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.

Steve? Thank you, David, and good afternoon, everyone. We're pleased to close 2024 with financial results that once again met or exceeded our expectations. Our strong financial performance in the fourth quarter and the full year 2024 continues to demonstrate how the powerful combination of our diversified product offerings, scalable operating model, world-class risk management capabilities, and balance sheet flexibility allow us to consistently deliver strong top and bottom line results. Turning to our fourth quarter results, Total company revenue of $730 million increased 25 percent from the fourth quarter of 2023, slightly exceeding our expectations, as total company combined loan and finance receivables balances on an amortized basis increased 20 percent from the end of the fourth quarter of 2023. Total company originations during the fourth quarter rose 20 percent from the fourth quarter of 2023 to just over $1.7 billion. Revenue from small business lending increased 36% from the fourth quarter of 2023 to $286 million as small business receivables on an amortized basis ended the quarter at $2.5 billion, or 21% higher than the end of the fourth quarter of 2023. Small business originations rose 20% year-over-year to $1.1 billion. Revenue from our consumer businesses increased 19 percent from the fourth quarter of 2023 to $434 million if consumer receivables on an amortized basis ended the fourth quarter at $1.5 billion, or 19 percent higher than the end of the fourth quarter of 2023. Consumer originations grew 21 percent from the fourth quarter of 2023 to $602 million. For the first quarter of 2025, we expect total company revenue to be flat to slightly higher sequentially, resulting in year-over-year revenue growth of around 20 percent. This expectation will depend upon the level, timing, and mix of originations growth during the quarter. Now turning to credit, which is the most significant driver of net revenue and portfolio fair value. As a reminder, consumer credit losses typically follow a seasonal pattern. peaking in the fourth quarter and reaching their lowest point during the second quarter. The consolidated net revenue margin of 57% for the fourth quarter was in line with our expectations and reflects continued strong credit performance. The consolidated net charge-off ratio for the fourth quarter declined 80 basis points from the fourth quarter of 2023 to 8.9%. With the net charge-off ratios for the consumer and small business portfolios both experiencing meaningful year-over-year decreases. Expectations for our future credit performance remain stable as reflected by the sequential and year-over-year improvement in the consolidated 30-plus day delinquency rate, as well as the stability in the consolidated portfolio fair value premium. Looking ahead, we expect the total company net revenue margin for the first quarter of 2025 to be flat sequentially, as the impact of lower sequential consolidated originations from the aforementioned expected consumer seasonality is offset by sequential improvement in the consolidated net charge-off rate we typically see in the first quarter. This expectation will depend upon portfolio payment performance and the level of timing and mix of originations growth during the first quarter. Now turning to expenses. Total operating expenses for the fourth quarter, including marketing, were 34% of revenue, compared to 37% of revenue in the fourth quarter of 2023, as we continue to see the benefits of our efficient marketing activities, the leverage inherent in our online-only model, and thoughtful expense management. Fourth quarter marketing spend continued to efficiently drive growth and was in line with our expectations. Marketing costs increased to $151 million, or 21% of revenue, compared to $122 million, or 21% of revenue, in the fourth quarter of 2023. With the seasonality we typically experience during the first quarter of the year, we expect marketing expenses as a percentage of revenue to range in the upper teens for the first quarter and will depend upon the growth and mix of originations. Operations and technology expenses for the fourth quarter increased to $58 million, or 8% of revenue, compared to $47 million, or 8% of revenue in the fourth quarter of 2023, driven by growth in receivables and originations over the past year. Given the significant variable component of this expense category, sequential increases in ONT costs could be expected in an environment where originations and receivables are growing, it should be around 8.5% of total revenue. Our fixed costs continue to scale as we focus on operating efficiency and thoughtful expense management. General administrative expenses for the fourth quarter increased to $38 million, or 5% of revenue. Excluding one-time items, G&A expenses in the fourth quarter of 2023 totaled $34 million, or 6% of revenues. While there may be slight variations from