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EI

Enova International, Inc. (ENVA)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 delivered 25% YoY revenue growth to $689.9M and 10% sequential growth, with adjusted EPS up 63% YoY to $2.45; GAAP diluted EPS was $1.57, pressured by a $16.6M non-cash impairment (Linear) and $4.7M early debt extinguishment costs .
  • Credit remained solid: consolidated net revenue margin 58% (flat YoY), net charge-offs 8.4% of average receivables (down from 9.4% YoY), fair value premium steady; originations rose 28% YoY to $1.61B and receivables hit a record $3.8B .
  • Management guided Q4 to >20% revenue growth YoY, ~5% sequential growth, net revenue margin 55–58%, and ≥25% YoY growth in adjusted EPS; cost of funds likely peaked, with each 25 bps SOFR cut adding ~+$0.10 to adjusted EPS over 12 months .
  • Capital and funding catalysts: $1.2B liquidity at quarter-end; completed $500M 2029 notes (9.125%) and launched a new $300M buyback program; repurchased $23M in Q3 and continue to emphasize opportunistic repurchases given valuation disconnect .

What Went Well and What Went Wrong

  • What Went Well

    • Broad-based growth and operating leverage: “annual growth above 25% in originations, revenue and adjusted EPS” driven by ML underwriting and diversified offerings; adjusted EBITDA +42% YoY to $171.9M and adjusted EPS +63% to $2.45 .
    • Credit quality and margin stability: net revenue margin 58% (upper end of expectations), net charge-offs 8.4% vs 9.4% last year; fair value premiums “largely unchanged” QoQ .
    • Funding/return of capital: $1.2B liquidity, five financing transactions totaling $2.1B since last call, Q3 cost of funds 9.6% and likely peaked; new $300M buyback; Q3 repurchases $23M .

  • What Went Wrong

    • GAAP EPS optics: Diluted EPS fell sequentially to $1.57 (from $1.93 in Q2) due to a $16.6M non-cash equity-method loss (Linear write-down) and $4.7M early extinguishment costs, despite higher revenue and adjusted profitability .
    • Slightly higher delinquencies (mix-driven): >30-day delinquency ratio rose sequentially to 7.8% (from 7.5% in Q2), with management citing mix shift (more CashNet within consumer) though 1+ delinquency improved YoY; fair value marks steady .
    • Interest expense still elevated: Q3 cost of funds ticked up 24 bps sequentially to 9.6%; though management expects tailwinds from a cutting cycle, near-term interest burden continues to weigh on GAAP earnings sensitivity .

Financial Results

MetricQ1 2024Q2 2024Q3 2024
Revenue ($USD Millions)$609.9 $628.4 $689.9
Net Revenue Margin (%)57% 59% 58%
Net Income ($USD Millions)$48.4 $53.9 $43.4
Diluted EPS ($)$1.64 $1.93 $1.57
Adjusted EBITDA ($USD Millions)$149.0 $162.5 $171.9
Adjusted EPS ($)$1.91 $2.21 $2.45
  • Q3 YoY reference: Revenue $551.4M, diluted EPS $1.29 in Q3 2023; net revenue margin ~58% (flat YoY) .
  • Estimate comparisons: S&P Global consensus retrieval was unavailable at time of analysis; management characterized results as “in line or better than expectations” .

Segment revenue breakdown

SegmentQ1 2024Q2 2024Q3 2024
Small Business Revenue ($M)$236 $252 $269
Consumer Revenue ($M)$365 $368 $411
Portfolio Mix (SMB/Consumer)65% / 35% 64% / 36% 62% / 38%

Key portfolio KPIs

KPIQ1 2024Q2 2024Q3 2024
Originations ($M)$1,377.4 $1,408.7 $1,613.9
Ending Combined Principal ($M)$3,309.2 $3,436.1 $3,611.7
Ending Combined Fair Value ($M)$3,810.0 $3,956.4 $4,159.9
Fair Value as % of Principal115.1% 115.1% 115.2%
>30 Days Delinquent ($M)$279.7 $268.1 $293.8
>30 Days Delinquent (% of balance)8.1% 7.5% 7.8%
Net Charge-offs (% of avg)8.5% 7.7% 8.4%
Net Revenue ($M)$339.1 $363.4 $393.3
Net Revenue Margin (%)56.4% 58.7% 57.8%

Operating efficiency and funding (Q3 unless noted):

  • Total operating expenses 34% of revenue (vs 37% in Q3’23); marketing 20% of revenue; O&T 8% (70% variable), G&A ~6% .
  • Liquidity $1.2B at quarter-end (cash & marketable securities ~$262M; $925M availability) .
  • Cost of funds 9.6% (+24 bps QoQ); Fed cuts expected to benefit 2025 EPS run-rate .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue growth YoYQ4 2024~20% YoY growth >20% YoY growth Raised
Revenue growth Seq.Q4 2024N/A~+5% sequential New
Net Revenue MarginQ4 2024N/A (Q3 “upper 50s”) 55%–58% New specificity
Marketing % of RevQ4 2024~20% (Q3 guide) ~20% Maintained
O&T % of RevQ4 2024~9% (Q3 guide) 8%–9% Slightly lower range
G&A % of RevQ4 2024~6% (near term) ~6% Maintained
Adjusted EPS growth YoYQ4 2024+20%–25% YoY ≥+25% YoY Raised
EPS sensitivity to SOFRNext 12 monthsN/A+$0.10 per 25 bps cut New disclosure
Cost of FundsNear-term10.5%–11% of rev (full-year 2024) 9.6% in Q3; likely peaked Improving outlook

