Enova(ENVA) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted EBITDA increased 18% year-over-year and 15% sequentially to $149 million, while adjusted EPS rose 7$1.91 [4][14] - Total company revenue for Q1 2024 was $610 million, a 26$1.4 billion [85][42] - The net charge-off ratio for the small business portfolio declined to 4.7% from 4.8% last quarter, aligning with the expected range of 4% to 5% [11] Business Line Data and Key Metrics Changes - Small business revenue increased 22% year-over-year to $236 million, while consumer revenue rose 30$365 million [58] - Consumer originations grew 43% year-over-year to $417 million, with expectations for total company revenue to increase slightly sequentially in Q2 [10][42] - Marketing expenses were 18$3.5 billion in combined loan and finance receivables, a 23% increase year-over-year [43] - Originations in Brazil increased 29% sequentially and 83% year-over-year on a constant currency basis, highlighting growth opportunities in international markets [81] Company Strategy and Development Direction - The company aims to unlock shareholder value while maintaining significant liquidity for growth, with a focus on a diversified portfolio to capture market share in non-prime lending [5][84] - Management emphasized the importance of credit quality and efficient marketing strategies to drive growth and profitability [60][64] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to drive profitable growth, citing strong credit performance and a solid job market as key factors [54][5] - The company anticipates continued growth in originations for 2024, with expectations of at least 15% growth compared to 2023 [15] Other Important Information - The company executed the largest quarterly return of capital through share repurchases in its history, acquiring approximately 2.4 million shares for $139 million [9][46] - The balance sheet remains strong with$738 million in liquidity, including $232 million in cash and marketable securities [61] Q&A Session Summary Question: Is the stock undervalued and will there be more capital returns? - Management believes the stock is undervalued and plans to continue returning capital to shareholders while maintaining liquidity [7][66] Question: How does the composition of new versus recurring customers look? - The mix of new customers has remained steady, with improvements in digital channels contributing to growth [23][70] Question: What is the outlook for marketing expenses and their efficiency? - Marketing expenses are expected to be around 20% of revenue in Q2, with ongoing improvements in marketing efficiency [60][104] Question: How does the company view the competitive environment? - Management noted that the competitive environment is currently favorable, with many competitors struggling, allowing the company to execute effectively [33][84] Question: What are the expectations for credit losses moving forward? - Management expects credit losses to follow seasonal patterns, with slight increases in charge-offs anticipated due to a shift towards higher-yielding products [59][68]