Enova International, Inc. (ENVA)·Q2 2024 Earnings Summary

Executive Summary

• Q2 revenue was $628.4M, up 26% YoY and 3% QoQ; adjusted EPS was $2.21 (+28% YoY, +16% QoQ), GAAP diluted EPS was $1.93 (+29% YoY), and adjusted EBITDA reached $162.5M (+29% YoY) .
• Net revenue margin was 59% (vs. 60% in Q2’23), supported by stable credit; total originations were ~$1.41B (+27% YoY) and combined loans/receivables rose 25% YoY to a record ~$3.6B .
• Segment performance: SMB revenue hit a record $252M (+32% YoY; +6% QoQ), consumer revenue was $368M (+22% YoY; +1% QoQ) .
• Liquidity ended Q2 at ~$891M (cash/marketables + facility capacity); management repurchased ~$62M of stock in Q2 and reiterated a focus on opportunistic buybacks as a capital return catalyst .
• Outlook: Q3 revenue guided to >5% sequential growth and >20% YoY, net revenue margin in the “upper 50%” range; Q4 revenue guided to ~20% YoY growth and adjusted EPS +20–25% YoY—potential positive narrative for shares if execution continues .

What Went Well and What Went Wrong

What Went Well

• Strong growth and stable credit: “originations, receivables, revenue, EBITDA, and EPS all up 25% or more year-over-year,” with net charge-offs falling to 7.7% from 8.5% in Q1 and remaining well below pre-pandemic levels .
• Segment breadth and demand: SMB revenue hit a record while consumer remained resilient; marketing efficiency held at 19% of revenue, demonstrating scalable demand capture .
• Funding access and cost: Three Q2 financing transactions totaling just over $1B executed at cost-effective terms; term securitization spreads ~100 bps better vs. last year and 2028 notes trading above par, indicating constructive markets .

Management quote:

• “We delivered another quarter of strong results driven by…machine learning analytics…diversified product offerings and solid balance sheet…[with] stable credit across our entire product range.” — CEO David Fisher .

What Went Wrong

• Net revenue margin modestly lower YoY (59% vs. 60%) as portfolio mix shifted toward lines of credit and consumer seasonality, though still “upper 50%” and in-line with expectations .
• Delinquencies >30 days ticked up YoY in dollar terms (to $268.1M) though % of balance was 7.5% vs. 7.7% last year; charge-offs as % of average balance edged up to 7.7% vs. 7.6% in Q2’23 .
• Interest expense increased vs. prior year amid higher short-term rates; cost of funds steady at 9.3% and interest as % of revenue expected at 10.5–11% for 2024, pressuring GAAP EPS leverage vs. revenue growth .

Financial Results

Segment breakdown

Key KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• Strategy and positioning: “We believe we are in a strong position heading into the back half of 2024 with considerable momentum, a constructive macroeconomic environment, and stable credit across our entire product range.” — CEO David Fisher .
• Outlook detail: “For the third quarter, we expect consolidated revenue to increase more than 5% sequentially…net revenue margin in the upper 50% range…these expectations should result in sequential growth in adjusted EPS of more than 5%.” — CFO Steve Cunningham .
• Funding markets: “Both term trades were nearly 100 bps better vs. one year ago…our 2028 notes issued late last year trading well above par, indicating spread compression.” — CFO Steve Cunningham .

Q&A Highlights

• Competitive environment steady; some competitors more cautious, enabling ENVA to lean into growth without being “particularly aggressive” .
• Fair value marks and portfolio mix: Stability indicates outlook for discounted risk-adjusted cash flows remains very stable .
• Funding and refinancing: Improved term spreads; opportunistic approach to 2025 notes refi; covenant package expected similar to 2028 notes to allow higher capital returns .
• Consumer repayment and SMB funnel: Payment rates stable; SMB yields guided slightly higher with NCO ~5% .
• Macro and cohort quality: Tightening elsewhere benefits ENVA SMB intake quality; consumer credit box optimized to target desired charge-off outcomes .

Estimates Context

• Wall Street consensus (S&P Global) for Q2’24 EPS and revenue was unavailable at time of retrieval due to SPGI daily request limits; we could not compare reported results to consensus. Management characterized Q2 results as “in-line with or better than our expectations,” but that is not a substitute for Street consensus .

Key Takeaways for Investors

• Growth with credit stability: Revenue +26% YoY, adjusted EPS +28% YoY, with net revenue margin at 59% and charge-offs trending down sequentially—supportive of multiple expansion if sustained .
• Segment breadth: Record SMB revenue and resilient consumer revenue underpin diversified growth; portfolio skew to lines of credit supports ongoing demand capture .
• Operating leverage intact: Marketing ~19–20% of revenue, O&T ~9%, G&A ~6% guidance demonstrates cost discipline and scalability .
• Funding tailwinds: Term spreads ~100 bps tighter YoY and notes above par signal improving financing conditions; interest burden likely eases with potential rate cuts over time .
• Capital returns: ~$62M buybacks in Q2 and continued focus on opportunistic repurchases add to EPS accretion and support the equity story .
• Outlook catalysts: Q3 revenue >5% sequential, Q4 adjusted EPS +20–25% YoY—if delivered, should positively influence sentiment and estimate revisions .
• Risk watch: Delinquency and charge-off metrics remain in healthy ranges but should be monitored alongside mix shifts and macro conditions; management maintains disciplined unit economics .