Enova International, Inc. [ENVA] Filings

10-Q 1 enva-20240331.htm 10-Q 10-Q

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 March 31, 2024

☐ 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 1-35503

Enova International, Inc.

(Exact name of registrant as specified in its charter)


Delaware		45-3190813
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification No.)

175 West Jackson Blvd. Chicago, Illinois		60604
(Address of principal executive offices)		(Zip Code)

(312) 568-4200

(Registrant’s telephone number, including area code)

NONE

(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 Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $.00001 par value per share	ENVA	New 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.

Yes ☒ No ☐

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).

Yes ☒ No ☐

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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller 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 ☒

27,119,675 of the Registrant’s common shares, $0.00001 par value, were outstanding as of April 22, 2024.

CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You should not place undue reliance on these statements. These forward-looking statements give current expectations or forecasts of future events and reflect the views and assumptions of senior management with respect to the business, financial condition, operations and prospects of Enova International, Inc. and its subsidiaries (collectively, the “Company”). When used in this report, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecast,” “project” and similar expressions or variations as they relate to the Company or its management are intended to identify forward-looking statements. Forward-looking statements address matters that involve risks and uncertainties that are beyond the ability of the Company to control and, in some cases, predict. Accordingly, there are or will be important factors that could cause the Company’s actual results to differ materially from those indicated in these statements. Key factors that could cause the Company’s actual financial results, performance or condition to differ from the expectations expressed or implied in such forward-looking statements include, but are not limited to, the following:

•

the effect of laws and regulations targeting our industry that directly or indirectly regulate or prohibit our operations or render them unprofitable or impractical;

•

the effect of and compliance with domestic and international consumer credit, tax and other laws and government rules and regulations applicable to our business, including changes in such laws, rules and regulations, or changes in the interpretation or enforcement thereof, and the regulatory and examination authority of the Consumer Financial Protection Bureau with respect to providers of consumer financial products and services in the United States;

•

the effect of and compliance with enforcement actions, orders and agreements issued by applicable regulators, such as the Consent Order issued by the Consumer Financial Protection Bureau in November 2023;

•

changes in federal or state laws or regulations, or judicial decisions involving licensing or supervision of commercial lenders, interest rate limitations, the enforceability of choice of law provisions in loan agreements, the validity of bank sponsor partnerships, the use of brokers or other significant changes;

•

our ability to process or collect loans and finance receivables through the Automated Clearing House system;

•

the deterioration of the political, regulatory or economic environment in countries where we operate or in the future may operate;

•

the actions of third parties who provide, acquire or offer products and services to, from or for us;

•

public and regulatory perception of the consumer loan business, small business financing and our business practices;

•

the effect of any current or future litigation proceedings and any judicial decisions or rulemaking that affects us, our products or the legality or enforceability of our arbitration agreements;

•

changes in demand for our services, changes in competition and the continued acceptance of the online channel by our customers;

•

changes in our ability to satisfy our debt obligations or to refinance existing debt obligations or obtain new capital to finance growth;

•

a prolonged interruption in the operations of our facilities, systems and business functions, including our information technology and other business systems;

•

compliance with laws and regulations applicable to our international operations, including anti-corruption laws such as the Foreign Corrupt Practices Act and international anti-money laundering, trade and economic sanctions laws;

•

our ability to attract and retain qualified officers;

•

cyber-attacks or security breaches;

•

acts of God, war or terrorism, pandemics and other events;

•

inflation, interest rate and foreign currency exchange rate fluctuations;

•

changes in the capital markets, including the debt and equity markets;

•

the effects of macroeconomic conditions on our business, including inflation, recession and unemployment;

•

the effect of any of the above changes on our business or the markets in which we operate;

•

the risk that the Company will not successfully integrate acquired companies or that costs associated with integration are higher than anticipated;

•

the risk that the cost savings, synergies, growth and cash flows from acquisitions will not be fully realized or will take longer to realize than expected;

•

litigation risk related to acquisitions; and

•

other risks and uncertainties described herein.

The foregoing list of factors is not exhaustive and new factors may emerge or changes to these factors may occur that would impact the Company’s business and cause actual results to differ materially from those expressed in any of our forward-looking statements. Additional information regarding these and other factors may be contained in the Company’s filings with the Securities and Exchange Commission (the “SEC”). Readers of this report are encouraged to review the Company’s filings with the SEC, including the risks described under “Risk Factors” contained in the Company’s Form 10-K and any updates to those risk factors contained in subsequent Forms 10-Q, to obtain more detail about the Company’s risks and uncertainties. All forward-looking statements involve risks, assumptions and uncertainties. The occurrence of the events described, and the achievement of the expected results, depends on many events, some or all of which are not predictable or within the Company’s control. If one or more events related to these or other risks or uncertainties materialize, or if management’s underlying assumptions prove to be incorrect, actual results may differ materially from what the Company anticipates. The forward-looking statements in this report are made as of the date of this report, and the Company disclaims any intention or obligation to update or revise any forward-looking statements to reflect events or circumstances occurring after the date of this report. All forward-looking statements in this report are expressly qualified in their entirety by the foregoing cautionary statements.

ENOVA INTERNATIONAL, INC.

INDEX TO FORM 10-Q


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets – March 31, 2024 and 2023 and December 31, 2023	1
	Consolidated Statements of Income – Three Months Ended March 31, 2024 and 2023	3
	Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2024 and 2023	4
	Consolidated Statements of Stockholders’ Equity – Three Months Ended March 31, 2024 and 2023	5
	Consolidated Statements of Cash Flows – Three Months Ended March 31, 2024 and 2023	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35

SIGNATURES		36

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

(Unaudited)


	March 31,						December 31,
	2024			2023			2023
Assets
Cash and cash equivalents(1)	$	76,458		$	97,680		$	54,357
Restricted cash(1)		152,469			190,713			323,082
Loans and finance receivables at fair value(1)		3,795,210			3,003,366			3,629,167
Income taxes receivable		85,424			37,884			44,129
Other receivables and prepaid expenses(1)		65,963			55,478			71,982
Property and equipment, net		111,678			95,413			108,705
Operating lease right-of-use assets		13,651			12,398			14,251
Goodwill		279,275			279,275			279,275
Intangible assets, net		16,991			25,046			19,005
Other assets(1)		39,408			49,739			41,583
Total assets	$	4,636,527		$	3,846,992		$	4,585,536
Liabilities and Stockholders’ Equity
Accounts payable and accrued expenses(1)	$	290,603		$	177,869		$	261,156
Operating lease liabilities		26,959			25,695			27,042
Deferred tax liabilities, net		127,887			108,294			113,350
Long-term debt(1)		3,040,867			2,314,381			2,943,805
Total liabilities		3,486,316			2,626,239			3,345,353
Commitments and contingencies (Note 7)
Stockholders’ equity:
Common stock, $0.00001 par value, 250,000,000 shares authorized, 46,193,337, 44,917,916 and 45,339,814 shares issued and 27,349,818, 31,334,875 and 29,089,258 outstanding as of March 31, 2024 and 2023 and December 31, 2023, respectively		—			—			—
Preferred stock, $0.00001 par value, 25,000,000 shares authorized, no shares issued and outstanding		—			—			—
Additional paid in capital		298,191			258,806			284,256
Retained earnings		1,536,734			1,364,108			1,488,306
Accumulated other comprehensive loss		(7,234	)		(7,337	)		(6,264	)
Treasury stock, at cost (18,843,519, 13,583,041 and 16,250,556 shares as of March 31, 2024 and 2023 and December 31, 2023, respectively)		(677,480	)		(394,824	)		(526,115	)
Total stockholders’ equity		1,150,211			1,220,753			1,240,183
Total liabilities and stockholders’ equity	$	4,636,527		$	3,846,992		$	4,585,536

(1) Includes amounts in wholly-owned, bankruptcy-remote special purpose subsidiaries (“VIEs”) presented separately in the table below.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

(Unaudited)

The following table presents the aggregated assets and liabilities of consolidated VIEs, which are included in the Consolidated Balance Sheets above. The assets in the table below may only be used to settle obligations of consolidated VIEs and are in excess of those obligations. See Note 1 for additional information.


	March 31,				December 31,
	2024		2023		2023
Assets of consolidated VIEs, included in total assets above
Cash and cash equivalents	$	893	$	316	$	315
Restricted cash		137,340		174,937		135,980
Loans and finance receivables at fair value		2,850,633		1,775,732		2,656,049
Other receivables and prepaid expenses		35		4,706		6,792
Other assets		8,793		5,156		6,915
Total assets	$	2,997,694	$	1,960,847	$	2,806,051
Liabilities of consolidated VIEs, included in total liabilities above
Accounts payable and accrued expenses	$	11,955	$	8,982	$	10,469
Long-term debt		1,848,462		1,367,754		1,661,823
Total liabilities	$	1,860,417	$	1,376,736	$	1,672,292

See notes to consolidated financial statements.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(Unaudited)


	Three Months Ended
	March 31,
	2024			2023
Revenue	$	609,889		$	483,256
Change in Fair Value		(264,023	)		(197,366	)
Net Revenue		345,866			285,890
Operating Expenses
Marketing		110,567			79,755
Operations and technology		54,379			49,169
General and administrative		39,865			37,158
Depreciation and amortization		10,263			10,540
Total Operating Expenses		215,074			176,622
Income from Operations		130,792			109,268
Interest expense, net		(65,597	)		(43,321	)
Foreign currency transaction loss		(48	)		(171	)
Equity method investment loss		—			(6	)
Other nonoperating expenses		(492	)		(133	)
Income before Income Taxes		64,655			65,637
Provision for income taxes		16,227			14,714
Net income	$	48,428		$	50,923
Earnings Per Share
Earnings per common share:
Basic	$	1.72		$	1.62
Diluted	$	1.64		$	1.56
Weighted average common shares outstanding:
Basic		28,196			31,341
Diluted		29,503			32,711

See notes to consolidated financial statements.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)


	Three Months Ended
	March 31,
	2024			2023
Net income	$	48,428		$	50,923
Other comprehensive gain (loss), net of tax:
Foreign currency translation (loss) gain(1)		(970	)		960
Unrealized loss on investments, net of tax		—			(2,307	)
Total other comprehensive loss, net of tax		(970	)		(1,347	)
Comprehensive Income	$	47,458		$	49,576

(1) Net of tax benefit (provision) of $319 and $(305) for the three months ended March 31, 2024 and 2023, respectively.

See notes to consolidated financial statements.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(Unaudited)



									Accumulated
					Additional				Other									Total
	Common Stock				Paid in		Retained		Comprehensive			Treasury Stock, at cost						Stockholders’
	Shares		Amount		Capital		Earnings		Loss			Shares			Amount			Equity
Balance at December 31, 2022		44,327	$	—	$	251,878	$	1,313,185	$	(5,990	)		(13,106	)	$	(372,928	)	$	1,186,145
Stock-based compensation expense		—		—		5,969		—		—			—			—			5,969
Shares issued for vested RSUs		510		—		—		—		—			—			—			—
Shares issued for stock option exercises		81		—		959		—		—			—			—			959
Net income		—		—		—		50,923		—			—			—			50,923
Unrealized loss on investments, net of tax		—		—		—		—		(2,307	)		—			—			(2,307	)
Foreign currency translation gain, net of tax		—		—		—		—		960			—			—			960
Purchases of treasury shares, at cost		—		—		—		—		—			(477	)		(21,896	)		(21,896	)
Balance at March 31, 2023		44,918	$	—	$	258,806	$	1,364,108	$	(7,337	)		(13,583	)	$	(394,824	)	$	1,220,753

Balance at December 31, 2023		45,340	$	—	$	284,256	$	1,488,306	$	(6,264	)		(16,251	)	$	(526,115	)	$	1,240,183
Stock-based compensation expense		—		—		7,639		—		—			—			—			7,639
Shares issued for vested RSUs		541		—		—		—		—			—			—			—
Shares issued for stock option exercises		312		—		6,296		—		—			—			—			6,296
Net income		—		—		—		48,428		—			—			—			48,428
Foreign currency translation loss, net of tax		—		—		—		—		(970	)		—			—			(970	)
Purchases of treasury shares, at cost		—		—		—		—		—			(2,593	)		(151,365	)		(151,365	)
Balance at March 31, 2024		46,193	$	—	$	298,191	$	1,536,734	$	(7,234	)		(18,844	)	$	(677,480	)	$	1,150,211

See notes to consolidated financial statements.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	Three Months Ended
	March 31,
	2024			2023
Cash Flows from Operating Activities
Net income	$	48,428		$	50,923
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		10,263			10,540
Amortization of deferred loan costs and debt discount		3,929			1,822
Change in fair value of loans and finance receivables		262,106			195,055
Stock-based compensation expense		7,639			5,969
Loss on early extinguishment of debt		492			133
Operating leases, net		517			(951	)
Deferred income taxes, net		14,537			4,125
Changes in operating assets and liabilities:
Finance and service charges on loans and finance receivables		1,699			13,608
Other receivables and prepaid expenses and other assets		11,246			14,258
Accounts payable and accrued expenses		(14,934	)		(25,996	)
Current income taxes		2,641			12,530
Net cash provided by operating activities		348,563			282,016
Cash Flows from Investing Activities
Loans and finance receivables originated or acquired		(1,278,575	)		(919,869	)
Loans and finance receivables repaid		846,616			724,818
Capitalization of software development costs and purchases of fixed assets		(11,225	)		(10,378	)
Net cash used in investing activities		(443,184	)		(205,429	)
Cash Flows from Financing Activities
Borrowings under revolving line of credit		142,000			60,000
Repayments under revolving line of credit		(65,000	)		—
Borrowings under securitization facilities		258,061			278,342
Repayments under securitization facilities		(72,372	)		(238,076	)
Repayments of senior notes		(168,702	)		(43,646	)
Debt issuance costs paid		(2,893	)		(2,128	)
Proceeds from exercise of stock options		6,296			959
Treasury shares purchased		(151,365	)		(21,896	)
Net cash (used in) provided by financing activities		(53,975	)		33,555
Effect of exchange rates on cash, cash equivalents and restricted cash		84			(149	)
Net (decrease) increase in cash, cash equivalents and restricted cash		(148,512	)		109,993
Cash, cash equivalents and restricted cash at beginning of year		377,439			178,400
Cash, cash equivalents and restricted cash at end of period	$	228,927		$	288,393

Supplemental Disclosures
Non-cash renewal of loans and finance receivables	$	88,622		$	130,846

See notes to consolidated financial statements.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Significant Accounting Policies

Nature of the Company

Enova International, Inc. and its subsidiaries (collectively, the “Company”) operate an internet-based lending platform to serve customers in need of cash to fulfill their financial responsibilities. Through a network of direct and indirect marketing channels, the Company offers funds to its customers through a variety of loan and finance receivable products that are primarily unsecured. The business is operated primarily through the internet to provide convenient, fully-automated financial solutions to its customers. The Company provides financing to small businesses through either installment loans or line of credit accounts and originates, guarantees or purchases consumer installment loans and line of credit accounts. The Company also provides services related to third-party lenders’ consumer loan products in some markets by acting as a credit services organization or credit access business on behalf of consumers in accordance with applicable state laws (“CSO program”).