quarter to quarter, we expect G&A expenses in the near term will be around 6% of total revenue. Our balance sheet and liquidity position remain strong and give us the financial flexibility to successfully navigate a range of operating environments while delivering on our commitment to drive long-term shareholder value through both continued investments in our business and share repurchases. During the fourth quarter, we acquired 525,000 shares at a cost of $51 million. And we started 2025 with share repurchase capacity of approximately $65 million available under our senior no covenants. We're pleased by the increase in our valuation during 2024, which better recognizes the ability of our differentiated business model to deliver consistently strong financial results. With that said, We still believe there's more value inherent in our business given our expectations for 2025 adjusted EPS growth, which I'll discuss in a moment, and the PEG ratio based on current analyst estimates for 2025 and 2026. Given this opportunity, we remain committed to opportunistic stock buybacks as our primary vehicle to unlock shareholder value. And we are very well positioned to do so as we ended the fourth quarter with $1.3 billion of liquidity, including $326 million of cash and marketable securities, and $944 million of available capacity on debt facilities. Our cost of funds for the fourth quarter was 9.1%, or 43 basis points lower than the third quarter, primarily as a result of the Federal Reserve's 100 basis point reduction in the Fed funds rate over the past several months. as well as strong execution on recent financing transactions. We expect some continued reduction in our cost of funds during 2025, but the level will depend upon the pace of additional rate cuts by the Fed, if any, credit spreads on new financing transactions, our funding mix, and the level, timing, and mix of originations growth. Even with no additional rate cuts by the Fed, we expect our cost of funds for the full year 2025 to decline approximately 50 basis points from the full year 2024 rate of 9.3%, which would result in interest expense as a percentage of revenue for the full year 2025 of around 10 to 10.25%. Our effective tax rate for the fourth quarter was 18%. The sequential decline was driven by a decrease in our uncertain tax position reserve and related interest, tax benefits resulting from share price increases on stock options exercised during the fourth quarter, and favorable state rate changes. While there may be variations from quarter to quarter, we expect our normalized annual effective tax rate to remain in the mid-20 percent range. Finally, we continue to deliver solid profitability this quarter. Compared to the fourth quarter of 2023, adjusted EBITDA, a non-GAAP measure, increased 34% to $174 million, and adjusted EPS, a non-GAAP measure, increased 43% to $2.61 per diluted share. To wrap up, let me summarize our first quarter and full year 2025 expectations. For the first quarter, we expect revenue to follow our typical seasonality, and to be flat to slightly higher sequentially. Seasonally lower originations are expected to offset improvement in the net charge-off rate, resulting in little change to the net revenue margin sequentially. In addition, we expect marketing expenses as a percentage of revenue to be in the upper teens. ONT costs of around 8.5% of revenue, and GNA costs around 6% of revenue. Interest expense as a percentage of revenue is expected to be around 10.5%. With a more normalized tax rate, these expectations should lead to adjusted EPS for the first quarter of 2025, but it's about 5% higher sequentially. Our first quarter expectations will depend upon customer payment rates and the level, timing, and mix of originations growth. Now turning to our expectations for the full year of 2025, assuming a stable macroeconomic environment with no material changes in the unemployment situation in a largely unchanged interest rate environment, we would expect growth in originations for the full year 2025 compared to the full year of 2024 to increase by around 15%. The resulting growth in receivables with stable credit, continued operating leverage, and a reduced cost of funds should result in full-year 2025 growth for revenue that is slightly faster than originations and adjusted EPS growth of around 25%. Our expectations for 2025 will depend upon the macroeconomic environment and the resulting impact on demand, customer payment rates, and the level, timing, and mix of originations growth. In closing, we're proud of what we achieved during 2024 and have started 2025 on solid financial footing with a constructive macroeconomic environment. We remain confident in our ability to generate meaningful financial results by leveraging our differentiated business model and balance sheet strength to meet customer needs while creating significant value for our shareholders. And with that, we'd be happy to take your questions.

