ELVT - Earnings call transcript Q4 2018

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Operator

Greetings, and welcome to the Elevate Fourth Quarter and Full-Year 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to you, Al Comeaux, Chief Communications Officer. begin. please you, Thank

Al Comeaux

full-year-XXXX thanks XXXX us today, earnings release quarter a and release of accompanied our available is on quarter we Elevate's Slide Please now a available our webcast on and call X press being and fourth which to our presentation. full-year at website. conference website is slide of with A Today's for presentation, elevate.com/investors. is afternoon, copy on the joining fourth issued results. and Good call. by also that is Earlier refer

release answers expressed the actual subject cause and Reform all implied statements. forward-looking or our any filings to and our Private described of that include, remarks note obligation with Act. will of Litigation those could press recent have that and results these Our statements. make by as others, include such only to this XX-Q to forward-looking within Securities matters we issued risks are we that risks Form call, These meaning report be statements forward-looking disclaim other These materially the among statements forward-looking we of from quarterly the different forward-looking speak today, date statements Please on SEC. update in most the

our financial will During call make we non-GAAP measures. today, reference to

our the reconciliation special issued expenses. to measures our to not provide For release furnished do our and today non-GAAP of of inability website historical refer to certain charges non-GAAP to have and at forward-looking financial reconciliation presentation, been to a slide are of We complete our and GAAP financial press a project available due elevate.com/investors. which please both SEC measures, on

to as Lutes. our call as Ken. the CEO, CFO, over turn today I Chris on our and the Rees; Chairman call now me Joining are Ken will well

Kenneth Rees

improvement of on XXXX X, growth Al, in a of of XX%. and XX% growth EBITDA year press all call full-year saw as release, our you XXXX. our was Slide We we over and you, revenue today. on significant joining nearly thank for adjusted us Starting detailed and Thank

by XXXX points long-term path over Our adjusted XX%. nearly to EBITDA and margin expanded remain full-year XX% XXX on achieve our target we basis of to

end million adjusted some We also net execution originally to misses than despite our at slower second than $XX.X doubled and XXXX income a anticipated, in touch we'll XXXX second. a more half on which

financial we product in important In coverage performance, improved diversification. addition milestones and to achieved channel

the originated strong performance the FinWise partnership growth Our FinWise costs the $XX flagship than bank Bank $XXX. with early the with state customer of and in RISE. the of loans million roughly less particularly acquisition been has and The quarter doubled during coverage product portfolio fourth

few rapidly a options ability credit discuss I'll just to were in of markets a the months many gives it our advantages expand matter demonstrates later, As technology platform of our limited reach new this do and us. consumer and

also important We credit results of our feel diversification potential strong the long-term continue early an and this line the and expansion product represents indicate our We of to Today the card product about Card. be demand. optimistic product,

and response activation of RISE combination active inactive cross-sell of rate and campaigns high holders. email across first remarkably X% Our have a account

other need excellent we've progress measured credit as very out. out in be than rolling are previously, and us of mail. a despite we'll And we made However, new performance, direct space credit for said the it further cards building for channels tuning

channels. these up XX% XXXX. channels future up in us of XX% customer XXXX, sets from through believe We expanded mail for non-direct growth for accounted acquisition Our strong in this

we're turning challenges Page our for Now our guidance performance behind financial caused to addressing to that the X, fall XXXX.

improvements. margin key slowed October expected our in earnings As three XXXX factors we call, discussed

QX anticipated and XXXX were This growth First, profitability have we new promising. slowed impacted QX XXXX acquisition and been These scores on appear more a scores that reviewed strategies developed to were and performance focus delayed. now new anticipated and to very and these than improvements. strategies result customer underwritings, improve as

Second, to customer a partner key lowers will although growth Improvements enhanced to for too in to support we [ph] expansion retrospect through attracted strategy the the grew channels latter capabilities It company, the underwriting is half new in our in channel in acquired are we as the are for of continue partners had view that channel particular that are strategic channels. profitability year. the and other aggressively profitable, they by underway non-direct advantages improved the channels. these but channels without support note and margins through expected specific important mail channel

that report I'm significantly. to UK Lastly, down results, financial has pleased impacted that item the Complaints, XXXX come other

at We are XXXX. seeing in than levels volumes lower back QX peak Complaint their now