Basis of Presentation

The consolidated financial statements of the Company included herein have been prepared on the basis of accounting principles generally accepted in the United States (“GAAP”) and reflect the historical results of operations and cash flows of the Company during each respective period. The consolidated financial statements include goodwill and intangible assets arising from businesses previously acquired. The financial information included herein may not be indicative of the consolidated financial position, operating results, changes in stockholders’ equity and cash flows of the Company in the future. Intercompany transactions are eliminated.

The Company consolidates any VIE where it has been determined it is the primary beneficiary. The primary beneficiary is the entity which has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance as well as the obligation to absorb losses or receive benefits of the entity that could potentially be significant to the VIE.

The consolidated financial statements presented as of March 31, 2024 and 2023 and for the three-month periods ended March 31, 2024 and 2023 are unaudited but, in management’s opinion, include all adjustments necessary for a fair presentation of the results for such interim periods. Operating results for the three-month period are not necessarily indicative of the results that may be expected for the full fiscal year.

These consolidated financial statements and related notes should be read in conjunction with the Company’s audited consolidated financial statements as of December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022 and 2021 and related notes, which are included on Form 10-K filed with the SEC on February 23, 2024.

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheets (in thousands):


	March 31,
	2024		2023
Cash and cash equivalents	$	76,458	$	97,680
Restricted cash		152,469		190,713
Total cash, cash equivalents and restricted cash	$	228,927	$	288,393

Loans and Finance Receivables

The Company utilizes the fair value option on its entire loan and finance receivable portfolio. As such, loans and finance receivables are carried at fair value in the consolidated balance sheet with changes in fair value recorded in the consolidated income statement. To derive the fair value, the Company generally utilizes discounted cash flow analyses that factor in estimated losses, prepayments, utilization rates and servicing costs over the estimated duration of the underlying assets. Loss, prepayment, utilization and servicing cost assumptions are determined using historical data and include appropriate consideration of recent trends and anticipated future performance. Future cash flows are discounted using a rate of return that the Company believes a market participant would require. Accrued and unpaid interest and fees are included in “Loans and finance receivables at fair value” in the consolidated balance sheets.

If a loan is renewed or refinanced, the renewal or refinanced loan is considered a new loan. The Company generally does not consider modifications that do not necessitate the customer to sign a new loan agreement to be new loans.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Current and Delinquent Loans and Finance Receivables

The Company classifies its loans and finance receivables as either current or delinquent. When a customer does not make a scheduled payment in full as of the due date, the receivable is considered delinquent. For the OnDeck portfolio, there is no accrual of interest income on loans when the customer misses their most recent payment. Excluding the OnDeck portfolio, there is no accrual of interest income on loans when a customer falls more than one payment behind. Loans may be returned to accrual status if the customer rectifies and the loan no longer meets non-accrual criteria. The Company allows for normal payment processing time before considering a loan delinquent but does not provide for any additional grace period.

The Company offers certain forbearance options on its loan products with features such as payment deferrals without the incurrence of additional finance charges or late fees. If a loan is deemed to be current and the customer makes a deferral or payment modification, the loan is still deemed to be current until the next scheduled payment is missed.

For the consumer portfolio, the Company generally charges off a loan or finance receivable when it becomes 65 days delinquent. If deemed uncollectible prior to this, it is charged off at that point. For the small business portfolio, the Company generally charges off a loan or finance receivable when it is probable that it will be unable to collect all of the remaining principal payments, which is generally after 90 days of delinquency and 30 days of non-activity. Recoveries on loans and finance receivables that were previously charged off are generally recognized when collected or sold.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. In accordance with Accounting Standards Codification (“ASC”) 350, Goodwill, the Company tests goodwill and intangible assets with an indefinite life for potential impairment annually as of October 1 and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value below its carrying amount.

The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. In assessing the qualitative factors, management considers relevant events and circumstances including but not limited to macroeconomic conditions, industry and market environment, overall financial performance of the Company, cash flow from operating activities, market capitalization and stock price. If the Company determines that the quantitative impairment test is required, management uses the income approach to complete its annual goodwill assessment. The income approach uses future cash flows and estimated terminal values for the Company that are discounted using a market participant perspective to determine the fair value, which is then compared to the carrying value to determine if there is impairment. The income approach includes assumptions about revenue growth rates, operating margins and terminal growth rates discounted by an estimated weighted-average cost of capital derived from other publicly-traded companies that are similar but not identical from an operational and economic standpoint.

Revenue Recognition

The Company recognizes revenue based on the financing products and services it offers and on loans it acquires. “Revenue” in the consolidated statements of income primarily includes interest income, statement and draw fees on line of credit accounts, fees for services provided through the Company’s CSO program (“CSO fees”), revenue on receivables purchase agreements (“RPAs”), origination fees, and other fees as permitted by applicable laws and pursuant to the agreement with the customer. Interest income is generally recognized on an effective yield basis over the contractual term of the loan on installment loans or the estimated outstanding period of the draw on line of credit accounts. Statement fees on line of credit accounts are similar to interest charges and are generally recognized similarly to interest income. Draw fees on line of credit accounts are generally recognized at the time of draw. Revenue on RPAs is recognized over the projected delivery term of the agreement. CSO fees are recognized over the term of the loan. Origination fees are charged to customers on certain installment loan products and are recognized upon origination.

Marketing Expenses

Marketing expenses consist of digital costs, lead purchase costs and offline marketing costs such as television and direct mail advertising. All marketing expenses are expensed as incurred.

Equity Method Investments

On February 24, 2021, the Company contributed the platform-as-service business assumed in the OnDeck acquisition to Linear Financial Technologies Holding LLC (“Linear”) in exchange for ownership units in that entity. The Company records its interest in Linear under the equity method of accounting. As of March 31, 2024 and 2023 and December 31, 2023, the carrying value of the Company’s

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

investment in Linear was $16.1 million, $16.0 million and $16.1 million, respectively, which the Company has included in “Other assets” on the consolidated balance sheets.

In December 2021, the Company sold a portion of its interest in On Deck Capital Australia PTY LTD (“OnDeck Australia”). Prior to this, the Company had consolidated the financial position and results of operations of OnDeck Australia under the voting interest model. Subsequent to the transaction, the Company owns a 20% equity interest in OnDeck Australia and no longer has control over the entity; as such, the Company has deconsolidated OnDeck Australia from its financial statements and now records its interest under the equity method of accounting. As of March 31, 2024 and December 31, 2023, the Company's investment in OnDeck Australia had no carrying value. As of March 31, 2023, the carrying value of the Company’s investment in OnDeck Australia was $1.1 million which the Company has included in “Other assets” on the consolidated balance sheets.

Equity method income has been included in “Equity method investment loss” in the consolidated income statements.

Variable Interest Entities

As part of the Company’s overall funding strategy and as part of its efforts to support its liquidity from varying sources, the Company has established a securitization program through several securitization facilities. The Company transfers certain loan receivables to VIEs, which issue notes backed by the underlying loan receivables and are serviced by another wholly-owned subsidiary of the Company. The cash flows from the loans held by the VIEs are used to repay obligations under the notes.

The Company is required to evaluate the VIEs for consolidation. The Company has the ability to direct the activities of the VIEs that most significantly impact the economic performance of the entities as the servicer of the securitized loan receivables. Additionally, the Company has the right to receive residual payments, which expose it to potentially significant losses and returns. Accordingly, the Company determined it is the primary beneficiary of the VIEs and is required to consolidate them. The assets and liabilities related to the VIEs are included in the Company’s consolidated financial statements and are accounted for as secured borrowings.

2. Loans and Finance Receivables

Revenue generated from the Company’s loans and finance receivables for the three months ended March 31, 2024 and 2023 was as follows (dollars in thousands):


	Three Months Ended
	March 31,
	2024		2023
Consumer loans and finance receivables revenue	$	364,731	$	281,011
Small business loans and finance receivables revenue		236,477		194,456
Total loans and finance receivables revenue		601,208		475,467
Other		8,681		7,789
Total revenue	$	609,889	$	483,256

Loans and Finance Receivables at Fair Value

The components of Company-owned loans and finance receivables at March 31, 2024 and 2023 and December 31, 2023 were as follows (dollars in thousands):


	As of March 31, 2024
			Small
	Consumer		Business		Total
Principal balance - accrual	$	995,099	$	2,029,515	$	3,024,614
Principal balance - non-accrual		111,265		162,551		273,816
Total principal balance		1,106,364		2,192,066		3,298,430

Accrued interest and fees		102,187		37,851		140,038

Loans and finance receivables at fair value - accrual		1,325,892		2,380,253		3,706,145
Loans and finance receivables at fair value - non-accrual		21,273		67,792		89,065
Loans and finance receivables at fair value	$	1,347,165	$	2,448,045	$	3,795,210
Difference between principal balance and fair value	$	240,801	$	255,979	$	496,780

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


	As of March 31, 2023
			Small
	Consumer		Business		Total
Principal balance - accrual	$	823,844	$	1,704,336	$	2,528,180
Principal balance - non-accrual		84,243		87,637		171,880
Total principal balance		908,087		1,791,973		2,700,060

Accrued interest and fees		70,643		14,532		85,175

Loans and finance receivables at fair value - accrual		1,054,257		1,902,935		2,957,192
Loans and finance receivables at fair value - non-accrual		8,610		37,564		46,174
Loans and finance receivables at fair value	$	1,062,867	$	1,940,499	$	3,003,366
Difference between principal balance and fair value	$	154,780	$	148,526	$	303,306


	As of December 31, 2023
			Small
	Consumer		Business		Total
Principal balance - accrual	$	1,019,057	$	1,860,419	$	2,879,476
Principal balance - non-accrual		119,871		155,388		275,259
Total principal balance		1,138,928		2,015,807		3,154,735

Accrued interest and fees		107,747		34,600		142,347

Loans and finance receivables at fair value - accrual		1,358,734		2,172,404		3,531,138
Loans and finance receivables at fair value - non-accrual		22,050		75,979		98,029
Loans and finance receivables at fair value	$	1,380,784	$	2,248,383	$	3,629,167
Difference between principal balance and fair value	$	241,856	$	232,576	$	474,432

As of March 31, 2024 and 2023 and December 31, 2023, the aggregate fair value of loans and finance receivables that were 90 days or more past due was $32.8 million, $5.9 million and $24.3 million, respectively, of which, $15.8 million, $5.7 million and $23.6 million, respectively, was in non-accrual status. The aggregate unpaid principal balance for loans and finance receivables that were 90 days or more past due was $75.7 million, $14.8 million and $43.6 million, respectively.

Changes in the fair value of Company-owned loans and finance receivables during the three months ended March 31, 2024 and 2023 were as follows (dollars in thousands):


	Three Months Ended March 31, 2024
				Small
	Consumer			Business			Total
Balance at beginning of period	$	1,380,784		$	2,248,383		$	3,629,167
Originations or acquisitions(1)		407,263			959,935			1,367,198
Interest and fees(2)		364,731			236,477			601,208
Repayments		(621,720	)		(917,623	)		(1,539,343	)
Charge-offs, net(3)		(187,419	)		(99,279	)		(286,698	)
Net change in fair value(3)		4,440			20,152			24,592
Effect of foreign currency translation		(914	)		—			(914	)
Balance at end of period	$	1,347,165		$	2,448,045		$	3,795,210

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


	Three Months Ended March 31, 2023
				Small
	Consumer			Business			Total
Balance at beginning of period	$	1,083,062		$	1,935,466		$	3,018,528
Originations or acquisitions(1)		280,551			770,164			1,050,715
Interest and fees(2)		281,011			194,456			475,467
Repayments		(467,533	)		(879,183	)		(1,346,716	)
Charge-offs, net(3)		(156,272	)		(76,215	)		(232,487	)
Net change in fair value(3)		41,621			(4,189	)		37,432
Effect of foreign currency translation		427			—			427
Balance at end of period	$	1,062,867		$	1,940,499		$	3,003,366

(1) Originations or acquisitions is presented on a cost basis.

(2) Included in “Revenue” in the consolidated statements of income.

(3) Included in “Change in Fair Value” in the consolidated statements of income.

