continue $XX in leverage to the customer maintaining expenses XX% XX% the quarter allowed to online CPS. while $XX million were to grew XXXX. has of third strong levels

associated with legal, complaints to in measure in spend to quarter the the or revenue of XX% of expenses the of XX% increased a X% the compliance We ongoing million totaled third $XX primarily volume-related remainder EBITDA, likely XXXX, million range revenue $XX or revenue third expenses. million Operations will personnel quarter. of percentage expenses, and quarter non-GAAP the marketing of reflect were UK. higher year. prior General third for compared in of including on third $XX quarter lower were in million XX% administrative the expect mid-teens or expenses and and $XX revenue of technology quarter revenue expenses in $XX in the variable and the year compared the the year-over-year Adjusted XX% of of and in or the million third

margin the XX.X% to adjusted compared the year. prior EBITDA quarter was in third XX.X% Our of

which million quarter, expense $X.X XXXX. to the $X the of Our compensation in compares third was stock-based third quarter in million

between returns. Our tax available have tax typical filing. utilizing tax benefited In from primarily the recognition and and only changes of accelerate in methods deductions deductions elections financial the of these timing on quarter would resulted to the years, taxes reporting tax XXXX to third provision for tax return

recognized required law federal of be tax to provision the permanent line. deductions these because in tax recent However, from change, were one-time the savings

financing our from in share million million be We to loss Net benefited per of loss $X.XX EBITDA, share, debt our in a was normalized million, October $XX.X notes tax. The million the a the unsecured XX% XXXX. a $X.X $X.XX from mid-XX%. X.X% Company’s quarter million of Adjusted on called of of proceeds compares during senior were rate Net diluted the equivalents. during of the income of issuance notes a of the remaining diluted a X.XX%, includes per rising per income $X.X measure, the of drop from the a early continue is effective per to cash which $XX.X retiring cash using or XXXX increased X.XX% income of loss third third $X.XX quarter year. in prior the or with quarter or diluted the and or $X.XX XXXX drop unrestricted a September. third quarter cost share the in Net will and $XX.X extinguishment earnings, the effective our to note that as tax during result diluted share quarter non-GAAP of during $XXX believe net in portion million in

we During cash quarter, totaled $XXX from the and of the flows total quarter million with debt cash And unrestricted third ended and million. million. operations cash equivalents $XXX of the $XXX

the million loan $XXX debt million securitization quarter at end under facilities. combined of the balance outstanding Our installment included $XXX of our

to provide successfully capital financing refinance efficient or growth continue existing [ph] sources We access to and debt. re-letter support of new to markets

seasonal secured October, led line unsecured X.XX% to admitted from market Today, million move to million During announced change our capacity Also credit cost bank increase X%. of $XX as additional our of the borrowing quarter, support transactions. existing used no note $XXX raise we prime to the the in in peaks plus we two with we we borrowing were revolving notes at senior growth. liquidity to retire accessed seven-year $XXX into which notes for X.X%, of million and

rates. from million funds resulting market, new raised First, base million. further quarterly cost cost points XXX our transaction of cost at our of diverse near In cost also costs, total support market $XXX to secured to facility so lowers and And LIBOR near $XXX pricing inaugural this facility new our fixed one interest of a public today, of the term sources lowest financing. of investor finally, we at company we far added the funding our our total ability million security product. of brings a a at NetCredit year, in secured new our $XXX have despite two-year competitive month The plus the facility blended a capacity growth installment prime in multiclass to ever, $XXX expands of X%. NetCredit The increases basis reflects our announced access securitization, prime we million

quarter funds XX a same Our quarter year for third was a from ago. cost X.X%, the of the basis-point decrease

expect of transactions. improve continue funds we benefits as recognize We our cost cost XXXX of the recent to into to

to outlook for quarter to like I’d fourth turn our Now, full-year and the XXXX.

outlook higher a reflects new levels businesses, credit, mix regulatory customers current our sustained stable our pounds impact of could Our volatility of and continued the and each in in from growth our no impact originations, Any significant businesses changes. results. significant British from strong to

to of a typical continue We expect businesses. XXXX, experience quarterly seasonality new as across our during customers the add quarter we fourth to

