Company Quick10K Filing
Elevate Credit
Price4.47 EPS1
Shares45 P/E7
MCap200 P/FCF1
Net Debt472 EBIT90
TEV672 TEV/EBIT7
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-09-30 Filed 2020-11-09
10-Q 2020-06-30 Filed 2020-08-07
10-Q 2020-03-31 Filed 2020-05-08
10-K 2019-12-31 Filed 2020-02-14
10-Q 2019-09-30 Filed 2019-11-08
10-Q 2019-06-30 Filed 2019-08-09
10-Q 2019-03-31 Filed 2019-05-10
10-K 2018-12-31 Filed 2019-03-08
10-Q 2018-09-30 Filed 2018-11-09
10-Q 2018-06-30 Filed 2018-08-10
10-Q 2018-03-31 Filed 2018-05-11
10-K 2017-12-31 Filed 2018-03-09
10-Q 2017-09-30 Filed 2017-11-09
10-Q 2017-06-30 Filed 2017-08-11
10-Q 2017-03-31 Filed 2017-05-18
8-K 2021-02-08 Earnings, Exhibits
8-K 2020-11-09
8-K 2020-08-06
8-K 2020-07-17
8-K 2020-06-29
8-K 2020-05-06
8-K 2020-05-01
8-K 2020-02-10
8-K 2019-11-21
8-K 2019-11-04
8-K 2019-07-29
8-K 2019-05-03
8-K 2019-04-29
8-K 2019-02-11
8-K 2019-02-06
8-K 2019-01-24
8-K 2018-10-29
8-K 2018-07-30
8-K 2018-05-31
8-K 2018-05-04
8-K 2018-04-30
8-K 2018-03-19
8-K 2018-02-08
8-K 2018-01-24
8-K 2018-01-24

ELVT 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Note 1 - Basis of Presentation and Accounting Changes
Note 2 - Earnings per Share
Note 3 - Loans Receivable and Revenue
Note 4 - Variable Interest Entities
Note 5 - Notes Payable, Net
Note 6 - Goodwill and Intangible Assets
Note 7 - Leases
Note 8 - Share - Based Compensation
Note 9 - Fair Value Measurements
Note 10 - Derivatives
Note 11 - Income Taxes
Note 12 - Commitments, Contingencies and Guarantees
Note 14 - Related Parties
Note 15 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1A. Risk Factors
Item 6. Exhibits
EX-10.2 firstamendmenttofiftha.htm
EX-10.3 ecspvfinancingagreement.htm
EX-10.4 vpcfinwisesecondamendm.htm
EX-10.5 vpcelasticfirstamendme.htm
EX-31.1 exhibit31109-30x20.htm
EX-31.2 exhibit31209-30x20.htm
EX-32.1 exhibit32109-30x20.htm
EX-32.2 exhibit32209-30x20.htm

Elevate Credit Earnings 2020-09-30

Balance SheetIncome StatementCash Flow
77061646230815402017201820192020
Assets, Equity
2101651207530-152017201820192020
Rev, G Profit, Net Income
100500-50-100-1502017201820192020
Ops, Inv, Fin

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

(Mark One)
     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     For the quarterly period ended September 30, 2020
or
     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     For the transition period from __________ to __________

Commission file number 001-37680

elvt-20200930_g1.jpg
 ELEVATE CREDIT, INC.
(Exact name of registrant as specified in its charter)
 
Delaware46-4714474
State or Other Jurisdiction of
Incorporation or Organization
I.R.S. Employer Identification Number
4150 International Plaza,Suite 300
Fort Worth,TX76109
Address of Principal Executive OfficesZip Code
(817) 928-1500
Registrant’s Telephone Number, Including Area Code
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act.
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Shares, $0.0004 par valueELVTNew York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YesNo
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
YesNo






Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerNon-accelerated filer
Accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Class
Outstanding at November 5, 2020
Common Shares, $0.0004 par value38,070,426







TABLE OF CONTENTS
 
Part I - Financial Information
Item 1. Financial Statements
Item 2.
Item 3.
Item 4.
Part II - Other Information
Item 1.
Item 1A.
Item 2.
Item 6.







NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") that are based on our management’s beliefs and assumptions and on information currently available to our management. The forward-looking statements are contained throughout this Quarterly Report on Form 10-Q, including in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and "Risk Factors." Forward-looking statements include information concerning our strategy, future operations, future financial position, future revenues, projected expenses, margins, prospects and plans and objectives of management. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “could,” “seek,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
our future financial performance, including our expectations regarding our revenue, cost of revenue, growth rate of revenue, cost of borrowing, credit losses, marketing costs, net charge-offs, gross profit or gross margin, operating expenses, operating margins, loans outstanding, credit quality, ability to generate cash flow and ability to achieve and maintain future profitability;
the effects of the outbreak and continuation of the novel coronavirus ("COVID-19") on demand for our products, our business, our financial condition and results of operations, including as a result of the expansion of our payment flexibility program to provide temporary relief to certain customers, underwriting changes we and the bank originators we support are implementing to address credit risk associated with originations during the economic crisis created by the COVID-19 pandemic, and new legislation or other governmental responses to the pandemic;
the availability of debt financing, funding sources and disruptions in credit markets;
our ability to meet anticipated cash operating expenses and capital expenditure requirements, including our plans with respect to assessing minimum cash and liquidity requirements and implementing measures to ensure that our cash and liquidity position is maintained through the current economic cycle;
anticipated trends, growth rates, seasonal fluctuations and challenges in our business and in the markets in which we operate;
our ability to anticipate market needs and develop new and enhanced or differentiated products, services and mobile apps to meet those needs, and our ability to successfully monetize them;
our expectations with respect to trends in our average portfolio effective annual percentage rate;
our anticipated growth and growth strategies and our ability to effectively manage that growth;
our anticipated expansion of relationships with strategic partners, including banks;
customer demand for our product and our ability to respond to fluctuations in demand;
our ability to attract potential customers and retain existing customers and our cost of customer acquisition;
the ability of customers to repay loans;
interest rates and origination fees on loans;
the impact of competition in our industry and innovation by our competitors;
our ability to attract and retain necessary qualified directors, officers and employees to expand our operations;
our reliance on third-party service providers;
our access to the automated clearing house system;
the efficacy of our marketing efforts and relationships with marketing affiliates;
our anticipated direct marketing costs and spending;
the evolution of technology affecting our products, services and markets;
continued innovation of our analytics platform, including releases of new credit models;
our ability to prevent security breaches, disruption in service and comparable events that could compromise the personal and confidential information held in our data systems, reduce the attractiveness of the platform or adversely impact our ability to service loans;
4


our ability to detect and filter fraudulent or incorrect information provided to us by our customers or by third parties;
our ability to adequately protect our intellectual property;
our compliance with applicable local, state, federal and foreign laws;
our compliance with, and the effects on our business and results of operations from, current or future applicable regulatory developments and regulations, including developments or changes from the Consumer Financial Protection Bureau ("CFPB") and developments or changes in state law;
regulatory developments or scrutiny by agencies regulating our business or the businesses of our third-party partners;
public perception of our business and industry;
the anticipated effect on our business of litigation or regulatory proceedings to which we or our officers are a party;
the anticipated effect on our business of natural or man-made catastrophes;
the increased expenses and administrative workload associated with being a public company;
failure to maintain an effective system of internal controls necessary to accurately report our financial results and prevent fraud;
our liquidity and working capital requirements;
the estimates and estimate methodologies used in preparing our consolidated financial statements;
the utility of non-GAAP financial measures;
the future trading prices of our common stock and the impact of securities analysts’ reports on these prices;
our anticipated development and release of certain products and applications and changes to certain products;
our anticipated investing activity;
trends anticipated to continue as our portfolio of loans matures; and
any future repurchases under our share repurchase program, including the timing and amount of repurchases thereunder.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss these risks in greater detail in "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
5

