Enova International, Inc.

Good afternoon, and welcome to the Inova International Second Quarter 2025 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 two. Please note, this event is being recorded. I would now like to turn the conference over to Lindsay Savarese, Investor Relations for Inova. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Inova released results for the second quarter, 2025, and did June 30, 2025, this afternoon after market close. 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.enova.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 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, MANOVA 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 the 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. Before we jump into our quarterly earnings discussion, I want to take a moment to touch on the upcoming leadership changes that we announced this afternoon. After over 12 years serving as the Chairman and CEO of Inova, I've decided that now is the time to transition into the role of Executive Chairman, effective January 1, 2026. With the full support of the board, this move was thoroughly, thoughtfully, and deliberately planned as part of the company's disciplined and measured long-term leadership transition planning. And I'm confident that it's the right decision for the future of Inova. In my new role, I'll continue to lead the board, providing strategic advice to the company, facilitating a seamless transition, and ensuring that we continue our mission of helping hardworking people get access to fast and trustworthy credits. I've committed to stay in this role for a minimum of two years. Steve Cunningham, our CFO, will replace me as CEO concurrent with my transition to executive chairman on January 1st. And Scott Cornelius, our treasurer, will succeed Steve as CFO. In addition, Steve is joining our board of directors as of today. Having worked closely with both Steve and Scott over many years, I'm confident that they are the right leaders to see Innova through its next phase of growth. These leadership and execution have been critical to our success and performance consistency. His deep understanding of the company's culture, processes, and strategy, combined with his outstanding leadership acumen, operational excellence, and decades of financial services experience, make him an ideal candidate to build on our momentum and position the company for continued success. And Scott has been instrumental in transforming Innova's financial profile, leveraging his deep financial expertise to optimize capital structure, enhance liquidity, refine our ROE framework, and support the company's strategic growth initiatives. I'd like to congratulate Steve and Scott on their new roles and thank the entire Inova team for their hard work over the years. I've never been more excited about Inova's future. If I wasn't, we wouldn't be making this transition now. We have an incredibly deep team, a strong foundation, a time-tested playbook, and industry-leading products, all clear signs that we have a lot of success ahead of us. Now turning to our quarterly results. In the second quarter, we once again leveraged the strength of our team, the breadth of our product offerings, our flexible online-only business model, and the sophistication of our machine learning models to deliver solid revenue and profitable growth driven by strong demand and stable credit. For the fifth quarter in a row, we generated greater than 20% year-over-year growth and revenue originations, and adjusted EPS. Second quarter originations increased 28% year-over-year and 4% sequentially to $1.8 billion. The strong origination growth produced a 20% year-over-year increase in our combined loan and finance receivables to a record $4.3 billion. Small business products represented 65% of this portfolio and consumer was 35%. Revenue increased 22% year-over-year and 2% sequentially to $764 million in the second quarter. S&B revenue increased 30% year-over-year and 7% sequentially to a record $326 million. And our consumer revenue increased $428 million, 17% higher than a year ago, basically flat sequentially off an unexpectedly strong Q1 as we discussed last quarter. Driven by the operating leverage inherent in our online-only business, growth in EPS again outpaced origination and revenue growth. Adjusted EPS increased 48% year-over-year, primarily as a result of efficient marketing and a lower cost of funds combined with our growth. Marketing expense was 19% of our total revenue, slightly below our expectations and compared to 19% in Q2 of 2024. Credit quality continues to be solid across the portfolio. The consolidated net charge-off ratio for the quarter declined to 8.1% from 8.6% last quarter and 7.7% in Q2 of last year. Overall, our consumer customer base remains on solid footing, driven by healthy wage and job growth and low levels of unemployment. As you may have seen, the U.S. economy added 147,000 jobs in June, well above the forecast, while the unemployment rate fell to 4.1%, and hourly wages continued to rise. These data points continue to highlight ongoing resilience in the labor market. While the labor market remains strong, it's important to note that we have carefully designed our business to operate and succeed in any environment. We serve nine non-prime borrowers, many of whom regularly face income volatility, and are experienced in managing variabilities in their finances. Because of this, recessions or market downturns tend to have less of an impact on our non-prime customers than on prime borrowers. And as we've discussed before, our unit economics framework, combined with our sophisticated technology and analytics, are designed to assess risk in real time with the short duration and payment frequency of our products, providing rapid feedback. This has enabled us to consistently deliver strong growth and margins while driving shareholder value, whether facing significant macroeconomic shocks like the Great Recession, COVID, or rising inflation as we experienced in 2023, or these more typical seasonal and cyclical variations in demand and sentiment. In Q2 of this year, while the overall economy remained solid, We did observe some of these minor cyclical fluctuations I just mentioned, particularly in our consumer book early in the quarter. This was likely in response to the uncertainty around the impacts of tariffs on the job market and inflation. This led to slightly elevated default metrics from new customers. In response, we quickly tightened our credit models to slow originations. With the combination of fast feedback we get from the design of our products, our sophisticated models, and our world-class team, we routinely make these types of adjustments to ensure our originations are meeting our credit and ROE targets. For Q2, this meant consumer originations were slightly softer than we anticipated, but still reflected healthy growth. And combined with the benefits of our diversified business, we were able to generate almost 30% consolidated origination growth along with strong profitability. And looking forward, performance in our back book remains strong. And because we adjusted so quickly, we do not anticipate any significant impact to our consumer business in the upcoming quarters. As we know from our years of experience, it is normal to see short-term fluctuations in demand and credit in any one product or customer segment, highlighting the importance of the diversification in our business. which gives us the flexibility to shift resources between consumer and SMB as macro conditions dictate. This is unique in our industry, and we believe critical to delivering long-term, consistent growth and stable results. Our SMB business had another very strong quarter as we continued to benefit from our leading brand presence, scale, and low levels of competition. resulting in solid demand and credit across the portfolio. Originations for SMB were a record $1.2 billion in Q2, marking the fourth quarter over $1 billion. Insights from internal and external sources reflect solid underlying trends for small businesses. In conjunction with AcroList, we released the sixth iteration of our Small Business Cash Flow Trend Report in May. This offers key insights into the state of small businesses and highlights ongoing trends observed over the past year. Consistent with previous findings, the survey found that small businesses feel increasingly optimistic about future growth, as over 90% of small business owners are expecting moderate to significant growth over the next year. In addition, 76% of small businesses now prefer non-bank lenders for their speed and convenience, an all-time high according to the survey. These findings highlight continued optimism among small businesses, which is a key driver of economic growth and job creation. Access to capital is crucial as they invest in growth opportunities, manage cash flow needs, and weather unexpected challenges. And we believe our differentiated solutions position us exceptionally well to continue to meet these demands. In addition, our SMB portfolio continues to be well diversified across a wide range of industries, geographies, loan sizes, product types, and price levels. As I mentioned on our last call, we continue to expect that tariffs will not have a substantial impact to our portfolio, largely due to the diversity, size, and industries of our borrowers. Before I wrap up, I'd like to spend a few moments to discuss our strategy and outlook for the remainder of 2025 and beyond. Steve and I share a common vision that our focused growth strategy continues to be the right path forward for the company. We remain committed to prudently managing the business to produce sustainable and profitable growth, and we believe our diversified business, strong competitive position, world-class team, advanced technology and analytics platform, positioned us very well for the remainder of the year and beyond. With that, I'd like to turn the call over to Steve, 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?