However, of ongoing through uncertainty issue the keeping Sunny balances be flat least regulatory first half XXXX. the we'll around our the product of given this at UK

delivering net a As line lower top reflects we've historically result growth as focus you'll year, that we the improvement of strong in income XXXX for the generated Chris factors, notice guidance on I'll these detailed and growth. but than strategies for and our financial of review turn for support now, margin a improvement long-term to call scores the performance. generation of underwriting our And next over to

Christopher Lutes

XXXX fiscal Thanks results. good everybody. Ken to afternoon QX year discuss I'm going and and both XXXX

issued with highlighted release also debt on in facilities Park Capital elaborate we the I'll a that today. separate Additionally, press Victory amended

principal but QX loans X.X%. Looking X.X% top than $XXX was the $XX.X for revenue our which fourth or basis the low the XXXX, were of quarter. end of million, million the revenue Slide a from up half X, $XXX.X slightly our XXXX guidance On totaled less quarter million combined of receivable up at year-over-year

new loans XXXX acquisition just except growth originated all decided customer products RISE FinWise resulting QX loan across for slow discussed, three in to we and Ken As Bank. by

flat uncertainty XXXX three last UK balances the the Complaints. Looking at to of fourth quarter regarding relatively UK discussed our each of during products, Sunny loan were due we kept quarter first

quality balances prior were the and of quarter at sequential quarter modestly loan XXXX experienced both fourth during XX, versus from the August peak XXXX. While balances of end our new XXXX strong our Sunny to up there its growth the rate. we the regarding XX% UK complaint We year-end slight until December regulatory a complaint very about loan Revenues is loans partnership in more loan versus in Bank cautious in XXXX than default slightly RISE were process. primarily remain prior and million are credit down rates. FinWise our look originating from from from volume better good drop continue $XXX,XXX targeted Sunny QX about loans mail UK first Initial dropped to materially loans UK increasing FX average performing approximately $XX due direct one XXXX quarter, QX in XXXX in the drop. certainty the results payment

and high Additionally, the low a existing customer in new time Any rate resulting an CAC good sub response a product was to expect very $XXX. out we we credit quality states in low to CAC, FinWise slowdown FinWise offset new the the state loan partnership was from resulting license but better the expected. performance helped portfolio. RISE from our growth than loan growth roll This

Lastly, loan modest growth quarter the fourth Elastic and the experienced of growth also product XXXX. during revenue

XXXX. materially However, XX% up slower do slower growth, revenues rate from $XXX.X loan Elastic its fiscal in a in the revenues still not year up of of during to the half XXXX. of XX.X% were model the fourth million new basis. first a credit out This from of loan XXXX despite were million balances year-over-year is growth the rolled We Elastic Despite quarter on until up expect growth during grow is $XXX.X XX% XXXX, the year-over-year prior-year.

of new fiscal ahead and generation flat we as we Looking strategies tune both half out our expect the to year first growth during XXXX, for Elastic and credit RISE. roll revenue year-over-year XXXX and of models

expect XXXX growth X% of half XX%. to For the of annualized second we revenue

in adjusted the Looking XXXX of XXXX year tax change or in for QX $XX.X XX% last fourth and $X.X the up XXXX. per share after of excluding income quarter Slide XXXX per net growth than from year XX% or after EBITDA Adjusted quarter at and Fiscal $XXX.X more the $X.XX a the fiscal of quarter share XXXX year. or year share $XX.X $X.XX year we or income was tax XXXX per $X.X double fourth the impact up bottom line income federal diluted the with are up income year-over-year almost XXXX million the Bottom very EBITDA net $X.XX fourth for fiscal totaled million year law of half the diluted our quarter excluding adjusted basis. $X.X of $X.XX the net federal of million share last for of impact diluted on year. in prior million of change year-over-year net totaled per adjusted from XXXX million diluted totaled the the fourth for law X, profitability million both pleased the fiscal

to year timing due loan provisioning. slowdown income growth first we XXXX second year fiscal during the of to the would of ahead revenue of lower first in to net the half and XXXX expect half half than the in the loss Looking be

