Enova Reports Fourth Quarter and Full Year 2023 Results
- 20% increase in total revenue for the fourth quarter of 2023
- Record quarterly originations of $1.4 billion
- 22% increase in total revenue for full year 2023
- Net income from continuing operations of $175 million
- Positive outlook for 2024
- None.
Insights
An examination of Enova International's financial performance reveals several key points that are of interest to investors and market observers. The company's 20% revenue increase in Q4 2023 compared to Q4 2022 indicates a robust growth trajectory, potentially driven by effective business strategies and market demand. However, the reduction in net revenue margin from 60% to 56% suggests a decrease in profitability or an increase in costs relative to revenue, which warrants further scrutiny.
Enova's record originations of $1.4 billion highlight strong market demand for their products, particularly in the small and medium-sized business (SMB) sector. This is a positive sign of the company's market penetration and could signal future revenue growth. The increase in the fair value of the consolidated portfolio to 115% of principal reflects confidence in the quality and performance of Enova's loan portfolio, which may be reassuring to investors concerned about credit risk.
The company's liquidity position, with $870 million in cash, marketable securities and available credit, indicates a solid financial foundation that supports both operational needs and strategic initiatives, such as the $66 million share repurchase. This action suggests that management believes the stock is undervalued and is a positive signal to the market about the company's future prospects.
From a market perspective, Enova International's performance can be contextualized within the broader fintech and lending industry. The company's online-only business model and use of machine learning for credit risk management are competitive advantages that align with industry trends towards digitalization and data-driven decision-making. Enova's ability to adapt and innovate in this space is critical for maintaining its competitive edge and responding to evolving consumer preferences.
The company's diversified product offerings may contribute to resilience against market volatility, as they can cater to different customer segments and demand cycles. The emphasis on a solid balance sheet and operating efficiency is particularly relevant in an industry where regulatory scrutiny and economic fluctuations can quickly impact financial stability.
Furthermore, the company's forward-looking statements regarding an improving macroeconomic environment and momentum across product ranges provide an optimistic outlook for investors. However, these projections should be balanced against external economic factors that could affect consumer borrowing behavior and the overall demand for credit products.
Analyzing Enova's financial results within the economic context, the company's growth amidst a dynamic economic landscape suggests effective management and a strong market position. The 16% increase in combined loans and finance receivables indicates expanding credit activity, which can be a bellwether for economic confidence among businesses and consumers.
However, it is essential to consider the broader economic environment, including interest rate trends, inflation and employment levels, which can influence loan demand and credit performance. The company's solid credit performance and outlook may reflect not only strong risk management practices but also a favorable economic environment that has supported borrowers' ability to repay debts.
The ability of Enova to access multiple funding markets in Q4 demonstrates financial agility and investor confidence, which could be crucial in navigating potential economic headwinds. Investors should also be aware of the potential risks associated with an economic downturn, which could impact loan performance and the company's financial results.
- Total revenue increased
20% from the fourth quarter of 2022 to$584 million - Diluted earnings per share totaled
$1.13 $1.83 - Total company combined loans and finance receivables increased
16% from the end of fourth quarter of 2022 to$3.3 billion $1.4 billion - Continued solid credit performance and outlook with a fourth quarter net revenue margin of
56% and a sequential increase in the fair value of the consolidated portfolio as a percentage of principal to115% at December 31 - Liquidity, including cash and marketable securities and available capacity on facilities, totaled
$870 million - Repurchased
$66 million
"We are pleased to end the year on a positive note with another strong quarter of solid revenue and profitable growth," said David Fisher, Enova's CEO. "Our performance in 2023 was made possible by the world class team we have built at Enova, along with our flexible online-only business model, nimble machine learning powered credit risk management capabilities, diversified product offerings and solid balance sheet. We delivered a record quarter of originations, driven by strong demand, especially in our SMB business and solid credit performance across our entire portfolio. Looking ahead, we feel like we are in a strong position heading into 2024 with an improving macroeconomic environment and good momentum across our entire product range."