Operator? We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. The first question is from Moshi Orenbuck with TD Cowan. Please go ahead.

Great. Thanks, Dave and Steve. Could you talk a little bit about kind of the competitive environment in both consumer and small business and how you're seeing it? Any changes? It feels like some lenders are coming back on the consumer side. I'm not sure if that's in your market or around it. If you could just give us a little bit there.

Yeah, sure. I think as you can see from the very strong origination growth in Q4 that there certainly hasn't been any negative impacts from competition. And as I mentioned in my prepared remarks, we've also had a very strong start to Q1 with January originations. You know, you do see people kind of poking in and out, both on the consumer side and small business side, but they tend to be smaller, the impacts tend to be small, and they tend to be fleeting. We've not seen kind of a sustained competitive push on either the consumer or small business side in a very, very long time. And, again, I think evidenced, you know, by our ability to take, you know, really significant volume in Q4. kind of shows that to be the case.

Okay, thanks. And maybe a couple of the other lenders in non-prime, most of, I think there are probably more credit card, but still have talked about a little less seasonality in the business. Is that something that you've seen or, you know, because it sounded like you're looking for, you know, typical seasonal patterns from the standpoint of you know, originations, repayments, and credit. Anything that's changed, you know, since in the last year or two?

Hey, Moshe. This is Steve. You know, I think, as I said in my remarks, I think we expect to see the typical seasonality as we move through Q1. You can see that, you know, particularly in Q4 on the consumer side, you can see the timing of that move around month to month. but depending on the timing of certain holidays, but you have tended to see that happen pretty consistently. And with Q1 coming online, some of that could carry over a little bit into January, but you typically see it fall off fairly quickly as you move into the post-holiday and tax refund season. So I think from our point of view, the seasonality that we've seen over time, it still holds. Great. Thanks so much.

The next question is from David Scharf with JMP. Please go ahead.

Thanks. Thanks for taking my questions. David, maybe just following up on some of the sort of top-down sentiment commentary you provided. Regarding the sort of consistent comment that you could grow faster, but it's not in the best interest, as you think about the consumer, you know, Are you seeing any signs of what you would call a healthier consumer versus a year ago? Or rather, are you sitting on a loan book that has better consumers because you tightened credit? Just trying to get a sense as you kind of gauge the macro environment, you know, whether it's just sort of stable and reflecting, you know, the credit actions you've taken over the last couple of years, or if in fact there are any indicators out there that, you know, are some green flags that say, you know what, maybe we will loosen the credit box a little.

Yeah, let me answer that two different ways. It's kind of a top-down and bottoms-up way of viewing it. I think on the consumer side of our business, we see the consumers that we target kind of more globally being very strong. We think that segment of the population is continues to benefit from a very strong labor market and rising wages. And in that environment, that's a very conducive environment for us. In terms of the overall portfolio, I think we were actually a little light on risk a year ago, and we added a bit of risk during the year, not a ton, and most of it actually in the first half of the year and then kind of maintained in the second half of the year. So as you kind of play that forward through 2025, I would not expect kind of major changes in the performance of the portfolio. As you know, our consumer book is very short-term in nature. So most of that additional risk you would have seen by the end of 2024. So overall, we feel really good about the book that we've already originated, but also the continued health of... the kind of non-prime consumer, which makes us feel good about the performance of the book going forward, but also our ability to originate additional loans. On the small business side, I would say if anything, we feel better about the health of small businesses across the country. I think they've had one more year to build strength kind of following the pandemic and following the high inflationary years of kind of 22, early 23. And so we're feeling also very good about kind of the general health of small businesses.

Got it. That's a helpful color. And on the SMB side, boy, this may be real early, but based on either just maybe informal chatter or surveys and or the vertical, you know, the industry mix of who you lend to, do you anticipate any impact on from just all of the noise around tariffs impacting the demand for your credit.

I mean, yeah, it certainly could. It depends how large the kind of macro impacts are. But, you know, there's businesses that will benefit from the tariffs and businesses that will, you know, get hurt from the tariffs. And we have an extremely diversified small business loan book, as we discussed before. And so, you know, we largely think that will balance out. We don't, there's not any concentrations in our a loan book, say, you know, from wholesalers, for example, that would be maybe more nervous about. So, yeah, too early to know for sure. Obviously, no one knows, you know, how big or impactful tariffs will be. But, you know, we've certainly spent plenty of time thinking about it and don't have any particular areas of concern.

Got it. And then, you know, just lastly, I'm going to re-ask maybe Moshe's question on competition, just to make sure I'm clear. You know, obviously there's been a lot of private credit flowing into the personal loan market in the last 18 months, but that's more the near-prime sort of high-teens APR up into the maybe one main, you know, 30% range. Has there been any new private capital flowing into kind of your tier of lines of credit personal loans, your credit tiers?

I mean, we have the same competitors we had five years ago. And, you know, I think our growth rate's just been much higher than theirs. And so we're, you know, kind of as relative to their size, we're much bigger than them than we were five years ago. We were already bigger than them. So, We haven't seen it. I think the debt markets have been good lately, so I think maybe some of our competitors have had a little easier time accessing them, but we have too, and that's certainly what helped fuel our growth over the last couple of years. Got it.

Great. Thanks so much. Yep. Again, if you have a question, please press star then 1. The next question comes from John Hecht with Jefferies. Please go ahead.