We loss are rate this in quarter impact paydowns XXXX resulting of expecting and loss the reducing delay tax refund less the reserves. provisioning in of a this by during year first loan the could loan release season loan

inserted rates percentage reasons better is lower years. we drive our slightly are but our X, worse graph new is a XXXX strategies On the XXXX Slide to slide Turning on than vintage vintage, and on This coming loan as our one to of we than cumulative so continue scores XXXX. prior that still this new to generation credit also work our a can prioritizing vintages the rates loss of for we originations CAC. of loss in

margin benefiting see XXXX. into volatility the fiscal state We range be RISE quarterly believe Bank We CAC primarily biggest of CAC. through although expanded and of XXXX is pleased the one partnership to we believe CAC our the FinWise continue expected in of $XXX the drop that expansion may the with our anticipated $XXX drivers will in to year coverage some our from it

quarter RISE fourth CAC was for the in XXXX earlier, $XXX. mentioned less states As new than these FinWise

XXXX, those range Elastic marketing Elastic we rates to from of RISE expect While last historical high response the towards throughout we has CAC all believe do the states. XX drop benefited CAC combined as across will don't

margin X, XXXX a EBITDA prior year adjusted Slide margin year within gross ago. to from XX% Turning to from year our this year. up All for which XX% our XXXX XX% XX.X%, the happened was in expansion fiscal fiscal increased

in FinWise Card Our the launches operating only as leverage and in Bank second the of improvement Today product half saw expense XXXX. both we slight invested

believe fiscal line operating we earlier, items. discussed during marketing the continued year expansion will both margin XXXX As in and expenses happen

result Additionally, in income margin also net funds that cost an expanded of XXXX. decrease our believe we will the in in

totaling turning X, like months fixed debt have in million interest July plus amended Terms CAC will Slide five-year facilities XXXX for the three-month which LIBOR XXXX debt announced swap product X, date rate debt sub RISE draw-downs for VPC on for effective release to for the X.X% excluding in The rate facilities press to have risk current is is Sunny XX.X% LIBOR a XXXX the roughly existing $XX at our to until include we subordinated discuss today. and separate the products be Pricing less is debt I future the tied amended all on Lastly, maturity would facilities facilities three three-month LIBOR. X, for $XXX as pricing following: than effective of Elastic and The in will facility. the will million the the pricing drawdown. ESPV Only that facilities unchanged. the February

million and now Today in for purpose for €XXX the license Republic $XXX facilities, debt RISE combined a the available million UK Card, million existing million commitment for have Sunny million the and debt. Bank $XXX $XXX products $XX $X over commitments billion for RISE Elastic FinWise SPV, a subordinated Bank special vehicle, state and for Our

other these a point XX% basis been net for unused in The of under in $XXX the capacity other $XX No facility determined. approximately X, reduction last the which then. for the debt will is There's in and life There prepayment XXXX XXXX $X.X continues and compliance The XXXX. penalties. are million no facilities of except payable product we facilities net have of revolver amended million is the in February to call in a the first payment fee of facilities a have with X, both of will each meeting fees. each of cost the each until January in five-year will them. maturity. facilities. to amendment interest is three-year be a expanded we all funds in We for million and XXXX prepayment maturity monthly QX available threshold maturity amortize quarter provision covenants $XX of until facility not over million has fiscal a we which the date sub income to There the there None the XXXX years product commitment XXXX. year subject due date currently There XXXX is on income net reduction thresholds. The is certain income in and than no and have able two anticipate yet for year penalties in XXXX in are threshold XX are

over call Now to Ken. let me the back turn

Kenneth Rees

Thanks Chris.

XXXX Turning to Page review I'll guidance. our XX,

mentioned, As will continue slower first we in half growth the generated of QX XXXX during XXXX. Chris the

models reflects all our expect and year X% channels. to the This million measured in the to $XXX keep and out half fairly approach and tuning half expected underwriting and across strategies our revenues XX% and first between XXXX revenues $XXX We million. enhanced to second for rolling for during in the the products growth forecast in grow by flat year XXXX them of of resulting

expect growth XXXX. we net EBITDA very adjusted in during strong income However,

year million XXXX XXXX expect between guidance. This in an $XXX grow nearly XX% million. midpoint XX% fiscal EBITDA to the than to to between expansion at less represents We EBITDA XX% adjusted and XX% margins in of and from $XXX

focus XXXX impact of to the strong will $XX very $X.XX of net growth for XXXX. fiscal key the income that year we objectives continued facilities we Elevate a diluted the per Chris in and $XX highlights discussed, at half Page in first foundations the share our Given the million between XXXX EPS from income half in in growth XX the of on debt This $X.XX as profitable for expecting of are latter doubling for the net least positive million. yield XXXX between amended fiscal year. and year

amended expanded support the First, facilities as cost growth than current our capital that significantly with completed credit will Chris we levels. and of VPC discussed, lower accelerated

full drop to in February realized the cost be We benefits in will capital first the July of XXXX. XXXX starting in see the with

strategies tuning next-generation are just we across credit not and of are our This and scores We products credit to very focused is rather update to simple first applies We're very growth deploying on channels. their and all acquisition a miles, number customer of sources, we year. of weren’t million from conservative in about revenue of in potential $XXX to the a remarkable techniques more last fuel in available growth period began data XXXX revenue excited $XX are integrating we that and our when benefits improved new that to million growth. the nearly we tools this at in margins even taking half a accelerating ensure to year before full the opportunity for to get partner the exciting is remain channel. This growth an We again. particularly and long-term approach

just products than million from of XXX we with example, month is applications our see which X positioned. an less best partners our consumers As believe each channel credit are credit scores where one

increasingly We and year. are continuing source to become the the channel will and latter imp technology half it improve customer to an optimize our underwriting of acquisitions in this that of expect

regulatory the monitor to UK continue situation. we Finally,

to past As from peak features product. maintaining consistently balances has remain our been we to until but still awards feel to product its costs stated wins product, and I Sunny UK growth we mentioned, superior this the QX margins levels. very have are are impediment is come which evolving certainty. in related the for long-term portfolio for our anticipated down we these there more for UK product complaints optimistic its prospects we the remain Since as XXXX, cost in the Having about regulatory customer product said, service in achieving of regulations an responding

XXXX. Elevate yet The we Turning reaccelerate planned be demand to optimism market expect after growth continues market to we implement regarding underserved. in remains XX, nonprime the deeply and perspective and improvements unchanged very credit for is for strong, to the Page our opportunity

score savings discussed, broadly score income recent prime emergency been and has credit by high million shutdown. lenders aggressive or increased instability the has Furthermore, credit rates in the consumers practices. Americans as new options than with hand less adults of customers breed Elevate's collections the in the credit time As for XXX than paycheck even XX% and and in living the responsible government for less our has changing lenders, This the growth a arms and represent based other on a paycheck to and/or have lenders pushed no products largely UK of into are and in the gig a financial at installment decades now shown approximately payday all. past store $XXX more have of economy a that are better. U.S. lives

operating have are We diversification. also strong countries. product two products, and regulatory provide partners, four believe and now in our bank three We products

installment span capable the needs products of loans, facing lines cards credit range are credit fulfilling of and they full consumers. Our credit and of nonprime

growth of earnings. line We proud year-over-year line bottom and consistent in are our top revenue

have We better payday million are to loans. need in X.X having nearly served options also credit $X of consumers proud of them saved billion

We growth And online expect UK long open term to the continue more as I'll we for to with serve in options. call nonprime now, questions. and the U.S. up credit earnings responsible consumers drive

Operator

Thank question David of with JMP Securities. line you. proceed. first [Operator Please comes Our the from Instructions] Scharf

David Scharf

good questions. for Hi, afternoon. Thanks taking my

with doubling that been up trend basis, realistically is $XXX for of FinWise leverage longer-term? sense secularly is on this cautious much to how could Just permanent think $XXX there trying to as lowering the metric that's this seem the one quarter $XXX a outperforming about you you a partially you think and that CAC every pretty of range. outlook quite something I a the now couple I'm with things, sort of because wondering much to to to get you've below and a answered mean that be footprint the on I guidance by