Fourth Quarter 2023 Summary
- Total revenue of
$584 million 20% from$486 million - Net revenue margin of
56% in the fourth quarter of 2023 compared to60% in the fourth quarter of 2022. - Net income of
$35 million $1.13 $51 million $1.56 - Fourth quarter 2023 adjusted EBITDA, a non-GAAP measure, of
$130 million $120 million - Adjusted earnings of
$57 million $1.83 $57 million $1.76
Full Year 2023 Summary
- Total revenue of
$2.1 billion 22% from$1.7 billion - Net revenue margin of
58% in 2023 compared to64% in 2022. - Net income from continuing operations of
$175 million $5.49 $207 million $6.19 - Full year 2023 adjusted EBITDA, a non-GAAP measure, of
$503 million $443 million - Adjusted earnings of
$219 million $6.85 $228 million $6.81
"We ended 2023 with positive momentum as strong growth in originations, receivables and revenue along with solid credit and operating efficiency drove another quarter of solid financial results," said Steve Cunningham, CFO of Enova. "We continued to successfully access multiple funding markets during the fourth quarter and our ample liquidity and strong balance sheet enabled record originations this quarter while returning significant capital to shareholders through share repurchases. Our strong financial position as we begin 2024 has us well positioned to drive profitable growth and deliver on our commitment to generating long-term shareholder value."
For information regarding the non-GAAP financial measures discussed in this release, please see "Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Financial Measures" below.
Conference Call
Enova will host a conference call to discuss its fourth quarter and full year 2023 results at 4 p.m. Central Time / 5 p.m. Eastern Time today, January 30th. The live webcast of the call can be accessed at the Enova Investor Relations website at http://ir.enova.com, along with the company's earnings press release and supplemental financial information. The
About Enova
Enova International (NYSE: ENVA) is a leading financial services company with powerful online lending that serves small businesses and consumers who are underserved by traditional banks. Through its world-class analytics and machine learning algorithms, Enova has provided more than 9.5 million customers with over
Non-GAAP Financial Measures
In addition to the financial information prepared in conformity with generally accepted accounting principles, or GAAP, Enova provides historical non-GAAP financial information. Management believes that presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of Enova's operations. Management believes that these non-GAAP financial measures reflect an additional way of viewing aspects of Enova's business that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business.
Management provides non-GAAP financial information for informational purposes and to enhance understanding of Enova's GAAP consolidated financial statements. Readers should consider the information in addition to, but not instead of or superior to, Enova's 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.
Combined Loans and Finance Receivables
The combined loans and finance receivables measures are non-GAAP measures that include loans and finance receivables that Enova owns or has purchased and loans that Enova guarantees. Management believes 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. Management also believes that the comparison of the aggregate amounts from period to period is more meaningful than comparing only the amounts reflected on Enova's consolidated balance sheet since revenue is impacted by the aggregate amount of receivables owned by Enova and those guaranteed by Enova as reflected in its consolidated financial statements.
Adjusted Earnings Measures
In addition to reporting financial results in accordance with GAAP, Enova has provided adjusted earnings and adjusted earnings per share, or, collectively, the Adjusted Earnings Measures, which are non-GAAP measures. Management believes 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 provides a more complete understanding of Enova's financial performance, competitive position and prospects for the future. Management also believes 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 Enova's business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. In addition, management believes that the adjustments shown below are useful to investors in order to allow them to compare Enova's financial results during the periods shown without the effect of each of these expense items.
Adjusted EBITDA Measures
In addition to reporting financial results in accordance with GAAP, Enova has provided Adjusted EBITDA and Adjusted EBITDA margin, or, collectively, the Adjusted EBITDA measures, which are non-GAAP measures. Adjusted EBITDA is a non-GAAP measure that Enova defines as earnings excluding depreciation, amortization, interest, foreign currency transaction gains or losses, taxes and stock-based compensation. In addition, management believes that the adjustments for other nonoperating expenses, equity method investment income or loss, certain transaction-related costs and a discrete regulatory settlement 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 expense items. Adjusted EBITDA margin is a non-GAAP measure that Enova defines as Adjusted EBITDA as a percentage of total revenue. Management believes Adjusted EBITDA Measures are used by investors to analyze operating performance and evaluate Enova's ability to incur and service debt and Enova's capacity for making capital expenditures. Adjusted EBITDA Measures are also useful to investors to help assess Enova's estimated enterprise value.
