ENVA - Earnings call transcript Q1 2019 | Enova International, Inc.

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Operator

Good day, and welcome to the Enova International First Quarter 2019 Earnings Conference Call and Webcast. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Monica Gould, Investor Relations. Please go ahead.

Monica Gould

Thank you, Shantel, and good afternoon everyone. the afternoon of after for XX, ended results this XXXX, the released first XXXX quarter March Enova market close.

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

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

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

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

David Fisher

strategy. of will quarter. CFO, today. first our results Thanks effective everyone. our discuss driven update by joining that, also guidance. financial enabled to demand very results that first overview and call over exceeded our Cunningham, and our by we strong start the credit afternoon a our detail. I'll who deliver and Good guidance Steve in with marketing. giving performance to you the Top quarter, year then a kicked on good brief After will quarter, turn more I'm going I in line the This with efficient experienced top call seasonality. We to our and us were the line the typical In end consistent solid QX with profitability off guidance of for

EBITDA credit execution consistent EPS year as in year online These I XX% In million driven First results and businesses. quarter well last XX% by to record the mentioned, strong while $XX over model. adjusted leverage as over million, $X.XX. increase an increased of our first quarter solid quality revenue was $XXX reflect adjusted primarily U.S. our increased operating a in our growth last XX% just inherent continued of

During new the total year. quarter, represented in XX% last customers QX originations with loans of of to line

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

half back customer the the low quarter be we U.S. first with XXXX, is expected down by of typical new the driven a from tax saw was mix slightly XXs While in season the this return in to seasonality

our credit saw improvements we our customers expectations. noticeable excellent with in performance quality from charge-offs with credit line also and mentioned, I our in portfolio As across

new products. is of While portfolio result installment mix credit the largely our mix than the over well as net last line several higher charge-offs this shift customers and quarters, of of were high ongoing to as last year,

as in due our XXXX excellent to not year-over-year. declined into up total again first largely companywide we quality ongoing we quarter and sequential our data credit sequentially. We are originations experience could the be confident sophisticated X% tax that across a the down products. last originations our XX This AR of seen decline us seasonality effectively comp products. installer typically tough all experience, the years XX% The which seasonality in over as as originations of analytics was XX% expected LOC resulted did only Total well and diversification much typical in our than maintain in allows combined year-over-year X% reflect diversification with year. This higher see in which and in QX was to

and Steve EPS the still strong growth. saw moderation expectations of we while adjusted in discuss resulted more growth in QX delivering consistent above As detail, revenue will in our EBITDA

entered have this be originations second expected, year typical as quarter. will we've the more As accelerated the first quarter some in seasonality

calls We changes team on to in to is our our adjusting cutoffs. be able sophisticated by and leverage to experience growth challenging models can managing respond spend rapidly demand how prior discussed have marketing but credit our analytics

business past strong our managing to performance the on businesses and attributable focus U.S. brands, running have six Brazil, business, will is our our on We our prime our ability Our business. results Decisions, this consumer growth growth small near U.K. installment and as-a-Service our our these Enova financing, profitability approach our balanced business trade-offs to loan forward. in going demonstrated namely to offering, continue believe subprime versus we with business focus our U.S. U.S. Analytics

the quarter products, in large of X% of consisting increased generated profitability. remains growth and Our year-over-year single credit products. only diversified consumer and products, of subprime strong installment U.S. portfolio business XX% line well pay XX% XX% another Originations

believe given our increased year-over-year. We XX% addressable significant and single for U.S. share. growth there's to loan balances the year-over-year NetCredit a market increased over million in continue to X% in large opportunity market $XXX digit originations future

see total represented products year. compared NetCredit Our XX% large last QX end still of our for QX has avenues very of in near the a yet many business become growth we U.S. prime prime in to near portfolio market. of future XX% at the

decreased repositioning on driven Our primarily business our purposeful currency the year-over-year XX% accounting installment on U.K. U.K. to first revenue quarter by of basis focus offerings.

of the resonating is product consumers well revenue U.K. our by we the On and a market lender durations XX% on Stride the the XX% a are On installment and in wider future we well and in Stride leading with believe relaunched loan offers of in there. variety U.K. increased During subprime quarter APRs for growth. positioned range Installment basis. Financial, constant currency share Overall, remain year-over-year a in we U.K.

business. small to Turning

book business this financing in QX. increased during business call, expanding XX% us in space. As in quarters resulting seen we've at QX QX. The our we XX% attractive assertive more loan of our in be in the small discussed products earnings recent was business leading end representing in good moderately our a for unit strengthening small result of total economics year-over-year products of at our Originations demand to small growth