Kenneth Rees

it headway terms wanted underwriting. year year, that is we continues our between of as in the balance long-term overnight down for yes lower or as because this we didn’t for really We're I rates we a improvement the but half expansion to rates. get think to first go balance charge-off focused trying with as think top underwritings lower margin CAC we improve there priority that down on this make because much get I down. of mean, think in we our that a goes and CAC there right. making take charge-off always both so. We're We're not I committing

David Scharf

with the Got there line, lot line rate pieces kind the in for handholding and are the provide of – of from about can is well, origination the it. year loss growth the those it's And Is slowdown rates you've moving trends. loss any XXXX along that a provision guidance this you and implied as guidance support there top spillover earnings provided? us the thinking levels in

Christopher Lutes

David, hi in highlight as Yes, be we I to In in section it's QX. guidance than Chris. higher provision to QX probably the the normal rates tried expect

delay a in the expect QX, in we hopeful realize. QX, year. you've the is we got tax certainly I some in with we maybe in With as that level not loan reserves think loan this QX, rates is of would the where past the well charge-off they that expect, expect. customer growth underwriting normally then of the models But QX as see of increased as as paydown improvements the get expect over the provisioning And we - related season loss in much in certainly as into we what drop are release time were the we loan a not so to new from of to much acquisition we also there would balances QX nearly

Kenneth Rees

both the help think charge-off I to in understand looking that margin able quarterly CAC in and will forward driving basis improvements. be long-term to and point what's to rates improvements, you Right, a on we're

David Scharf

a of activity, earnings on stepped it where near know the I Got the the associated dampening in past there quarters origination and here, but sort tricky up you've highlighted has question investment been and provisioning term of lastly, from with that. effect

how see to imagine dynamics growth outlook the about earnings of would XXXX a from I more wondering provided of think term in helps realized I is if XXXX, restrained XXXX reacceleration to year-over-year we near top and were provisioning XXXX? versus top we about line As earnings kind guidance, be but into standpoint, would you've think outlook, given there it we a sort which just a I'm ought provisioning growth XXXX mid-teens still line

Kenneth Rees

That's great a question.

Christopher Lutes

with a CFO it take to the as the to David, then because more CFO level, high-level into Yes going next CECL one from thing now stands year the effect that's X. more perspective perspective, tactical I'll CEO over first me from right is still let it impact Ken provision it January going turn pronouncement a income from of FASB

current part we If show at stepped of implemented our that if reserve in investor loss of compared this it look rates our current would get for originations of and and loss were by up reserves, the but XX%. a product that if be XX% presentation, roughly at to level to you'll we principal somewhere the sense loan historical historical as clearly historically to look loss of to our XX% the level, CECL you are the provide graphs to in loss XX% we meaning percentage rates varies level provisioning is you consolidated have a trending as so take that range the

beginning take going provisioning it into to if all certainly a services are next effect. companies level pronouncement have is up of goes there upfront financial to that that going to stepped really year be accounting So

to things still XXXX one guidance. that's we more So we bit evaluate a the before little that of provide need

turn the I it just CEO a for over kind to out of perspective. want So to that I first of more way of before Ken get high-level

Kenneth Rees

I at products get can't mean, as this we're of I you to I or and this performance year about in a million getting the know impact and generally certainly up beyond. think year focused to into mentioned make some you're wanted we that bit are a hood what XXXX the the why to we comments on we're make almost just think because in yes, years, $XXX improvements improvements back by can, speaking the this earlier, in taking line step top million down well revenue the CECL year, we growth function this slowing we we of think but Chris what year in $XX the as six five is can a that and it stronger little And so mode we open speak grew a this in lot from bit, to

right, that you're margins by XXXX with expectation think margin is our but is unduly than growing it I growth higher have we do so we wouldn't and growth, So again. that consistent believe XXXX to squeeze can we

David Scharf

Got it, you. helpful, very thank

Operator

Thank you.

question Please from the Our next proceed. comes line of John Hecht Jefferies. with

John Hecht

get the Yes, wanted in I just to some delay refunds. color tax more on

this first – So different you some and if get much should all at and are lower paydowns the the of or of do we this so be are that seeing ever of would ramifications gone have it early we your you higher of historically and think what's expect And observing it about expected? the is that point, – refunds you how tax kind customers through losses that?