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share data) (Unaudited) | |||||||
December 31, | |||||||
2023 | 2022 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 54,357 | $ | 100,165 | |||
Restricted cash | 323,082 | 78,235 | |||||
Loans and finance receivables at fair value | 3,629,167 | 3,018,528 | |||||
Income taxes receivable | 44,129 | 43,741 | |||||
Other receivables and prepaid expenses | 71,982 | 66,267 | |||||
Property and equipment, net | 108,705 | 93,228 | |||||
Operating lease right-of-use asset | 14,251 | 19,347 | |||||
Goodwill | 279,275 | 279,275 | |||||
Intangible assets, net | 19,005 | 27,390 | |||||
Other assets | 41,583 | 54,713 | |||||
Total assets | $ | 4,585,536 | $ | 3,780,889 | |||
Liabilities and Stockholders' Equity | |||||||
Accounts payable and accrued expenses | $ | 261,156 | $ | 198,320 | |||
Operating lease liability | 27,042 | 33,595 | |||||
Deferred tax liabilities, net | 113,350 | 104,169 | |||||
Long-term debt | 2,943,805 | 2,258,660 | |||||
Total liabilities | 3,345,353 | 2,594,744 | |||||
Commitments and contingencies | |||||||
Stockholders' equity: | |||||||
Common stock, and 44,326,999 shares issued and 29,089,258 and 31,220,928 outstanding as of December 31, 2023 and 2022, respectively | — | — | |||||
Preferred stock, issued and outstanding | — | — | |||||
Additional paid in capital | 284,256 | 251,878 | |||||
Retained earnings | 1,488,306 | 1,313,185 | |||||
Accumulated other comprehensive loss | (6,264) | (5,990) | |||||
Treasury stock, at cost (16,250,556 and 13,106,071 shares as of December 31, 2023 and 2022, respectively) | (526,115) | (372,928) | |||||
Total stockholders' equity | 1,240,183 | 1,186,145 | |||||
Total liabilities and stockholders' equity | $ | 4,585,536 | $ | 3,780,889 | |||
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (Unaudited) | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | $ | 583,592 | $ | 486,164 | $ | 2,117,639 | $ | 1,736,085 | |||||||
Change in Fair Value | (258,556) | (196,056) | (887,717) | (618,521) | |||||||||||
Net Revenue | 325,036 | 290,108 | 1,229,922 | 1,117,564 | |||||||||||
Operating Expenses | |||||||||||||||
Marketing | 122,226 | 96,573 | 414,460 | 382,573 | |||||||||||
Operations and technology | 47,089 | 44,723 | 194,905 | 173,668 | |||||||||||
General and administrative | 49,148 | 35,064 | 160,265 | 140,464 | |||||||||||
Depreciation and amortization | 9,034 | 8,499 | 38,157 | 36,867 | |||||||||||
Total Operating Expenses | 227,497 | 184,859 | 807,787 | 733,572 | |||||||||||
Income from Operations | 97,539 | 105,249 | 422,135 | 383,992 | |||||||||||
Interest expense, net | (57,208) | (37,530) | (194,779) | (115,887) | |||||||||||
Foreign currency transaction gain (loss), net | 49 | (715) | 57 | (645) | |||||||||||
Equity method investment income (loss) | 1,251 | (87) | 116 | 6,435 | |||||||||||
Other nonoperating expenses | (3) | — | (282) | (1,321) | |||||||||||
Income before Income Taxes | 41,628 | 66,917 | 227,247 | 272,574 | |||||||||||
Provision for income taxes | 6,860 | 16,045 | 52,126 | 65,150 | |||||||||||
Net income | $ | 34,768 | $ | 50,872 | $ | 175,121 | $ | 207,424 | |||||||
Earnings Per Share: | |||||||||||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 1.17 | $ | 1.62 | $ | 5.71 | $ | 6.42 | |||||||
Diluted | $ | 1.13 | $ | 1.56 | $ | 5.49 | $ | 6.19 | |||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 29,687 | 31,401 | 30,673 | 32,290 | |||||||||||
Diluted | 30,887 | 32,627 | 31,921 | 33,483 | |||||||||||
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (dollars in thousands) (Unaudited) | |||||||