Guarantees of Consumer Loans

In connection with its CSO program, the Company guarantees consumer loan payment obligations to an unrelated third-party lender for consumer loans and is required to purchase any defaulted loans it has guaranteed. The guarantee represents an obligation to purchase specific loans that go into default. As of March 31, 2024 and 2023 and December 31, 2023, the consumer loans guaranteed by the Company had an estimated fair value of $14.8 million, $13.9 million and $18.5 million, respectively, and an outstanding principal balance of $10.8 million, $10.5 million and $13.5 million, respectively. As of March 31, 2024 and 2023 and December 31, 2023, the amount of consumer loans, including principal, fees and interest, guaranteed by the Company was $13.0 million, $12.8 million and $16.4 million, respectively. These loans are not included in the consolidated balance sheets as the Company does not own the loans prior to default.

3. Long-term debt

The Company’s long-term debt instruments and balances outstanding as of March 31, 2024 and 2023 and December 31, 2023, including maturity date, weighted average interest rate and borrowing capacity as of March 31, 2024, were as follows (dollars in thousands):


			Weighted				Outstanding
	Revolving		average	Borrowing			March 31,						December 31,
	period end date	Maturity date	interest rate(1)	capacity			2024			2023			2023
Funding Debt:
2018-1 Securitization Facility	March 2025	March 2027	9.58%	$	200,000		$	101,861		$	—		$	92,964
2018-2 Securitization Facility	July 2023	July 2025	10.42%		40,657			40,657			142,200			66,110
NCR 2022 Securitization Facility	October 2024	October 2026	10.08%		125,000			92,397			51,095			43,975
NCLOCR 2024 Securitization Facility	February 2027	February 2028	10.82%		150,000			50,000			—			—
ODR 2021-1 Securitization Facility	November 2025	November 2026	8.87%		233,333			221,331			197,167			151,331
ODR 2022-1 Securitization Facility	June 2024	June 2025	8.08%		420,000			246,668			282,000			277,586
RAOD Securitization Facility	November 2024	November 2025	8.13%		230,263			222,110			230,263			142,110
HWCR 2023 Securitization Facility	May 2025	May 2026	9.68%		287,214			287,214			—			287,214
ODAST III Securitization Notes	April 2024	May 2027	2.07%		300,000			300,000			300,000			300,000
2023-A Securitization Notes	—	December 2027	7.78%		63,605			63,605			170,014			78,865
ODAS IV Securitization Notes	—	August 2030	7.66%		227,051			227,051			—			227,051
Total funding debt			7.70%	$	2,277,123		$	1,852,894		$	1,372,739		$	1,667,206
Corporate Debt:
8.50% senior notes due 2024	—	September 2024	8.50%	$	—		$	—		$	206,205		$	168,702
8.50% senior notes due 2025	—	September 2025	8.50%		375,000			375,000			375,000			375,000
11.25% senior notes due 2028	—	December 2028	11.25%		400,000			400,000			—			400,000
Revolving line of credit	June 2026	June 2026	8.88%		515,000	(2)		433,000			369,000			356,000
Total corporate debt			9.55%	$	1,290,000		$	1,208,000		$	950,205		$	1,299,702
Less: Long-term debt issuance costs							$	(15,435	)	$	(6,134	)	$	(17,966	)
Less: Debt discounts								(4,592	)		(2,429	)		(5,137	)
Total long-term debt							$	3,040,867		$	2,314,381		$	2,943,805

(1) The weighted average interest rate is determined based on the rates and principal balances on March 31, 2024. It does not include the impact of the amortization of deferred loan origination costs or debt discounts.

(2) The Company had outstanding letters of credit under the Revolving line of credit of $0.7 million. $0.8 million and $0.8 million as of March 31, 2024 and 2023 and December 31, 2023, respectively.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Weighted average interest rates on long-term debt were 9.18% and 7.84% during the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024 and 2023 and December 31, 2023, the Company was in compliance with all covenants and other requirements set forth in the prevailing long-term debt agreements.

Recent Updates to Debt Facilities

NetCredit LOC Receivables 2024

On February 21, 2024, NetCredit LOC Receivables 2024, LLC, a wholly-owned indirect subsidiary of the Company, entered into a receivables securitization (the “NCLOCR 2024 Securitization Facility”) with lenders party thereto from time to time, Midtown Madison Management, LLC, as administrative agent and Citibank, N.A., as collateral trustee and paying agent. The NCLOCR 2024 Securitization Facility collateralizes certain receivables that have been and will be originated under the Company’s NetCredit brand by several of its subsidiaries and that meet specified criteria in exchange for a note payable.

The NCLOCR 2024 Securitization Facility has a revolving commitment of $150.0 million, which is required to be secured by eligible securitization receivables. The NCLOCR 2024 Securitization Facility is non-recourse to the Company. The facility has a revolving period that ends in February 2027 and a final maturity ending in February 2028.

The NCLOCR 2024 Securitization Facility is governed by a note issuance and purchase agreement, dated as of February 21, 2024, among NetCredit LOC Receivables 2024, LLC, the administrative agent, the lenders, and the collateral trustee and paying agent. The revolving loans shall accrue interest as a rate per annum equal to SOFR plus 5.50% with an advance rate of 85%. Interest payments on the NCLOCR 2024 Securitization Facility will be made monthly.

8.50% Senior Notes Due 2024

On January 3, 2024, the Company redeemed the remaining $168.7 million of 8.50% Senior Notes Due 2024 at par plus accrued interest. During the three months ended March 31, 2023, the Company repurchased $43.8 million principal amount of the 8.50% Senior Notes Due 2024 for aggregate cash consideration of $43.6 million plus accrued interest. During the three months ended March 31, 2024 and 2023, the Company recorded a loss on extinguishment of debt of $0.5 million ($0.4 million, net of tax) and $0.1 million ($0.1 million, net of tax), respectively, which is included in “Other nonoperating expenses” in the consolidated statements of income.

4. Income Taxes

The Company’s effective tax rate for the three months ended March 31, 2024 was 25.1%, compared to 22.4% for the three months ended March 31, 2023. The increase is primarily attributable to additional interest expense on unrecognized tax benefits and a remeasurement of the net deferred tax liability due to state rate adjustments, which were partially offset by excess tax benefits on stock compensation due to stock price appreciation.

As of March 31, 2024, the balance of unrecognized tax benefits, inclusive of interest and penalties, was $179.2 million, which is included in “Accounts payable and accrued expenses” on the consolidated balance sheet. This balance consists of a temporary component of $167.6 million, for which there is an equal and offsetting deferred tax asset, and a permanent component of $11.6 million, which, if recognized, would favorably affect the effective tax rate in the period of recognition. The Company had $94.4 million of unrecognized tax benefits as of March 31, 2023. As of December 31, 2023, the Company had $173.7 million of unrecognized tax benefits, of which $135.2 million is included in “Accounts payable and accrued expenses” on the consolidated balance sheet. The remaining $38.5 million is split between a reduction to deferred tax assets and an increase to income taxes payable. Based on the expiration of the statute of limitations for certain jurisdictions, the Company believes it is reasonably possible that, within the next twelve months, unrecognized tax benefits could decrease by approximately $2.2 million. The Company believes that it has adequately accounted for any material tax uncertainties in its existing reserves for all open tax years.

The Company’s U.S. tax returns are subject to examination by federal and state taxing authorities. The statute of limitations related to the Company’s consolidated Federal income tax returns is closed for all tax years up to and including 2019. The years open to examination by state, local and foreign government authorities vary by jurisdiction, but the statute of limitation is generally three years from the date the tax return is filed. For jurisdictions that have generated net operating losses, carryovers may be subject to the statute of limitations applicable for the year those carryovers are utilized. In these cases, the period for which the losses may be adjusted will extend to conform with the statute of limitations for the year in which the losses are utilized. In most circumstances, this is expected to increase the length of time that the applicable taxing authority may examine the carryovers by one year or longer, in limited cases.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

5. Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated using the treasury share method, by giving effect to the potential dilution that could occur if securities or other contracts to issue common shares were exercised and converted into common shares during the period. Restricted stock units issued under the Company’s stock-based employee compensation plans are included in diluted shares upon the granting of the awards even though the vesting of shares will occur over time.

The following table sets forth the reconciliation of numerators and denominators of basic and diluted earnings per share computations for the three months ended March 31, 2024 and 2023 (in thousands, except per share amounts):


	Three Months Ended
	March 31,
	2024		2023
Numerator:
Net income	$	48,428	$	50,923
Denominator:
Total weighted average basic shares		28,196		31,341
Shares applicable to stock-based compensation		1,307		1,370
Total weighted average diluted shares		29,503		32,711
Earnings per common share:
Earnings per common share – basic	$	1.72	$	1.62
Earnings per common share – diluted	$	1.64	$	1.56

For the three months ended March 31, 2024 and 2023, 269,123 and 339,765 shares of common stock underlying stock options, respectively, and no shares and 346,194 shares of common stock underlying restricted stock units, respectively, were excluded from the calculation of diluted net income per share because their effect would have been antidilutive.

6. Operating Segment Information

The Company provides online financial services to non-prime credit consumers and small businesses in the United States and Brazil and has one reportable segment. The Company has aggregated all components of its business into a single operating segment based on the similarities of the economic characteristics, the nature of the products and services, the nature of the production and distribution methods, the shared technology platforms, the type of customer and the nature of the regulatory environment.

Geographic Information

The following table presents the Company’s revenue by geographic region for the three months ended March 31, 2024 and 2023 (dollars in thousands):


	Three Months Ended
	March 31,
	2024		2023
Revenue
United States	$	598,119	$	479,053
Other international countries		11,770		4,203
Total revenue	$	609,889	$	483,256

The Company’s long-lived assets, which consist of the Company’s property and equipment, were $111.7 million, $95.4 million and $108.7 million at March 31, 2024 and 2023 and December 31, 2023, respectively. The operations for the Company’s businesses are primarily located within the United States, and the value of any long-lived assets located outside of the United States is immaterial.

7. Commitments and Contingencies

Consumer Financial Protection Bureau

On November 15, 2023, the Company consented to the issuance of a Consent Order by the Consumer Financial Protection Bureau (“CFPB”) pursuant to which the Company agreed, without admitting or denying any of the facts or conclusions, to pay a civil money penalty of $15.0 million. The civil money penalty was included in “General and Administrative” expenses in the Consolidated

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Statements of Income during the three months ended December 31, 2023. The Consent Order relates to issues, the majority of which were self-disclosed, such as payment processing and debiting errors.

Litigation

On April 23, 2018, the Commonwealth of Virginia, through Attorney General Mark R. Herring, filed a lawsuit in the Circuit Court for the County of Fairfax, Virginia against NC Financial Solutions of Utah, LLC (“NC Utah”), a subsidiary of the Company. The lawsuit alleges violations of the Virginia Consumer Protection Act relating to NC Utah’s communications with customers, collections of certain payments, its loan agreements, and the rates it charged to Virginia borrowers. The plaintiff sought to enjoin NC Utah from continuing its then-existing lending practices in Virginia, and still seeks restitution, civil penalties, and costs and expenses in connection with the same. Due to a change in the law, NC Utah no longer lends to Virginia residents and the injunctive remedies sought against NC Utah’s lending practices are no longer applicable. Neither the likelihood of an unfavorable decision nor the ultimate liability, if any, with respect to this matter can be determined at this time, and the Company is currently unable to estimate a range of reasonably possible losses, as defined by ASC 450-20-20, Contingencies–Loss Contingencies–Glossary, for this litigation. The Company carefully considered applicable Virginia law before NC Utah began lending in Virginia and, as a result, believes that the plaintiff’s claims in the complaint are without merit and intends to vigorously defend this lawsuit.

The Company is also involved in certain routine legal proceedings, claims and litigation matters encountered in the ordinary course of its business. Certain of these matters may be covered to an extent by insurance or by indemnification agreements with third parties. The Company has recorded accruals in its consolidated financial statements for those matters in which it is probable that it has incurred a loss and the amount of the loss, or range of loss, can be reasonably estimated. In the opinion of management, the resolution of these matters will not have a material adverse effect on the Company’s financial position, results of operations or liquidity.

8. Related Party Transactions

In December 2021, the Company divested a portion of its interest in OnDeck Australia and began recording its remaining interest utilizing the equity method of accounting. As of March 31, 2024, there was no outstanding balance between OnDeck Australia and the Company. As of March 31, 2023 and December 31, 2023, the Company had a due from affiliate balance of $0.2 million and $0.1 million, respectively, related to OnDeck Australia.

9. Fair Value Measurements

Recurring Fair Value Measurements

The Company uses a hierarchical framework that prioritizes and ranks the market observability of inputs used in its fair value measurements. Market price observability is affected by a number of factors, including the type of asset or liability and the characteristics specific to the asset or liability being measured. Assets and liabilities with readily available, active, quoted market prices or for which fair value can be measured from actively quoted prices generally are deemed to have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The Company classifies the inputs used to measure fair value into one of three levels as follows:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable.

Level 3: Unobservable inputs for the asset or liability measured.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those cases, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level of input that is significant to the entire measurement. Such determination requires significant management judgment.