Elevate Credit, Inc. and Subsidiaries
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except share amounts)September 30,
2020
December 31,
2019

(unaudited)
ASSETS
Cash and cash equivalents*
$224,259 $71,215 
Restricted cash
3,135 2,235 
 Loans receivable, net of allowance for loan losses of $49,909 and $79,912, respectively*
341,942 542,073 
Prepaid expenses and other assets*
9,576 6,737 
Operating lease right of use assets
8,811 10,191 
Receivable from CSO lenders
5,260 8,696 
Receivable from payment processors*
5,210 8,681 
Deferred tax assets, net
22,742 8,784 
Property and equipment, net
35,488 35,944 
Goodwill, net
6,776 6,776 
Intangible assets, net
1,163 1,253 
Assets from discontinued operations (see Note 13)
 81,002 
Total assets
$664,362 $783,587 

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued liabilities (See Note 14)*
$35,457 $38,679 
Operating lease liabilities
12,593 14,352 
Income taxes payable
691  
Deferred revenue*
5,911 12,087 
Notes payable, net (See Note 14)*
438,200 525,439 
Liabilities from discontinued operations (see Note 13)
 36,541 
Total liabilities
492,852 627,098 
COMMITMENTS, CONTINGENCIES AND GUARANTEES (Note 12)
STOCKHOLDERS’ EQUITY
Preferred stock; $0.0004 par value; 24,500,000 authorized shares; none issued and outstanding at September 30, 2020 and December 31, 2019.
  
Common stock; 0.0004 par value; 300,000,000 authorized shares; 44,960,438 and 44,445,736 issued; 39,082,894 and 43,676,826 outstanding, respectively
18 18 
Additional paid-in capital
199,194 193,061 
Treasury stock; at cost; 5,877,544 and 768,910 shares of common stock, respectively
(13,775)(3,344)
Accumulated deficit
(13,927)(34,342)
Accumulated other comprehensive income, net of tax benefit of $0 and $1,353, respectively
 1,096 
Total stockholders’ equity
171,510 156,489 
Total liabilities and stockholders’ equity
$664,362 $783,587 

* These balances include certain assets and liabilities of variable interest entities (“VIEs”) that can only be used to settle the liabilities of that respective VIE. All assets of the Company are pledged as security for the Company’s outstanding debt, including debt held by the VIEs. For further information regarding the assets and liabilities included in the Company's consolidated accounts, see Note 4—Variable Interest Entities.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6


Elevate Credit, Inc. and Subsidiaries
CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in thousands, except share and per share amounts)2020201920202019
Revenues
$94,164 $164,296 $374,622 $474,736 
Cost of sales:
Provision for loan losses
13,164 91,702 133,216 235,339 
     Direct marketing costs
2,585 10,927 13,898 29,198 
     Other cost of sales
1,672 2,447 5,949 7,233 
Total cost of sales
17,421 105,076 153,063 271,770 
Gross profit
76,743 59,220 221,559 202,966 
Operating expenses:
Compensation and benefits
23,921 23,289 64,239 67,428 
Professional services
8,236 7,552 24,633 23,416 
Selling and marketing
610 1,117 2,468 3,669 
Occupancy and equipment
4,717 3,887 14,196 11,722 
Depreciation and amortization
4,588 4,013 13,413 11,824 
Other
590 1,045 2,568 3,667 
Total operating expenses
42,662 40,903 121,517 121,726 
Operating income
34,081 18,317 100,042 81,240 
Other expense:
Net interest expense (See Note 14)
(11,575)(13,629)(37,408)(48,565)
Non-operating loss
(1,007)(695)(6,692)(695)
Total other expense
(12,582)(14,324)(44,100)(49,260)
Income from continuing operations before taxes
21,499 3,993 55,942 31,980 
Income tax expense
4,883 1,345 15,311 9,994 
Net income from continuing operations
16,616 2,648 40,631 21,986 
Net income (loss) from discontinued operations
4,465 2,116 (15,908)1,908 
Net income
$21,081 $4,764 $24,723 $23,894 