Year Ended December 31, | |||||||
2023 | 2022 | ||||||
Cash flows provided by operating activities | $ | 1,166,869 | $ | 893,998 | |||
Cash flows from investing activities | |||||||
Loans and finance receivables | (1,449,417) | (1,631,354) | |||||
Capitalization of software development costs and purchases of fixed assets | (45,241) | (43,629) | |||||
Sale of subsidiary | — | 8,713 | |||||
Total cash flows used in investing activities | (1,494,658) | (1,666,270) | |||||
Cash flows provided by financing activities | 526,541 | 724,866 | |||||
Effect of exchange rates on cash | 287 | (77) | |||||
Net change in cash and cash equivalents and restricted cash | 199,039 | (47,483) | |||||
Cash, cash equivalents and restricted cash at beginning of year | 178,400 | 225,883 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 377,439 | $ | 178,400 | |||
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES LOANS AND FINANCE RECEIVABLES FINANCIAL AND OPERATING DATA (dollars in thousands)
| ||||||||||||
The following table includes financial information for loans and finance receivables, which is based on loan and finance receivable balances for the three months ended December 31, 2023 and 2022. | ||||||||||||
Three Months Ended December 31 | 2023 | 2022 | Change | |||||||||
Ending combined loan and finance receivable principal balance: | ||||||||||||
Company owned | $ | 3,154,735 | $ | 2,739,164 | $ | 415,571 | ||||||
Guaranteed by the Company(a) | 13,537 | 12,937 | 600 | |||||||||
Total combined loan and finance receivable principal balance(b) | $ | 3,168,272 | $ | 2,752,101 | $ | 416,171 | ||||||
Ending combined loan and finance receivable fair value balance: | ||||||||||||
Company owned | $ | 3,629,167 | $ | 3,018,528 | $ | 610,639 | ||||||
Guaranteed by the Company(a) | 18,534 | 16,257 | 2,277 | |||||||||
Ending combined loan and finance receivable fair value balance(b) | $ | 3,647,701 | $ | 3,034,785 | $ | 612,916 | ||||||
Fair value as a % of principal(c) | 115.1 | % | 110.3 | % | 4.8 | % | ||||||
Ending combined loan and finance receivable balance, including principal and accrued fees/interest outstanding: | ||||||||||||
Company owned | $ | 3,297,082 | $ | 2,837,799 | $ | 459,283 | ||||||
Guaranteed by the Company(a) | 16,351 | 15,644 | 707 | |||||||||
Ending combined loan and finance receivable balance(b) | $ | 3,313,433 | $ | 2,853,443 | $ | 459,990 | ||||||
Average combined loan and finance receivable balance, including principal and accrued fees/interest outstanding: | ||||||||||||
Company owned(d) | $ | 3,141,479 | $ | 2,723,006 | $ | 418,473 | ||||||
Guaranteed by the Company(a)(d) | 16,341 | 15,050 | 1,291 | |||||||||
Average combined loan and finance receivable balance(a)(d) | $ | 3,157,820 | $ | 2,738,056 | $ | 419,764 | ||||||
Revenue | $ | 574,721 | $ | 478,945 | $ | 95,776 | ||||||
Change in fair value | (256,412) | (194,375) | (62,037) | |||||||||
Net revenue | 318,309 | 284,570 | 33,739 | |||||||||
Net revenue margin | 55.4 | % | 59.4 | % | (4.0) | % | ||||||
Change in fair value as a % of average loan and finance receivable balance(d) | 8.1 | % | 7.1 | % | 1.0 | % | ||||||
Delinquencies: | ||||||||||||
>30 days delinquent | $ | 263,524 | $ | 190,119 | $ | 73,405 | ||||||
>30 days delinquent as a % of loan and finance receivable balance(c) | 8.0 | % | 6.7 | % | 1.3 | % | ||||||
Charge-offs: | ||||||||||||
Charge-offs (net of recoveries) | $ | 305,436 | $ | 240,531 | $ | 64,905 | ||||||
Charge-offs (net of recoveries) as a % of average loan and finance receivable balance(d) | 9.7 | % | 8.8 | % | 0.9 | % | ||||||