During the three months ended March 31, 2024 and 2023, there were no transfers of assets or liabilities in or out of Level 3 fair value measurements. It is the Company’s policy to value any transfers between levels of the fair value hierarchy based on end of period fair values.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2024 and 2023 and December 31, 2023 are as follows (dollars in thousands):


	March 31,		Fair Value Measurements Using
	2024		Level 1		Level 2		Level 3
Financial assets:
Consumer loans and finance receivables(1)(2)	$	1,347,165	$	—	$	—	$	1,347,165
Small business loans and finance receivables(1)(2)		2,448,045		—		—		2,448,045
Non-qualified savings plan assets(3)		9,702		9,702		—		—
Investment in trading security(4)		3,492		3,492		—		—
Total	$	3,808,404	$	13,194	$	—	$	3,795,210

	March 31,		Fair Value Measurements Using
	2023		Level 1		Level 2		Level 3
Financial assets:
Consumer loans and finance receivables(1)(2)	$	1,062,867	$	—	$	—	$	1,062,867
Small business loans and finance receivables(1)(2)		1,940,499		—		—		1,940,499
Non-qualified savings plan assets(3)		7,168		7,168		—		—
Investment in trading security(4)		15,506		15,506		—		—
Total	$	3,026,040	$	22,674	$	—	$	3,003,366

	December 31,		Fair Value Measurements Using
	2023		Level 1		Level 2		Level 3
Financial assets:
Consumer loans and finance receivables(1)(2)	$	1,380,784	$	—	$	—	$	1,380,784
Small business loans and finance receivables(1)(2)		2,248,383		—		—		2,248,383
Non-qualified savings plan assets(3)		8,045		8,045		—		—
Investment in trading security(4)		7,169		7,169		—		—
Total	$	3,644,381	$	15,214	$	—	$	3,629,167

(1) Consumer and small business loans and finance receivables are included in “Loans and finance receivables at fair value” in the consolidated balance sheets.

(2) Consumer loans and finance receivables include $831.0 million, $460.5 million and $1,181.0 million in assets of consolidated VIEs as of March 31, 2024 and 2023 and December 31, 2023, respectively. Small business loans and finance receivables include $2,019.6 million, $1,315.2 million and $1,475.1 million in assets of consolidated VIEs as of March 31, 2024 and 2023 and December 31, 2023, respectively.

(3) The non-qualified savings plan assets are included in “Other receivables and prepaid expenses” in the Company’s consolidated balance sheets and have an offsetting liability, which is included in “Accounts payable and accrued expenses” in the Company’s consolidated balance sheets.

(4) Investment in trading security is included in “Other assets” in the Company’s consolidated balance sheets.

The Company primarily estimates the fair value of its loan and finance receivables portfolio using discounted cash flow models that have been internally developed. The models use inputs, such as estimated losses, prepayments, utilization rates, servicing costs and discount rates, that are unobservable but reflect the Company’s best estimates of the assumptions a market participant would use to calculate fair value. Certain unobservable inputs may, in isolation, have either a directionally consistent or opposite impact on the fair value of the financial instrument for a given change in that input. An increase to the net loss rate, prepayment rate, servicing cost, or discount rate would decrease the fair value of the Company’s loans and finance receivables. When multiple inputs are used within the valuation techniques for loans, a change in one input in a certain direction may be offset by an opposite change from another input.

The fair value of the nonqualified savings plan assets was deemed Level 1 as they are publicly traded equity securities for which market prices of identical assets are readily observable.

The fair value of the investment in trading security was deemed Level 1 as it is a publicly traded fund with active market pricing that is readily available.

The Company had no liabilities measured at fair value on a recurring basis as of March 31, 2024 and 2023 and December 31, 2023.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Fair Value Measurements on a Non-Recurring Basis

The Company measures non-financial assets and liabilities such as property and equipment and intangible assets at fair value on a non-recurring basis or when events or circumstances indicate that the carrying amount of the assets may be impaired. At March 31, 2024 and 2023 and December 31, 2023, there were no assets or liabilities recorded at fair value on a non-recurring basis.

Financial Assets and Liabilities Not Measured at Fair Value

The Company’s financial assets and liabilities as of March 31, 2024 and 2023 and December 31, 2023 that are not measured at fair value in the consolidated balance sheets are as follows (dollars in thousands):


	Balance at
	March 31,		Fair Value Measurements Using
	2024		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	76,458	$	76,458	$	—	$	—
Restricted cash (1)		152,469		152,469		—		—
Investment in unconsolidated investee (2)		6,918		—		—		6,918
Total	$	235,845	$	228,927	$	—	$	6,918
Financial liabilities:
Revolving line of credit	$	433,000	$	—	$	—	$	433,000
Securitization notes		1,851,830		—		1,853,450		—
8.50% senior notes due 2025		375,000		—		374,820		—
11.25% senior notes due 2028		396,471		—		422,012		—
Total	$	3,056,301	$	—	$	2,650,282	$	433,000


	Balance at
	March 31,		Fair Value Measurements Using
	2023		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	97,680	$	97,680	$	—	$	—
Restricted cash (1)		190,713		190,713		—		—
Investment in unconsolidated investee (2)		6,918		—		—		6,918
Total	$	295,311	$	288,393	$	—	$	6,918
Financial liabilities:
Revolving line of credit	$	369,000	$	—	$	—	$	369,000
Securitization notes		1,370,310		—		1,348,595		—
8.50% senior notes due 2024		206,205		—		203,130		—
8.50% senior notes due 2025		375,000		—		355,410		—
Total	$	2,320,515	$	—	$	1,907,135	$	369,000


	Balance at
	December 31,		Fair Value Measurements Using
	2023		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	54,357	$	54,357	$	—	$	—
Restricted cash (1)		323,082		323,082		—		—
Investment in unconsolidated investee (2)		6,918		—		—		6,918
Total	$	384,357	$	377,439	$	—	$	6,918
Financial liabilities:
Revolving line of credit	$	356,000	$	—	$	—	$	356,000
Securitization notes		1,665,785		—		1,660,596		—
8.50% senior notes due 2024		168,702		—		168,702		—
8.50% senior notes due 2025		375,000		—		370,729		—
11.25% senior notes due 2028		396,284		—		412,588		—
Total	$	2,961,771	$	—	$	2,612,615	$	356,000

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(1) Restricted cash includes $137.3 million, $174.9 million and $136.0 million in assets of consolidated VIEs as of March 31, 2024 and 2023 and December 31, 2023, respectively.

(2) Investment in unconsolidated investee is included in “Other assets” in the consolidated balance sheets.

Cash and cash equivalents and restricted cash bear interest at market rates and have maturities of less than 90 days. The carrying amount of restricted cash and cash equivalents approximates fair value.

The Company measures the fair value of its investment in unconsolidated investee using Level 3 inputs. Because the unconsolidated investee is a private company and financial information is limited, the Company estimates the fair value based on the best available information at the measurement date.

The Company measures the fair value of its revolving line of credit using Level 3 inputs. The Company considered the fair value of its other long-term debt and the timing of expected payment(s).

The fair values of the Company’s Securitization Notes and senior notes are estimated based on quoted prices in markets that are not active, which are deemed Level 2 inputs.

10. Subsequent Events

Subsequent events have been reviewed through the date these financial statements were issued.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of financial condition, results of operations, liquidity and capital resources and certain factors that may affect future results, including economic and industry-wide factors, of Enova International, Inc. and its subsidiaries should be read in conjunction with our consolidated financial statements and accompanying notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as with Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. The matters discussed in these forward-looking statements are subject to risk, uncertainties, and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements. Please see “Risk Factors” and “Cautionary Statement Concerning Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.

BUSINESS OVERVIEW

We are a leading technology and analytics company focused on providing online financial services. In 2023, we extended approximately $4.9 billion in credit or financing to borrowers and for the three months ended March 31, 2024, we extended approximately $1.4 billion in credit or financing to borrowers. As of March 31, 2024, we offered or arranged loans or draws on lines of credit to consumers in 37 states in the United States and Brazil. We also offered financing to small businesses in 49 states and Washington D.C. in the United States. We use our proprietary technology, analytics and customer service capabilities to quickly evaluate, underwrite and fund loans or provide financing, allowing us to offer consumers and small businesses credit or financing when and how they want it. Our customers include the large and growing number of consumers who and small businesses which have bank accounts but use alternative financial services because of their limited access to more traditional credit from banks, credit card companies and other lenders. We were an early entrant into online lending, launching our online business in 2004, and through March 31, 2024, we have completed approximately 61.9 million customer transactions and collected more than 65 terabytes of currently accessible customer behavior data since launch, allowing us to better analyze and underwrite our specific customer base. We have significantly diversified our business over the past several years, having expanded the markets we serve and the financing products we offer. These financing products include installment loans and line of credit accounts.

We believe our customers highly value our products and services as an important component of their personal or business finances because our products are convenient, quick and often less expensive than other available alternatives. We attribute the success of our business to our advanced and innovative technology systems, the proprietary analytical models we use to predict the performance of loans and finance receivables, our sophisticated customer acquisition programs, our dedication to customer service and our talented employees.

We have developed proprietary underwriting systems based on data we have collected over our 20 years of experience. These systems employ advanced risk analytics, including machine learning and artificial intelligence, to decide whether to approve financing transactions, to structure the amount and terms of the financings we offer pursuant to jurisdiction-specific regulations and to provide customers with their funds quickly and efficiently. Our systems closely monitor collection and portfolio performance data that we use to continually refine machine learning-enabled analytical models and statistical measures used in making our credit, purchase, marketing and collection decisions. Approximately 90% of models used in our analytical environment are machine learning-enabled.

Our flexible and scalable technology platforms allow us to process and complete customers’ transactions quickly and efficiently. In 2023, we processed approximately 3.0 million transactions, and we continue to grow our loan and finance receivable portfolios and increase the number of customers we serve through desktop, tablet and mobile platforms. Our highly customizable technology platforms allow us to efficiently develop and deploy new products to adapt to evolving regulatory requirements and consumer preference, and to enter new markets quickly. In October 2020, we acquired, through a merger, On Deck Capital Inc. (“OnDeck”), a small business lending company offering lending and funding solutions to small businesses in the U.S., Australia and Canada, to expand our small business offerings. In March 2021, we acquired Pangea Universal Holdings (“Pangea”), which provides mobile international money transfer services to customers in the U.S with a focus on Latin America and Asia. These new products have allowed us to further diversify our product offerings and customer base.

We have been able to consistently acquire new customers and successfully generate repeat business from returning customers when they need financing. We believe our customers are loyal to us because they are satisfied with our products and services. We acquire new customers from a variety of sources, including visits to our own websites, mobile sites or applications, and through direct marketing, affiliate marketing, lead providers and relationships with other lenders. We believe that the online convenience of our products and our 24/7 availability to accept applications with quick approval decisions are important to our customers.

Once a potential customer submits an application, we quickly provide a credit or purchase decision. If a loan or financing is approved, we or our lending partner typically fund the loan or financing the next business day or, in some cases, the same day. During the entire

process, from application through payment, we provide access to our well-trained customer service team. All of our operations, from customer acquisition through collections, are structured to build customer satisfaction and loyalty, in the event that a customer has a need for our products in the future. We have developed a series of sophisticated proprietary scoring models to support our various products. We believe that these models are an integral component of our operations and allow us to complete a high volume of customer transactions while actively managing risk and the related credit quality of our loan and finance receivable portfolios. We believe our successful application of these technological innovations differentiates our capabilities relative to competing platforms as evidenced by our history of strong growth and stable credit quality.

PRODUCTS AND SERVICES

Our online financing products and services provide customers with a deposit of funds to their bank account in exchange for a commitment to repay the amount deposited plus fees and/or interest. We originate, arrange, guarantee or purchase installment loans and line of credit accounts to consumers and small businesses. We have one reportable segment that includes all of our online financial services. Our loans and finance receivables generally have regular payments that amortize principal. Interest income is generally recognized on an effective, non-accelerated yield basis over the contractual term of the installment loan or estimated outstanding period of the draw on line of credit accounts.

•

Consumer installment loans. Certain subsidiaries (i) directly offer installment loans, (ii) as part of our Bank Programs, as discussed below, purchase or purchase a participating interest in, installment loans or (iii) as part of our CSO program, arrange and guarantee installment loans, as discussed below, to consumers. Certain subsidiaries offer, or arrange through our Bank Programs and CSO program, unsecured consumer installment loan products in 37 states in the United States. Internationally, we also offer or arrange unsecured consumer installment loan products in Brazil. Terms for our consumer installment loan products range between 3 and 60 months with an average contractual term of 39 months. Our loans have regular payments that amortize principal. Loan sizes for these products range between $300 and $10,000. The majority of these loans accrue interest daily at a fixed rate for the life of the loan and have no fees. The average annualized yield for these loans was 79% for the year ended December 31, 2023. Loans may be repaid early at any time with no additional prepayment charges.

•

Small business installment loans. Certain subsidiaries offer, or arrange through our Bank Programs, small business installment loans in 49 states and in Washington D.C. Terms for these products range between 3 and 24 months with an average contractual term of 16 months. Our loans have regular payments that amortize principal. Loan sizes for these products range between $5,000 and $250,000. There is generally a fee paid upon origination, and total interest is typically calculated at a fixed rate for the life of the loan. A portion of the interest is forgivable if prepaid early, although we also offer a full prepayment forgiveness option at a higher interest rate. The average annualized yield for these products was 42% for the year ended December 31, 2023.

•

Consumer line of credit accounts. Certain subsidiaries directly offer, or purchase participation interests in receivables through our Bank Programs, new consumer line of credit accounts in 31 states (and continue to service existing line of credit accounts in two additional states) in the United States. Line of credit accounts allow customers to draw on their unsecured line of credit in increments of their choosing up to their credit limit, which ranges between $100 and $7,000. Customers may pay off their account balance in full at any time or make required minimum payments in accordance with the terms of the line of credit account. The repayment period varies depending upon certain factors, which may include outstanding principal and differences in minimum payment calculations by product. Customers are typically charged a fee when funds are drawn and subsequently incur fee- or interest-based charges at a fixed rate, depending upon the product and the state in which the customer resides. The average annualized yield for these products was 182% for the year ended December 31, 2023.