Basic income per share
Continuing operations
$0.41 $0.06 $0.97 $0.50 
Discontinued operations
0.11 0.05 (0.38)0.05 
Basic earnings per share
$0.52 $0.11 $0.59 $0.55 

Diluted income per share
Continuing operations
$0.41 $0.06 $0.95 $0.50 
Discontinued operations
0.11 0.05 (0.37)0.04 
Diluted earnings per share
$0.52 $0.11 $0.58 $0.54 

Basic weighted average shares outstanding
40,230,256 44,169,964 41,856,894 43,736,458 
Diluted weighted average shares outstanding
40,762,330 44,743,944 42,624,808 44,320,427 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7

Elevate Credit, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(Dollars in thousands)Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Net income
$21,081 $4,764 $24,723 $23,894 
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment, net of tax of $0 and $1 for the three months ended 2020 and 2019, respectively, and $(14) and $(1) for the nine months ended 2020 and 2019, respectively
 (821)(2,061)(880)
Reclassification to Net loss from discontinued operations, net of tax of $0 and $1,369 for the three and nine months ended 2020, respectively, and $0 for the three and nine months ended 2019, respectively
  965  
Change in derivative valuation, net of tax of $0 for the three and nine months ended September 30, 2020, and $0 and $(95) for the three and nine months ended September 30, 2019, respectively
   (208)
Total other comprehensive (loss) income, net of tax
 (821)(1,096)(1,088)
Total comprehensive income
$21,081 $3,943 $23,627 $22,806 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8

Elevate Credit, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
For the periods ended September 30, 2020 and 2019
(Dollars in thousands except share amounts)Preferred Stock
Common Stock
Additional
paid-in
capital
Treasury StockAccumulated
deficit
Accumulated
other
comprehensive
income (loss)
Total
SharesAmountSharesAmountSharesAmount
Balances at December 31, 2018
  43,329,262 $18 $183,244  $ $(66,525)$54 $116,791 
Share-based compensation -US
— — — — 7,286 — — — — 7,286 
Share-based compensation -UK
— — — — (14)— — — — (14)
Exercise of stock options, net
— — 37,500 — 121 — — — — 121 
Vesting of restricted stock units, net
— — 733,447 — (1,350)— — — — (1,350)
ESPP shares issued
— — 142,267 — 498 — — — — 498 
Tax benefit of equity issuance costs
— — — — (2)— — — — (2)
Comprehensive loss:
Foreign currency translation adjustment net of tax of $(1)
— — — — — — — — (880)(880)
Change in derivative valuation net of tax of $(95)
— — — — — — — — (208)(208)
Treasury stock acquired
— — (91,370)— — 91,370 (434)— — (434)
Net income from continuing operations
— — — — — — — 21,986 — 21,986 
Net income from discontinued operations
— — — — — — — 1,908 — 1,908 
Balances at September 30, 2019

  44,151,106 $18 $189,783 91,370 $(434)$(42,631)$(1,034)$145,702 

Balances at December 31, 2019
  43,676,826 18 193,061 768,910 (3,344)(34,342)1,096 156,489 
Share-based compensation -US
— — — — 6,513 — — — — 6,513 
Share-based compensation -UK
— — — — 45 — — — — 45 
Exercise of stock options, net
— — 34,185 — (51)— — — — (51)
Vesting of restricted stock units, net
— — 199,933 — (727)— — — — (727)
ESPP shares issued
— — 280,584 — 353 — — — — 353 
Comprehensive loss:
Foreign currency translation adjustment net of tax of $(14)
— — — — — — — — (2,061)(2,061)
Reclassification to Net income (loss) from discontinued operations net of tax of $1,369
— — — — — — — — 965 965 
Treasury stock reissued for RSUs vesting
— — 983,625 — — (983,625)4,308 (4,308)—  
Treasury stock acquired
— — (6,092,259)— — 6,092,259 (14,739)— — (14,739)
Net income from continuing operations
— — — — — — — 40,631 — 40,631 
Net loss from discontinued operations
— — — — — — — (15,908)— (15,908)
Balances at September 30, 2020