(a) | Represents loans originated by third-party lenders through the CSO programs, which are not included in our consolidated balance sheets. | ||||||
(b) | Non-GAAP measure. | ||||||
(c) | Determined using period-end balances. | ||||||
(d) | The average combined loan and finance receivable balance is the average of the month-end balances during the period. | ||||||
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (dollars in thousands, except per share data) | ||||||||||||||||
Adjusted Earnings Measures | ||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net income | $ | 34,768 | $ | 50,872 | $ | 175,121 | $ | 207,424 | ||||||||
Adjustments: | ||||||||||||||||
Transaction-related costs(a) | 755 | — | 755 | — | ||||||||||||
Lease termination and cease use costs(b) | — | — | 1,698 | — | ||||||||||||
Equity method investment (income) loss(c) | (1,251) | 87 | (116) | (6,107) | ||||||||||||
Other nonoperating expenses(d) | 3 | — | 282 | 1,321 | ||||||||||||
Intangible asset amortization | 2,014 | 2,014 | 8,385 | 8,055 | ||||||||||||
Stock-based compensation expense | 7,458 | 5,993 | 26,738 | 21,950 | ||||||||||||
Foreign currency transaction (gain) loss, net | (49) | 715 | (57) | 645 | ||||||||||||
Cumulative tax effect of adjustments | (2,293) | (2,191) | (9,456) | (5,365) | ||||||||||||
Regulatory settlement(e) | 15,201 | — | 15,201 | — | ||||||||||||
Adjusted earnings | $ | 56,606 | $ | 57,490 | $ | 218,551 | $ | 227,923 | ||||||||
Diluted earnings per share | $ | 1.13 | $ | 1.56 | $ | 5.49 | $ | 6.19 | ||||||||
Adjusted earnings per share | $ | 1.83 | $ | 1.76 | $ | 6.85 | $ | 6.81 | ||||||||
Adjusted EBITDA | ||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net income | $ | 34,768 | $ | 50,872 | $ | 175,121 | $ | 207,424 | ||||||||
Depreciation and amortization expenses | 9,034 | 8,499 | 38,157 | 36,867 | ||||||||||||
Interest expense, net | 57,208 | 37,530 | 194,779 | 115,887 | ||||||||||||
Foreign currency transaction (gain) loss, net | (49) | 715 | (57) | 645 | ||||||||||||
Provision for income taxes | 6,860 | 16,045 | 52,126 | 65,150 | ||||||||||||
Stock-based compensation expense | 7,458 | 5,993 | 26,738 | 21,950 | ||||||||||||
Adjustments: | ||||||||||||||||
Transaction-related costs(a) | 755 | — | 755 | — | ||||||||||||
Equity method investment (income) loss(c) | (1,251) | 87 | (116) | (6,435) | ||||||||||||
Regulatory settlement(e) | 15,201 | — | 15,201 | — | ||||||||||||
Other nonoperating expenses(d) | 3 | — | 282 | 1,321 | ||||||||||||
Adjusted EBITDA | $ | 129,987 | $ | 119,741 | $ | 502,986 | $ | 442,809 | ||||||||
Adjusted EBITDA margin calculated as follows: | ||||||||||||||||
Total Revenue | $ | 583,592 | $ | 891,761 | $ | 2,117,639 | $ | 1,736,085 | ||||||||
Adjusted EBITDA | 129,987 | 119,741 | 502,986 | 442,809 | ||||||||||||
Adjusted EBITDA as a percentage of total revenue | 22.3 | % | 13.4 | % | 23.8 | % | 25.5 | % | ||||||||
(a) | In the fourth quarter of 2023, the Company recorded | ||||||
(b) | In the first quarter of 2023, the Company recorded a loss of | ||||||
(c) | In the second quarter of 2022, the Company recorded equity method investment income of | ||||||
(d) | In the second and third quarters of 2022, the Company recorded other nonoperating expenses totaling | ||||||
(e) | In the fourth quarter of 2023, the Company reached an agreement with the Consumer Financial Protection Bureau, or the CFPB, pursuant to which it agreed to pay a civil money penalty of | ||||||
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SOURCE Enova International, Inc.
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