Enova International, Inc. 2026 Q3 Earnings Call

Please go ahead. Thank you, operator, and good afternoon, everyone.

Enova released results for the third quarter of 2026, ended September 30, 2026, 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 Steve Cunningham, Chief Executive Officer, and Scott Cornelis, 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 Steve, I would 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 US GAAP reporting, Enova 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.

With that, I would like to turn the call over to Steve.

Thank you, Lindsey, and good afternoon, everyone. I appreciate you joining our call today. We are pleased to report another quarter of healthy growth and credit as originations, receivables, revenue, and adjusted EPS all grew 25% or more year-over-year. Our third quarter results are a testament to the strength of our strategy and proven capabilities and the powerful combination of our talented team, diversified product offerings, scalable online-only operating model, and world-class risk management capabilities. Reflecting the demand we saw during the quarter, originations growth was strong across both consumer and small business, resulting in consolidated originations of $2.6 billion, which was up 31% from the third quarter of 2025. This marked our 12th consecutive quarter of consolidated year-over-year originations growth of 20% or more.

Originations growth increased our consolidated portfolio to $5.9 billion, or 30% higher than a year ago, with small business products representing 68% of the portfolio and consumer products accounting for 32%. With strong portfolio growth, revenue increased 26% year-over-year and exceeded $1 billion during a quarter for the first time in our history. In addition, net charge-off rates across the portfolio reflect stable or improving performance, with the consolidated net charge-off ratio for the third quarter declining to 8.1% from 8.5% in the year-ago quarter. This solid credit performance, combined with the operating leverage inherent in our online-only business model, drove a 33% increase in adjusted EPS from a year ago, marking the ninth consecutive quarter of year-over-year growth in adjusted EPS of 30% or more.

Our results for the third quarter reflect a resilient macroeconomic environment, despite ongoing concerns about inflation and potential impacts on future interest rates and economic growth. The most recent Federal Reserve Beige Book showed economic activity increasing across most of the country, with no district reporting a decline. In addition, the Commerce Department's latest GDP revisions show the economy is stronger than first reported, as both first and second quarter GDP growth was revised higher. Broader economic strength has supported a steady labor market characterized by weekly unemployment claims in a tight band around historical lows, a stable unemployment rate, and wage growth pacing with inflation. Our consumer results reflect the resiliency of the U.S. consumer, as originations during the quarter reached a record $807 million, 37% higher than the third quarter of 2025, while consumer revenue grew 21% over the same period.

In addition, the consumer net charge-off rate followed our typical seasonality sequentially and declined to 100 basis points from the third quarter of 2025 to 15.1%. Recent data also shows that U.S. consumers continue to spend despite recent declines in sentiment. The Bureau of Economic Analysis reported that consumer spending during August was the largest monthly increase this year, on the heels of a healthy pace of spending during the second quarter. Consumer spending not only plays a key role in overall economic growth, it is a fundamental driver of the health of small businesses. Against this constructive consumer and macroeconomic backdrop, small business confidence remains high.

In line with previous findings, our 12th edition of the Small Business Cash Flow Trend Report, released in conjunction with Aqualis, found that small businesses remain optimistic about the future, with 93% of small businesses expecting moderate to significant growth over the next year. Recent surveys from the Chamber of Commerce and the NFIB have echoed similar small business optimism, and a majority of small business owners responding to these surveys remain confident in the health of their own individual businesses. Notably, according to the NFIB, the top reported issue among small businesses was no longer inflation, but instead has been replaced by labor quality and availability, which is a positive sign for the future stability of the labor market. Continued small business confidence and financial health is reflected in the continued growth and stable credit of our SMB business.

SMB originations rose 28% from the third quarter of 2025, resulting in a 34% increase in our well-diversified portfolio as we continue to leverage our leading brand presence, scale, and strong competitive position. In addition, the SMB net charge-off rate was unchanged from last quarter at 4.8% and has remained in a tight range consistent with our expectations over the last 12 quarters, while quarterly year-over-year originations growth has consistently exceeded 20% over the same period. As we've moved into the fourth quarter, we continue to see stable growth and credit across both our consumer and SMB businesses. As Scott will discuss, assuming the operating environment stays constructive as it has all year, we expect to close 2026 with strong fourth-quarter financial results. Before I wrap up, I'd like to spend a few moments discussing our strategy and outlook.

Our business is as healthy as ever, and we remain well-positioned to continue delivering on our commitment to driving long-term shareholder value while meeting our mission of helping hardworking people get access to fast, trustworthy credit. We have built a high-growth, highly profitable, and resilient business at Enova, serving large fragmented markets with diversified products powered by our online-only business model, world-class technology and risk management, talented team, and competitive funding capabilities. We've never wavered from our focus on meeting the credit needs of consumers and small businesses that are not well-served by traditional banks. Those populations are large, with upwards of 100 million consumers and more than 35 million small businesses in the U.S., most with credit needs that fall outside of the interest or underwriting expertise of traditional banks.

Over the years, we've adapted and evolved to strengthen and diversify our business while responsibly meeting the credit needs of these customers, and today offer both installment and line of credit products across the entire non-prime credit spectrum, with risk-based pricing reflecting the repayment risk of the borrower. Our exclusive online-only focus has us well-positioned to capture the rapidly increasing customer preferences for quickly transacting digitally anywhere and at any time. Uniquely, we serve both consumers and small businesses with these products and capabilities at scale. The application of our powerful machine learning analytics to the fast feedback from our product repayment terms in combination with our unit economics discipline allows us to adapt quickly to emerging issues or opportunities across a wide range of operating environments to deliver consistent financial performance.

In fact, in our 12-year history as a public company, we have never experienced a quarter of negative adjusted net income. That consistency has supported our ability to raise financing with highly competitive terms and rates that support our flexibility, profitability, and capital return capabilities. Our ability to continue to deliver meaningful growth and profitability has not been been diminished at all by our decision last month to withdraw our regulatory applications to become a bank. In fact, our planning over the past year brought to light new product, operational, and risk management insights that will support meaningful long-term growth by defending and extending our competitive positions and allowing us to leverage our technology and analytics capabilities to continue to take share in existing markets and thoughtfully expand into adjacent markets, either directly or with partners.