•

Small business line of credit accounts. Certain subsidiaries offer, or arrange through our Bank Programs, small business line of credit accounts in 49 states and in Washington D.C. in the United States. Terms for these products range between 12 and 24 months with regular payments that amortize principal. Loan sizes for these products range between $5,000 and $100,000. Interest is calculated at a fixed rate based on the outstanding balance. There is generally no fee paid upon origination with the exception of one of our small business line of credit products, which has an origination fee when allowed by state law. The average annualized yield for these products was 46% for the year ended December 31, 2023.

•

CSO program. We currently operate a credit services organization or credit access business (“CSO”) program in Texas. Through our CSO program, we provide services related to a third-party lender’s installment consumer loan products by acting as a credit services organization or credit access business on behalf of consumers in accordance with applicable state laws. Services offered under our CSO program include credit-related services such as arranging loans with an independent third-party lender and assisting in the preparation of loan applications and loan documents (“CSO loans”). When a consumer executes an agreement with us under our CSO program, we agree, for a fee payable to us by the consumer, to provide certain services, one of which is to guarantee the consumer’s obligation to repay the loan received by the consumer from the third-party lender if the consumer fails to do so. For CSO loans, the lender is responsible for providing the criteria by which the consumer’s application is underwritten and, if approved, determining the amount of the consumer loan. We, in turn, are responsible for assessing whether or not we will guarantee such loan. The guarantee represents an obligation to purchase the loan, which has terms of up to six months, if it goes into default.

•

Bank programs. Certain subsidiaries operate programs with certain banks (“Bank Programs”) to provide marketing services and loan servicing for certain installment loans and line of credit accounts. The Bank Programs that relate to the consumer portfolio include near-prime unsecured installment loans and line of credit accounts for which our subsidiaries receive marketing and servicing fees. The bank has the ability to sell, and the participating subsidiaries have the option, but not the requirement, to purchase the loans or a participating interest in receivables the bank originates. We do not guarantee the performance of the loans and line of credit accounts originated by the bank. The Bank Program that relates to the small business portfolio is with a separate bank and includes installment loans and line of credit accounts. We receive marketing fees while the bank receives origination fees and certain program fees. The bank has the ability to sell and we have the option, but not the requirement, to purchase the installment loans the bank originates and, in the case of line of credit accounts, extensions under those line of credit accounts. We do not guarantee the performance of the loans or line of credit accounts originated by the bank.

•

Money transfer business. Through the acquisition of Pangea, we operate a money transfer platform that allows customers to send money from the United States to Mexico, other Latin American countries and Asia. The customer pays us in U.S. dollars, and we then make local currency available to the intended recipient of the transfer in one of many termination countries. Our revenue model includes a fee per transfer and an exchange rate spread. Our customers can access our proprietary platform via the website, Android app, or iOS (Apple) app.

OUR MARKETS

We currently provide our services in the following countries:

•

United States. We began our online business in the United States in May 2004. As of March 31, 2024, we provided services in all 50 states and Washington D.C. We market our financing products under the names CashNetUSA at www.cashnetusa.com, NetCredit at www.netcredit.com, OnDeck at www.ondeck.com, Headway Capital at www.headwaycapital.com and Pangea at www.pangeamoneytransfer.com.

•

Brazil. In June 2014, we launched our business in Brazil under the name Simplic at www.simplic.com.br, where we arrange unsecured consumer installment loans for a third-party lender. We plan to continue to invest in and expand our financial services program in Brazil.

Our internet websites and the information contained therein or connected thereto are not intended to be incorporated by reference into this Quarterly Report on Form 10-Q.

RECENT REGULATORY DEVELOPMENTS

State of Washington SSB 6025

In March 2024, the Governor of the State of Washington signed into law a bill that amends the Consumer Loan Act (“CLA”) to add anti-evasion language and a predominant economic interest test for closed-end and open-end loans. In addition, the bill would prohibit engaging in “any activity subject to” the CLA without a license as required by the CLA. The law expands the CLA’s coverage to include any loan made to a “person physically located” in Washington, in addition to the existing coverage of any loan made to a “resident” of Washington, “by a licensee, or persons subject to this chapter”. The current rate cap under the CLA is 25%. The law will take effect on June 6, 2024, and applies to loans or advances originated on or after that date. We do not expect the changes brought about by this law to have a material impact on our consolidated financial statements.

Consumer Financial Protection Bureau

On November 15, 2023, we consented to the issuance of a Consent Order by the CFPB pursuant to which we agreed, without admitting or denying any of the facts or conclusions, to pay a civil money penalty of $15 million. The Consent Order relates to issues, the majority of which were self-disclosed, including payment processing and debiting errors. We remain subject to the restrictions and obligations of the Consent Order, including prohibitions from engaging in certain conduct. Any noncompliance with the Consent Order or similar orders or agreements from other regulators could lead to further regulatory penalties and could have a material adverse impact on our business, prospects, results of operations, financial condition and cash flows and could prohibit or directly or indirectly impair our ability to continue current operations.

On October 6, 2017, the CFPB issued its final rule entitled “Payday, Vehicle Title, and Certain High-Cost Installment Loans” (the “Small Dollar Rule”), which covers certain consumer loans that we offer. The Small Dollar Rule requires that lenders who make short-term loans and longer-term loans with balloon payments reasonably determine consumers’ ability to repay the loans according to their terms before issuing the loans. The Small Dollar Rule also introduces new limitations on repayment processes for those lenders as well as lenders of other longer-term loans with an annual percentage rate greater than 36 percent that include an ACH authorization or similar payment provision. If a consumer has two consecutive failed payment attempts, the lender must obtain the consumer’s new and specific

authorization to make further withdrawals from the consumer’s bank account. For loans covered by the Small Dollar Rule, lenders must provide certain notices to consumers before attempting a first payment withdrawal or an unusual withdrawal and after two consecutive failed withdrawal attempts. On June 7, 2019, the CFPB issued a final rule to set the compliance date for the mandatory underwriting provisions of the Small Dollar Rule to November 19, 2020. On July 7, 2020, the CFPB issued a final rule rescinding the ability to repay (“ATR”) provisions of the Small Dollar Rule along with related provisions, such as the establishment of registered information systems for checking ATR and reporting loan activity. The payment provisions of the Small Dollar Rule remain in place. In April 2018, an action was filed against the CFPB making a constitutional challenge to the Small Dollar Rule. On October 19, 2022, a three-judge panel of the Fifth Circuit U.S. Circuit Court of Appeals ruled that the funding structure of the CFPB is unconstitutional and vacated the Small Dollar Rule. The Supreme Court granted the Petition on February 27, 2023 but declined to expedite the proceeding. The Supreme Court heard oral arguments on October 3, 2023. The Supreme Court is expected to rule on the matter in spring of 2024. If the Small Dollar Rule does become effective in its current proposed form, we will need to make certain changes to our payment processes and customer notifications in our U.S. consumer lending business.

On March 30, 2023, the CFPB issued its final rule to implement Section 1071 of the Dodd-Frank Act. Section 1071 amended the Equal Credit Opportunity Act to require financial institutions to collect and report certain data in connection with credit applications made by small businesses, including women- or minority-owned small businesses, and applies to small business loans that we offer. For loans covered by the small business lending rule, a “covered lender” will be required to collect and report on certain information pursuant to an application for credit. Section 1071 requires covered lenders to collect and report information the financial institution generates and information obtained from the applicant, including the applicant’s minority-owned business status, women-owned business status and LGBTQI+-owned status and the applicant’s principal owners’ ethnicity, race and sex, and expressly prohibits a financial institution from discouraging an applicant from responding to requests for applicant-provided data. The implementation date for Section 1071 has been stayed for all covered financial institutions until after the resolution of the Supreme Court’s decision in Community Financial Services Association of America Ltd v. Consumer Financial Protection Bureau.

Minnesota Commerce Omnibus Bill

In May 2023, the Governor of Minnesota signed into law a bill that caps the APR on consumer small loans and consumer short-term loans at a 50% all-in APR and expressly provides for predominant economic interest and totality of the circumstance tests for true lender purposes. The bill defines "consumer small loan" as a consumer-purpose unsecured loan equal to or less than $350 that must be repaid in a single installment. The bill defines a "consumer short-term loan" as a loan to a borrower which has a principal amount, or an advance on a credit limit, of $1,300 or less and requires a minimum payment of more than 25% of the principal balance or credit advance within 60 days. The bill requires the lender to perform an ability to pay analysis if the all-in APR on a consumer small loan or consumer short-term loan exceeds 36%. The bill also codifies a predominant economic interest test for bank service arrangements whereby a broker or servicer with a predominant economic interest in a loan is considered to be the “true lender” for purposes of applying the rate cap. The law took effect on January 1, 2024 and applies to loans or advances originated on or after that date. We do not expect the changes brought about by this law to have a material impact on our consolidated financial statements.

European Union Pillar Two Directive

On December 15, 2022, the European Union (“EU”) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development (“OECD”) Pillar Two Framework that was supported by over 130 countries worldwide. The EU effective dates are January 1, 2024, and January 1, 2025, for different aspects of the directive. A significant number of other countries are expected to also implement similar legislation. As of March 31, 2024, among the jurisdictions where the Company operates, only the U.K. has enacted legislation adopting the Pillar Two Rules, effective in fiscal 2025. We do not expect the changes brought about by this directive to have a material impact on our consolidated financial statements.

RESULTS OF OPERATIONS

Highlights

Our financial results for the three-month period ended March 31, 2024, or the current quarter, are summarized below.

•

Consolidated total revenue increased $126.6 million, or 26.2%, to $609.9 million in the current quarter compared to $483.3 million for the three months ended March 31, 2023, or the prior year quarter.

•

Consolidated net revenue was $345.9 million in the current quarter compared to $285.9 million in the prior year quarter.

•

Consolidated income from operations increased $21.5 million, or 19.7%, to $130.8 million in the current quarter compared to $109.3 million in the prior year quarter.

•

Consolidated net income was $48.4 million in the current quarter compared to $50.9 million in the prior year quarter. Consolidated diluted income per share was $1.64 in the current quarter compared to $1.56 in the prior year quarter.

Overview

The following tables reflect our results of operations for the periods indicated, both in dollars and as a percentage of total revenue (dollars in thousands, except per share data):


	Three Months Ended March 31,
	2024			2023
Revenue
Loans and finance receivables revenue	$	601,208		$	475,467
Other		8,681			7,789
Total Revenue		609,889			483,256
Change in Fair Value		(264,023	)		(197,366	)
Net Revenue		345,866			285,890
Operating Expenses
Marketing		110,567			79,755
Operations and technology		54,379			49,169
General and administrative		39,865			37,158
Depreciation and amortization		10,263			10,540
Total Operating Expenses		215,074			176,622
Income from Operations		130,792			109,268
Interest expense, net		(65,597	)		(43,321	)
Foreign currency transaction loss		(48	)		(171	)
Equity method investment loss		—			(6	)
Other nonoperating expenses		(492	)		(133	)
Income before Income Taxes		64,655			65,637
Provision for income taxes		16,227			14,714
Net income	$	48,428		$	50,923
Earnings per common share - diluted	$	1.64		$	1.56

Revenue
Loans and finance receivables revenue		98.6	%		98.4	%
Other		1.4			1.6
Total Revenue		100.0			100.0
Change in Fair Value		(43.3	)		(40.8	)
Net Revenue		56.7			59.2
Operating Expenses
Marketing		18.1			16.5
Operations and technology		8.9			10.2
General and administrative		6.6			7.7
Depreciation and amortization		1.7			2.2
Total Operating Expenses		35.3			36.6
Income from Operations		21.4			22.6
Interest expense, net		(10.8	)		(9.0	)
Foreign currency transaction loss		—			—
Equity method investment loss		—			—
Other nonoperating expenses		—			—
Income before Income Taxes		10.6			13.6
Provision for income taxes		2.7			3.0
Net income		7.9	%		10.5	%

Valuation of Loans and Finance Receivables

We carry our loans and finance receivables at fair value with changes in fair value recognized directly in earnings. We estimate the fair value of our loans and finance receivables primarily using internally-developed, discounted cash flow analyses to more accurately predict future payments. We adjust contractual cash flows for estimated losses, prepayments and servicing costs over the estimated duration of the underlying assets and discount the future cash flows using a rate of return that we believe a market participant would require. Model results may be adjusted by management if we do not believe the output reflects the fair value of the portfolio, as defined under GAAP. The models are updated at each measurement date to capture any changes in internal factors such as nature, term, volume, payment trends, remaining time to maturity, and portfolio mix, as well as changes in underwriting or observed trends expected to impact future performance. We have validated model performance by comparing past valuations with actual performance noted after each valuation.

During 2023 and continuing into the first fiscal quarter of 2024, views in the marketplace on the economy and its near-term prospects remained mixed with concerns on employment, inflation, and other macroeconomic trends. In certain situations, management concluded that the probability of future charge-offs or prepayments was different than what we had experienced in the past and, therefore, altered those assumptions in our fair value models. We continue to utilize this approach and have adjusted these assumptions where appropriate. We also evaluate the discount rates used in our models on a quarterly basis and adjust when appropriate to be responsive to changes in the market and representative of what a market participant would use. As of March 31, 2024, we deemed the resulting fair value of our loans and finance receivables to be an appropriate market-based exit price that considers current market conditions.

NON-GAAP FINANCIAL MEASURES

In addition to the financial information prepared in conformity with GAAP, we provide historical non-GAAP financial information. We believe that presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of our operations. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our business that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. Readers should consider the information in addition to, but not instead of or superior to, our consolidated financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.

Adjusted Earnings Measures

In addition to reporting financial results in accordance with GAAP, we have provided adjusted earnings and adjusted earnings per share, or, collectively, the Adjusted Earnings Measures, which are non-GAAP measures. We believe that the presentation of these measures provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments and amortization methods, which can provide a more complete understanding of our financial performance, competitive position and prospects for the future. We also believe that investors regularly rely on non-GAAP financial measures, such as the Adjusted Earnings Measures, to assess operating performance and that such measures may highlight trends in our business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. In addition, we believe that the adjustments shown below are useful to investors in order to allow them to compare our financial results during the periods shown without the effect of each of these income or expense items.