Afternoon, guys. Thanks for taking the questions. Congratulations on another strong year of growth. First question is just because maybe we haven't talked about this as much as kind of recently is the mix of new and recurring customers in both portfolios, the small business portfolio and the consumer portfolio. And I know sometimes you give an update and sometimes you don't, but I'm wondering, you know, has that generally over the past year, has that shifted? And as you look to 25, where do you see the better, well, the better opportunity to contribute to growth? Is it lean into new customers or to harvest the, call it the recurring customer?

Hey, John. So one reason we don't talk much about the new customer mix anymore is because it's just been remarkably stable for such a long period of time. And it's been, you know, plus or minus around 40% of originations for both portfolios, both consumer and small business for quite some time. So there's really not much to say about it. Like when we were growing back pre-COVID, it was a little different story. When you think about going forward, I think we'll continue our focus on attracting new customers into our franchise with our unit economics approach and our efficient marketing approach that we've always taken. Obviously, we've built a lot of new customers over the years and we'll be focused on continuing to serve those returning customers. I don't see a big shift in the new returning customer mix as you look out over time. Plus or minus around 40 is probably what it will be for some time.

Okay. And then a second question is, Steve, you mentioned some cost of capital savings this year, and I think that's in spite of, I guess, assuming, is it no rate cuts or just one rate cut? And then beyond that, maybe remind us the sensitivity around rates, maybe so for each extra 25 basis points. rate reduction, what would that present to potential EPS upside, you know, as it's settled in?

Yeah, well, I was just giving you an example in my commentary that if the Fed did not cut again, 2025's cost of funds would come down about 50 basis points. In our guidance, we've assumed that there's one cut. So I think, you know, we're below where the market would think it would be, but we think there's a cut at some point later in 2025. And the rule of thumb, just giving our floating rate mix, which is just under 50% of our total interest-bearing liabilities. So just on the floating rate piece alone, every 25 basis points of SOFR reduction would lead to 10 cents of EPS accretion 12 months after that cut happened, so it's an annualized figure. So every quarter point is about 10 cents of EPS over a year. Okay, super helpful. Thanks very much.

The next question is from Vincent Cantik with BTIG. Please go ahead.

Hey, good afternoon. Thanks for taking my questions and great results. First, I wanted to go back to the small business and consumer discussion. So you sound very optimistic on both SMB and consumer, and so I just wanted to dig into that a little bit and talk about the relative strength between the two businesses when you're thinking about 2025. So, for example, when you gave that 15% year-to-year origination growth guidance for 2025, are both businesses similar growth, or is one more so than the other? And then specifically on SMB, you talked about, you know, a lot of optimism there and the business is feeling optimistic. Maybe you could give us some color in what they're borrowing to invest for, and particularly your comment about they're bypassing traditional banks. Just wondering what you're seeing there.

Thank you. Yeah, so let me take, you know, in terms of, like, what we see... out through time. So I don't expect that we're going to see a big shift in the mix between consumer and in our 15% guide between consumer and small business. We'll continue to see SMB at around 60% of the portfolio, a little bit over, but maybe a slow grind towards that. But as you know, we're kind of indifferent to that. With the way our unit economics and our decisioning work, we go where we can generate acceptable returns and serve as many customers as we can. So that's kind of what you should expect when you think about that growth for 2025. And I think then the second question you're asking is about the use cases. Is that right, Vincent? Yeah, that's exactly it. Yeah, I mean, I think the use cases across, you know, the consumer are not going to change. They haven't changed for a very long time. And I think for our small businesses, when they come to us, anything – that they need as it relates to being able to cover cash flow needs. And there's a, we've got a lot of those listed in our investor deck, but it can be any number of, depending on the industries that we're serving, can be any number of things, but we don't think that use cases across the portfolios is going to change in 2025.

Okay, that's great. Thank you. And then switching gears to expenses going forward. Especially that it just seems like you have very good efficiency going forward. And I know you gave the revenue guidance for 2025 and then the UPS guide so we can back into expenses. But it does seem like your marketing efficiency was really good for the growth you had in originations. And then actually the ONT and G&A expenses were better than guidance for the fourth quarter of 2024. So I'm just wondering as you're achieving this growth rate, maybe exiting 2025, should we be expecting like better and better efficiency through the course of the year and then basically entering into 2026? Thank you.

