Annual Report
2018
mission
Helping hardworking people get
access to fast, trustworthy credit
Great! They have worked with me when I needed it, and are
very kind, patient, and friendly people.
— Leslie, NetCredit Customer
Very fast and easy! And a true
life saver in an emergency!
— Amanda, CashNetUSA Customer
Empresa séria resolveu o
meu problema rápido.
— Cliente Feliz do Simplic
QuickQuid has helped me out in a
tough situation! Would use again.
— Sophie, QuickQuid Customer
Excellent company. Really
helped me out of a tight
situation, even with my poor
credit rating. Just because my
credit rating is poor, doesn't
mean I'm bad with handling my
(cid:262)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:86)(cid:17)(cid:3)(cid:55)(cid:75)(cid:68)(cid:81)(cid:78)(cid:3)(cid:92)(cid:82)(cid:88)(cid:17)
— Mariana, On Stride Financial Customer
The process was easy, the management
of my funds is easy and the couple of
times I've had to call for information,
the customer service was expedient and
helped me right away. As someone who
consults in the service management
space, I am truly impressed!
— Jim, Headway Capital Customer
I've funded with The Business Backer three times. Their process is simple and
funding is quick. Every person I've worked with has been helpful and very friendly!
— Debra, The Business Backer Customer
Dear Fellow Stockholders,
Since we launched our Focused
Growth strategy three years ago,
we have driven meaningful growth
(cid:86)(cid:71)(cid:72)(cid:75)(cid:68)(cid:3)(cid:67)(cid:68)(cid:75)(cid:72)(cid:85)(cid:68)(cid:81)(cid:72)(cid:77)(cid:70)(cid:3)(cid:82)(cid:78)(cid:75)(cid:72)(cid:67)(cid:3)(cid:79)(cid:81)(cid:78)(cid:421)(cid:83)(cid:64)(cid:65)(cid:72)(cid:75)(cid:72)(cid:83)(cid:88)(cid:13)
We have expanded access to credit
(cid:65)(cid:88)(cid:3)(cid:69)(cid:78)(cid:66)(cid:84)(cid:82)(cid:72)(cid:77)(cid:70)(cid:3)(cid:78)(cid:84)(cid:81)(cid:3)(cid:81)(cid:68)(cid:82)(cid:78)(cid:84)(cid:81)(cid:66)(cid:68)(cid:82)(cid:3)(cid:78)(cid:77)(cid:3)(cid:78)(cid:84)(cid:81)(cid:3)
(cid:82)(cid:72)(cid:87)(cid:3)(cid:70)(cid:81)(cid:78)(cid:86)(cid:83)(cid:71)(cid:3)(cid:65)(cid:84)(cid:82)(cid:72)(cid:77)(cid:68)(cid:82)(cid:82)(cid:68)(cid:82)(cid:11)(cid:3)(cid:77)(cid:64)(cid:76)(cid:68)(cid:75)(cid:88)(cid:3)(cid:78)(cid:84)(cid:81)(cid:3)
(cid:52)(cid:13)(cid:50)(cid:13)(cid:3)(cid:82)(cid:84)(cid:65)(cid:79)(cid:81)(cid:72)(cid:76)(cid:68)(cid:11)(cid:3)(cid:52)(cid:13)(cid:50)(cid:13)(cid:3)(cid:77)(cid:68)(cid:64)(cid:81)(cid:12)(cid:79)(cid:81)(cid:72)(cid:76)(cid:68)(cid:11)(cid:3)(cid:52)(cid:13)(cid:42)(cid:13)