XX% on last Going to on focused currency to opportunities. forward will continue this year. growth quarter to be market see first attractive we due basis in a constant originations QX we comparison declined maintaining the Brazil of to difficult strong a year-over-year In a extent

slowed businesses class In deal population of with certain to is implemented Brazil stable we and while we but banks see practices addition, regulatory reconfigured there. new originations intentionally a with our Brazil practices debiting we huge growing operational environment. middle a in large there one continue smaller to by the opportunity

as-a-Service offering and business Enova a product continues to their develop outreach customers. potential Lastly real-time to Decisions, Analytics

us the sophisticated in for remains other this to and still opportunities use analytics there While their data stages, help early businesses believe our are decision. business to we with

compliance Federal to on In March, small dollar for XXXX a Judge ordered update. want brief I up, wrap provide stay a August I our the date rule. Before regulatory

and Right you rule. know, covers is provisions repay now provision the to the of earlier that payment whether in it The year Judge revisiting CFPB also be this unclear payment by it that long As will the also the revisited the CFPB. the ability remains how remain announced will rule. portions stay stay

At product our us platform, experience to of regulatory extensive ability As for of repay is and changes well the bills the once to flexibility considering California regardless offering we legislature succeed with the with the rulemaking the state a consumer dealing believe positions the the again provision, and level, number of credit. navigating outcome online litigation. diversified

help based supported consistently have on good facts that consumers. We regulations

oriented that without in set example, which the protections Senate Committee support recaps. restrictive the passed For we a Banking of propose California consumer bill

stay takes open new product will a as Separately, summer engage passed California. installment a these new the bills through next start up year. Oklahoma for describe in just Overall, detail. more in and we're outlook off opportunity for when Steve lending nice raising will a strong which to are effect team it Our our progress XXXX there the will in us bill year as

we be streams, on guidance happy will our turn talented you us With have of As the our growth technology, call up may and to over demonstrated, world-class advanced his remarks, answer will following competitive and effectively the analytics Steve? employees we very set and strong and we’ll more beyond. remainder questions revenue to to provide any I'll platform and have. financial well details the We business for that profitability. XXXX to Steve balance position diversified who continue believe that, manage

Steve Cunningham

Thank and quarter afternoon quarter second you, operating our the then the year by XXXX good I'll XXXX. everyone. reviewing first for financial of the start for our performance and provide and outlook David and full

earnings pleased of results adjusted which to quarter guidance and in originations, reflect solid bottom-line contribute guidance. the and range our middle declines exceeding per with our profitability. we mentioned, As results and of first receivables report adjusted financial to David are another EBITDA with seasonality Financial in sequential quarter revenue share typical our revenue strong

accounted from and growth million the all adjusted Total a continue which finance line receivables quarterly by total basis income, quarterly first driven driven the our Installment our XX% year-over-year XX%. is to quarter of basis our to at total driven drive our of and finance to company. in net diversification increased XX% quarter for of range of Installment to in purchase of to guidance the portfolio million grew XXXX. midpoint the was which credit earnings ago agreements combined was in headwinds. a Domestic operations our and again of X% to balances. revenue seasonality consumer customer’s of a Total increased line credit businesses per EBITDA $XXX increased adjusted Domestic and increase business sequentially above in XX% typical quarter in compared million and On currency are line these the year-over-year revenue domestic loans, of the our million. quarter constant originations originations of products loan records revenue year-over-year by credit RPA sequential growth year for and the fact $XXX originations total quarter products. balances comprise year-over-year by $XXX million business. for total Enova products, increase primarily originations as loans loan in first revenue to currency preference XXXX. year-over-year XX% U.S. nearly as XX% XX% now receivables, in in this declined revenue for first was installment revenue receivables public revenue and end Revenue international credit quarter of growth share revenue company of XX% this a our revenue and XXXX of In domestic a and increased million $XXX continued XX% to and line $XXX increased XX% originations installment rose total lower small decreased a on demonstrating credit $XXX first Total XX% XX% products and X% revenue. our increase and year-over-year decline of our in loan line

revenue decreased international balances to ago loan international balances receivables year-over-year. international demand loan to for of total as revenue our business of constant year-over-year International aforementioned year XX% currency revenue XXXX. On basis basis and decreased products to year-over-year. combined repositioning decreased XX% while a domestic balances finance currency year-over-year. these for constant on primarily strong X% drove of a International the Total basis. from year balances headwinds. $XX decreased International our a UK revenue On million currency decreased increased well installment first as loan XX% due a the accounted quarter X% compared of in ago. year-over-year international quarter XX% the loans XX% X% loan Continued short-term

