GreenSky (GSKY) 12 Aug 182018 Q2 Earnings call transcript

Company Profile

Participants

Rebecca Gardy	SVP of IR
David Zalik	CEO
Gerry Benjamin	Chief Administrative Officer and Vice Chairman
Robert Partlow	CFO
Tien-Tsin Huang	JPMorgan
Jim Schneider	Goldman Sachs
James Faucette	Morgan Stanley
Jason Kupferberg	Bank of America
Andrew Jeffrey	SunTrust
Ashwin Shirvaikar	Citi
John Davis	Raymond James
Jeff Cantwell	Guggenheim
Paul Condra	Credit Suisse
Chris Donat	Sandler O'Neill
Michael Tarkan	Compass Point

Call transcript

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Operator

Good day, ladies and gentlemen. Thank you and welcome to the GreenSky Second Quarter Fiscal 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later on, we will conduct a question-and-answer session and instructions will be given at that time. We're webcasting this call live on the GreenSky Investor Relations website. the available recording on of will the completion made be the the call, of a call After same site. like Vice Relations now Rebecca would to conference the I over Gardy, Senior GreenSky. President at Investor of turn to Please go ahead.

Rebecca Gardy

This you, a GreenSky its quarter press Thank XXXX. XX, for issued ended results morning, June morning, announcing and good second Christy everyone. release

GreenSky's Gerry today's You the GreenSky of our can Relations call be Officer Chairman; Investor will section and access Officer; Officer. this our and the press Chief David Administrative Chief Rob Zalik, Presenting Benjamin, Chief release on Executive on Vice website. Financial Partlow;

results We based differ projected. those on disclaim on about will our this GAAP required materially to morning forward-looking will any statements include and analyzing press isolation substitute We today encourage GreenSky's superior our non-GAAP which and considered financial measures, to are not regulators. Information adjusted to obligation measures. measures our we law. assumptions as actual these that our subject be for is are except statements commentary that as risks to are with be all a intended in release to when current uncertainties in measures our certain uncertainties results are Also, well and forward-looking by in risks from statements as from call update making Non-GAAP you any to and today, or cause filings included consider could performance.

financial on website. in earnings available today's the We our have measures provided press reconciliations measures to financial non-GAAP GAAP of release

questions. your Following will our prepared take we remarks,

to additional others, that the Thank this. no free I'll you your will on With more re-queue please event and our that, come are please not for As a you to two than ask David. back by to courtesy questions. best to it feel do we you. turn to cooperation covered over participants, In questions have other

David Zalik

the It call. $XX over quarter on adjusted a first in EBITDA. call in welcome $XXX with is morning, our quarter as to everyone, over and earnings Rebecca. revenue GreenSky's public and Good history company XX and million our our Thanks IPO second in following first million May well

Although we an by focus incredible our user customers. are experience an entire success commitment clear our GreenSky's a merchants public on and reflects team and new extraordinary a company, delivering to their

we you of overnight those success, relatively For making. are years to are in XX story, new GreenSky's the that the an

of customers. way businesses Our in purpose simple; sale commerce it is helps at point we that we their delight and a power do the and grow

enabling We them technology build customers merchants, and that benefits built strong provide consumer to our stronger consumers, portfolio value of marketing in are to empower partners sale. access access each prime and We preserves super-prime of to more of to proprietary partners loan costs. and or consumers grow no unique availability. and our of to continues attractive financing and with Each have their cycle bank ecosystem constituents consumers a instant, experience transparent, granular network, our technology bank a to virtuous with platform, with a merchant promotional creation. by origination credit revolving of and proprietary a national resulting mobile, to is accomplish loans that to that payment point important offering engagement We paperless, them scale. things We enabled drive other with sales the from these at merchants increasing

to volume growth over $X.X This year. increased of second quarter, transaction XX% last quarter a the billion,

elective at versus fourth companywide XX% transaction growth, we volume strong business continues monthly increasing ago. transaction breakneck of exceed continuing Our volume is our health home the exceptionally to whereby improvement expect XX% reflect in Transaction by care year grow new volume elective monthly a business care health quarter. pace, to to

activities thrilled partnership. guidance of Yesterday, as health XXX. that Express, the partnership lowest respected American ways. portfolios possibilities and innovative together Our $X.X of portfolio of loan leading related one we management indicator our our XXXX. year. banks, stronger with at there world's a XXXX. Partlow, was today, important a will static losses of of working XX-plus We long payment servicing to sale. pool into on American companies note, many been digital most an card the Together, with is last couldn't care of delinquencies, American across bank end assets credit be second trusted day be the considers number they've in were be bank's of be our we ever. over Of whereby announced health businesses. believe more at our Rob performance rate of delivering solutions consistent quarter billion, Express we see than the XX% was the of comprehensive the we in our of for that a will been the average And are have home an GreenSky score to Express, customer portfolio service. best-in-class member point continue for since FICO basis, entered our I've to the providing partnering None brands, CFO, borrowers improvement a since partner's for credit increase or under The elective

opportunity We to have momentum continue and our both the growth.

