Enova(ENVA) - 2018 Q4 - Annual Report

Financial Performance - The company achieved a compound annual growth rate of 26.8% in net loan and finance receivables, growing from $163.0 million in 2011 to $859.9 million in 2018[41] - Revenue increased at a compound annual growth rate of 12.8%, from $480.3 million in 2011 to $1,114.1 million in 2018[41] - Adjusted EBITDA grew at a compound annual growth rate of 13.3%, from $87.7 million to $210.6 million over the same period[41] Revenue Sources - Revenue contribution from installment and line of credit products rose from 11.7% of total revenue in 2010 to 80.2% in 2018[39] - The international revenue increased from $40.5 million (15.9% of total revenue) in 2009 to $167.6 million (15.0% of total revenue) in 2018[39] - Approximately 54% of new consumer transactions in 2018 were generated through direct marketing channels, up from 32% in 2009[42] Market Opportunities - The company estimates a $69 billion consumer lending opportunity market in the United States and an $80 billion market in Brazil[38] - 41% of respondents in a Federal Reserve report indicated they could not cover an emergency expense of $400, highlighting the demand for alternative financial services[33] - The analytics-as-a-service market was valued at over $7 billion and is expected to grow at a CAGR of 30%, reaching $49 billion by the end of 2022[36] Data and Technology - The company has accumulated approximately 26 terabytes of consumer behavior data from over 47 million transactions in more than 14 years of operation[39] - In 2018, the company accessed approximately 89 million credit reports, significantly enhancing its data capabilities[49] - The decision engine currently utilizes over 100 algorithms and more than 1,000 variables to make rapid credit determinations[50] Compliance and Regulation - The company is subject to extensive regulation under various federal, state, local, and international statutes[80] - The company agreed to pay a civil money penalty of $5 million as part of a Consent Order issued by the CFPB[94] - The company is required to comply with the federal Truth in Lending Act and the Fair Credit Reporting Act[81] - The company must maintain an anti-money laundering compliance program under the USA PATRIOT Act and the Bank Secrecy Act[90] - The company is subject to the federal Electronic Funds Transfer Act regarding consumer loan transactions[87] - The company has enhanced its compliance management system following the CFPB's review[94] Operational Insights - The company has a scalable IT infrastructure that supports substantial growth demands and rapid product launches[49] - The proprietary models used for underwriting are based on over 14 years of transaction history, allowing for quick risk assessments[51] - The company employs around 600 employees in its call centers as of December 31, 2018, to support customer service operations[59] Fraud Prevention - The company has developed predictive models to identify fraudulent applications, resulting in a low false positive rate[55] Seasonal Trends - Seasonal demand for consumer loan products peaks in the third and fourth quarters, aligning with the holiday season[67] Employee and Management - As of December 31, 2018, the company had 1,218 employees[78] - Steven Cunningham, the Chief Financial Officer, previously managed a $20 billion receivables business at Capital One Financial[76] International Operations - The company has exposure to foreign currency exchange risks, particularly in its UK and Brazilian operations, with notional amounts of outstanding contracts as of December 31, 2017, totaling $12,039,000[468] - In 2018, the company recorded a gain of $243,000 from forward currency exchange contracts, while in 2017, it experienced a loss of $55,000[468] - A hypothetical 10% weakening of the Brazilian Real against the U.S. dollar would result in a decrease to net income of $954,000[466] Advertising and Marketing - The company’s advertising and marketing activities are regulated under various consumer protection laws in international jurisdictions[123]