Enova International Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Moshe Orenbuch - TD Cowen - Analyst : I guess, Steve, can you talk a little bit about how you're thinking about -- you mentioned that you can see this as kind of continuing into 2025, like this strong environment for originations on both sides of the business. How do you think about -- like what makes it change for either better or worse? Are there any competitive changes or can you just talk about that a little bit?

Question: Moshe Orenbuch - TD Cowen - Analyst : Just a follow-up on the consumer credit front. The charge-offs in the quarter, you noted, were kind of down on a year-on-year basis, but delinquencies were up. And the charge-offs being down, obviously, kind of a good sign, as many other lenders are seeing. It's tough for consumers to get out of delinquency once they're in it. Can you talk a little bit about how this quarter's delinquency rate is going to be reflected as you go forward and what it says about the portfolio performance?

Question: David Scharf - JMP Securities - Analyst : I wanted to dig in a little more just in terms of the product mix. And specifically, I think Steve and Dave, you both had commented you're not growing as fast as you could. And not to diminish the impressive growth in consumer, SMB is growing materially faster recently. And I'm wondering, A, if you could just provide a little more color on maybe what differences you're seeing that is driving such a stronger growth in origination volumes among small businesses versus consumer. And B, circling back to your comment about not growing as fast as you could, is that applicable to both products or is that mostly a commentary about the consumer?

Question: David Scharf - JMP Securities - Analyst : No, that's great color, and to the extent you only get rewarded for growing so fast, there's no need to push the envelope, I guess. Maybe just one quick follow-up on funding. Steve, I appreciate the sensitivity analysis on the 25-bp change in SOFR. You had also, I believe, the last quarter or so, provided some outlook about how to think about funding costs in the context of percent of revenue. I think last time it was 10.5% to 11%. Is that changing much in your mind? What should be kind of the base case we look at?

Question: John Hecht - Jefferies - Analyst : Congratulations on another great quarter. I think, most of my questions have been asked and answered. I mean, I guess, one of them is that, David, you did cite, generally speaking, just weaker competition. And I think you've been in that environment where you, guys, your strengths have allowed you to have describe it as a weaker market, but maybe it's just a market that you're stronger in. But I'm wondering like, what would your outlook be for that? Is there an environment where you think competition would come back? If it would, which product or segment would it be in? Or do you feel more that you just -- you're building more sustainable advantages over time?

Question: John Hecht - Jefferies - Analyst : And then I guess as a related follow-up, just given that backdrop, with respect to the characteristics of the originations, obviously, we know the mix of SMB versus consumer, but is there anything that is worth calling out with respect to new versus recurring mixed changes or the characteristics of the small -- SMB categories? Or is it pretty consistent?

Question: John Rowan - Janney Montgomery Scott LLC - Analyst : Sorry if this was asked already, but was there a reason why CSO loan balances went up so sharply sequentially? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 22, 2024 / 9:00PM, ENVA.N - Q3 2024 Enova International Inc Earnings Call

Question: John Rowan - Janney Montgomery Scott LLC - Analyst : Okay, and then I just want to make sure I'm hearing you guys correctly. We're talking about obviously -- we're talking about stable credit, but obviously the charge-off rate for the consumer was up at 8.7% versus 7.8% last year. Can you just talk to that and whether or not that has anything to do with the increase in the CSO loan balances? Just kind of talk me through that increase in the charge-off specifically in the consumer book.

Question: John Rowan - Janney Montgomery Scott LLC - Analyst : Sorry. Yes, you're right.

Question: Vincent Caintic - BTIG - Analyst : First for David, and it's kind of a follow-up on David Scharf's question about the originations. The growth rate, especially sequentially, is pretty impressive after what was also a strong second quarter. I'm just trying to maybe parse out maybe what could be driving this because it seems like maybe the macro is okay, the SMB consumer is feeling a bit more confident, and then conversely, your underwriting still seems pretty tight. So just wondering if maybe as we're thinking about fourth quarter and beyond, do you expect this kind of strong growth and acceleration to continue? And does anything need to change, or say, particularly positive in order to achieve that level of growth? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 22, 2024 / 9:00PM, ENVA.N - Q3 2024 Enova International Inc Earnings Call

Question: Vincent Caintic - BTIG - Analyst : And then for Steve, always appreciate the detailed fourth-quarter guidance. I guess as we're thinking medium term and with the growth rates you're achieving and the originations and revenue, I'm just wondering as you're thinking about the expenses, how operationally efficient can the business be? So I'm sort of thinking that as you're growing your fixed expenses, the EPS should be growing even faster. Is there anything you can do to maybe help us understand how much operating leverage you have in the business? Thank you.