profit for our the increased in our in of range of fourth in guidance expectations. new increase the at the our first profit our previous losses quarter. first quarters our gross continually stable end was expected from At gross new XX.X% guidance improved margins, XX% first company see first high-end the businesses a quarter year percentage new of equal receivables loan solid at upper a was quarter typically which the the experienced XX.X%.The and to across customers quarters. loan of of as margin Overall originations were gross year the rising seasoning the financing to the of given proportion as of loan increase lower end quarter of the of receivables profit gross in from profit ago was in of quarter David allowance we’re the continues quarter monitor Turning reflects generating and near product receivables economics allowance receivable as year This quarter for of to during reflected is of with the and the advantages the quarter originated we Net year seasonality ratio XX.X% during first and proportion the customers our for our consolidated continued quality seasonally in gross to portfolio growth. was customer average originations. all finance from is compares of the combined we the percentage liability of past quarter expectation the the This credit gross the total percentage Typical profit performance of of of we’ve the the in liability past our and mentioned, from Total XXXX. for XX.X%.As end in gross margin in ago XX% portfolio compared the over margin ago losses recent We company remain the several as the quarter returns in our to range XX%. as expectations portfolio the prior with across line a the reflect margin the charge-offs company of the on financing XX% portfolio. our and quarter. of the year credit marginal and combined to pleased XX.X% and total the and described

our margin including the profit of consolidated of mix to will range continue pace margin XX% profit of gross the influenced in characteristics growth customers and in portfolio. the For versus and the XXXX XX%.Quarter-to-quarter originations by to seasonality the and we loans in be gross mix new of expect our originations, be to growth returning and financings

seasoning the from the and from gross gross year domestic in was the the the quarter. installment earlier. by in quarter that ago XX% XX% international to compared gross on first year the business profit the recent growth The XX% in in gross focus customer change Our purposeful of new U.K. originations XX% driven profit margin in quarters profit fourth XXXX margin customers quarter and the new profit David in primarily compared for offerings recent the by first of quarter repositioning decrease of of prior international was to quarter margin first installment international in our quarter was the in reflects XXXX.Our loans, mentioned of XX% margin to which

our We lower customers margin in profit the expect slightly to new we installment international XXXX in grow our international and XX%, gross to be of than in previous guidance as XX% our attract range businesses.

international the characteristics mix loans in profit model of customers the scalable the influenced contributed in operating generate customer online profit growth originations, meeting of including to margin will the record and Efficient and versus of our quarterly and quarter-to-quarter, ability new reminder, levels in originations the demand. pace leverage portfolio. or of by returning to financings seasonality marketing a be in in mix As growth gross our

including million revenue or expenses XX% million of the marketing operating revenue total or in compared XXXX. $XX of XXXX, of quarter of quarter first the During were first $XX XX%

marketing XX% of XXXX. in $XX quarter We in compared X% declined or of revenue the Marketing continue million year-over-year $XX the to efficiency to million expenses quarter in first revenue spend. of see XX% our to or first

variable from in related $XX the in in volume of to our primarily been with the revenue percentage or highest expect complaints XX% XX% quarter $XX of compared the marketing first the administrative ongoing totaled million in expenses quarter higher General to $XX spend were first during XXXX of revenue growth expenses -related in the of including half teens expenses $XX low-to-mid in record and the million revenue associated revenue primarily of million technology the in range first second reached and million EBITDA XX% first revenue expenses or in a or Operations of XXXX XX% seasonal personnel from periods prior quarter. of were higher $XX XX% compared of in and with increased We or and year higher the year. will U.K. the of expenses. the measure the million and first were quarter quarterly and non-GAAP quarter Adjusted year-over-year

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

million quarter, $X.X expense XXXX.Our per normalized compared million net in million first our diluted quarter $XX.X diluted $X.XX measure tax expect quarter XXXX. per range. or in tax to in a of a non-GAAP million income compares income first in of XX.X% per a of be XX.X% quarter quarter which effective $XX share the and or quarter compensation of $X.XX or the or Net from share stock-based million quarter effective mid-XX% prior from the year. was XXXX.We in $XX.X the first rate to share of million the earnings diluted $X.X $XX.X the the $X.XX increased $X.XX was rate first share to in the first per to increased Our in the to ongoing first rate first diluted Adjusted in

liquidity operating position our continue to strong financing cash maintain We in facilities. meaningful capacity and flows solid with a available