The following table provides reconciliations between net income and diluted earnings per share calculated in accordance with GAAP to the Adjusted Earnings Measures (in thousands, except per share data):


	Three Months Ended
	March 31,
	2024			2023
Net income	$	48,428		$	50,923
Adjustments:
Transaction-related costs(a)		327			—
Lease termination and cease-use costs(b)		—			1,698
Equity method investment loss		—			6
Other nonoperating expenses(c)		492			133
Intangible asset amortization		2,014			2,344
Stock-based compensation expense		7,639			5,969
Foreign currency transaction loss		48			171
Cumulative tax effect of adjustments		(2,642	)		(2,571	)
Adjusted earnings	$	56,306		$	58,673

Diluted earnings per share	$	1.64		$	1.56
Adjustments:
Transaction-related costs		0.01			—
Lease termination and cease-use costs		—			0.05
Equity method investment loss		—			—
Other nonoperating expenses		0.02			—
Intangible asset amortization		0.07			0.07
Stock-based compensation expense		0.26			0.18
Foreign currency transaction loss		—			0.01
Cumulative tax effect of adjustments		(0.09	)		(0.08	)
Adjusted earnings per share	$	1.91		$	1.79

(a) In the first quarter of 2024, we recorded costs totaling $0.3 million ($0.2 million net of related tax) related to a consent solicitation for the Senior Notes due 2025.

(b) In the first quarter of 2023, we incurred expenses totaling $1.7 million ($1.3 million net of tax) related to the exit of leased office space.

(c) In the first quarters of 2024 and 2023, we recorded other nonoperating expenses of $0.5 million ($0.4 million net of tax) and $0.1 million ($0.1 million net of tax), respectively, related to early extinguishment of debt.

Adjusted EBITDA

The table below shows Adjusted EBITDA, which is a non-GAAP measure that we define as earnings excluding depreciation, amortization, interest, foreign currency transaction gains or losses, taxes and stock-based compensation expense. We believe Adjusted EBITDA is used by investors to analyze operating performance and evaluate our ability to incur and service debt and our capacity for making capital expenditures. Adjusted EBITDA is also useful to investors to help assess our estimated enterprise value. In addition, we believe that the adjustments for equity method investment income and other nonoperating expenses shown below are useful to investors in order to allow them to compare our financial results during the periods shown without the effect of the income or expense items. The computation of Adjusted EBITDA, as presented below, may differ from the computation of similarly-titled measures provided by other companies (in thousands):


	Three Months Ended
	March 31,
	2024			2023
Net income	$	48,428		$	50,923
Depreciation and amortization expenses		10,263			10,540
Interest expense, net		65,597			43,321
Foreign currency transaction loss		48			171
Provision for income taxes		16,227			14,714
Stock-based compensation expense		7,639			5,969
Adjustments:
Transaction-related costs(a)		327			—
Equity method investment loss		—			6
Other nonoperating expenses(b)		492			133
Adjusted EBITDA	$	149,021		$	125,777

Adjusted EBITDA margin calculated as follows:
Total Revenue	$	609,889		$	483,256
Adjusted EBITDA		149,021			125,777
Adjusted EBITDA as a percentage of total revenue		24.4	%		26.0	%

(a) In the first quarter of 2024, we recorded costs totaling $0.3 million ($0.2 million net of related tax) related to a consent solicitation for the Senior Notes due 2025.

(b) In the first quarters of 2024 and 2023, we recorded other nonoperating expenses of $0.5 million ($0.4 million net of tax) and $0.1 million ($0.1 million net of tax), respectively, related to early extinguishment of debt.

Combined Loans and Finance Receivables Measures

In addition to reporting loans and finance receivables balance information in accordance with GAAP (see Note 2 in the Notes to Consolidated Financial Statements included in this report), we have provided metrics on a combined basis. The Combined Loans and Finance Receivables Measures are non-GAAP measures that include both loans and RPAs we own or have purchased and loans we guarantee, which are either GAAP items or disclosures required by GAAP. See “—Loan and Finance Receivable Balances” and “—Credit Performance of Loans and Finance Receivables” below for reconciliations between Company owned and purchased loans and finance receivables, gross, change in fair value and charge-offs (net of recoveries) calculated in accordance with GAAP to the Combined Loans and Finance Receivables Measures.

We believe these non-GAAP measures provide investors with important information needed to evaluate the magnitude of potential receivable losses and the opportunity for revenue performance of the loans and finance receivable portfolio on an aggregate basis. We also believe that the comparison of the aggregate amounts from period to period is more meaningful than comparing only the amounts reflected on our consolidated balance sheet since both revenue and cost of revenue are impacted by the aggregate amount of receivables we own and those we guarantee as reflected in our consolidated financial statements.

THREE MONTHS ENDED MARCH 31, 2024 COMPARED TO THREE MONTHS ENDED MARCH 31, 2023

Revenue and Net Revenue

Revenue increased $126.6 million, or 26.2%, to $609.9 million for the current quarter as compared to $483.3 million for the prior year quarter. The increase was driven by a 29.8% increase in revenue from our consumer portfolio and a 21.6% increase in revenue from our small business portfolio as higher levels of originations have led to higher loan balances for both portfolios.

Net revenue for the current quarter was $345.9 million compared to $285.9 million for the prior year quarter. Our consolidated net revenue margin was 56.7% for the current quarter compared to 59.2% for the prior year quarter. The decrease in consolidated net revenue margin was driven primarily by lower net revenue margin in the consumer portfolio, partially offset by higher net revenue margin in the small business portfolio. Refer to “—Consumer Loans and Finance Receivables” and “—Small Business Loans and Finance Receivables” below for additional discussion of net revenue for the current quarter.

The following table sets forth the components of revenue and net revenue, separated by product for the current quarter and the prior year quarter (in thousands):


	Three Months Ended March 31,
	2024			2023			$ Change			% Change
Revenue by product:
Consumer loans and finance receivables revenue	$	364,731		$	281,011		$	83,720			29.8	%
Small business loans and finance receivables revenue		236,477			194,456			42,021			21.6
Total loans and finance receivables revenue		601,208			475,467			125,741			26.4
Other		8,681			7,789			892			11.5
Total revenue		609,889			483,256			126,633			26.2
Change in fair value		(264,023	)		(197,366	)		(66,657	)		33.8
Net revenue	$	345,866		$	285,890		$	59,976			21.0	%

Revenue by product (% to total):
Consumer loans and finance receivables revenue		59.8	%		58.2	%
Small business loans and finance receivables revenue		38.8			40.2
Total loans and finance receivables revenue		98.6			98.4
Other		1.4			1.6
Total revenue		100.0			100.0
Change in fair value		(43.3	)		(40.8	)
Net revenue		56.7	%		59.2	%

Revenue generated from the Company’s operations for the current quarter and the prior year quarter was as follows (in thousands):


	Three Months Ended March 31,
	2024		2023
Loan interest	$	394,939	$	349,947
Statement and draw fees on line of credit accounts		177,941		94,165
Other		37,009		39,144
Total Revenue	$	609,889	$	483,256

Loan and Finance Receivable Balances

The fair value of our loan and finance receivable portfolio in our consolidated financial statements was $3,795.2 million and $3,003.4 million as of March 31, 2024 and 2023, respectively. The outstanding principal balance of our loan and finance receivables portfolio was $3,298.4 million and $2,700.1 million as of March 31, 2024 and 2023, respectively. The fair value of the combined loan and finance receivables portfolio includes $14.8 million and $13.9 million with an outstanding principal balance of $10.8 million and $10.5 million of consumer loan balances that are guaranteed by us but not owned by us, which are not included in our consolidated financial statements as of March 31, 2024 and 2023, respectively.

The consumer portfolio balance was 35.7% of our combined loan and finance receivable portfolio balance at fair value as of March 31, 2024, which is flat compared to 35.7% as of March 31, 2023. Our small business portfolio of loans and finance receivables was 64.3% of our combined loan and finance receivable portfolio at fair value as of March 31, 2024, compared to 64.3% as of March 31, 2023. See “—Non-GAAP Disclosure—Combined Loans and Finance Receivables Measures” above for additional information related to combined loans and finance receivables.

The following tables summarize loan and finance receivable balances outstanding as of March 31, 2024 and 2023 (in thousands):


	As of March 31, 2024									As of March 31, 2023
				Guaranteed									Guaranteed
	Company			by the						Company			by the
	Owned(a)			Company(a)			Combined			Owned(a)			Company(a)			Combined
Consumer loans and finance receivables
Principal	$	1,106,364		$	10,780		$	1,117,144		$	908,087		$	10,549		$	918,636
Fair value		1,347,165			14,773			1,361,938			1,062,867			13,901			1,076,768
Fair value as a % of principal		121.8	%		137.0	%		121.9	%		117.0	%		131.8	%		117.2	%
Small business loans and finance receivables
Principal	$	2,192,066		$	—		$	2,192,066		$	1,791,973		$	—		$	1,791,973
Fair value		2,448,045			—			2,448,045			1,940,499			—			1,940,499
Fair value as a % of principal		111.7	%		—	%		111.7	%		108.3	%		—	%		108.3	%
Total loans and finance receivables
Principal	$	3,298,430		$	10,780		$	3,309,210		$	2,700,060		$	10,549		$	2,710,609
Fair value		3,795,210			14,773			3,809,983			3,003,366			13,901			3,017,267
Fair value as a % of principal		115.1	%		137.0	%		115.1	%		111.2	%		131.8	%		111.3	%

(a) GAAP measure. The loans and finance receivables balances guaranteed by us relate to loans originated by a third-party lender through the CSO program that we have not yet purchased and, therefore, are not included in our consolidated financial statements.

At March 31, 2024 and 2023, the ratio of fair value as a percentage of principal was 115.1% and 111.2%, respectively, on company owned loans and finance receivables and 115.1% and 111.3%, respectively, on combined loans and finance receivables. These ratios increased compared to the prior year due to improvement in both the consumer and small business portfolios. Refer to “—Consumer Loans and Finance Receivables” and “—Small Business Loans and Finance Receivables” below for additional discussion of fair value ratios for the current quarter.

Average Amount Outstanding per Loan and Finance Receivable

The average amount outstanding per loan and finance receivable is calculated as the total combined loans and finance receivables, gross balance at the end of the period divided by the total number of combined loans and finance receivables outstanding at the end of the period. The following table shows the average amount outstanding per loan and finance receivable by product at March 31, 2024 and 2023:


	As of March 31,
	2024		2023
Average amount outstanding per loan and finance receivable(a)
Consumer loans and finance receivables(b)	$	1,875	$	1,964
Small business loans and finance receivables		39,151		38,021
Total loans and finance receivables(b)		4,872		5,065

(a) The disclosure regarding the average amount per loan and finance receivable is statistical data that is not included in our consolidated financial statements.

(b) Includes loans guaranteed by us, which represent loans originated by a third-party lender through the CSO program that we have not yet purchased and, therefore, are not included in our consolidated financial statements.

The average amount outstanding per loan and finance receivable was fairly consistent in the current quarter compared to the prior year quarter for our overall portfolio as well as the underlying consumer and small business books.

Average Loan and Finance Receivable Origination

The average loan and finance receivable origination amount is calculated as the total amount of combined loans and finance receivables originated, renewed and purchased for the period divided by the total number of combined loans and finance receivables originated,

renewed and purchased for the period. The following table shows the average loan and finance receivable origination amount by product for the current quarter compared to the prior year quarter:


	Three Months Ended
	March 31,
	2024		2023
Average loan and finance receivable origination amount(a)
Consumer loans and finance receivables(b)(c)	$	547	$	569
Small business loans and finance receivables(c)		16,059		16,398
Total loans and finance receivables(b)		1,675		1,901

(a) The disclosure regarding the average loan origination amount is statistical data that is not included in our consolidated financial statements.

The average loan and finance receivable origination amount is smaller than the average amount outstanding per loan and finance receivable in the previous section as the former measure includes incremental draws on our line of credit accounts whereas the latter measure includes the entire outstanding receivable on our line of credit accounts.

The average loan and finance receivable origination amount decreased to $1,675 from $1,901 during the current quarter compared to the prior year quarter, due primarily to a higher percentage of line of credit draws in comparison to installment loan originations, as the former are typically lower in average dollar amount.

Credit Performance of Loans and Finance Receivables

We monitor the performance of our loans and finance receivables. Internal factors such as portfolio composition (e.g., interest rate, loan term, geography information, customer mix, credit quality) and performance (e.g., delinquency, loss trends, prepayment rates) are reviewed on a regular basis at various levels (e.g., product, vintage). We also weigh the impact of relevant, internal business decisions on the portfolio. External factors such as macroeconomic trends, financial market liquidity expectations, competitive landscape and legal/regulatory requirements are also reviewed on a regular basis.

The payment status of a customer, including the degree of any delinquency, is a significant factor in determining estimated charge-offs in the cash flow models that we use to determine fair value. The following table shows payment status on outstanding principal, interest and fees as of the end of each of the last five quarters (in thousands):


	2023												2024
	First			Second			Third			Fourth			First
	Quarter			Quarter			Quarter			Quarter			Quarter
Ending combined loans and finance receivables, including principal and accrued fees/interest outstanding:
Company owned	$	2,785,235		$	2,857,557		$	3,037,904		$	3,297,082		$	3,438,468
Guaranteed by the Company(a)		12,841			16,972			16,533			16,351			13,046
Ending combined loan and finance receivables balance(b)	$	2,798,076		$	2,874,529		$	3,054,437		$	3,313,433		$	3,451,514
> 30 days delinquent		198,011			221,540			242,126			263,524			279,659
> 30 days delinquency rate		7.1	%		7.7	%		7.9	%		8.0	%		8.1	%

(a) Represents loans originated by a third-party lender through the CSO program that we have not yet purchased, which are not included in our consolidated balance sheets.