(cid:66)(cid:78)(cid:77)(cid:82)(cid:84)(cid:76)(cid:68)(cid:81)(cid:11)(cid:3)(cid:52)(cid:13)(cid:50)(cid:13)(cid:3)(cid:82)(cid:76)(cid:64)(cid:75)(cid:75)(cid:3)(cid:65)(cid:84)(cid:82)(cid:72)(cid:77)(cid:68)(cid:82)(cid:82)(cid:11)(cid:3)(cid:33)(cid:81)(cid:64)(cid:89)(cid:72)(cid:75)
(cid:64)(cid:77)(cid:67)(cid:3)(cid:36)(cid:77)(cid:78)(cid:85)(cid:64)(cid:3)(cid:35)(cid:68)(cid:66)(cid:72)(cid:82)(cid:72)(cid:78)(cid:77)(cid:82)(cid:3)(cid:65)(cid:84)(cid:82)(cid:72)(cid:77)(cid:68)(cid:82)(cid:82)(cid:68)(cid:82)(cid:13)
We have enhanced our product
(cid:78)(cid:420)(cid:68)(cid:81)(cid:72)(cid:77)(cid:70)(cid:82)(cid:3)(cid:83)(cid:78)(cid:3)(cid:67)(cid:81)(cid:72)(cid:85)(cid:68)(cid:3)(cid:67)(cid:68)(cid:76)(cid:64)(cid:77)(cid:67)(cid:3)(cid:64)(cid:77)(cid:67)(cid:3)
capture market share. And we have
(cid:67)(cid:72)(cid:85)(cid:68)(cid:81)(cid:82)(cid:72)(cid:421)(cid:68)(cid:67)(cid:3)(cid:78)(cid:84)(cid:81)(cid:3)(cid:69)(cid:84)(cid:77)(cid:67)(cid:72)(cid:77)(cid:70)(cid:3)(cid:82)(cid:78)(cid:84)(cid:81)(cid:66)(cid:68)(cid:82)(cid:3)
while lowering our total cost of
capital.
In 2018 we generated record new
customer growth with healthy
demand. As a result, our revenue
increased 32% year-over-year
(cid:83)(cid:78)(cid:3)(cid:78)(cid:85)(cid:68)(cid:81)(cid:3)(cid:665)(cid:16)(cid:3)(cid:65)(cid:72)(cid:75)(cid:75)(cid:72)(cid:78)(cid:77)(cid:13)(cid:3)(cid:50)(cid:83)(cid:64)(cid:65)(cid:75)(cid:68)(cid:3)(cid:66)(cid:81)(cid:68)(cid:67)(cid:72)(cid:83)(cid:11)(cid:3)
(cid:66)(cid:78)(cid:76)(cid:65)(cid:72)(cid:77)(cid:68)(cid:67)(cid:3)(cid:86)(cid:72)(cid:83)(cid:71)(cid:3)(cid:68)(cid:423)(cid:66)(cid:72)(cid:68)(cid:77)(cid:83)(cid:3)(cid:76)(cid:64)(cid:81)(cid:74)(cid:68)(cid:83)(cid:72)(cid:77)(cid:70)(cid:3)
and the strong operating leverage
inherent in our online model, led
(cid:83)(cid:78)(cid:3)(cid:82)(cid:78)(cid:75)(cid:72)(cid:67)(cid:3)(cid:79)(cid:81)(cid:78)(cid:421)(cid:83)(cid:64)(cid:65)(cid:72)(cid:75)(cid:72)(cid:83)(cid:88)(cid:11)(cid:3)(cid:68)(cid:85)(cid:68)(cid:77)(cid:3)(cid:86)(cid:72)(cid:83)(cid:71)(cid:3)
the high mix of new customers.
Our GAAP net income more than
(cid:67)(cid:78)(cid:84)(cid:65)(cid:75)(cid:68)(cid:67)(cid:3)(cid:72)(cid:77)(cid:3)(cid:17)(cid:15)(cid:16)(cid:23)(cid:3)(cid:83)(cid:78)(cid:3)(cid:665)(cid:22)(cid:15)(cid:3)(cid:76)(cid:72)(cid:75)(cid:75)(cid:72)(cid:78)(cid:77)(cid:11)(cid:3)(cid:78)(cid:81)
$1.99 per share, compared to $29
million, or $0.86 per share, in the
prior year.