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

securitization $XXX $XXX our million Our outstanding million end and at the includes revolver. million combined debt under corporate of $XX quarter amount our loan installment no outstanding balance facilities the under of

for our from seasonality see quarter. the low to we and our fourth would seasonal full-year seasonality, originations through quarter and expect move like the XXXX.We I typical As year, outlook peak point to increased in second demand first during XXXX quarter Now turn the to typically quarterly the during

we adjusted and revenues EPS than as seasonality As sequential into move faster growth provisioning the that and faster scale rise lowers typically generate and our periods outpaces benefits. adjusted EBITDA margins related growth gross

of mix and in no regulatory reflects line growth businesses relative current changes credit faster installment originations, our British significant and from the stable steady the volatility growth, to credit, Our in customers pound and also impact products, growth levels. an outlook of significant no new expectation of from continued in

expect higher performance. revenue are to and the to adjusted quarter between billion to between XXXX, $XXX to billion year, diluted total of adjusted $XX revising on total share As between our be continue EBITDA be now between earnings expect we earnings million profitability per earnings share to noted in per $X.XX million $X.XX full $XXX based EBITDA share. to adjusted $XX be earnings share be $X.XX $XXX $X.XX and million and to $X.XX release, to and adjusted and and per second be our per $XXX expect share, Diluted $X.XX between first we per $X.XX million share per be per and to $X.XX your between and Full in million be share, and quarter $X.XX revenue We be per $X.XX earnings share. between and million. and between

questions, And profitability As to we and would XXXX. operator? and for of remained generate remainder David your happy are about to mentioned, with we take that increased optimistic growth be our very well-positioned the ability

Operator

will first go from John ahead. question coming [Operator Instructions] from Jefferies. Hecht be Your Please

John Hecht

strategic it's trends the that growth I had clear credit – to loans. installment on demand that wondering, some growth are the changes the seeing to of been your focus tied snap tied terms really are geographic line of versus there’s Both the or origination in but in of good just higher marketing pockets? consumer I'm different or year-over-year just that marketing, want factors to line you those credit.

David Fisher

passing also and short-term products it’s of there I of – several didn't new really credit for prior as years have big oppose products. from States over have laws, up and that have last you're us opening single as credit, is It’s products that expanding to the dollar line a So seeing pay line counts products. that subprime in products – have it's of availability short-term line shift think, States as what especially combination to a in do of business the do credit our credit line of amounts, well didn’t out

amounts those seen the you've impact. those loan actually because in sizes, relatively loans biggest larger that businesses over our the of In credit or the which installment one is somewhat year you'll certainly growing fastest So because are have that of in muted counts terms see dollar small last net as two. of the terms

John Hecht

year say And like loan talk line with you – maybe can the what's to credit average balance versus respect of for happened? about last what’s of installment

Steve Cunningham

really over meaningfully changed past Our average balances had the year, a John.

John Hecht

its mix. Okay, so

international course Okay. factors you margin, impacted few a move How year expect on there and do the fast or the U.K. to you relative a it as the was something about And about just migration one then that guess quarter last I the longer-term? talked the talked to is is over recover gross in you year. this year things recovery then you of that and

David Fisher

booking, for quarters as up, a losses installment seems Long-term definitely know Well, wide our does a shift the It ramps seem meaningfully. longer-term. till installment big of be loan so new a thing product. really in to pretty very lot range like a slows the Customers obviously normalizes, a as growth to from that product the its wide flexibility product great well APRs those you resonating range that'll U.K. really upfront this as it a before. and it’s have of any new sizes, we talked and many till of take from the short-term really product us to to It's pretty customers

So and drop led to in margins than there. the adoption, what stronger the we strong expected we’ve that's gross seen that

John Hecht

channels and any channels? efficacy sense expenses deploying model in then response changes including us different our and rates you're there, of different a of better leveraging give just these the seeing how to various And for rates much budget, maybe marketing kind marketing getting you to relative you're can

David Fisher

seasonality decent in is saw what We saw we just we anomaly us. saw – past. definitely was that’s It’s what Last typical in an again, rates which QX. more surprised the typically QX and year that’s

way year back think we surprised more. getting pulled We of little I back so in back that. the kind a just in it to marketing bit This everybody, QX. pull

As we’ve – would QX,we’ve strengthening season entered leaning the as definitely clearly a marketing. expected post seen demand, demand tax and we're be return into

shifts effect much on our overnight of say more reliance terms the have I growth seeing of and in the providers controlling think They're over last are three fairly last couple years destiny sort the the these of and think has to and success new been But I marketing. TV years, greatly side in lead leaning on direct-mail of they on but actually not big attracting reducing we’re the are longer-term now five in it's good had side. the dramatic. in minor and terms of not over our – They customers. mix TV

Operator

ahead Your comes please. Go Instructions] question from [Operator next JMP Scharf, David Securities.