  39,082,894 $18 $199,194 5,877,544 $(13,775)$(13,927)$ $171,510 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
9

Elevate Credit, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)Nine Months Ended September 30,
20202019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$24,723 $23,894 
Less: Net (income) loss from discontinued operations, net of tax
15,908 (1,908)
Net income from continuing operations
40,631 21,986 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
13,413 11,824 
Provision for loan losses
133,216 235,339 
Share-based compensation
6,513 7,272 
Amortization of debt issuance costs
515 449 
Amortization of loan premium
3,734 4,454 
Amortization of derivative assets
 108 
Amortization of operating leases
(378)113 
Deferred income tax expense, net
14,178 9,418 
Non-operating loss
6,692 695 
Changes in operating assets and liabilities:
Prepaid expenses and other assets
(3,305)(486)
Income taxes payable
1,156  
Receivables from payment processors
3,470 2,022 
Receivables from CSO lenders
3,436 6,489 
Interest receivable
(30,417)(53,803)
State and other taxes payable
(91)68 
Deferred revenue
(5,558)(10,670)
Accounts payable and accrued liabilities
(9,500)4,565 
Net cash provided by continuing operating activities
177,705 239,843 
Net cash provided by discontinued operating activities
1,286 29,261 
Net cash provided by operating activities
178,991 269,104 
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans receivable originated or participations purchased
(419,472)(771,835)
Principal collections and recoveries on loans receivable
514,316 580,002 
Participation premium paid
(2,823)(4,530)
Purchases of property and equipment
(12,867)(14,881)
Net cash provided by (used in) continuing investing activities
79,154 (211,244)
Net cash provided by (used in) discontinued investing activities
9,457 (23,006)
Net cash provided by (used in) investing activities
88,611 (234,250)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10

Elevate Credit, Inc. and Subsidiaries
 Nine Months Ended September 30,
(Dollars in thousands)20202019
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable
$6,500 $49,000 
Payments of notes payable
(94,000)(60,000)
Debt issuance costs paid
(253)(2,593)
Debt prepayment costs paid
 (850)
ESPP shares issued
354 498 
Common stock repurchased
(14,739)(434)
Proceeds from stock option exercises
27 121 
Taxes paid related to net share settlement of equity awards
(804)(1,349)
Net cash used in continuing financing activities
(102,915)(15,607)
Net cash used in discontinued financing activities
(16,310)(4)
Net cash used in financing activities
(119,225)(15,611)
Net increase in cash, cash equivalents and restricted cash
148,377 19,243 
Change in cash, cash equivalents and restricted cash from discontinued operations
5,567 (6,251)
Change in cash, cash equivalents and restricted cash from continuing operations
153,944 12,992 
Cash and cash equivalents, beginning of period
71,215 48,349 
Restricted cash, beginning of period
2,235 2,535 
Cash, cash equivalents and restricted cash, beginning of period
73,450 50,884 
Cash and cash equivalents, end of period
224,259 61,641 
Restricted cash, end of period
3,135 2,235 
Cash, cash equivalents and restricted cash, end of period
$227,394 $63,876 
Supplemental cash flow information:
Interest paid
$36,979 $49,877 
Taxes paid
$397 $565 
Non-cash activities:
CSO fees charged-off included in Deferred revenues and Loans receivable
$684 $4,174 
CSO fees on loans paid-off prior to maturity included in Receivable from CSO lenders and Deferred revenue
$42 $159 
Annual membership fee included in Deferred revenues and Loans receivable
$108 $72 
Reissuances of Treasury stock
$4,308 $ 
Changes in fair value of interest rate caps
$ $304 
Tax benefit of equity issuance costs included in Additional paid-in capital
$ $2 
Impact of deferred tax asset included in Other comprehensive income
$1,354 36 
Leasehold improvements allowance included in Property and equipment, net
$ $439