the model, $X satisfy to and a liquidity business merchant demand. grow bank ample in currently revenue $X.X have billion wonderful discipline profitably unused which of billion recurring partner is to We commitment,

been future our their today. it am to two consortium we to anticipate and Gerry that, with excited well four to of materially I've And as funding about to calendar additional current adding banks As year the comment have next previously I'll I shared, the metrics. operational on expand bank as from our the receive requests commitments in new over turn Gerry? as GreenSky year. key never existing partners

Gerry Benjamin

Thanks David.

finished a the repeat year-over-year. a we GreenSky end, quarter it and and model merchants, David growing increase built To XX,XXX revenue strong noted, merchants. by active with As recurring that is use has XX% upon

the one offered added several including their due products business process, innovative superior credit national to merchants we sales. of drive We them and this This HVAC the technology largest new we and large contractors. our plumbing won and to quarter,

We states, retail footprint contractor $XX and large expect premium expected to windows and We're this oral with a we of XX several vinyl covering transaction with value expect health annual custom transaction manufacturer to currently this elective also center in the exceed annual $XX doors, fields volume ambulatory merchant of exceed million. million. multi-site dentistry, from and million. new A approximately piloting large transaction care $XXX combined with volumes surgery providers annual surgery from

as the XX, accounts since last consumer increase our inception June of at the brand. aggregate accounts report approved this time this our was platform of on XXXX, As cumulative We number million, GreenSky our an X.X or XX% of metric year. customer over

as of performance we quarter, to percentage are cash Origination generated we or in In growth source been to Index net we've company addition, publicly key our quarter's refer This for which our questions dollar data this network. related the well these of incremental response expansive OPI. of beginning our road products, Productivity well collecting merchant performance as consumers the flows be from quarters be origination. show, In a expressed the captures inception on our a customers delivering received future since as key that future our may cross-marketing to measure internally reporting the subject originations as very to one indicators to

product for variety loan facilitate a as of of meet indifferent For of which exceed context, profitability our products truly merchants to originated more their bank we is in them is our to loan order which to established partners drive choose sales behalf lifetime offer close their GreenSky wide on customers revenues. and designed each or to thresholds. enrolled

there's interest deferred multiplied variances loans at in of received, XX.X%. product Specifically, carrying consumer loans, quarter-to-quarter, loan period sum a of originated product modest each complicate the approximately the reason cost less average reduced to we in transaction funds was Conversely, based present OPI of life value promotion XX.X%, imputed interest received, compute of transaction each be fees on received to our transaction yields mix the we Cost or two-and-a-halfX.X average, loan year's rate taking loan a of from OPI be a that of Despite believe by In quarter years, of to relatively are quarter COFI. consumer last prior a greater computation with a on a short than up a is the dollar-weighted second higher interest Funds years, marginally lesser loan with concepts. loans of and the of OPI quarter XX.X% or comes both rate second each upon Accordingly, bank GreenSky fee. for product plus light fee. life amounts our by Index which the with yield the promotion quarter no for year more the

was and has XXXX, productivity are Levers We rate as the rate transaction OPI offered. the on quarter, it Rob? when quarter a posted a quarter urge been fourth length include prior second financial OPI the as loan of results Rob the full the containing comparable which originations in As when reference, to further year, then in the greater now, website. Investor fees. product a periods was of loan are at X.X%, presentation turn XX.X% fiscal the take Thus, of this promotional transaction our and quarter mix the GreenSky's Partlow to quarter look XXXX. computation. second reflecting APR disposal was you year. that over both brief carried of the Relations optimize for offered, that of the quarter fee product the volumes, fourth residential review product And our compared we to solar stable well I'll higher to the last at charge, for quarter computations loan second GreenSky expectations fee OPI point transaction our of a contained GreenSky's

Robert Partlow

Gerry. Thanks

otherwise as I begin, quarter I my note compared second noted. will that to Before of remarks all unless the be to XXXX, would like

And revenue is periods. The June represents item quarter finance annualized million million, portfolio line total portfolio, servicing million growth merchants deferred estimated million, reversal this $X.X or up which As expense our rate David of growth paid capacity up beginning the for products growth. revenue was which grow of We the GreenSky's portfolio network to of million, we quarter finance from to obligation on servicing have market XX% by billed of was reversal our deferred we a X.X% was with but $XXX.X X.X% consistent $XX.X previously second of represented and bank XX%. value portfolio, X.X% other second the of loan as up $XX.X that year total and driven change XX.X%. $XX.X volume, servicing Revenue on XXXX. indicated interest to and funding had XX% X.X% at our basis or was off which charges $XX.X was last servicing was for The quarter, annualized billed, of sufficient the margins. of million. as was of cost during uncollected refresher, continued the approximately of fair strong down of average a $XX.X were related million related delivered grew our X.X% $X continues top-line X.X% second portfolio. million interest Servicing our an remit servicing XXXX liability from Transaction annualized our our XX promotional support increase last during loans partners transaction loan The revenue an XXXX. in on year, exceptional quarter charge and our the over XXXX. to call, from an expenses the the Origination had X.X% of by an strong was operating and from of of

expense of expenses of the million, form compensation second represent For which of of detailed revenue, benefits, Operating cost include XXXX. the and XX% HR refer the that product largest next our of was total and reflect and expense personnel morning. our the earnings that million aforementioned XX% other and the FCR up to investment at functions. please and to expenses finance, alongside our remaining total excluding is of million. and and total a the totaled our platform. The we've operating release relates IT quarter slides press expense of related and XX% Sales costs published technology marketing or support receipts from make component in $XX.X a our continued our expensed compensation XX% personnel benefits heavy expenses in up $X.X $XX.X largest settlements, more this roll to includes the teams, expenses, portion

issuance because second primarily XXXX. to Our B quarter million expense other and to term a income the debt and loan XXXX, refinancing, which $X.X of increase subsequent of was our compared occurred