(b) Non-GAAP measure. See “—Non-GAAP Disclosure—Combined Loans and Finance Receivables Measures” above.

Consumer Loans and Finance Receivables

The following table includes financial information for our consumer loans and finance receivables. Delinquency metrics include principal, interest and fees, and only amounts that are past due (in thousands):


	2023												2024
	First			Second			Third			Fourth			First
	Quarter			Quarter			Quarter			Quarter			Quarter
Consumer loans and finance receivables:
Consumer combined loan and finance receivable principal balance:
Company owned	$	908,087		$	983,388		$	1,078,228		$	1,138,928		$	1,106,364
Guaranteed by the Company(a)		10,549			14,199			13,684			13,537			10,780
Total combined loan and finance receivable principal balance(b)	$	918,636		$	997,587		$	1,091,912		$	1,152,465		$	1,117,144
Consumer combined loan and finance receivable fair value balance:
Company owned	$	1,062,867		$	1,168,044		$	1,286,330		$	1,380,784		$	1,347,165
Guaranteed by the Company(a)		13,901			19,115			18,661			18,534			14,773
Ending combined loan and finance receivable fair value balance(b)	$	1,076,768		$	1,187,159		$	1,304,991		$	1,399,318		$	1,361,938
Fair value as a % of principal(b)(c)		117.2	%		119.0	%		119.5	%		121.4	%		121.9	%
Consumer combined loan and finance receivable balance, including principal and accrued fees/interest outstanding:
Company owned	$	978,730		$	1,068,742		$	1,182,769		$	1,246,675		$	1,208,551
Guaranteed by the Company(a)		12,841			16,972			16,533			16,351			13,046
Ending combined loan and finance receivable balance(b)	$	991,571		$	1,085,714		$	1,199,302		$	1,263,026		$	1,221,597
Average consumer combined loan and finance receivable balance, including principal and accrued fees/interest outstanding:
Company owned(d)	$	1,015,849		$	1,017,061		$	1,133,499		$	1,218,622		$	1,242,677
Guaranteed by the Company(a)(d)		14,206			14,627			17,681			16,341			14,956
Average combined loan and finance receivable balance(b)(d)	$	1,030,055		$	1,031,688		$	1,151,180		$	1,234,963		$	1,257,633
Installment loans as percentage of average combined loan and finance receivable balance		58.9	%		53.5	%		46.4	%		42.3	%		40.4	%
Line of credit accounts as percentage of average combined loan and finance receivable balance		41.1	%		46.5	%		53.6	%		57.7	%		59.6	%

Revenue	$	281,011		$	302,264		$	347,898		$	364,058		$	364,731
Change in fair value		(114,651	)		(115,946	)		(174,766	)		(183,169	)		(182,979	)
Net revenue		166,360			186,318			173,132			180,889			181,752
Net revenue margin		59.2	%		61.6	%		49.8	%		49.7	%		49.8	%

Combined loan and finance receivable originations and purchases	$	291,203		$	401,468		$	478,501		$	497,978		$	417,432

Delinquencies:
> 30 days delinquent	$	72,092		$	73,829		$	93,542		$	90,596		$	84,137
> 30 days delinquent as a % of combined loan and finance receivable balance(b)(c)		7.3	%		6.8	%		7.8	%		7.2	%		6.9	%

Charge-offs:
Charge-offs (net of recoveries)	$	156,272		$	131,198		$	178,902		$	213,813		$	187,419
Charge-offs (net of recoveries) as a % of average combined loan and finance receivable balance(b)(d)		15.2	%		12.7	%		15.5	%		17.3	%		14.9	%

(a) Represents loans originated by a third-party lender through the CSO program that we have not yet purchased, which are not included in our consolidated balance sheets.

(b) Non-GAAP measure.

(d) The average combined loan and finance receivable balance is the average of the month-end balances during the period.

The ending balance, including principal and accrued fees/interest outstanding, of combined consumer loans and finance receivables at March 31, 2024 increased 23.2% to $1,221.6 million compared to $991.6 million at March 31, 2023, due primarily to originations outpacing repayments.

The percentage of loans greater than 30 days delinquent decreased slightly to 6.9% at March 31, 2024 from 7.3% at March 31, 2023 due primarily to stronger credit performance in most of our consumer products. Charge-offs (net of recoveries) as a percentage of average combined loan balance also decreased slightly to 14.9% for the current quarter, compared to 15.2% for the prior year quarter due to stronger credit performance of the blended portfolio. Demand for our consumer loan products and services in the United States has historically been highest in the third and fourth quarters of each year, corresponding to the holiday season, and lowest in the first quarter of each year, corresponding to our customers’ receipt of income tax refunds. Lower originations, particularly to new customers, which typically default at a higher percentage than returning customers, generally result in lower delinquencies and charge-offs as the book is more seasoned.

Revenue related to our consumer loans and finance receivables was $364.7 million for the current quarter, compared to $281.0 million for the prior year quarter. The increase in revenue was driven primarily by growth in the overall portfolio. The net revenue margin related to our consumer loans and finance receivables was 49.8% for the current quarter, compared to 59.2% for the prior year quarter, but has been stable for the past three sequential quarters.

The ratio of fair value as a percentage of principal on consumer loans and finance receivables was 121.9% at March 31, 2024, compared to 117.2% at March 31, 2023 and 121.4% at December 31, 2023. The increase from the prior year quarter was due primarily to a mix shift towards line of credit products, which generally have a higher fair value as a percentage of principal compared to installment loans. Refer also to “Results of Operations—Valuation of Loans and Finance Receivables” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional discussion on loan valuation.

Small Business Loans and Finance Receivables

The following table includes financial information for our small business loans and finance receivables. Delinquency metrics include principal, interest, and fees, and only amounts that are past due (in thousands):


	2023												2024
	First			Second			Third			Fourth			First
	Quarter			Quarter			Quarter			Quarter			Quarter
Small business loans and finance receivables:
Total loan and finance receivable principal balance	$	1,791,973		$	1,773,554		$	1,826,458		$	2,015,807		$	2,192,066
Ending loan and finance receivable fair value balance		1,940,499			1,924,401			2,034,732			2,248,383			2,448,045
Fair value as a % of principal(a)		108.3	%		108.5	%		111.4	%		111.5	%		111.7	%

Ending loan and finance receivable balance, including principal and accrued fees/interest outstanding	$	1,806,505		$	1,788,815		$	1,855,135		$	2,050,407		$	2,229,917

Average loan and finance receivable balance(b)	$	1,809,800		$	1,800,700		$	1,813,995		$	1,922,857		$	2,133,422
Installment loans as percentage of average combined loan and finance receivable balance		62.3	%		59.1	%		57.2	%		55.3	%		54.0	%
Line of credit accounts as percentage of average combined loan and finance receivable balance		37.7	%		40.9	%		42.8	%		44.7	%		46.0	%

Revenue	$	194,456		$	190,459		$	195,226		$	210,663		$	236,477
Change in fair value		(80,404	)		(82,180	)		(54,992	)		(73,243	)		(79,127	)
Net revenue		114,052			108,279			140,234			137,420			157,350
Net revenue margin		58.7	%		56.9	%		71.8	%		65.2	%		66.5	%

Combined loan and finance receivable originations and purchases	$	770,164		$	711,659		$	782,685		$	927,807		$	959,935

Delinquencies:
> 30 days delinquent	$	125,919		$	147,711		$	148,584		$	172,928		$	195,522
> 30 days delinquent as a % of loan balance(a)		7.0	%		8.3	%		8.0	%		8.4	%		8.8	%

Charge-offs:
Charge-offs (net of recoveries)	$	76,215		$	83,772		$	99,001		$	91,623		$	99,279
Charge-offs (net of recoveries) as a % of average loan and finance receivable balance(b)		4.2	%		4.7	%		5.5	%		4.8	%		4.7	%

(a) Determined using period-end balances.

(b) The average loan and finance receivable balance is the average of the month-end balances during the period.

The ending balance, including principal and accrued fees/interest outstanding, of small business loans and finance receivables at March 31, 2024 increased 23.4% to $2,229.9 million compared to $1,806.5 million at March 31, 2023, due primarily to originations outpacing repayments.

The percentage of loans greater than 30 days delinquent was 8.8% at March 31, 2024, compared to 7.0% at March 31, 2023. Charge-offs (net of recoveries) as a percentage of average loan balance increased to 4.7% for the current quarter, compared to 4.2% in the prior year quarter. The credit performance of our small business portfolio was stronger in 2022 as the portfolio was more seasoned due to reductions in originations in response to the pandemic. Delinquency and charge-offs have since increased to more normal levels due to the acceleration in originations and macroeconomic pressures on our customers and their businesses.

Revenue related to our small business loans and finance receivables was $236.5 million for the current quarter, compared to $194.5 million for the prior year quarter. The increase in revenue was driven primarily by growth in the overall portfolio. The net revenue margin related to our small business loans and finance receivables was 66.5% for the current quarter, compared to 58.7% for the prior

year quarter, due to improved performance of more recent vintages. The net revenue margin in the current quarter was more consistent with historical levels as credit performance has returned to more normalized levels.

The ratio of fair value as a percentage of principal on small business loans and finance receivables was 111.7% at March 31, 2024, compared to 108.3% at March 31, 2023 and 111.5% at December 31, 2023. The increase from March 31, 2023 was due primarily to recent vintages, which have exhibited improved performance, being a higher percentage of the portfolio.

Total Operating Expenses

Total operating expenses increased $38.5 million, or 21.8%, to $215.1 million in the current quarter, compared to $176.6 million in the prior year quarter.

Marketing expense increased to $110.6 million in the current quarter compared to $79.7 million in the prior year quarter due primarily to growth in the overall business as well as higher online advertising costs intended to capture increasing market demand for both our consumer and small business loan products and higher commissionable originations in our small business portfolio.

Operations and technology expense increased to $54.4 million in the current quarter compared to $49.2 million in the prior year quarter, due primarily to higher variable costs, particularly underwriting, collection and personnel costs, due to the increase in originations and the size of the loan portfolio. As a percentage of revenue, operations and technology expense decreased to 8.9% in the current year quarter from 10.2% in the prior year quarter, as increased originations and revenues outpaced fixed costs.

General and administrative expense increased to $39.9 million in the current quarter compared to $37.2 million in the prior year quarter, due largely to higher personnel costs, partially offset by lower occupancy and legal and consulting costs. As a percentage of revenue, general and administrative expense decreased to 6.6% in the current year quarter from 7.7% in the prior year quarter, as increased originations and revenues outpaced fixed costs.

Depreciation and amortization expense decreased $0.3 million or 2.6% compared to the prior year quarter driven primarily by a decrease in leasehold improvements resulting from the exit of leased office space in 2023, partially offset by additional internally-developed software.

Nonoperating Items

Interest expense, net increased $22.3 million, or 51.4%, to $65.6 million in the current quarter compared to $43.3 million in the prior year quarter. The increase was due primarily to an increase in the average amount of debt outstanding, which increased $640.1 million to $2,919.8 million during the current quarter from $2,279.7 million during the prior year quarter, and an increase in the weighted average interest rate on our outstanding debt to 9.18% during the current quarter from 7.84% during the prior year quarter resulting primarily from year-over-year increases in benchmark rates.

Provision for Income Taxes

The effective tax rate of 25.1% in the current quarter was higher than the 22.4% rate recorded in the prior year quarter due primarily to additional interest expense on unrecognized tax benefits and a remeasurement of the net deferred tax liability due to state rate adjustments, which was partially offset by excess tax benefits on stock compensation due to stock price appreciation.

Net Income

Net income decreased $2.5 million, or 4.9%, to $48.4 million during the current quarter compared to $50.9 million during the prior year quarter. The decrease was due primarily to higher interest expense as a result of an increase in the average amount of debt outstanding and an increase in the weighted average interest rate on our outstanding debt. The increase in interest expense was partially offset by an increase in income from operations due primarily to increased net revenue and lower operating expenses as a percentage of revenue.

LIQUIDITY AND CAPITAL RESOURCES

Capital Funding Strategy

We seek to maintain a stable and flexible balance sheet to ensure that liquidity and funding are available to meet our business obligations. As of March 31, 2024, we had cash, cash equivalents, and restricted cash of $228.9 million, of which $152.5 million was restricted, compared to $377.4 million, of which $323.1 million was restricted, as of December 31, 2023. During the three months ended March 31, 2024, we entered into a new $150.0 million consumer loan securitization facility. As of March 31, 2024, we had funding capacity of $505.6 million. Based on numerous stressed-case modeling scenarios, we believe we have sufficient liquidity to run our operations for

the foreseeable future. Further, we have no recourse debt obligations due until September 2025. As part of our capital and liquidity management, we may from time to time acquire our outstanding debt securities, including through redemptions, tender offers, open market purchases, negotiated transactions or otherwise, in accordance with applicable securities laws and in compliance with the indentures governing our outstanding debt securities, upon such terms and at such prices as we may determine.

Historically, we have generated significant cash flow through normal operating activities for funding both long-term and short-term needs. Our near-term liquidity is managed to ensure that adequate resources are available to fund our seasonal working capital growth, which is driven by demand for our loan and financing products. On September 19, 2018, we issued and sold $375.0 million in aggregate principal amount of 8.50% senior notes due 2025 (the “2025 Senior Notes”) and used the net proceeds, in part, to retire existing indebtedness. On December 6, 2023, we issued and sold $400.0 million in aggregate principal amount of 11.25% Senior Notes due 2028 (the “2028 Senior Notes”) and used the net proceeds, in part, to retire existing indebtedness, including the remaining principal amount outstanding under our 8.50% senior notes due 2024 (the “2024 Senior Notes”).

On June 23, 2022, we entered into an amendment and restatement of our existing secured revolving credit agreement (as amended, the “Credit Agreement”) that, among other things, increased the borrowing capacity to $440.0 million, with a $20.0 million letter of credit sublimit and $10.0 million swingline loan sublimit. On October 19, 2023, we amended the Credit Agreement to, among other changes, increase the total commitment amount from $440.0 million to $515.0 million. The Credit Agreement bears interest, at our option, at the base rate plus 0.75% or the Secured Overnight Financing Rate plus 3.50%. In addition to customary fees for a credit facility of this size and type, the Credit Agreement provides for payment of a commitment fee calculated with respect to the unused portion of the commitment, and ranges from 0.15% per annum to 0.50% per annum depending on usage. The Credit Agreement contains certain prepayment penalties if it is terminated on or before the first and second anniversary dates, subject to certain exceptions. The Credit Agreement matures on June 30, 2026. As of April 22, 2024, our available borrowings under the Credit Agreement were $96.4 million. Since 2016, we have entered into several loan securitization facilities and offered asset-backed notes to fund our growth, primarily in our near-prime consumer installment loan and small business loan businesses. As of April 22, 2024, we had funding capacity of $406.1 million. We expect that our operating needs, including satisfying our obligations under our debt agreements and funding our working capital growth, will be satisfied by a combination of cash flows from operations, borrowings under the Credit Agreement, or any refinancing, replacement thereof or increase in borrowings thereunder, and securitization or sale of loans and finance receivables under our consumer and small business loan securitization facilities.

As of March 31, 2024, we were in compliance with all financial ratios, covenants and other requirements set forth in our debt agreements. Unexpected changes in our financial condition or other unforeseen factors may result in our inability to obtain third-party financing or could increase our borrowing costs in the future. To the extent we experience short-term or long-term funding disruptions, we have the ability to adjust our volume of lending and financing to consumers and small businesses that would reduce cash outflow requirements while increasing cash inflows through repayments. Additional alternatives may include the securitization or sale of assets, increased borrowings under the Credit Agreement, or any refinancing or replacement thereof, and reductions in capital spending, which could be expected to generate additional liquidity.

Capital

Total stockholders’ equity decreased by $90.0 million to $1,150.2 million at March 31, 2024 from $1,240.2 million at December 31, 2023. The decrease of stockholders’ equity was driven primarily by repurchases of our outstanding common stock, partially offset by net income for the three months ended March 31, 2024 and, to a lesser extent, stock-based compensation expense. Our book value per share outstanding decreased to $42.06 at March 31, 2024 from $42.63 at December 31, 2023, which was primarily driven by the increase in treasury stock as a result of share repurchases, which is discussed in more detail below, partially offset by net income during the current year.

On November 7, 2022, we announced the Board of Directors authorized an increase to our share repurchase program of up to $150.0 million through December 31, 2023 (the “November 2022 Authorization”). The November 2022 Authorization went into effect in March 2023 upon exhaustion of our previous authorization. On October 24, 2023, we announced the Board of Directors authorized a new share repurchase program totaling $300.0 million through December 31, 2024. The new program replaced the November 2022 Authorization. The Company repurchased $91.5 million of common stock under the November 2022 Authorization before it was terminated. Repurchases under our repurchase program will be made in accordance with applicable securities laws from time to time in the open market, through privately negotiated transactions or otherwise. The share repurchase program does not obligate us to purchase any shares of our common stock. The authorization for the share repurchase program may be terminated, increased or decreased by the Board of Directors in its discretion at any time. During the three months ended March 31, 2024, we had $138.8 million in repurchases of common stock under our share repurchase program.

Cash

Our cash and cash equivalents are held primarily for working capital purposes and are used to fund a portion of our lending activities. From time to time, we use excess cash and cash equivalents to fund our lending activities. We do not enter into investments for trading or speculative purposes. Our policy is to invest cash in excess of our immediate working capital requirements in short-term investments, deposit accounts or other arrangements designed to preserve the principal balance and maintain adequate liquidity. Our excess cash may be invested primarily in overnight sweep accounts, money market instruments or similar arrangements that provide competitive returns consistent with our polices and market conditions.

Our restricted cash primarily consists of funds held in accounts as reserves on certain debt facilities and as collateral for issuing bank partner transactions. We have no ability to draw on such funds as long as they remain restricted under the applicable arrangements but have the ability to use these funds to finance loan originations, subject to meeting borrowing base requirements. Our policy is to invest restricted cash held in debt facility related accounts, to the extent permitted by such debt facility, in investments designed to preserve the principal balance and provide liquidity. Accordingly, such cash is invested primarily in money market instruments that offer daily purchase and redemption and provide competitive returns consistent with our policies and market conditions.

Current Debt Facilities

The following table summarizes our debt facilities as of March 31, 2024 (dollars in thousands).


	Revolving period end date	Maturity date	Weighted average interest rate(a)	Borrowing capacity			Principal outstanding
Funding Debt:
2018-1 Securitization Facility	March 2025	March 2027	9.58%		200,000			101,861
2018-2 Securitization Facility	July 2023	July 2025	10.42%		40,657			40,657
NCR 2022 Securitization Facility	October 2024	October 2026	10.08%		125,000			92,397
NCLOCR 2024 Securitization Facility	February 2027	February 2028	10.82%		150,000			50,000
ODR 2021-1 Securitization Facility	November 2025	November 2026	8.87%		233,333			221,331
ODR 2022-1 Securitization Facility	June 2024	June 2025	8.08%		420,000			246,668
RAOD Securitization Facility	November 2024	November 2025	8.13%		230,263			222,110
HWCR 2023 Securitization Facility	May 2025	May 2026	9.68%		287,214			287,214
ODAST III Securitization Notes	April 2024	May 2027	2.07%		300,000			300,000
2023-A Securitization Notes	—	December 2027	7.78%		63,605			63,605
ODAS IV Securitization Notes	—	August 2030	7.66%		227,051			227,051
Total funding debt			7.70%	$	2,277,123		$	1,852,894
Corporate Debt:
8.50% senior notes due 2025	—	September 2025	8.50%		375,000			375,000
11.25% senior notes due 2028	—	December 2028	11.25%		400,000			400,000
Revolving line of credit	June 2026	June 2026	8.88%		515,000	(b)		433,000
Total corporate debt			9.55%	$	1,290,000		$	1,208,000

(a) The weighted average interest rate is determined based on the rates and principal balances on March 31, 2024. It does not include the impact of the amortization of deferred loan origination costs or debt discounts.

(b) We had an outstanding letter of credit under the Revolving line of credit of $0.7 million as of March 31, 2024.

Our ability to fully utilize the available capacity of our debt facilities may also be impacted by provisions that limit concentration risk and eligibility.

Cash Flows

Our cash flows and other key indicators of liquidity are summarized as follows (dollars in thousands):


	Three Months Ended March 31,
	2024			2023
Total cash flows provided by operating activities	$	348,563		$	282,016
Cash flows used in investing activities
Loans and finance receivables		(431,959	)		(195,051	)
Capitalization of software development costs and purchases of fixed assets		(11,225	)		(10,378	)
Total cash flows used in investing activities		(443,184	)		(205,429	)
Cash flows (used in) provided by financing activities	$	(53,975	)	$	33,555

Cash Flows from Operating Activities

Net cash provided by operating activities increased $66.5 million, or 23.6%, to $348.6 million in the current quarter from $282.0 million for the prior year quarter. The increase was driven primarily by additional interest and fee income from growth in the loan portfolio.

We believe cash flows from operations and available cash balances and borrowings under our loan securitization facilities and Credit Agreement, which may include increased borrowings under our Credit Agreement, any refinancing or replacement thereof, and additional securitization of loans, will be sufficient to fund our future operating liquidity needs, including to fund our working capital growth.

Cash Flows from Investing Activities

Net cash used in investing activities was $443.2 million for the current quarter compared to $205.4 million for the prior year quarter. This change was due primarily to loan originations outpacing repayments by a wider margin in the current quarter compared to the prior year quarter.

Cash Flows from Financing Activities

Cash flows used in financing activities for the current quarter were driven primarily by $168.7 million in repayments to extinguish the remaining balance of our 2024 Senior Notes and $151.4 million in share repurchases, partially offset by $185.7 million in net borrowings under our securitization facilities and $77.0 million in net borrowings under our revolving line of credit. Cash flows provided by financing activities for the prior year quarter were driven primarily by $60.0 million and $40.3 million in net borrowings under our revolving line of credit and securitization facilities, respectively, partially offset by $43.6 million in repayments of our 2024 Senior Notes and $21.9 million in share repurchases.

CRITICAL ACCOUNTING ESTIMATES

There have been no material changes to the information on critical accounting estimates described in our Annual Report on Form 10‑K for the year ended December 31, 2023.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

See Note 1 in the Notes to Consolidated Financial Statements included in this report for a discussion of recent accounting pronouncements that may be significant to Enova.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our exposure to market risk since the most recent fiscal year end. Refer to our market risk disclosures in our Annual Report on Form 10‑K for the year ended December 31, 2023.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, or the “Exchange Act”) as of March 31, 2024 (the “Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective and provide reasonable assurance (i) to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms; and (ii) to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during the quarter ended March 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See the “Litigation” section of Note 7 of the notes to our consolidated financial statements (unaudited) of Part I, “Item 1 Financial Statements.”

ITEM 1A. RISK FACTORS

There have been no material changes from the Risk Factors described in Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides the information with respect to purchases made by us of shares of our common stock.


Period	Total Number of Shares Purchased(a)		Average Price Paid Per Share(b)		Total Number of Shares Purchased as Part of Publicly Announced Plan(c)		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan(b)(c) (in thousands)
January 1 – January 31, 2024		595,406	$	55.25		594,349	$	220,427
February 1 – February 29, 2024		1,511,540		57.64		1,302,945		144,789
March 1 – March 31, 2024		486,017		62.39		486,017		114,468
Total		2,592,963	$	57.98		2,383,311	$	114,468

(a) Includes shares withheld from employees as tax payments for shares issued under the Company’s stock-based compensation plans of 1,057 and 208,595 for the months of January and February, respectively. These shares were not acquired pursuant to a publicly announced repurchase plan.

(b) The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. During the three months ended March 31, 2024, the Company reflected the applicable excise tax in treasury stock as part of the cost basis of the stock repurchased and recorded a corresponding liability for the excise taxes payable in accounts payable and accrued expenses on the consolidated balance sheet. All dollar amounts presented exclude such excise taxes.

(c) On October 24, 2023, the Company announced the Board of Directors authorized a new share repurchase program totaling $300.0 million through December 31, 2024 (the “October 2023 Authorization”). The October 2023 Authorization replaced the previous authorization. All share repurchases made under the October 2023 Authorization were made through open market transactions. Our share repurchase program is subject to market conditions, does not obligate us to purchase any shares of our common stock, and may be terminated, increased or decreased by the Board of Directors in its discretion at any time.

We do not plan to declare cash dividends in the foreseeable future. Any declaration of dividends is at the discretion of our Board of Directors. Our agreements governing our existing debt contain restrictions which limit our ability to pay dividends.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

During the quarter ended March 31, 2024, none of our directors or Section 16 officers adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.

ITEM 6. EXHIBITS


Exhibit No.		Exhibit Description

3.1		Enova International, Inc. Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q filed on July 28, 2023)
3.1
3.2		Enova International, Inc. Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on November 17, 2017)

10.1*		Note Issuance and Purchase Agreement among NetCredit LOC Receivables 2024, LLC as Issuer, Citibank, N.A. as Collateral Agent and Paying Agent, each of the note purchasers listed on Schedule I thereto as Initial Note Purchasers, each of the other note purchasers from time to time party thereto, and Midtown Madison Management LLC, as Administrative Agent dated as of February 21, 2024
		d
31.1*		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: April 24, 2024	ENOVA INTERNATIONAL, INC.

	By:	/s/ Steven E. Cunningham
		Steven E. Cunningham
		Chief Financial Officer
		(On behalf of the Registrant and as Principal Financial Officer)

Enova International, Inc. [ENVA] Filings
10-Q	[2024-04-24]
10-K	[2024-02-23]
10-Q	[2023-10-25]
10-Q	[2023-07-28]
10-Q	[2023-04-28]
10-K	[2023-02-24]
10-Q	[2022-10-28]
10-Q	[2022-07-29]
10-Q	[2022-05-03]
10-K	[2022-02-28]
10-Q	[2021-10-29]
10-Q	[2021-08-02]
10-Q	[2021-05-03]
10-K	[2021-02-26]
10-Q	[2020-10-28]
10-Q	[2020-07-29]
10-Q	[2020-05-05]
10-K	[2020-02-27]
10-Q	[2019-10-30]
10-Q	[2019-07-31]
10-Q	[2019-05-01]
10-K	[2019-02-27]
10-Q	[2018-10-31]
10-Q	[2018-08-01]
10-Q	[2018-05-02]
10-K	[2018-02-26]
10-Q	[2017-11-01]
10-Q	[2017-08-02]
10-Q	[2017-05-03]
10-K	[2017-02-24]
10-Q	[2016-11-02]
10-Q	[2016-08-04]
10-Q	[2016-05-06]
10-K	[2016-03-07]
10-Q	[2015-11-12]
10-Q	[2015-08-11]
10-Q	[2015-05-08]
10-K	[2015-03-20]
10-Q	[2014-11-14]
S-1	[2014-10-30]