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

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-35503

img112718138_0.jpg 

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.

 

1


 

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.

2


 

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.

3


 

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.

4


 

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.

5


 

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.

6


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.

7


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

8


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

 

 

9


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