During share EBITDA earnings be our period, spend peak by provisions and impacted growth losses. gross margin, per marketing could for and higher

noted release, guidance. our of we are quarter fourth earnings raising XXXX As in our

to $X.XX revenue total EBITDA $X.XX share. and between share to per and between $XX and $XXX million. to million, per $XXX between expect between share. per be million be million earnings Diluted $X.XX per and and $XX We $X.XX be Adjusted earnings be to adjusted share

billion between $X.XXX now $X.XX are adjusted and and we to our raising diluted million; between revenue and $X.XX share to $X.XX between be share share; be earnings be and expect to EBITDA to guidance XXXX, and adjusted earnings between per $XXX and $X.XX per share. $X.XXX per total full-year the billion; be again For $XXX million per

with we we that, to But next David to be provide ability as happy guidance our your would for optimistic QX mentioned, questions. detailed We our will early very year. profitability. and about And XXXX on Operator? generate take call, growth and are increasing XXXX

Operator

go comes question JMP Please Scharf David First Securities. ahead. with from Instructions] [Operator

David Scharf

curious, starting afternoon. market to acknowledged, David, that of share with Thanks a as for and last coming very Good where be my overall just lot what side. the are I are have -- there may the this But, It’s I sense just in you couple products I well? similar asked Hi. on maybe of yours taking quarters, but TAM. there they these customers still you’ve any from, know limited refinancing for questions. new mean, probably I’m whether demand other

David Fisher

Yes.

loans, People NetCredit you’re this two with an to five aren’t of are need product or they little term only termish average of shorter taking I products, they the thinking into years, bit. think, when refinancing David, them. average a are the our four loans go short-term These even plus. duration over

about continually they because what are the when market, in the rolled they the new our the market. continually a mortgage It’s apple. to website, a they they to attractive when going you are view nice are opportunity if continually bites in at And marketing, of winning pricing, So, our continuous products like as to are customer, the thing lots you those until opportunities. bite product. the the It’s another not by continue out, we lose share, have have single-digit at a And to of they back the time We apple. where the most long source. it’s XX-year with a our market winning grow market. are efficient in we’ve And we

product, and it’s continual products. to side, -- improvement great those numerous line one-off of installment factors. It’s products combination aren’t the really been installment continuous numerous on So, line have credit things, of shift Those we product it’s of credit.

good You can buy those marketing. with really

of the marketplace business for in over any doing credit. or our any winning are product, those are opportunity the they you well, longer customers kind in take product, of advantage The other other products loan when when have share. when -- you’re to We lots are of term

David Scharf

a where sounds... re-up then that loan, based lender XX% in so a the XX% And maybe installment didn’t of down get are are are to they may didn’t know what your of but at, and getting situations be any I and pay store nature, by share from. that you’re short-term was maybe it lot lenders Well, store taking of if in obviously I based customers coming online, these

David Fisher

mean, to the storefront storefront I guys. it’s No, that. not fund Yes. historically, forever, their continue customers lenders, will

anywhere kids their we’re [ph] them. minute. customers. day able increasingly much approved I paperwork being place, do think, logging on of little from the we’re with phone Instead, to having online to time, and bringing lender Enova, and efficiency down same go five just storefront as in funding toes, the seeing what as their And not with any schlep along with just rather is, apply to our any customers

the storefront of of benefits the rapid going quickly terms some of of speed rise in So, the day with funding. same lenders are historic away

David Scharf

And upfront. a past, looks requires being obviously that side, beyond much been recurring with of go the origination volumes credit to XX% new more of theme this to in the Probably you approached wanted quarter. whether new asked it’s to that the turning customers. customers pool It the provisioning within you like attributable percentage I it

terms thinking overall the sense. of fluid a such peak? the I It’s loss get of target moving portfolio to trying when be percentage and mean, about terms should might inflection rates borrowers a trying that of repeat of in we Just roadmap consists an this point modeling, be we should of go loss, thinking a losses, that or if little of more to for of a get quarterly XX%-ish as in should sort blended expected peak range beyond a just it into that?