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Credit/Net revenue marginStable; net revenue margin “upper 50s” and seasonal patterns intact Margin 58% at upper end; charge-offs 8.4% vs 9.4% YoY Stable to better YoY
SMB vs Consumer growthSMB and consumer both strong; SMB yields grinding higher; SMB charge-offs ~5% First >$1B SMB originations; SMB rev +38% YoY; consumer rev +18% YoY SMB outgrowing consumer
CompetitionLimited new entrants; ENVA share gains “We don’t have a lot of strong competitors” currently Benign
Funding & ratesMultiple ABS deals; interest expense 10.5–11% of rev in 2024 5 deals totaling $2.1B; cost of funds likely peaked; +$0.10 EPS per 25 bps cut Tailwind building
Valuation/BuybacksUndervalued; stepped-up repurchases New $300M buyback; Q3 repurchases $23M; continue opportunistic Ongoing capital return
Regulatory/macroJobs/wages drive demand; customers resilient; CFPB backdrop discussed “Constructive macro”; Fed cutting path a tailwind; customers performing well Supportive

Management Commentary

  • CEO: “For the second quarter in a row, we generated annual growth above 25% in originations, revenue and adjusted EPS… Both our consumer and small business customers are performing well” .
  • CFO: “Our solid balance sheet should provide tailwinds to our future profitability in a falling interest rate environment while enabling our ability to both efficiently fund growth and return significant capital to shareholders” .
  • CFO on Q4 outlook: “We would expect consolidated revenue to increase around 5% sequentially… net revenue margin between 55% and 58%… These expectations should result in an increase in adjusted EPS of 25% or more compared to the fourth quarter of 2023” .
  • CEO on competition: “We don’t have a lot of strong competitors… no sign of any meaningful changes on the competitive front” .

Q&A Highlights

  • 2025 momentum: Management expects momentum to continue into 2025 absent a major macro/competitive shift; growth is deliberately paced via higher internal ROE targets .
  • Consumer delinquencies: Sequential uptick due to mix shift (more CashNet) rather than worsening credit; 1+ delinquency down YoY; fair value premium flat .
  • SMB/consumer growth drivers: SMB growth partly reflects less bank lending and more high-quality borrowers; consumer growth steady with strong jobs/wages .
  • Funding costs: Q4 interest expense as % of revenue seen toward lower end of prior 10.5–11% range; cost of funds likely peaked following Fed cuts .
  • New vs returning customers: Mix “pretty consistent” across portfolios .

Estimates Context

  • Wall Street consensus from S&P Global could not be retrieved at the time of analysis due to an access limitation; therefore, explicit revenue/EPS beat/miss vs consensus is not shown. Management stated results were “in line or better than our expectations” .

Key Takeaways for Investors

  • Growth with discipline: Revenue +25% YoY and adj. EPS +63% YoY with stable credit and operating leverage; mix-shift dynamics explain minor delinquency moves without fair value pressure .
  • 4Q setup constructive: Guide implies double-digit sequential EBITDA/earnings potential with margin in the upper 50s and ≥25% adj. EPS growth YoY; watch origination timing/mix .
  • Rates tailwind emerging: Each 25 bps SOFR cut adds ~+$0.10 to adjusted EPS over 12 months; management believes cost of funds has likely peaked .
  • Capital deployment catalyst: New $300M buyback, Q3 repurchases, and $1.2B liquidity support continued shrink in share count and ROE accretion; debt maturity extension (2029 notes) de-risks the stack .
  • SMB engine: First >$1B SMB originations quarter; SMB revenue +38% YoY as ENVA benefits from benign competition and bank pullback, with yields trending higher .
  • Watch GAAP vs non-GAAP optics: Q3 GAAP EPS included a $16.6M non-cash impairment and $4.7M extinguishment cost; core profitability (adj. EPS/EBITDA) remained strong .
  • Narrative support: Management confidence, stable credit, and explicit Q4 targets provide near-term visibility; lack of strong competitors and diversified products support medium-term thesis .

Additional Relevant Press Releases (Q3 period context)

  • New $300M share repurchase authorization (Aug 12, 2024) .
  • $500M Senior Notes due 2029 at 9.125% to refinance 2025 notes and general purposes (Aug 12, 2024) .
  • Announced private offering and tender/consent for 2025 notes (July 29, 2024) .

Citations:

  • Q3 2024 8-K press release and financials:
  • Q3 2024 earnings call transcript:
  • Q2 2024 8-K/press:
  • Q2 2024 call:
  • Q1 2024 8-K/press:
  • Q1 2024 call:
  • Additional PRs: