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EI

Enova International, Inc. (ENVA)·Q1 2024 Earnings Summary

Executive Summary

  • Revenue $609.9M, up 26% YoY and up 5% QoQ; net revenue margin 57% vs 56% in Q4, with adjusted EBITDA $149.0M and adjusted EPS $1.91. Diluted EPS was $1.64, slightly below adjusted as interest expense rose with higher rates .
  • Small Business revenue reached a record $236M (+20% YoY) and Consumer revenue rose to $365M (+30% YoY); combined loans and finance receivables hit a record $3.5B (+23% YoY) on $1.4B originations .
  • The company executed its largest quarterly buyback ever ($139M), ending Q1 with $738M liquidity; management reiterated shares remain undervalued—returning capital is a clear near-term catalyst .
  • Q2 outlook: slight sequential revenue growth, net revenue margin in the upper 50% range, marketing ~20% of revenue, and adjusted EPS up 5–10% sequentially; full-year originations growth ≥15% with revenue and adjusted EPS growth in the upper teens .

What Went Well and What Went Wrong

What Went Well

  • Strong growth with stable credit: “another quarter of consistent and profitable growth,” as revenue rose 26% YoY to $610M; adjusted EBITDA up 18% YoY to $149M; adjusted EPS up 7% YoY to $1.91 .
  • Segment execution: SMB revenue hit a record $236M (+20% YoY), Consumer revenue $365M (+30% YoY). Net charge-offs fell sequentially to 8.5% of average receivables; SMB charge-offs were 4.7%, in the expected 4–5% range .
  • Capital returns and liquidity: $139M buyback in Q1—the largest in company history; liquidity stood at $738M (cash/marketable securities plus facility capacity), positioning Enova to continue repurchases in Q2 .

What Went Wrong

  • Interest expense headwind: cost of funds was 9.2% (≈+140 bps YoY), and interest expense is expected to run 10.5–11% of revenue in 2024, pressuring GAAP EPS vs adjusted EPS .
  • Net revenue margin below prior-year level: 57% in Q1 2024 vs 59% in Q1 2023, reflecting seasonality and credit mix, though slightly above internal expectations .
  • Slightly higher delinquency vs prior year: >30-day delinquency 8.1% vs 7.1% in Q1 2023; net charge-off ratio 8.5% vs 8.2% in Q1 2023 (still below pre-COVID levels per management) .

Financial Results

MetricQ1 2023Q4 2023Q1 2024
Revenue ($USD Millions)$483.256 $583.592 $609.889
Net Revenue ($USD Millions)$285.890 $325.036 $345.866
Net Revenue Margin (%)59% 56% 57%
Diluted EPS ($)$1.56 $1.13 $1.64
Adjusted EPS ($)$1.79 $1.83 $1.91
Adjusted EBITDA ($USD Millions)$125.777 $129.987 $149.021
Marketing ($USD Millions)$79.755 $122.226 $110.567
Operations & Technology ($USD Millions)$49.169 $47.089 $54.379
General & Administrative ($USD Millions)$37.158 $49.148 $39.865
Interest Expense ($USD Millions)$43.321 $57.208 $65.597

Segment Breakdown (Q1 2024)

Segment MetricQ1 2024
Small Business Revenue ($USD Millions)$236
Consumer Revenue ($USD Millions)$365
Small Business Originations ($USD Millions)$960
Consumer Originations ($USD Millions)$417
Small Business Revenue YoY (%)+20%
Consumer Revenue YoY (%)+30%