David Fisher

can. We as right are I from see my in we now, to we’re soon. very extremely don’t products mentioned what think But prepared still that resonate our see wrong. remarks, proven to things the customer tried demand. I strong could The seeing continuing new be customer anytime market. the I to really well strong. abating emphasize We think volume volume, there’s take two us on good in demand And, we are that encouraging new remains the to continue that as call, we all

credits we’re seeing we operating portfolio we of to profitability, overall -- to -- and and still performance first able are even The of stable strong new that high the are with those kind able customer then, vintages. the structure. across our generate of level is, And because across growth, efficient

ahead strong take new those all we’re challenging that building the without and levels So, of we to having business makes profitability get volume our a at factors today. invest because us absolutely customer to can combination willing good are the

a allows nice into So, really in demand. we’re we that to think lean that spot strong us

David Scharf

quick get last in One one and I’ll back queue.

restrained. for small business public looking there of where to cautious or in couple wondering, not lending a in wind a is similar you it’s to the particular quarters that maybe frothy. On there viewpoint it’s and -- about perhaps business that been whether it that small of out comp about maybe few things relative number sort I provided you business that actually ago, quite product, reaccelerate years drive decision is And contrasting a you’re the big want know, there online as being are down? commentary David, I’m

David Fisher

it got profitable require the is good It’s kind of is business a focus. amount that separate. doesn’t and of Look, team huge today

tread been So, bit focus I we’re here. side and mind, their the But, years water in cutting has about comments it’s origination able retrenching last on two expenses. -- over OnDeck. to a the keep little hear

to still of amount make -- size origination of kind even able So, it’s with money. at significant are of they unclear that

So, the cautious that business on remaining rest a keeps us the being not of with actually drain our resources.

long-term, be to for long-term. other we’ve where we in forever. won’t patient where willing believe We’re now businesses But didn’t believe market, in unlike market the the patient; we be we exited,

we’re will we market patient. see So, next we still And the how two. evolves year over the or

Operator

John next ahead. comes Rowan go with from Janney. Please question The

John Rowan

customers talk to stable, is you the about were existing just mix are toward interpret an charge-off new I higher. causing your overall to about the year-over-year. rate go wanted understand, higher and credit, between new that comments? is it the stable accurate charge-off credit. but Obviously, and stable charge-offs Is talking in says customers shift statement customers When that rates to how just release, we’re press the

David Fisher

that on how That’s example see right. it credit And the exactly -- detailed effect. line portfolio, of how how works you Steve gave of that can really exactly

that’s So, correct.

stable customers credit charge-off very customers, rates. you If isolated of across kind see for vintages you and performance them separated existing new with would

Steve Cunningham

at that, back think we’re -- really close through add, how pretty coverage good can John, covering I stability. if see go you is and John, doing expectations I allowance you you think XX which losses, look next with from the to quarter-to-quarter going and we’re if with days another which time, of back that I of example our go was is

John Rowan

was What new I if that you get could gave about it. down, Okay. you repeat didn’t customers? data the it

Steve Cunningham

Sure.

So, for the quarter, it was XX%.

for is XXXX piece the new it XXXX year-to-date XX% versus customer I for The other the proportion originations, gave which year-to-date company XX%. was consolidated and was

John Rowan

about Correct? customer origination talking originations. as We’re of a new total percent

Steve Cunningham

That’s correct.

John Rowan

question on regulations. one And then,

to opened guys question. You the kind of the door

on guys look we’re in the is are And addressing customers what to like. risk product about in handicap into the will end as to based you you you know going how limbo how regulations any that So, Right? going assess if far value change talk way value what their signing kind them. to Obviously lifetime as customer a the And always necessarily new don’t is going there of do CFPB? new a XXXX, you the when lifetime address we the of from as be

David Fisher

It’s account rule some a proposed CFPB’s not now quite is now, final now quite proposed time been time rule been -- rule into to over X.X has maybe. now. the for rule We’ve the final the out been years for which some for taking

new likely become it had the we’ve final -- like. -- for rule the new that’s the rule. which so, as final expected rule current rule sounds so don’t won’t our to But we will like to compared We the long final that And more new look current to less expect calculus will will that -- know us what operate time. the it proposed lifetime effective, customers the certainly give opposed of increase a than final become only area to won’t that value

John Rowan

to are assessing right? what be the on basis based final just So, on already rule a you prior was, clear, lifetime customers

David Fisher

Yes. We that in are to our account certainly taking calculation.