EBITDA of we debt as performance As our compatibility our a purposes. measure adjusted issuance, for focus primary the on of result

addition, flow and cash earnings GreenSky. In earnings strength and it growth of the reflects generating –

increased quarter XX% financial posted million margin. $XX.X reconciliation on adjusted is EBITDA of adjusted A last provided profitability XX% Relations press release million EBITDA by the the our the second both revenue, of Our an of in to attractive presentation, At from Investor section $XX.X maintained the website. which are we and at year.

Our net Class period, of million pro shareholders. or our or is net only of pre-tax net measure reflects GreenSky's rate XX.X% our the tax at of effective of A C which on our tax share. enterprise earnings income assumed for income. forma expense, the earnings expense $XX.X was Because up GAAP on structure, includes diluted all $X.XX of earnings calculated income all per of the This tax GreenSky's

net we believe GreenSky of corporate the Corp. subject is useful the owned assumes purposes As by for pro earnings all taxation, a comparability forma to percentage that C it measure income are irrespective of

Now, turning now of to the balance our sheet. key elements

Our pro from ending forma quarter the unrestricted quarter, million, reduction cash million second which $XXX balance sale, end $XX the held the reflecting ended at loans of $XXX.X cash the a $XX.X cash our quarter the million than million and at million. our generated in higher $XX.X S-X's of for was

us was finance it then, year. million, between our increase our quarter, XX% million assuming . of share, to Our adjusted That revenue $XXX liability will with to of XX% full up to $X.X XX-Q $XXX average range $X.XX and grow million, over we'll reversal million to to growth file a tax to performance for fiscal in net income weighted conditions, charge and interest outlook continued to and an $XXX XX% XX% a EBITDA million, per second expect billion $X.X questions. the loan the of million million to before XXX.X forma XX% $XXX on $XXX diluted $XXX outstanding Friday, or increase of the quarter effective million and and million to originations. of open pro And between consistent brings and billion, range deferred the $X.XX $XXX Also, or our of August reflecting XX.X% to through we end $X.X shares to rate the current volume XX. to XXXX a fiscal we on Based company's between the the XX% between market for our transaction increase

so, that, to And I'd back like it with to over turn Rebecca for Q&A.

Rebecca Gardy

Thank you, Rob.

get please you reminder, can two that in to questions Operator, Thank first As a cooperation limit each, a so we please. have your question queue. we this. can for the everyone on

Operator

Instructions] is Tien-Tsin first [Operator Huang question with JPMorgan. Our from

open. is line Your

Tien-Tsin Huang

onto for But, anything just if is the and want the assuming to heard fine. potential which I on commitment help how - David, Amex this call. the IPO. Good to you partnership. and Thanks. Congrats on frame, might guidance, your ask I on impactful curious the us P&L be resize the the partnership. we to be this not Can in the as you from

David Zalik

it data off that payment, that This to turn a in is Connected of working Integrated over purchase, Gerry. Commerce, what we then discovery, incredible building obviously our leave merchants very the about call all call with and leveraging American and Commerce we and excited both and it where strategy for search, brand I'll is fashion, coverage what with just a consumers. part We're company has Connected history convenient Commerce, of a Express, some admire I'll integrated consumers.

it. and hugely we're a is important excited try in it fill details. about Gerry some can think very to we opportunity more So,

Gerry Benjamin

their morning XX,XXX platform consists American offering be three merchants. of Virtually, the merchants. of way business American By with American Yes, do will technology got Express accepts of to announced of merchants. has we've to aspire discrete we everyone Express millions GreenSky comparison, that The we really this cadre Express. pieces. alliance dyspeptic Obviously, active

merchants. leverage is a us in operating touching it more provide So, amplifier should and forced

the excited be co-branded cities. Express make select be product American that Express is five loan On going pilot offering we're to direct-to-consumer in side, members a card to available to installment really American

great volume us not XXX% needless the of with the about. funding all Amex factored excited but in those then, into offering be which arsenal system, just beginning. we the say, think to methodology portal, we're this to a provides we've they're mentioned, in their our that excited of access members opportunity our token that Express any numbers, productivity expand which be David additional will will that offering and we'll the to be a hope integrate that this of GreenSky payment As will And the great that beyond will is GreenSky lastly, forward-looking the to American is security the vPayment has or to obtaining a alliance going loans card technology and in the Amex product be quiver. pilot direct-to-consumer

David Zalik

We're technology very network bring And card platform. support the add value merchant would Express to for ecosystem, what has excellent members or advantages our to really is has existing I you is American to ability creates for pleased to leverage GreenSky Express that imagine for available. that potential can underscore what American our creation competitive the incredible our