KPIs

KPIQ1 2023Q4 2023Q1 2024
Ending Combined Receivables Fair Value ($USD Millions)$3,017.267 $3,647.701 $3,809.983
Fair Value as % of Principal (%)111.3% 115.1% 115.1%
Originations ($USD Millions)$1,061.367 $1,400.000 $1,377.367
>30 Days Delinquent (%)7.1% 8.0% 8.1%
Net Charge-offs (% of Average Balance)8.2% 9.7% 8.5%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Revenue GrowthQ2 2024Not providedSlight sequential increase; YoY growth >20%New
Net Revenue MarginQ2 2024Not providedUpper 50% rangeNew
Marketing Expense (% of Revenue)Q2 2024Not provided~20%New
Operations & Technology (% of Revenue)Q2 2024Not provided~9%New
G&A (% of Revenue)Q2 2024Not provided6–7%New
Interest Expense (% of Revenue)Q2 2024Not provided10.5–11%New
Adjusted EPS Sequential GrowthQ2 2024Not provided+5% to +10%New
Originations GrowthFY 2024Not provided≥15% YoYNew
Revenue & Adjusted EPS GrowthFY 2024Not providedUpper teens (or slightly higher than originations)New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2023)Current Period (Q1 2024)Trend
Marketing intensity/efficiencyElevated marketing to capture strong demand; Q3 marketing 21% of revenue; originations skewed late in quarter Marketing efficient; Q2 guide ~20% of revenue Stable, slightly higher spend to drive growth
SMB credit normalizationHigher-than-expected losses from 2H’22 vintages peaking in Q3; improving delinquency; fair value ratios up SMB charge-offs 4.7%, within 4–5% range; fair value premiums stable Improving/stabilizing
Consumer demand & seasonalityStrong demand; leaned into consumer originations (+19% seq) Consumer revenue +30% YoY; seasonality typical; net charge-off ratio down seq to 14.9% Healthy demand, normal seasonality
Liquidity & capital returnsNew $300M buyback authorization; ~$1B liquidity Largest quarterly buyback $139M; $738M liquidity; plan to utilize ~$65M capacity in Q2 Accelerated repurchases
Cost of funds/interest ratesCost of funds ~8.3%; expected to remain similar near term Cost of funds 9.2%; higher-for-longer rates expected; interest expense 10.5–11% of revenue Higher rate headwind persists
Competitive environmentBenign; peers pulling back; more TV/digital; direct channel growing Continued benign environment; diversified portfolio enables share gains Supportive backdrop
Fair value accountingBeneficial in growth environments; reflects portfolio performance Fair value premiums stable; supports margin outlook Consistent

Management Commentary

  • CEO: “Our talented team continues to use that experience to skillfully leverage our flexible online-only business model, diversified product offerings and machine learning-powered credit risk management capabilities…while delivering stable credit performance as both our small business and consumer customers remain on solid footing” .
  • CFO: “We also executed the largest quarterly return of capital through share repurchases in our company’s history…balance sheet flexibility continues to support…portfolio growth and significant capital returns” .
  • Strategy: Diversified SMB/consumer mix and disciplined unit economics; consumer health anchored by strong employment and wage growth; SMB supported by steady consumer spending .
  • Outlook: Slight sequential revenue growth in Q2 with net revenue margin in upper 50% range; full-year originations growth ≥15% and revenue/adjusted EPS growth in upper teens .

Q&A Highlights

  • Capital returns: With upcoming 2025 senior notes refinance, management expects more covenant flexibility to expand repurchase capacity; intends to utilize most of ~$65M capacity in Q2, subject to market conditions .
  • Guidance triangulation: Q2 adjusted EPS +5–10% sequential driven by slight revenue growth and higher net revenue margin, partially offset by interest expense at top end of 10–11% range .
  • Credit mix: Lower losses vs pre-COVID largely due to mix shift away from single-pay toward line-of-credit/installment in consumer and toward higher-yield SMB products (slightly higher defaults, but better ROEs) .
  • Marketing channels: Mix stable—direct mail (consumer), TV growing across both segments, digital gaining share vs leads; competitive environment remains benign .
  • Tax refund timing: Limited intra-quarter benefit; Q2 started in line with expectations .

Estimates Context

  • We attempted to retrieve Wall Street consensus estimates from S&P Global (EPS, revenue, EBITDA) for Q1 2024 and nearby periods, but access limits prevented retrieval at this time. As a result, versus-consensus comparisons are unavailable. Values would be retrieved from S&P Global when accessible.

Key Takeaways for Investors

  • Revenue momentum with margin resilience: Q1 revenue $609.9M (+26% YoY; +5% QoQ) and net revenue margin 57% set a strong base; Q2 margin guided to upper 50s indicates continued credit stability .
  • Segment strength: Record SMB revenue ($236M) and robust Consumer ($365M) support diversified growth; combined receivables at record $3.5B provide visibility on future revenue .
  • Buyback acceleration as a catalyst: Largest quarterly buyback ($139M) and $738M liquidity point to continued capital return; management views shares as undervalued .
  • Interest rate headwinds: Cost of funds 9.2% and interest expense guided to 10.5–11% of revenue temper GAAP EPS; lower rates would be an earnings tailwind longer term .
  • Credit mix optimization: Intentional tilt to higher-yield SMB products may lift defaults modestly but increases ROE; consumer portfolio benefits from strong employment/wages .
  • Near-term setup: Q2 adjusted EPS guided +5–10% sequential with slight revenue growth; marketing ~20% supports originations while O&T and G&A scale with revenue .
  • Execution focus: Machine learning risk management, online-only model, and disciplined unit economics continue to drive profitable growth and nimble allocation across products .

Additional Documents Checked

  • Q1 2024 8-K press release (full), including financial statements and non-GAAP reconciliations .
  • Q1 2024 earnings call transcript (full) –.
  • Prior quarters: Q4 2023 8-K press release (full) and KPIs ; Q3 2023 earnings call transcript (full) –.
  • No other Q1 2024 press releases found in the document set [press-release search returned none].