CURO (CURO) - 2024 4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Q4 gross originations grew 11.3% year over year to $75.2 million, with a two-year stack growth of 25.7% [67] - Q4 revenue increased by 9.4% to$ 63 million, marking the seventh consecutive quarter of year-over-year growth [74] - Full year 2024 gross originations grew approximately 5%, with Q4 growth exceeding the 6% to 8% outlook [68] - Gross profit for Q4 was approximately $7.4 million, down from$ 8.9 million in the previous year, while full year gross profit was $45.8 million, up about 10% versus 2023 [75][76] - Adjusted EBITDA for full year 2024 was approximately$ 4.8 million, a $6.7 million improvement compared to the previous year [83] Business Line Data and Key Metrics Changes - Total app originations grew by 32% year over year in Q4, with 46 million in gross originations starting in the app [33][34] - K-PAY originations increased by approximately 52% year over year, accounting for roughly 41% of total originations [35] - Direct and waterfall gross originations grew approximately 44% year over year in Q4, excluding home furnishings and mattress categories [50] Market Data and Key Metrics Changes - Gross originations for the top 25 merchants grew 10% during Q4, with the largest merchant, Wayfair, representing 27% of total gross originations, down from 43% in Q4 2023 [69][70] - Cross-shopping activity grew approximately 60% in Q4, indicating a vibrant marketplace [72] Company Strategy and Development Direction - The company aims to enhance consumer engagement, merchant engagement, referral partnerships, and improve unit economics to drive profitability [27] - The focus is on leveraging the Catapult app marketplace to drive consumer engagement and gross originations [33][38] - The company plans to introduce new merchants to the marketplace and enhance marketing efforts to increase application growth [89] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential despite a challenging macro environment, particularly in the home furnishings and mattress category [88] - The company anticipates gross originations growth of at least 20% and revenue growth of at least 20% for 2025 [92] - Management noted that they have not seen significant changes in consumer behavior due to tariffs, with delinquencies remaining in line with expectations [100][102] Other Important Information - The company reported a disciplined approach to expense management, with total operating expenses decreasing by 37% in Q4 [80] - As of December 31, 2024, total cash and cash equivalents were$ 16.6 million, including $13.1 million of restricted cash [84] Q&A Session Summary Question: Outlook for margins in 2025 - Management expects gross profit to remain in the 18% to 20% range for 2025, consistent with previous years [98] Question: Changes in consumer behavior due to tariffs - Management has not observed significant changes in consumer behavior related to tariffs, with stability in delinquencies [100][102] Question: Drivers for EBITDA margin improvement - The improvement in EBITDA margin is primarily due to diligent expense management while focusing on growth [110] Question: Growth in Wayfair originations - Wayfair's gross origination growth continues to decline, but the business outside of Wayfair remains strong, growing at 50% [114] Question: Merchant acquisition in uncertain macro environments - Management believes that uncertainty can accelerate merchant acquisition as they seek growth opportunities [120]