Kenneth Rees

we don’t and ever tax couple impact how have season, a with also believe know, another delay drop have and that that during only ago a is of do that. a A we there not probably that would that mean the is but season bit balances and in then if government in, mean, a tell. years February, it's tax little early different to season seeing hard things I does the of the tax is excuse normally payoffs I I and can't but, I that to this It's way granted that say, about seen more kicks we they tax would season. refunds the January, early due in you dropped Exactly back but agree different. not we we're little shutdown me talked when

it's down season. the slowing think payoff I

We expected it will come eventually.

that haven’t into right the the the ability translate the seeing season delay it to but of customers rest so their are season and equate repay plays higher we'll losses, how impacting tax out, the very though see We we're not now the charge-off good on significant tax see to stress rates loan. are in our holding

John Hecht

if customers, in some versus quality just Okay. then see given that didn’t understanding definitely throughout their have of would the affect about you more alone, think basis trends recurring course products bit to of do rates have credit And if thinking payments you the clear you asset - recurring little on new higher accurate of XXXX? – customers you the when kind on a recurring it, that's we you're expect that customer loss RISE more focused just improvement it's and that shouldn’t

Christopher Lutes

- right. me more performing your customers certainly Let are The seasoned is point better.

So, that we now see we're the the I of mean, to rates are anticipate charge-off I starting to leading that already it's and some lower experiencing and throughout think year.

is that in So earnings XXXX. a in increased terms what of part delivering we're of

John Hecht

did Okay, level so XXXX do charge you you in than think XXXX? see and at lower product the you'll offs in

Christopher Lutes

Yes.

Kenneth Rees

Yes.

John Hecht

Okay. And the then last question is Chris, you talked about lower rate.

any expense specific savings specific have of a can or us the what quarterly you details interest You be all else also equal? Do might about sense talked about some give you for expenses. advertising dollar

Christopher Lutes

a million combined Let size so. the X I roughly the RISE is kind me February and facilities have think the reprice Sunny of mean, way come FinWise with about or $XXX facility at effective those different we'll and of it to help. at along I facilities new

rather X, amendment So the in retroactive February debt amortization you'll The see of days so $XXX July of immediately facility, X. down already goes having going then it. we'll that Elastic fee, ago over $X.X million years five beginning feel take little have pretty impact to quarterly to amortize that five that very than comfortable that be over all to XX able that the we and million That QX. reprice years. and in the will we That's kicks

immediate then debt really FinWise facilities won't QX QX RISE, X. and impact nice a be and until and July see in from to seen full going you're So Sunny impact the the

John Hecht

Okay.

Christopher Lutes

there And then year also… as next are I said,

John Hecht

might down, step You yes.

Christopher Lutes

down step might full as plus year. have Elastic you'll we for Yes, well, the the

expense, next two you decline. interest the the of should course years the over So see

Kenneth Rees

we historically say one came and our into in it to we a debt when the I us I'll seasonality lot but know bit of previous down business the in how help but that And to a us management Chris's which the have pay with our of thing that drawn don't payoffs is more out and along manage maximum does the year really bit adds comments, the season of if had we this really to go there's ability gives [ph] a flexibility more tax continue business works. this

Christopher Lutes

now pay to managing that QX the up we more during a right interest of be the us cash for not deployed appropriately each of and can a that loans in we lot re-borrow we Yes, and have would to facility wasn't the downs. forced on drive to to away normally and down allow XX% where QX use so interest seasonality pay hopefully will QX cash be because revolver expense in little a paying of bit down that

John Hecht

you guys much. very thank Great,

Kenneth Rees

you. Thank

Operator

Thank you.

Our Eric question Wasserstrom from line proceed. with Please next UBS. comes of

Eric Wasserstrom

Thanks.

guidance in does you've the follow Slide compare to XX, for to expectations should the I'm with sequential, the questions. over out your with up annual revenue your same just and the Just expansion looking balance first timeframe? respect the how similar on revenue I sheet in at increase that laid outlook, that on say, or

Christopher Lutes

It little bit a will be less.

revenue the range the the I will to XX% half increase year XX% lag percent second that. think and the loan of behind should in the balances over probably

that balances growing loan year-over-year XXXX year in have you growth the expanded for up us second should XX% XX% revenue half the in at of of to set if So terms XXXX. nicely

