Enova International, Inc.

Good afternoon, and welcome to the Inova International Fourth Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Cassidy Patterson, Investor Relations. Please go ahead.

Thank you, Operator, and good afternoon, everyone. ANOVA released results for the fourth quarter and full year 2024 ended December 31, 2024, this afternoon after the market closed. If you did not receive a copy of our earnings press release, You may obtain it from the Investor Relations section of our website at ir.anova.com. With me on today's call are David Fisher, Chief Executive Officer, and Steve Cunningham, Chief Financial Officer. This call is being webcast and will be archived on the Investor Relations section of our website. Before I turn the call over to David, I'd like to note that today's discussion will contain forward-looking statements and, as such, is subject to risks and uncertainties. Actual results may differ materially as a result from these various important risk factors, including those discussed in our earnings press release and in our annual report on Form 10-K, quarterly reports on Forms 10-Q, and current reports on Forms 8-K. Please note that any forward-looking statements that are made on this call are based on assumptions as of today. and we undertake no obligation to update these statements as a result of new information or future events. In addition to U.S. GAAP reporting, ANOVA reports certain financial measures that do not conform to generally accepted accounting principles. We believe these non-GAAP measures enhance the understanding of our performance. Reconciliations between these GAAP and non-GAAP measures are included in the tables found in today's press release. As noted in our earnings release, we have posted supplemental financial information on the IR portion of our website. And with that, I'd like to turn the call over to David.

Thanks, and good afternoon, everyone. I appreciate you joining our call today. We are pleased to end a strong year with another solid quarter. Fourth quarter results were in line or better than our expectations, with over 20% growth in revenue, originations, adjusted EBITDA, and adjusted EPS, as compared to 2023, all driven by solid growth across our portfolio and stable credit. 2024 was Inova's best year yet, resulting in record levels of revenue, originations, and EPS. Our skilled team, world-class technology, proprietary machine learning algorithms, and diversified product offerings have enabled us to achieve a 20-year history of profitably lending through a variety of credit cycles. Fourth quarter originations increased 20% year-over-year and 6% sequentially to $1.7 billion. As a result of the strong origination growth, our combined loan and finance receivables increased 21% year-over-year to a record $4 billion. Consistent with recent quarters, small business products represented 62% of the total portfolio and consumer was 38%. As we expected, origination growth moderated from the 25% plus growth we generated in the first nine months of the year due to our continued focus on balancing risk and growth, as well as a difficult year-over-year comparison from very strong originations growth in the fourth quarter of 2023. As we discussed last quarter, we are disciplined in this balanced approach that is grounded in our extremely sophisticated unit economics framework. And so while we could certainly be growing originations faster, given our strong competitive position and stable credit, we believe our current approach positions the business well for long-term success. It is also important to remember that our online-only business model generates significant operating leverage, and combined with our commitment to repurchasing our stock, we continue to expect EPS growth to outpace origination growth, as Steve will discuss in more detail. We generated revenue of $730 million in the quarter, an increase of 25% year-over-year and 6% sequentially. Profitability metrics grew even faster, driven by our strong operating leverage and diligent credit management. Adjusted EBITDA increased 34% year-over-year, and adjusted EPS increased 43%. Once again, our diversified portfolio and efficient marketing were the underpinnings of this growth. S&B revenue increased 36% year-over-year and 6% sequentially to a record $286 million, while our consumer revenue increased 19% year-over-year and 6% sequentially to a record $434 million. Marketing expense was 21% of our total revenue in line with our expectations and with Q4 of 2023. As I mentioned, credit quality remains good across the portfolio. due to the stability and strength we have seen in the performance of our customers. The consolidated net charge-off ratio for the quarter declined slightly from the fourth quarter of 2023, as we saw improvements in that ratio in both our consumer and small businesses, despite significant growth in both of those portfolios. Demand and credit in our consumer business continues to be driven by jobs and wage growth. Our target customers are those who traditional lenders view as too risky and too difficult to underwrite, leading them to be underserved by mainstream financial institutions. Due to our highly experienced team and proprietary improvement technology and analytics, we've been very successful serving this large segment of the market, and the macroeconomic environment continues to be favorable for this group. The latest jobs report showed a strong finish to the year, with unemployment ticking down slightly from 4.2 percent in November to 4.1 percent in December, highlighting the economy's resilience. December also recorded the largest monthly jobs gain of the year, indicating that the U.S. economy remains strong. Further, the strength in the labor market is concentrated in our target customer's demographic, as wage gains on average have exceeded inflation. Turning to our SMB business, we had our second quarter in a row of over $1 billion in originations, driven by continued consumer spending and optimism about the current economy from small businesses. In conjunction with AcroList, in November, we released the fourth iteration of our Small Business Cash Flow Trend Report, which offers key insights into small business cash flow trends, inflation challenges, and growth opportunities. Consistent with previous findings, the survey found that small businesses feel increasingly optimistic about future growth, as over 90 percent of small business owners are expecting moderate to significant growth over the next six months. This latest report also shows a meaningful shift in where small businesses are first seeking capital, as nearly 75 percent of small business owners reported bypassing traditional banks in favor of alternative lenders like Inova. Supporting our own findings, the National Federation of Independent Business announced that its Small Business Optimism Index increased 3.4 points to 105.1 in December, marking the second month in a row above the 51-year average of 98 and the highest reading since October of 2018. Before I wrap up, I'd like to take a few moments to discuss our strategy and outlook for 2025 and beyond. We're encouraged by the strong momentum and good credit performance across our portfolio. As I just mentioned, based on internal and external data, both our consumer and small business customers are on solid footing as they continue to benefit from job growth, low unemployment rates, easing inflation, and rising real wages. And while still very early in the year, we're off to a great start with strong origination volumes across all of our products. Over our 20-year company history, we've demonstrated a track record of consistent, profitable lending through cycles with proven unit economics. We are pleased to have delivered a strong end to a strong year in 2024, supported by a constructive macroeconomic and operating backdrop, which provides solid momentum and positions us well for 2025. That said, We remain mindful of the potential for changes in the macro environment, but we believe our business is resilient across a wide range of economic conditions, and we are committed to a balanced strategy of generating meaningful growth while carefully managing risk. Finally, I want to extend a big thanks for the amazing team we have built at Inova. Our performance in 2024 was made possible by the hard work and determination of this world-class team leading us to be ranked among computer world's best places to work in IT for the 12th year in a row. With that, I would like to turn the call over to Steve Cunningham, our CFO, who will discuss our financial results and outlook in more detail. And following Steve's remarks, we'll be happy to answer any questions you may have.