(cid:46)(cid:84)(cid:81)(cid:3)(cid:52)(cid:13)(cid:50)(cid:13)(cid:3)(cid:82)(cid:84)(cid:65)(cid:79)(cid:81)(cid:72)(cid:76)(cid:68)(cid:3)(cid:65)(cid:84)(cid:82)(cid:72)(cid:77)(cid:68)(cid:82)(cid:82)(cid:3)
continued to grow revenue and
(cid:79)(cid:81)(cid:78)(cid:421)(cid:83)(cid:64)(cid:65)(cid:72)(cid:75)(cid:72)(cid:83)(cid:88)(cid:3)(cid:83)(cid:71)(cid:81)(cid:78)(cid:84)(cid:70)(cid:71)(cid:78)(cid:84)(cid:83)(cid:3)(cid:17)(cid:15)(cid:16)(cid:23)(cid:13)(cid:3)(cid:52)(cid:13)(cid:50)(cid:13)(cid:3)
(cid:82)(cid:84)(cid:65)(cid:79)(cid:81)(cid:72)(cid:76)(cid:68)(cid:3)(cid:78)(cid:81)(cid:72)(cid:70)(cid:72)(cid:77)(cid:64)(cid:83)(cid:72)(cid:78)(cid:77)(cid:82)(cid:3)(cid:70)(cid:81)(cid:68)(cid:86)(cid:3)(cid:16)(cid:24)(cid:4)(cid:3)
from 2017, demonstrating our
(cid:64)(cid:65)(cid:72)(cid:75)(cid:72)(cid:83)(cid:88)(cid:3)(cid:83)(cid:78)(cid:3)(cid:66)(cid:78)(cid:77)(cid:83)(cid:72)(cid:77)(cid:84)(cid:68)(cid:3)(cid:67)(cid:81)(cid:72)(cid:85)(cid:72)(cid:77)(cid:70)(cid:3)(cid:70)(cid:81)(cid:78)(cid:86)(cid:83)(cid:71)(cid:3)(cid:72)(cid:77)(cid:3)
(cid:83)(cid:71)(cid:72)(cid:82)(cid:3)(cid:75)(cid:64)(cid:81)(cid:70)(cid:68)(cid:3)(cid:65)(cid:84)(cid:82)(cid:72)(cid:77)(cid:68)(cid:82)(cid:82)(cid:13)(cid:3)(cid:40)(cid:77)(cid:77)(cid:78)(cid:85)(cid:64)(cid:83)(cid:72)(cid:78)(cid:77)(cid:82)(cid:3)(cid:75)(cid:72)(cid:74)(cid:68)(cid:3)
(cid:82)(cid:64)(cid:76)(cid:68)(cid:12)(cid:67)(cid:64)(cid:88)(cid:3)(cid:69)(cid:84)(cid:77)(cid:67)(cid:72)(cid:77)(cid:70)(cid:3)(cid:64)(cid:77)(cid:67)(cid:3)(cid:77)(cid:68)(cid:86)(cid:3)(cid:421)(cid:77)(cid:64)(cid:77)(cid:66)(cid:72)(cid:64)(cid:75)
education programs provided
customers with added value. This
(cid:65)(cid:84)(cid:82)(cid:72)(cid:77)(cid:68)(cid:82)(cid:82)(cid:3)(cid:81)(cid:68)(cid:76)(cid:64)(cid:72)(cid:77)(cid:82)(cid:3)(cid:86)(cid:68)(cid:75)(cid:75)(cid:3)(cid:67)(cid:72)(cid:85)(cid:68)(cid:81)(cid:82)(cid:72)(cid:421)(cid:68)(cid:67)(cid:11)(cid:3)
consisting of 48% line of credit
products, 35% installment products
and only 17% single-pay products
as of year-end 2018.