Eric Wasserstrom

actually leverage of in talked the costs. the And gave on loss related the to on may you. But target sort topics, Chris, about of then picking thank a just, and marketing your okay, your expectations be couple you operating on also level. close although your again prepared commentary up running you're it, guidance think expense pretty Got I you

operating whether wanted view outcome? to just the contributor to fact XXXX EBITDA leverage I be a was going clarify in to in your So

Christopher Lutes

It's possible.

hope percentage always at leverage. back down I of revenue head that year you'll CFO to we the next comes see be think some so that is expense to opportunity we margin of is, think revenue once there's the As should kind we a start growth, on some as double-digit definite year-over-year to, probably that answer shaking I there's to the so more year that I the if continue should because more. Ken get his see decline. marketing cap - impact like expect it me This that

Eric Wasserstrom

EPS between And differences growth just income that accounts diluted on rate the in that - net what for small then versus expected is difference? the primarily

Christopher Lutes

standpoint got that, an and I'm average average conservative roughly I've will that on under a know we the necessarily shares I right difference. with I'm based don't think for just be shares on so now that would slightly year. increase weighted weighted increase conservative, albeit, $XX being that bit of outstanding. I XX Part million but million about just than outstanding QX little less in probably ended the a

Eric Wasserstrom

current two understand sources level is it the from, XX.X that dilution maybe state coming just to a it is rate. based And in have the and like - if and Of be then and just at articulated, the we state trends correct? call let's that we than thirds up X approximately that the of look EBITDA seems will just you kind adjusted or between where on of XXXX the XX end XXXX almost basically end backing improvement the Slide closer as to those margin that

Christopher Lutes

continued even operating the Yes, term set to to you losses out that's of bit went term was we might I over a or top you're three of public. or the like where over I expect on there long hope years four as be process think think of long that's to and next there. mean started as we public target, I'd years but this couple mean, leverage, get if well ago going upside that little that XX%. basis, we that in improvement and say, even CAC I some a our to more And improvement be. in at not get

Kenneth Rees

what margin the slow caveat XX% can like growth was gets it I retain high The or we and can't more though rates, XXXX But in get is getting to and to you obviously I as think we to that's know of our tell big can how teens distance that for growth growth much John remember whether I of it. in is, who level asked we'd so see issue you question that of into beyond. the is, mean we're striking though a David

Eric Wasserstrom

does in and this you of statement. the have change on CISIL influence, income position fast then and be of are I be your you it effectively growth dynamic to a sort environment much earn your and know growth operating going I all a enable will last what at of [indiscernible]? guess you mean, is the particularly then that any question my and and to basis to to going - better in I how loss of a which of change off. it attractiveness Yes, economically to that margins you hop MPV slower accounting might you sort - out But shouldn't is generate that know I'll begin where know an to but way relative make

Christopher Lutes

a of as that this, got point. flow major probably where a One that multiples the are moderates when think than couple least cash I income outlook, change growth like PE dealing a but mediates very other would at meaningful, flow. environment There we I impact answers we hopefully from Cash accelerate accounting sort is [ph] the CISIL argue fix have. multiples it's just or evaluation the opportunities are with the of at the look good that. hopefully more just meaningful to streams the and you've so need on that investor to also you're of

to a that's continue environment. evaluate in So we that something need to seasonal

flows is, something I figure cash is It we'll think in any figure have change. thing XXXX the to right to us, it all obviously banks definitely that we a It's that. out and the growth don't you're fact impacts, communicate else if is because how for to still out just big we need everybody to it business. answers So mean not I it have a it's good increases and

Eric Wasserstrom

Great, thanks very much for my taking all questions.