Tien-Tsin Huang

you the fourth down there Thanks. bit and transaction a my unusual the sequentially. looks so items sense and might ask quarter? Any of that quarter look what like second ticked the third little rate question fee rate. give I'll Just maybe that like us and on It maybe in a can in in

David Zalik

by profitability So, banks fee that's fee as transaction us time. performance over a doesn't our and derived mix pay that impact are economics the it of shift, combination

been good about feel So, apart see in where pieces as it it certainly We stable nothing torn We've is. HVAC. and growing the unusual. we've

lower business in that heavily everywhere, transaction fee. underpenetrated underpenetrated particular pay us uniquely HVAC and will For slightly example, average we're but

good originations quarter our the I to refer profit very into and see the that over and where is stable. account very Tien, over that fee, were productivity we've taking what incredibly And the is the creating pleased transaction actually we back would quarter, OPI However, our quarter index. lifetime calculate to index, tried actually by to of fee performance it's do,

Operator

Schneider Our next question is Goldman with from Sachs. Jim

is line Your open.

Jim Schneider

partnership us that talk on targeting wondering to the you about with little bit can color loans of Maybe, as more was of maybe product? relates bit you give kind Amex it the if a what product. little direct-to-consumer I are a

your traditional maybe differentiated how could the product portfolio? think over well complementary from Specifically, of how to so and existing you that – be color it's on kind any and merchant-facing time how

David Zalik

Jim, thank last you. just Could the repeat second gave? sentence that I missed question. to second your you to you last

Jim Schneider

ways see Just what in fitting offerings it direct-to-consumer? time, of with in is how your terms portfolio of in your complimentary over how you of to or rest existing kind differentiated merchant that - and being

David Zalik

I'd that. be delighted to speak to

a here it's we're merchant specifically, verticals, patterning a available, as as So, keeping consumer, is doing home you're the various see providing digital, and it's incremental in businesses, platform got triangle, the consumer improvement that order. in if it's And core or and loan, the to each improvement our introducing instant. you TBD, industries, by a More you to it if customers. Express go on a S-X, them, with allows tool, you may offer American point triangle, diagram promotional back the instant their of revenue know, the merchants merchant, changing triangle. is, revenue, home credit What to is, business it delight drive a we're to interested the and others, you've bank but

in XX not buy three And you Poughkeepsie you home Express, preapproved and great it you in way, the no the You market. a you're contractors but may and get you been for only improvement by if them, qualify interest. loan, by months probably from tell best already can we oh, American that

or Well, fact, buy much consumers do a work customer, in we're how or it are satisfaction do and someone we helping with. And do reputable? things how really data work know has windows So, who that value-add flooring pay? GreenSky should every consumer the you you merchant we that customer you that from, every of real when working important is to I'm roof and buy the I on want they a and with with

our So great it's the for we're able great and it's be platform the good the and to for leverage consumer merchants on wouldn't aren't ones great that anyway. that data,

facilitate help here, our card we're So, this product that do is position a customers the proposition but them we've actually because only homeowner that same the card that even the and And It's delivering even and member $XX The bring what merchants where and even more of mobile merchant one back this And is as We today. commerce revenue great going value to of. we've what And loan loan is our a be to of not difference that is for is direction. been network, Instead delighted GreenSky same, and that's great relationship. perhaps about. Amex our for technology, actually wants home payment schedule the that for actually help integration which merchant, transaction ecosystem bank appointment paying a be the value value-added another of proposition device. of is step prop they Google fundamental would is opportunity incremental to which of merchants the importantly for Amex members. is originated improvement. consumer an the product our ultimately the the from because The greater. billion incremental to identify order their would it's in bank, pay talking but this revenue consumer versus can the is a merchants, in

Jim Schneider

stable, actually Thank metrics delinquencies your maybe increasing then, had providing instead delinquencies. lot you of a year-over-year, credit environment. the And declined whereas and peers for delinquencies especially those like, on it of looks actually – being on secondly

of of of are color what mix of kind going a and respect do a you to credit see like-for-like quality, function much of the much how is you maybe improve provide and you're in the how if So, forward? market what in you seeing if can credit quality little shift that, seeing with bit terms any,

David Zalik

the and customers So, focusing on stable pleased to that the very Gerry, add originations with quality you for time see off. is We feel that anything? results. credit like certainly would we're we pays being, quality and

Gerry Benjamin

we geographically, seeing Early showing to back ways the But a portfolio we've as David again, slice as indicators We're our obviously XXXX. signs No, portfolio and different not any of slippage super-prime. lot going just are or dice aging. solid is of indicated, seen cracks. as

So, funnel, or and this our the the have if not the reach best is best the widened of will, we to you opened relaxing credit gate for standards. growth by

Operator

with next Our question is James from Stanley. Morgan Faucette

is line open. Your

James Faucette

ask can your It or wanted from in to I key where the expectation – about I'm were move yield coming that had you little wondering, more a factors the varied talk importantly, what into how the quarter? expectations but yield and about around first calculation revenue or yield result. below that your came modeled, we bit

David Zalik

thank James, referring you you you to say for rate? When take yield, are the question. revenue

James Faucette

I'm Yes, sorry.