David Scharf

wondering, want your spend. follow-up earnings demonstrated discussion on the managing of has the on and can't is that am in to David but marketing. particularly kind you a at know know on of I percentage you're based in of think sense at for how just guidance give of revenue and quarterly kind a It's maybe to lot spend have guys spend the that anything broader given pulling is we pretty should for of terms this scale model the of no that guidance become I or I by is as awful actually about us sustain you range marketing an to throttling clear you've floor now, just on flexibility back to quarter-to-quarter. growth? prior $XX.X think year from million marketing that a that the below of questions

David Fisher

profitability try We marketing We where in thresholds and on guidance and as given our pull on exceeding out. our marketing QX levels higher we're back just make to profitability. tried of not season. our just through try not we to return - return above achieve lower to them the operations. generated played to because hitting a of normal sure That’s demand, the marketing range We be do tax with

So ever purposely as not customer unlike QX seen. new levels we've where we percentages lowest did do QX, a marketing - still we that of in extremely of percentage growth, the back, of of marketing but saw pulled our strong revenue because

marketing so expect of a the was I absolute future would very, or either revenue And percentage get very dollars -very, that more a and in number. not number. low to much as That very of

the that the Right the the back year again last having ranges, given for we've now dollars kind and marketing season as the of a up are We spending in some it as to of growth revenue well - we mid-to-upper paid middle in of return season be very and and deploy would comfortable why terms In percentage kind opportunities teens that tax of off of good of marketing if to we in ended quarter. pullback of some year. a marketing dollars kind our quarter we and found so in moved guidance like that opportunity throughout deploy the a of accelerate year back we seeing that's more into year kind the the We can. hasn't lot. last quarter to of would year, a the changed we we think marketing can for exited for the

growth that’s the for So great future.

thinking And crazy of a the but business, think be some where the going the We’re dollar the you're not of that's of good forward so opportunities - we find like quarter would spend good expect generating we QX, we returns quarters in we’re growth teens, in to if go economics not - about about below every spend in to spending any back quarters. certainly right year range, we and happy at the for really we unit three attractive know, in marketing the in will - in upper can we you any if things happen. more kind were

David Scharf

think gross David, really percentage range. want XX later have the understood clarification the hand Because to overnight margins. on the thought and XX% of the little back those sure of make full-year course forward. I Yet just was going one how because in level get quarter that I you modestly Okay. Easy international to said trimmed to question, just couple the the comment XX of heard I reconcile the but that over guidance and first may to know going trend point still those year? off in a that I'm to thought I kind margins of you the are I about helpful That's on commentary points

Steve Cunningham

Yes David, this is Steve.

so the over I That's is really the about be purposeful it you'll of these our expect looking see the talked again but was to the to in I on growing talking we’re overnight. fast there going and course some depend but year what making David won’t as my think those also of how it's deviations some future. of we’re new returning that we’re from about to transitions return commentary, see repositionings, as versus

points, meaningful our brought best again, So think you it. view five normalization it going see should we was but based that's to best forward fairly today. a down some It to so probably the about way expect on reduction,

David Scharf

$X.XX, million but you guidance for sort of trying is take it it $X the was Steve, end, I your an mechanical the in could of like easier went in and low roughly pre-tax by guidance taken below the lastly like about sort to assumptions it it's year looks EBITDA a wondering, sort operating there’s line of of it high $XX calculation which my by up was reconcile? if earnings just million but I million of question for $XX And by offline reduction sort like up more then just book the yet

Steve Cunningham

the against EBITDA, I but has below financing a financing slightly big think lower our tax sheet there's the steady to we we that. balance did been levers of you than needed expect into Really year, tax, view so lower and so going size pretty two are have level have - sheet balance did did lower we maybe

our below the instruments across line. well. mix, So have that's really And the leverage you some mix some also shifts EBITDA see financing we as

Operator

for Fisher back closing any to turn conference Okay. [Operator Instructions] now you. I would remarks. David the like Thank to

David Fisher

for Have everybody We'll Thanks today. a good chatting forward call next our Great. to again quarter. evening. joining look

Enova International (ENVA) 25 Apr 192019 Q1 Earnings call transcript