Christopher Lutes

you. Thank

Operator

Thank you. Hogan proceed. Blair. Our next with the question of line William [Operator Brian Instructions] Please from comes

Brian Hogan

can the of waiting are - of having or is of good discussions to going mean, A status question what's they're Hey, what you or just do kind on kind the what industry there? - what I the regulatory U.K. you you're characterize discussions, kind afternoon. and seeing what

Christopher Lutes

complaint QX. we quarter. they volumes dramatically. in third But volumes FCA complaint complaints uncertainty about had with as QX half come in the was the that FASB as deal in and were That's these up the issue to said the spike there's were how pretty of long the we for term. what their to in down peak still Well, the are going

think service of of think we good very is most we and winning affordability with our We We in We satisfaction customer products not So, know customer awards. that. customers. and got a are product we've of the the robust job have underwriting some checks concerns do any broader sort that - doing our regulatory credit industry. have

keeping a So - that for us just into regulatory only we really issue that like is be sort mode. going into comes from mode companies new what reviewing we sure as understand understand get that's back administration growth complaint the what is of management these we to growth the making environments getting back a before

Brian Hogan

the are profitable? operations Sure, UK

Kenneth Rees

is. it Yes,

Brian Hogan

or couple than hopefully what's I you'll and pace growth depends margin have previous the of you but All then say loan XX.X% and and on pace the that but expansion right, kind your just you of or mentioned your on more margin revenue the a of and in of as XXXX obviously some XX% years and did to? over get guess of and remarks what term, XX% clarify margin long expansion to that you,

Kenneth Rees

obviously of to question but and not get can rates. to Yes, as it that kick too growth does the on I said question, the

growth So if of at can XX% more we being modest rate, see couple in years. at - the we next

are out to look right a to a about we're where the what of try being before continue we as for with just company having strong which of keep still may As would future with they doubled very broad we we product improvement. there, expanded to the We do few RISE in that's reach think a opportunities XXXX years margins us the channels strong margin able drive to be now. for demand set

we'll and a to may - I not the But apologize. I just a So the we ramp of things it's up year. think environment and into latter end to things as situation see in macroeconomic very in the we decide pace particular XXXX look slower be of like we economic want part what precise it's have at or answer the the to keep going looks

Brian Hogan

of cause accelerate And guess macro or a you obviously to factor just what would I keep than more steady? it

Kenneth Rees

and step part, but real us well will, the think and through and to rates, is certainly we customer we've opportunity a improvements obviously to assuming as coming as acquisition are in big XXXX. some we for growth seeing macro as they make those function are that Well, that's the performing and said charge-off incentive spur costs

Brian Hogan

just I the tax and All a for right, think XXXX, rate may you're have one, assuming real missed quick I it?

Christopher Lutes

XX% to in It will be the XX% range.

Brian Hogan

have All re-thinking obviously discuss regulatory small are States, environment of you Can right. the there seen in right. changes lower and the any United kind you either the

Kenneth Rees

don't U.S. couple impact least in any speaking, years. planned we're negative and sort the We big More watering was we're business. regulatory were I fine broadly in it as down next changes any originally or at the of either the rule we and having of the really everybody We of change CFPB fine did it positive like of think don't to the see our it aware see with rule. that now. environment Right, with

Brian Hogan

right, and focused States your still you from last you United – any me the one All your you think one but obviously of you discuss is, the a and on and environment kind kind will front? really banks of bank I pure the then on competitive said market, if changes in competition the on can are

Kenneth Rees

few of players of Yes, like environment. a sort sort a lot and it I competitive do as we've of industries evolved a large stable seems mean through

all bigger I don't all were know for So that much. seeing it's The good that pretty changed players continued growth. opportunities

impact products. serve far their us. any Fintech be I'm our like products cases to up technology help and continue out we're thing I like mean the not interest I fact own seeing And analytics. partnering bank that is our banks leverage partnerships the as to some banks pleased to more any with in good that really in at to customers a disruptive partners as from appears least and think. credit seeing expand three bank with our that now or really what banks we're providers think aren't platform We'd our We would there go, we

yet credit opportunity nonprime own with in a provide continued I see to customers. banks on change So work their willingness don't to I really there's think dramatic banks

Brian Hogan

All right, thank you.

Operator

you. thank And

We at no me time. questions back have Allow remarks. in this over closing queue floor the further to to hand

Kenneth Rees

your growth thanks all right in customers to well, All made and success who everybody. you and our and interest have for on night possible. the our call to Elevate employees of Good

Operator

Thank you. This concludes today's teleconference.

your time for your at lines this you and disconnect thank may participation. You

Elevate Credit (ELVT) 11 Feb 192018 Q4 Earnings call transcript