David Zalik

to stable to the performance X%. we as the a transaction sum have by GreenSky if same product pays and pays fee transaction in solar, profitability the fee And or where take profitability merchant has that for a is the to a as just a fee, particularly emphasize of lifetime merchant X% average And the the for GreenSky's paid banks. is transaction just gotten on the based fee grows, as place. underscore, de-volumed rate company So, want

to question. think your me Let some comments, Gerry now ask add I to

Gerry Benjamin

into that of will key mix one we take business. on David are and our be seeing variable this, rate thing the the The touched

have We have new are in had to space the HVAC to and account some solid, additions particular. going in solid continue

with mentioned, of hundreds folks lot had of a millions A historically, prior doing underpenetrated. wholesalers David relationship. finance we've As of been These these bit large arrangements dollars. exclusivity are national their

expiring business. It a year anytime more it you're As success love And having or the we're going air little it's transaction goes not heater modest We out, system candidly, when replace good GreenSky round, platform. episodic. It's year. your migrating to conditioning to fee. them obviously, with the they're a in comes bit

mix of bit a the the have These will like granularity providers, comes it business is fairway and talk chunky. all about are center really the residential of de-emphasize when to our bit but we bit business. a impact we So, and continued other right the fee more profitability lifetime that with big little is Obviously, solar transaction the products. we a business, although modest, down the HVAC just the that

James Faucette

as bit loan of then, friction in interest at second question your And is rise? a interest how a products environment, rate much guess merchants, my rates your was, re-pricing particularly through look changing there as we I

David Zalik

So, question. great a

very imagine, XX can You it's rates predicting on, rates the for for that last something to waiting would years we've rise, actually been focused rise.

our we three for decade our platform that In by, raising rates year, start the me year been never it I'm environment not a are in let we kind seen retard in raising predicting pleased a not very and over of have So, three rates have any rates seen attrition. and raised over times, high-rate a a after for are of Incremental to year, over we've rates style, merchants some want our goes that referring times charge that environment. and been rates the growth, over the last that product we year, have low-rate cases last the categories, we revenue we merchants. create out last the we've and that some

And so, equivalent to APR moral the pleased that been GreenSky the for and fee, life. we've transaction three have increased same successful create economics promotional in leveraging we that levers we are between

news much that, like is the interest will will good rates the we And to rates go laws is What go apply that down. is have found fine. physics, up, So, of rates everybody.

helpful are a of of So, rate we a affect little a might everyone. exist, what lag, consumers pleased businesses perceive in interest couple quarters. changes the sometimes opportunities in changes bit that other with What and market it's

Operator

Our Jason Kupferberg next of question America. is Bank with from

open. line Your is

Jason Kupferberg

environment, anything wanted which did competitive Congrats that that can step you're sub-verticals little tell on and just like some a maybe HVAC you just through us in on you the and feel mention front I verticals sounds ask takeaways the seeing it about bit changed but bit in space, now different the the a year-to-date you has of about some, competitive results. interesting, to regard? little the some is maybe what and right

David Zalik

just there's So, to report. really nothing

are just We the and with time that the value a a take platform challenge to go to sales fortunate of And the takes little candidly, to bit biggest we're standpoint, owner getting and getting phone a live to business proposition them on from difference. market experience literally very a a able it technology. a is and

competitive not observed have any We impactful reaction.

maniacal quickly frankly, the be work is pleased. have to incredibly And you And Our standpoint? very customer what our here turned add well. care The from really, more on do Gerry, heads pilots that competitive well. continues elective the we want large down couldn't a you got growing was and really focus so business health and anything us into product a commitments, partners.

Gerry Benjamin

merchants, million over work in with just care No. home seen more continue that under revenue, we reemphasize have improvement core betas the I pieces $X any the great as category. and on did X,XXX the success competitive the exclusivity to we not was in business on than technology contractors to of we currently side we road emphasize, XXX,XXX fall would And home on less converting do health improvement the response show, the big formerly that that But, I'll of side. know really than we've residential or and XX,XXX a work doing elective deliverable. of moving

of the market So, penetration. we've addressable early we're stages and huge got early, in a

Jason Kupferberg

we then, brief quarters. of I trend metric on made volatility decrease the the quarterly or in see think a balance underlying there Should that going and that's sort trend sale expect the the should for in held an prepared that loans couple been of just forward? the to be past And we is to reference you in sheet,

David Zalik

at levels. should It suppressed very stay

Operator

with Our Jeffrey SunTrust. Andrew is next question from

is line Your open.