John Rowan

Okay.

they new, lifetime rule, get you’re better just we And your a final assigning aggressive new I more will of if kind they rules, if growth, be, comments whatever if not better. under customer even So, frankly, can are lifetime may new, I’m those see better values the interpreting look We mean, new values restrictive? new here.

David Fisher

rule It’s certainly possible, says. that dependent what but new highly on final obviously

Operator

Hecht Please John with comes Jefferies. go next The ahead. question from

John Hecht

the funds, capacity for in we about is with first QX cost lower as you’ve sense I sounds kind question your of of added terms -- lot like just a have of us mean, run quick expense, Can interest refied liquidity, rate you’ve it but of think give you’ve should how I The obviously, you that? modeling. well. a

Steve Cunningham

cost funds. would you quarter gave I the -- third of I John, Yes.

the the as as the that mentioned take in used new much those to can of the you think carrying remaining cash because and we’re we non-tendered a now well. that call transactions quarter of probably end not couple to as start I I the at notes were we on that we factor released XXXXs. today

the were carrying think ready-to-go talked at on our amounts cash we’ve increasingly the that on balance sheet about. focus levels I So, standby and reasonable keeping of

without So, being we spike should expect to all indexes underlying see equal that funds, of from a continue where… the to in big creep down to things cost

John Hecht

too of go funds, of kind liquidity. capacity to going you’ve Yes. growth clearly, Cost for some or added just of I’m wondering threshold that lower, it’s

I’m so, rate sense amount dollar And should next for wondering trend what have do the a you interest for of quarter?

Steve Cunningham

It’s on John. all going growth, to depend the

David Fisher

and added get we capacity debt are upfront are you as taking originations filled upfront, the of taking will interest on upfront. debt Most that opposed you cash with is paying

Steve Cunningham

note Yes. up a where bit. way our which when we kind X.X is prefunded, David is as is issue note. overall we standby. little the The the new But balance to senior mentioned, a And we blended. always do now coupon We were of down versus it

need pull and in So, you standby them most financings now mode, them… you are as of our

John Hecht

Okay.

So, much more efficient.

Okay, got I appreciate it. that.

to or and undergone line don’t range used still it’s something of forth. And And also component more maturing versus in some charge-offs expect mix huge of there? a growth. fluctuation I’m going in so Sorry, understand reflective of we the component now, fluctuations of customers Okay. really a migration and customers wondering, credit the there just of of the seasonal should is of the were that rapid say mix or you we’re the new charge-offs, products, is then I then, new In else?

David Fisher

strong. credit I mean, the in the rate line of is of growth very still product

because products, to it XXX% three be years new because Now, it’s becoming faster a ago customers. some it tends just existing that than other a proportion -- just newer, is becoming is product more almost as of the

that long. the But, new in very, very product very for been is in strong of customer growth, have that. rate growth We

So, is it’s strong It’s for higher it; great, customers charge-offs our a high. great really are standpoint, a which time love very, some very going great, still to come, have which thing. from to levels retention is product;

good have profitability in that product. We

product as are. We fast excited are we as be extremely growing that to

John Hecht

you’re tell Okay, able what you’re have CECL working to able at you to or of great. point something any kind And then, still to through? Steve, final about thought question, us been this give is

Steve Cunningham

little the go, And It’s bit our that Yes. XXXX, relates it’s will go we’re something more talk as have early. it or we as outlook. a looking into a to impacts to obviously, definitely that to but We we still performance at. on adjustments little about

from maybe really if it with that time, we of stabilize one to tuned. stay bit, It’s recall, a sheet you compared there one adjustment. time today. quarterly then actually forward, our going So, things hopefully, sort And approach balance will implementation of just to be have an

Operator

remarks. like turn our to concludes session. any conference David over question-and-answer back I Fisher This would to the closing for

David Fisher

catching Right. rest year. you Thanks on the a call our lot. look the up good us today. your a to in everybody of day. to for give XXXX joining early on Have We’ll forward wrap-up Thanks

Operator

has The presentation. concluded. today’s Thank for you conference now attending

now may disconnect. You

Enova International (ENVA) 25 Oct 182018 Q3 Earnings call transcript