Enova(US:ENVA)2021-05-02 04:32Financial Data and Key Metrics Changes - Revenue in Q1 2021 decreased 2% sequentially and 28% year-over-year, totaling $259 million [8][23] - Adjusted EBITDA rose 278% year-over-year to $137 million, marking a first-quarter record [8] - Adjusted EPS increased more than 8 times to $2.20, also a first-quarter record [8][43] - Total company originations were $506 million, a 7% increase from Q1 2020 [24] Business Line Data and Key Metrics Changes - Small business products represented 55% of the portfolio, with SMB originations increasing 11% sequentially to $322 million [15][25] - Revenue from SMB products increased 17% sequentially and more than tripled year-over-year to $76 million [15][23] - Consumer receivables decreased 9% sequentially and 41% year-over-year, totaling $572 million [25][26] - Consumer originations totaled $184 million, down 25% sequentially and 53% year-over-year [27] Market Data and Key Metrics Changes - U.S. retail sales jumped 9.8% in March 2021, indicating positive economic recovery [14] - Jobless claims dropped sharply to 576,000, a new low since the pandemic began [14] Company Strategy and Development Direction - The company is focusing on increasing its presence in SMB lending, anticipating a surge in demand as the economy reopens [13][15] - The integration of OnDeck is largely complete, with expected annual cost synergies of over $50 million [16][17] - The acquisition of Pangea Universal Holdings aims to enhance the company's offerings in the mobile international money transfer market [18][19] Management's Comments on Operating Environment and Future Outlook - Management expects growth in originations to continue as economic recovery accelerates [14][21] - The company remains committed to helping consumers access credit, with a strong credit quality outlook [22][40] - Management anticipates that consumer spending will increase as the economy reopens, benefiting small businesses [12][13] Other Important Information - The effective tax rate for Q1 2021 was 27%, down from 34% in Q1 2020 [42] - The company ended the quarter with $392 million in cash and marketable securities [43] - The cost of funds for the quarter was 8.6%, reflecting a slight increase from the previous quarter [44] Q&A Session Summary Question: What is the impact of PPP loans on small business demand? - Management noted that demand for small business loans rebounded quickly after the previous round of PPP, but emphasized that PPP primarily supports payroll, not inventory or rent [50] Question: Will marketing spend increase as demand rises? - Management indicated a willingness to spend more on marketing to capture demand, while maintaining discipline in spending [53][54] Question: How does the company view competition in the current environment? - Management observed that competition has decreased, particularly among storefront lenders, which have been significantly impacted by the pandemic [68][69] Question: What is the expected trend for G&A expenses in 2021? - Management expects G&A expenses to decline in absolute dollars and as a percentage of revenue throughout 2021 due to synergies from the OnDeck acquisition [62][63]