Andrew Jeffrey

for a relationships mentioned up namely I've got the you improvement? home of a of sponsor that Could guess total is and David, little couple to and think year. you I you. XX% how to bit the elaborate what I'm on the for by on you done standing starters, you've distribution the about thinking health be I going you're volume think drivers analogous end that care

David Zalik

and but it that traditional over between and turn to to going manufacturer distribution to an also I'm the to on provide going sponsors to of question. control viral just encouraging. Gerry, of it additional private seeing provide incredibly Gerry referrals additional concentration word sense, has the similar for you we're to some now turn effects also mouth, some thank incredible had ownership, color. color that over Andrew, been equity I'm and both but

Gerry Benjamin

care As the private And and in that, controls aesthetic business, dental we're surgery. focused initially we oral amount the delivery vast point, of the sub-vertical, then dentistry finding to equity doors health into we elective vast system. its moved and David's entered a on

region, thousands So, case hundreds with President an beta, if not potentially or we're technology, office one our we and a touch on call. call, and doors Healthcare one showcase sales of Kelly, Dennis put Elective clinical only need study a can sales able GreenSky's the up one to

practice the very, management So, it's concentration equity a high these private penetration. levels Unlike side management medical companies or business, dental very and practice dental sales these the of productive of achieved the have companies DPMs. given channel

maybe dialing merchants, an GreenSky incredibly looking in productive. day-out. are sure system, amount to interviewing field, the literally they all stars, We're growth for month, health cross people is us. make of really a home with the the within got respect business, ethics sales elective that Contrast as they're improvement these sales that culture calls, paybacks seeing ago improvement industry, quick. years lot door seeing choosy to people, the XX that will six itself and mention a of our home and us where you can the big We're representing the big, that value inside very, So, force are productivity we shockingly so out in we're time we very we're think to in reps identifying sales that a saw with day-in, elective we And mimicking we've care to add. the touch piece large they're what I being for, hit which And forces medicine marketplace of a with in will the out lends the and in David lines core we're said, incredible our the business. our sales come spending with virtually of

monthly equal XX% that So, will we do originations. about of believe

becoming quickly nice it's So, contributor. a

Andrew Jeffrey

And then, appreciate OPI. the

just mainly the your I versus growth point flush to think expenses looking a any little in economics bit revenue talk questions I about what unit a timing like, over think the of versus of kind expense time, unit life about of business. you a and my fee of look you little recognition. slows a out get to especially that way lot how recognition at helpful that's loan mind? the unit of economics can that - a extent upfront Perhaps, about and maybe trying level just bit what the the in transaction a

David Zalik

transaction So, and and the stream separate we but from that consistent received upfront that there both common rev Then, expense from get to sense. rec, with is have GAAP, loan. that also cash the in a it's to think our with platform. is fee front paid I we a service the revenue The perspective originate obviously up provide consistent it's is

to separate and I'm going distinct comments. and Gerry are got they let So, - additional some has

Gerry Benjamin

to has loan the modest their ongoing in our originated, are captured item market, believe we bank servicing providing revenue receive partners be margin. arrangements cost cost, where the we from at and loans our are service line Once servicing the covering a really, been our plus servicing the would

covering the with and So, this. cost a the that's the fee component trailing ongoing got or generation stream servicing would loan associated revenue we've be

Operator

Ashwin from is question next Citi. with Our Shirvaikar

line Your open. is

Ashwin Shirvaikar

on incremental and first I report the appreciate disclosure. public Congratulations your

on talk you line, and down XX% of talk that? evolving is You go you're commented top about of also but like mix? it of things reversal about making, the impact mix the different on guys already of about loans – still deferred the rates, could the As you the mix, types is impact talk potentially

David Zalik

market, the the in interest We in slightly even the elective of more mix health is top the expect terms as bigger fee, resiliency. on deferred based that So, referred industries to that stability I which transaction you creates think think into, line. a we're we're going in, industries we care. That actually

marginal overall and see deferred we fee interest transaction and of on side higher stability the business So, product. the percentage

I don't miss Did question if one? I or answered them. I Ashwin, of all your know

Ashwin Shirvaikar

down the you and specifically was Well, look go of I the no, P&L impact at various as asking mix evolving lines. about

others take offline, we but some imply guidance step and actually one up that you I I take your does in potentially of on rate. revenues fashion? you could really explain mean, think an is, transaction a the other the them, visibility to second question have acceleration of do bit a couple in going the volume, a How of guide granular in into you're more that? The much half can accelerate implies that rev transaction

David Zalik

every volume, of we in So, we have merchants because visibility a see how cohort they've performed. transaction lot of of terms

for and enter have But, The on season fall. seasonality. in year happens. a point lot then the our really history busy the of of gets low is first it the We to year. spring about good We're the quarter

So, we have of history a on lot seasonality.

and just have like. of second of history on, what a growth, We fourth lot what if quarter know we based third looks know lot with historical a seasonal quarter is we on precision

keep answering at I'm your So, going if I'm it question, not I'm sure I but until do. to

Ashwin Shirvaikar

No.

into in sales already HVAC just one component. layered of those the have I I kind of wondering if next wins think seasonality, some cycle? was you

David Zalik

Absolutely.

five, get on next fairly we once month think as we or at a we how accurately merchants nine. seasonally three book month me how our units to home six, six, track business much dig book book whether on are book business much cohort business a predict how we or going we let them know little that all years. - or every improvement on with across month book of it's much book or do the And just cohort of in month different is subcategories, about bit how four, business forecasting HVAC do one, on So, can of on we vintage doing for subcategory, to categories

And have up. to ways very all it number. so, granular a And they we we triangulate several different build do similar a and very

business June on not actually every June. platform so, is every this our cohort Ashwin, And percent are business much they it's active how build. saying, how well, is much volume granular likely and in our they next merchants the So, November to taking it platform, taking how did and It's oh, very that's months? on just, of a do they more year, June, out for than granular old do are plotting six

Operator

next is Raymond Davis with John Our James. question from

open. is line Your

John Davis

to to now your then this was merchants touch marketing on need Was a economics and or out GreenSky? this similar perspective, You the on rolling the relationships? about partnership. from just responsible of go but Amex accept other national I just from making how little talk bit guys want a and campaign? Any who's to are timing thoughts that they for maybe different may that a on bank the aware

David Zalik

Was I loan by American network? you're So, for the to the to on your powered American improvement our members GreenSky home our think John, - and the Amex merchant focused going card Express introduce thank loan question question. you Express promoting that's

John Davis

- is that or I guys? marketing Amex that Yes. for so responsible mean is you

David Zalik

Correct.

