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Enova(ENVA) - 2020 Q4 - Annual Report
EnovaEnova(US:ENVA)2021-02-25 16:00

Financial Performance - Revenue increased at a compound annual growth rate of 14.0%, from $642.1 million in 2016 to $1,083.7 million in 2020[44]. - Adjusted EBITDA grew at a compound annual growth rate of 37.1%, from $117.7 million in 2016 to $415.3 million in 2020, with an adjusted EBITDA margin increase from 18.3% to 38.3%[44]. - Net income attributable to Enova International, Inc. was $377,844 thousand for 2020, compared to $36,612 thousand in 2019, indicating a significant increase[470]. - Earnings per share (EPS) for continuing operations was $11.86 for 2020, compared to $3.80 in 2019, reflecting a substantial increase of approximately 212.6%[470]. - Income from operations rose to $357,797 thousand in 2020, up from $248,210 thousand in 2019, representing a growth of approximately 44%[470]. - Net income for the year ended December 31, 2020, was $377,929 thousand, a significant increase from $36,612 thousand in 2019[475]. - Comprehensive income attributable to Enova International, Inc. for 2020 was $373,932 thousand, compared to $47,351 thousand in 2019[475]. - The company reported a gain on bargain purchase of $163,999 thousand in 2020, contributing positively to net income[470]. Market Opportunities - The U.S. consumer lending opportunity market is estimated at $69 billion, while Brazil's consumer loans market is estimated at $80 billion[41]. - The total U.S. small business loan market is estimated at $82 billion, with loans under $100,000 accounting for 60% of all small business loan growth[41]. - Approximately 22% of the population is unbanked or underbanked, with over 85% of those consumers using alternative financial service products[36]. Customer Acquisition and Marketing - Direct marketing generated approximately 52% of new consumer transactions in 2020, up from 32% in 2009[45]. - The company’s marketing strategy includes a multi-channel approach, utilizing television, digital, direct mail, and partner marketing to acquire new customers at low cost[60]. - The percentage of consumer loans sourced through direct marketing increased from approximately 32% in 2009 to 52% in 2020, indicating improved customer brand loyalty[61]. Technology and Data Analytics - The company has accumulated approximately 49 terabytes of consumer behavior data from over 53 million transactions in more than 16 years of operation[42]. - The decision engine utilizes more than 100 algorithms and over 1,000 variables, with a team of over 80 data and analytics professionals dedicated to its ongoing improvement as of December 31, 2020[53]. - The technology platforms are designed for scalability and flexibility, allowing the company to enter new markets and launch new products typically within three to six months from conception to launch[49]. Regulatory Compliance and Legal Matters - Enova's consumer loan business is subject to the federal Truth in Lending Act and Fair Credit Reporting Act, which mandate specific disclosures[88]. - The company has a commitment to compliance with various federal and state laws regarding consumer privacy and data security[96]. - The company faced a civil money penalty of $5 million from the CFPB due to issues related to loans made to active-duty military members[101]. - Enova agreed to pay a civil money penalty of $3.2 million in 2019 for failing to provide loan extensions to 308 consumers[104]. - The CFPB's Small Dollar Rule requires lenders to determine consumers' ability to repay loans before issuing them[103]. Operational Changes and Challenges - The company has altered or ceased making consumer loans in certain states due to newly introduced legislation that restricts its products and services[112]. - The company monitors proposed legislation that could impact its business operations regularly[112]. - The company faced challenges in the short-term loan industry due to increasing local regulations and restrictions[115]. Acquisition and Integration - The acquisition of On Deck Capital, Inc. was completed for a total purchase consideration of $115.7 million, with acquired loans and finance receivables recorded at a fair value of $528.6 million[456]. - The company has acquired OnDeck's proprietary data and analytics models, enhancing its ability to serve small businesses and manage risk of defaults[54]. - The acquisition of On Deck Capital, Inc. on October 13, 2020, expanded the company's financing offerings to small businesses in the U.S., Australia, and Canada[5]. Financial Position and Assets - Total assets increased to $2,108,075 thousand as of December 31, 2020, compared to $1,574,352 thousand in 2019, reflecting a growth of approximately 33.8%[463]. - Long-term debt decreased to $946,461 thousand as of December 31, 2020, down from $991,181 thousand in 2019, showing a reduction of about 4.5%[463]. - The company reported a net cash provided by operating activities of $740,871 in 2020, compared to $848,639 in 2019[1]. - Cash, cash equivalents, and restricted cash at the end of 2020 were $369,200, up from $80,964 at the end of 2019[1]. Employee and Leadership Insights - As of December 31, 2020, Enova had 1,549 employees, with 68 involved in servicing loans related to discontinued U.K. operations[82]. - Enova's leadership team has extensive experience from leading financial services companies and technology firms[84]. - The company maintains a culture of inclusion and provides resources for professional growth[83]. Accounting and Financial Reporting - The company’s internal control over financial reporting was deemed effective as of December 31, 2020, according to the independent auditor's report[448]. - The Company utilizes the fair value option for its entire loan and finance receivable portfolio starting January 1, 2020, impacting how loans are reported on the balance sheet[512]. - Marketing expenses are now fully expensed as incurred following the adoption of the fair value option on January 1, 2020, changing the accounting treatment from deferral and amortization[529].