Yeah, that's a great question. So I think when you think about our fixed costs, our G&A costs, you will continue to see us bring as percent of revenue that will continue to scale. and come down, you typically see in the first quarter of the year, you'll see it be a little more flat to how we exited the year, just because of the timing of merit increases on our workforce. And that'll show up in both ONT and G&A. But as you move through the year and exit 2025, you would expect ONT and G&A costs as a percent of revenue to be lower than where they were in Q4. of 2024 just because of the growth and scale of the business. And marketing, you know, we tend to talk about marketing as a percent of revenue, but it's really originations that drive the marketing costs. So it'll still, we would still expect it over a year to be around plus or minus 20% of revenue. And there could be a slow grind over time to a little bit lower, but, you know, again, we lean in and out of that as we see opportunities. So That's why we tend to say around 20%, a little lower in the first quarter, a little higher in the fourth quarter, and then sort of ranging in between during the year. Okay, great. That's very helpful.

Thank you.

The next question is from Kyle Joseph with Stevens. Please go ahead.

Hey, good afternoon. Thanks for taking my questions. Appreciate all the color you gave on first quarter and 25 guide. But, you know, as we enter the first quarter, just kind of walk us through, I know it's early, but any kind of what you're seeing on tax refunds and remind us of any sort of differences in terms of tax refund impacts on consumer versus small business and potential implications for guidance. Thanks.

Yeah, I think it's a little early for the refund season. I mean, we would expect – there hasn't probably been like a typical – refund season in a long time. It happens over a period of time, typically in Q1, and we would expect that to happen again. It's considered in our guide and the seasonality for the consumer business. And we don't expect there to be any difference on our SMB business as well from this year's tax season. So that's all sort of incorporated in our first quarter guide. We don't expect any surprises as it relates to tax refunds.

Understood. That's it for me. Congrats on a good quarter, good year. Thanks, guys.

Thanks, guys.

Thank you.

The next question is from John Rowan with Jannie. Please go ahead.

Good evening, guys. Hey, John. So, David, you mentioned being more pleased with the valuation of the stock. Just curious, you know, what do you have left under the repurchase authorization? Any change? I obviously said you're committed to opportunistic repurchases. I mean, I assume we're still kind of episodic with repurchases throughout 2025. Is that correct?

Yeah, I mean, Stephen gave you the specific number on the repurchase authorization. I think we're happy directionally. We're not satisfied with where it is. And we still think the stock is undervalued. If you just look at our growth rate over the years relative to our PE ratio, the PEG ratio is well under one. It's closer to a half. So we think there's still lots of opportunity in the stock price, which is why we continue to buy back stock. We talk about buying it back opportunistically. That doesn't mean we're only buying it back when there's big drops. It means we buy more back when there's drops in the stock price. But we are regularly buying back stock because we do think that there's significant long-term value still there.

Okay. Steve, do you have the repurchase authorization left?

Yeah, we have plenty. We have around $200 million left of the $300 million for the rest of the year. So, I mean, the authorization, you know, if we were, again, we are limited for the most part to 75% of gap net income. each quarter, you know, if we felt like there was a real opportunity and we had the earnings capacity, our board, I'm sure, would listen to our suggestions for reauthorization. So, as they've done really since 2017. Okay.

And then just the last question, obviously, there was a shift in posture from the CFPB with, you know, a new acting director and pausing all new roles. And I don't think there's any major rules that are kind of directly impacting your business right now. But is there anything that you're watching that, you know, if it doesn't get passed or gets delayed, et cetera, could have any, you know, impact on your business down the line?

Yeah, I mean, there's two. One is 1071, the small business disclosure rule. It's not a big deal for us. We don't kind of care one way or the other. It's just a little bit of work. that we'd rather not have to keep doing. And then there's the payment provisions of the small dollar rule that were to go into effect in March. Again, it kind of limits you to two debits without a reauthorization. It's not that different than our current practices today. So wasn't, you know, we do not anticipate a significant impact from that at all. but certainly some work to implement and some work to tweak our algorithms to deal with the new provisions. So, you know, if those don't happen, not necessarily a major positive benefit, but just gives our teams more opportunity to focus on, you know, kind of growth in other areas.

Okay.

All right. Thank you.

This concludes our question and answer session. I would like to turn the conference back over to David Fisher for any closing remarks.

I appreciate everyone joining our call today and we look forward to speaking with you again next quarter. Thanks and have a good evening.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.