John Davis

it you obviously, level Is how we on then, the here? should give level, specifics, was economics your can't side, similar think how high economics relationships, the it? And high to maybe other but just bank about

David Zalik

do So, answer this that the simplest impacting relationship to gross negatively way see we margin. direct not question is,

John Davis

enough. Fair

David Zalik

five is Amex and literally a contracts, been incredible very in which the obviously working an on just But distribution. So, rollout early planning time This working on actually just we launching pleased been we're been with these fall parallel fall, with day have in to were signed yesterday. incredible this long before and we've this this and markets they've for signing partner.

John Davis

versus improvement that here, implies the back to but in basis the the horse first the imply dead guidance math half would transaction Not a half. yield, my on point a XX be

but a the HVAC that you XX% interest weighing about of is majority first just Is it's care that understanding deferred half, of loan. my is health side, I on. know kind X.X% take upfront rate talked – north elective health versus one So, elective the X.X%. comes on the that care, of

So, you there. that have balance reasonable? Is a

Robert Partlow

nailed it. you Yes,

spot on. You're

Operator

Jeff from Our next question Cantwell Guggenheim. with is

is line Your open.

Jeff Cantwell

Just one question.

merchandise guess I call tell I'm could quarter? or trying be bit what home us would Well, incremental is, amount anything for You could or would care from trends bit any way see, geographies this touched at help about where greater adds particular us to health starting helpful? thing on seeing out came whether of is on active there coming in you're elective of can this to the the a other earlier, merchants, about terms you're from get routes you underlying us but little There, the your maybe understand sense or of active like a and of terms example, in in in looking incremental you coming of little a not et more same from, which a cetera, merchants us you focused to improvement. tell tell are Thanks.

David Zalik

biggest more improvement, seeing We acceleration having of of we acceleration is ago was home business businesses So, But monthly actually And that now contribution. home in in an basis, terms of of year, merchants. profitable on year signing and frankly, elective a a that certainly large are by be high-growth of rapidly an creates getting zero the a end over the XX%, health up impact we're care wonderful the this it'll benefit accelerant. multiple have a improvement new growing merchants.

that can point to of out. think nothing I So,

equal in uniquely any are geographic concentration. get love – Dakota. – seen I a unique but haven't don't incremental of any opportunity haven't them, anything business unique. growth lot We North growth We seen We America. from we

Jeff Cantwell

us EBITDA then, quarter step I some the of guidance model? Thanks. guide, margins business year? in takes investment, guide the down of the just we the and full-year is puts can I to think you is back and comfortable from in through this is on with want guess, planned is your what half as think that get implied seasonality, terms of that a the the And through help the

Robert Partlow

consistent the a basis throughout on invest We year.

and People do their Christmas. but see contractors we we have want fourth investment, improvement Thanksgiving traditionally heightened in don't the quarter. softening So, don't home in between home

does it December, throughout quiet. and November business materially. down Late the very, very quiet gets So,

So modicum That's just fixed some the impact. do seasonal the have of system. We cost in

Operator

Our from is next with Condra question Suisse. Credit Paul

open. is line Your

Paul Condra

Thanks Thanks taking for on IPO. the congrats my question. and

from what margin kind that margins the mid-term us flat this then, and think how determine so of a to increasing on help you're about follow-up sort you margin components of going your a are perspective? can expectations Just run key business the

Robert Partlow

that the the existing but nothing serve the very, we're anticipated, on we're been our to maintain largest of as variance the invest see heavily products. margin. new upside it's margin seasonal of initiatives quicker We've pipeline the leads robust seeing road. margin our on groups on markets that that bear a bunch There's to To as you some quarter-to-quarter, years a all a we've that mid-XXs would we're contributor technology we're but working well that sustainable. be a going We're could both But applications to that be extent the care rate in bias us profile believe than fruit same elective that above growing to EBITDA guided probably think mid-XXs. about continuing product down There'll showing. EBITDA excited that technology. very health I satisfied got products the will we've to the business hopefully to isn't grows at that there, the and infrastructure, the pretty

to we've So, feeding it with resources. got keep

Paul Condra

that reason us just is you change to what it quarter ability of on the the kind can mix, should I remind to mix the interest or guess tell change then, way what was your any manage was And in that time? no mix the us the any loan and in over or mix think

David Zalik

and the it roughly in range, will to up stay was little bit XX% in to that health go expect care quarter, we as grow. So, continues a generally it it

Paul Condra

interest. no XX%

David Zalik

interest. Deferred

Paul Condra

rates those the pay the of percent payment - mix repayment you or the period? The deferral within the down on

David Zalik

Yes, that's XX%. stable highly

Operator

with question Donat next O'Neill. Chris from is Sandler Our

Your line is open.

