Enova International Inc. ((ENVA)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Enova International Inc. recently held its earnings call, showcasing a strong financial performance with significant growth in originations and revenue, stable credit metrics, and operational efficiency. Despite these positive outcomes, there were concerns regarding a previous consumer credit adjustment and the company’s current market valuation.
Strong Loan Growth and Revenue Increase
Enova International reported a remarkable increase in loan originations and revenue. The third quarter saw originations rise by 22% year-over-year and 9% sequentially, reaching nearly $2 billion. Revenue also increased by 16% year-over-year and 5% sequentially, totaling $803 million.
Small Business Lending Surge
The company experienced a surge in small business lending, with SMB revenue increasing by 29% year-over-year and 7% sequentially to a record $348 million. Small business originations rose by 31% year-over-year, amounting to $1.4 billion.
Record Consumer Revenue
Consumer revenue reached new heights, increasing by 8% year-over-year and 4% sequentially to $443 million. This growth highlights the strength of Enova’s consumer lending segment.
Operational Efficiency and Profitability
Enova demonstrated strong operational efficiency and profitability, with adjusted EPS increasing by 37% year-over-year. The net revenue margin stood at 57.4%, and marketing expenses were efficiently managed, comprising 18% of revenue, down from 20% in the previous year.
Strong Liquidity Position
The company ended the quarter with a robust liquidity position, holding $1.2 billion, including $366 million in cash and marketable securities. This strong liquidity supports Enova’s financial stability and growth potential.
Stable Credit Performance
Enova maintained stable credit performance with a consolidated net charge-off ratio of 8.5%. Notably, small business credit metrics improved year-over-year, reflecting the company’s effective credit management strategies.
Consumer Credit Adjustment
Earlier in the year, Enova observed minor elevated default metrics in one consumer product, prompting tightened credit models. However, performance has since returned to normal, indicating effective corrective measures.
Persistent Valuation Gap
Despite Enova’s strong financial performance, the company continues to trade at discounts to indices and other specialty finance lenders. This persistent valuation gap remains a concern for stakeholders.
Forward-Looking Guidance
Looking ahead, Enova expects fourth-quarter revenue to grow by 10-15% year-over-year. This growth will be supported by reaccelerated consumer origination growth and continued robust small business demand. The company remains optimistic about its diversified portfolio and strong market position.
In conclusion, Enova International’s earnings call highlighted a robust financial performance with significant growth in key areas. Despite concerns about valuation and previous credit adjustments, the company remains well-positioned for future growth, supported by strong operational efficiency and a solid liquidity position.