Enova(ENVA) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Enova's unaudited Q1 2022 financial statements detail balance sheets, income, and cash flows, reflecting asset growth from loan expansion but a decline in net income Consolidated Balance Sheets As of March 31, 2022, total assets increased to $3.05 billion, driven by 81% growth in loans, funded by increased liabilities and long-term debt | Financial Metric | March 31, 2022 ($ thousands) | March 31, 2021 ($ thousands) | December 31, 2021 ($ thousands) | | :--- | :--- | :--- | :--- | | Total Assets | 3,047,144 | 2,133,642 | 2,761,483 | | Loans and finance receivables at fair value | 2,231,884 | 1,230,711 | 1,964,690 | | Total Liabilities | 1,969,194 | 1,128,034 | 1,668,431 | | Long-term debt | 1,696,751 | 874,514 | 1,384,399 | | Total Stockholders' Equity | 1,077,950 | 1,005,608 | 1,093,052 | Consolidated Statements of Income Total revenue grew 48.7% year-over-year to $385.7 million in Q1 2022, but net income declined to $52.4 million due to increased fair value changes and marketing expenses | Metric | Three Months Ended March 31, 2022 ($ thousands) | Three Months Ended March 31, 2021 ($ thousands) | | :--- | :--- | :--- | | Total Revenue | 385,731 | 259,444 | | Net Revenue | 268,689 | 238,366 | | Income from Operations | 90,746 | 123,455 | | Net Income Attributable to Enova | 52,443 | 75,920 | | Diluted EPS | $1.50 | $2.03 | Consolidated Statements of Cash Flows Net cash from operating activities increased to $153.5 million, while investing activities used $386.5 million due to loan originations, and financing provided $234.5 million | Cash Flow Activity | Three Months Ended March 31, 2022 ($ thousands) | Three Months Ended March 31, 2021 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | 153,539 | 117,028 | | Net cash used in investing activities | (386,495) | (44,454) | | Net cash provided by (used in) financing activities | 234,529 | (67,656) | Notes to Consolidated Financial Statements Detailed notes explain accounting policies, fair value changes in loans, debt, and income taxes, highlighting the company's single segment operation and increased borrowing capacity - The company utilizes the fair value option on its entire loan and finance receivable portfolio, with changes in fair value recorded in the consolidated income statement[33] | Revenue Source | Q1 2022 ($ thousands) | Q1 2021 ($ thousands) | | :--- | :--- | :--- | | Consumer loans and finance receivables | 248,547 | 181,737 | | Small business loans and finance receivables | 132,594 | 75,560 | | Total loans and finance receivables revenue | 381,141 | 257,297 | - During Q1 2022, the company amended four securitization facilities to increase commitment amounts, enhancing its borrowing capacity[63][64][66][67] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2022 performance, noting a 48.7% revenue increase from loan growth, but a net income decline due to higher marketing and fair value adjustments, alongside strong liquidity Business Overview Enova is a technology-driven online financial services provider for consumers and small businesses, leveraging proprietary analytics and machine learning to extend credit - The company extended approximately $1.0 billion in credit or financing to borrowers during the three months ended March 31, 2022[108] - Since its 2004 launch, Enova has completed approximately 56.0 million customer transactions and collected over 61 terabytes of customer behavior data[108] - Approximately 90% of the models used in the company's analytical environment are machine learning-enabled[110] Results of Operations Total revenue increased 48.7% year-over-year to $385.7 million in Q1 2022, driven by loan originations, but net income fell to $52.4 million due to significantly higher marketing expenses and fair value adjustments | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Total Revenue | $385.7 million | $259.4 million | | Net Income | $52.4 million | $75.9 million | | Diluted EPS | $1.50 | $2.03 | - Marketing expense increased significantly to $93.2 million in Q1 2022 from $28.6 million in Q1 2021, reflecting efforts to capture increasing market demand[160] | Portfolio | Fair Value as of March 31, 2022 | Fair Value as of March 31, 2021 | | :--- | :--- | :--- | | Consumer Loans (Combined) | $948.8 million | $588.6 million | | Small Business Loans | $1,297.5 million | $649.3 million | | Total (Combined) | $2,246.3 million | $1,237.9 million | Liquidity and Capital Resources The company maintained strong liquidity with $227.8 million in cash and $402.5 million in undrawn funding capacity, while repurchasing $74.0 million of common stock - As of March 31, 2022, the company had $402.5 million in committed and undrawn funding capacity and believes it has sufficient liquidity for the foreseeable future[170] - The company has no recourse debt obligations due until September 2024[170] - During Q1 2022, the company repurchased $74.0 million of common stock. A new $100.0 million share repurchase program was authorized in February 2022, replacing the prior one[175] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes in its exposure to market risk since its 2021 fiscal year-end - There have been no material changes in the company's exposure to market risk since the fiscal year ended December 31, 2021[188] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that as of March 31, 2022, the company's disclosure controls and procedures are effective[190] - No material changes in internal control over financial reporting occurred during the quarter[191] PART II. OTHER INFORMATION Item 1. Legal Proceedings Details a 2018 lawsuit by the Commonwealth of Virginia against a subsidiary for alleged consumer protection violations, which the company is vigorously defending - The company is defending a lawsuit filed by the Commonwealth of Virginia in 2018 against its subsidiary, NC Financial Solutions of Utah, LLC, alleging violations of the Virginia Consumer Protection Act, which the company believes are without merit[78][194] Item 1A. Risk Factors The company states there have been no material changes to the risk factors previously disclosed in its 2021 Annual Report on Form 10-K - There have been no material changes from the Risk Factors described in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021[194] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2022, the company repurchased 1,947,537 shares for $78.8 million and authorized a new $100 million share repurchase program | Period | Total Shares Purchased | Average Price Per Share | | :--- | :--- | :--- | | January 2022 | 757,900 | $41.27 | | February 2022 | 668,337 | $40.74 | | March 2022 | 521,300 | $38.85 | | Total | 1,947,537 | $40.44 | - On February 9, 2022, the Board of Directors authorized a new share repurchase program for up to $100.0 million through June 30, 2023, replacing the prior 2021 Authorization[196]