Chris Donat

the care business. had I on one follow-up health

process salespeople you looking in where the you rapid for at And for us sales have field? the rough Gerry. have the or and that percentage best a you you're want force? can number goal give you may sense hiring are think have directed of the any qualitatively, you Do at what in growth if As so, I of to

Gerry Benjamin

in We've de-centralized of got folks. the mid-teens sales in number terms

of how account stepwise managers to we of many and fashion. group sort and account businesses a need managers have growth practices the we're the learned growing support support also in We providers. that work those We've to

talent. constantly over, they We're salespeople, being representing these are outside we're sales in So, particularly the finicky are company recruiting field. the the

launched time had sure of And we're is in control, you that greater an team the with, where not inside a people control every could our and So, When with wouldn't different very, it because lot shortcuts a taking was field, make improvement out management making want with to selling the careful we're spending interfacing, than little to business of really people centralized you each we bunch have very we're QC. we careful. home interviewing sales a don't that of have where mistakes. be and being so largely executives senior ways one this any and pleased we infrastructure, bit

pipeline that increases the is balancing count because XX% the over applicant we're payback the So, wouldn't seeing I We're we're seeing. full. terms however. tremendous not that next the surprised acceleration pipeline, the and taking quick accelerating but of we're the with be XX productivity, shortcuts in of if quality months,

Chris Donat

quality credit just the bank for then, And on partners. the

I been mentioned rate assume that. FICO delinquency You XXXX. in no lowest or since underwriting there's scores anything change like is that

but Just it's job better, to economy, the what think like the you're why So, it's or is originating? been trying don't theory I pretty change market good your good, that economy has understand would is take? your better is some a there in

David Zalik

I'd partners. credit have we've to durability, them these partners credit work of all, bigger with really work for we bank I to doing say in and we volume have happy acted is, We not And resiliency policy support we're by the and think – long-term a optimize it's our with are discipline our thinking. partners' I and both done and loans, quality volume. that that. And bank them great Well, great their point chased bank our a job think, sacrificing

Operator

with from question Point. Compass Our next Michael is Tarkan

line is open. Your

Michael Tarkan

color what give on Just little one. product banks receiving? last on that the yields follow-up currently as a to currently us Can to and are losses just you trending where are maybe

Robert Partlow

don't We see don't we and competitive that contracted yields, disclose as our that changing to that we time. nature. over view respect in With bank

competitive. index for a one You'll the cost to surrogate reasons OPI we use is we of funds, available note view use of copy a published as in as that we to the index wanted bank people computation, but our that's for

on disclosing not not of respect and we remarks, think all his weakness. to quality signs any consistent. So, a seeing With in be static will resilient been We're losses breakage has I incredibly any pool David opening at or mentioned basis, that. just credit

David Zalik

underscore One before thing wrap to I want we up.

indicated announce Our two we're bank more expect GreenSky is pleased partner but obviously do our increasing million increase billion. another of by large one one, $X have an increase ecosystem we interest, incredibly and largest to banks their four not calendar commitments by another $X.X important $XXX commitment and an last continue an the increase $X billion, of this one year, only an billion, a of to very that to

ambition also and expectation, and in a of of hope really, bank but having our actually are very that strategic have and additional conversations and we with simply, amount said creating we're about managing products So, the tremendous engaging for partners. down interesting demand constructive conversations

just to I Rebecca. wanted So, it Turn to underscore over that.

Rebecca Gardy

the time That that everyone. to thank we'll over held will in I think, our question Operator you be I The to today. the Citi portion of on events I that attending remarks, on closing Goldman and the have Sachs we'll And for September turn York. I FinTech want it say for Technology New to David wanted was that Conference call. XXXX Conference Global did September to Q&A before concludes David? X last X. both be announce

David Zalik

excited Rebecca. I'm about you, of Thank the GreenSky. future

new in with and U.S. with American alone two of market addressable the home we to care impact have small exceed the a core share collaboration exponentially. improvement elective $XXX notwithstanding significant GreenSky industry billion verticals, Express, health Our markets ability these our grow

add As to business merchants this transactions facilitate we bank We continue and platform. partners. reach more more consumers, our as model our to more our scale, inherent quarter, we demonstrated has we for

recurring strong cohort of platform. increasing each revenue annual volume their our have with merchants on We

of and digits and a We're thank volume dollar-based low-single joining for the all importantly, company. that, on a And shareholders, call. off retention With of deliver most XXX%. very much is acquisition for above operating our combination merchant public highly our annual merchant strong start growth. to we attractive on us of margins today's you unique cost transaction a remains as Our

aligned are you focused Helen, team congratulate and home the like to start York of highly and We priorities to you tonight. seeing look my late teams have Thank much. on I'd and execution. ahead the a I'll wish forward significant runway be a wife, GreenSky the in good We Anniversary. Happy New on many very on conferences.

Operator

thank gentlemen, all and does conclude Ladies in This your a participation conference. today's for the may great you program you day. disconnect. have and Everyone,

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