41%
of americans
said they could
not cover an
emergency of
$4001
Over 6 Million Customers Served
1Federal Reserve Report on the Economic Well-Being of U.S. Households in 2017
175 W. Jackson Blvd.
Chicago, IL 60604
6 Growth Businesses
u.s. subprime
u.k. consumer
u.s. near-prime
brazil
u.s. small business
enova decisions
(cid:437)(cid:435)(cid:436)(cid:443)(cid:3)(cid:72)(cid:81)(cid:82)(cid:89)(cid:68)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)
introduced expanded installment
loan options, providing consumers
(cid:86)(cid:72)(cid:83)(cid:71)(cid:3)(cid:66)(cid:71)(cid:78)(cid:72)(cid:66)(cid:68)(cid:82)(cid:3)(cid:64)(cid:77)(cid:67)(cid:3)(cid:79)(cid:81)(cid:78)(cid:67)(cid:84)(cid:66)(cid:83)(cid:82)(cid:3)(cid:83)(cid:71)(cid:64)(cid:83)(cid:3)(cid:421)(cid:83)
them as their needs change. Full-
(cid:88)(cid:68)(cid:64)(cid:81)(cid:3)(cid:17)(cid:15)(cid:16)(cid:23)(cid:3)(cid:52)(cid:13)(cid:42)(cid:13)(cid:3)(cid:81)(cid:68)(cid:85)(cid:68)(cid:77)(cid:84)(cid:68)(cid:3)(cid:72)(cid:77)(cid:66)(cid:81)(cid:68)(cid:64)(cid:82)(cid:68)(cid:67)(cid:3)
(cid:17)(cid:18)(cid:4)(cid:11)(cid:3)(cid:67)(cid:81)(cid:72)(cid:85)(cid:68)(cid:77)(cid:3)(cid:65)(cid:88)(cid:3)(cid:82)(cid:83)(cid:81)(cid:78)(cid:77)(cid:70)(cid:3)(cid:67)(cid:68)(cid:76)(cid:64)(cid:77)(cid:67)(cid:3)(cid:69)(cid:78)(cid:81)
our installment product.
(cid:46)(cid:84)(cid:81)(cid:3)(cid:52)(cid:13)(cid:50)(cid:13)(cid:3)(cid:77)(cid:68)(cid:64)(cid:81)(cid:12)(cid:79)(cid:81)(cid:72)(cid:76)(cid:68)(cid:3)(cid:78)(cid:420)(cid:68)(cid:81)(cid:72)(cid:77)(cid:70)(cid:11)
NetCredit, continued its rapid
growth in 2018. NetCredit achieved
26% year-over-year growth in
originations and 27% growth in
(cid:75)(cid:78)(cid:64)(cid:77)(cid:3)(cid:65)(cid:64)(cid:75)(cid:64)(cid:77)(cid:66)(cid:68)(cid:82)(cid:3)(cid:83)(cid:78)(cid:3)(cid:665)(cid:19)(cid:22)(cid:15)(cid:3)(cid:76)(cid:72)(cid:75)(cid:75)(cid:72)(cid:78)(cid:77)(cid:3)(cid:64)(cid:83)
the end of 2018. Just six years after
its launch, NetCredit reached over
(cid:665)(cid:16)(cid:13)(cid:19)(cid:3)(cid:65)(cid:72)(cid:75)(cid:75)(cid:72)(cid:78)(cid:77)(cid:3)(cid:72)(cid:77)(cid:3)(cid:72)(cid:82)(cid:82)(cid:84)(cid:68)(cid:67)(cid:3)(cid:75)(cid:78)(cid:64)(cid:77)(cid:82)(cid:3)(cid:64)(cid:77)(cid:67)
(cid:71)(cid:64)(cid:82)(cid:3)(cid:65)(cid:68)(cid:66)(cid:78)(cid:76)(cid:68)(cid:3)(cid:64)(cid:3)(cid:82)(cid:84)(cid:65)(cid:82)(cid:83)(cid:64)(cid:77)(cid:83)(cid:72)(cid:64)(cid:75)(cid:3)(cid:65)(cid:84)(cid:82)(cid:72)(cid:77)(cid:68)(cid:82)(cid:82)
for Enova, comprising 45% of our
entire loan portfolio at year-end
2018.
(cid:40)(cid:77)(cid:3)(cid:83)(cid:71)(cid:68)(cid:3)(cid:52)(cid:13)(cid:42)(cid:13)(cid:11)(cid:3)(cid:86)(cid:68)(cid:3)(cid:81)(cid:68)(cid:76)(cid:64)(cid:72)(cid:77)(cid:3)(cid:83)(cid:71)(cid:68)(cid:3)(cid:77)(cid:84)(cid:76)(cid:65)(cid:68)(cid:81)
(cid:78)(cid:77)(cid:68)(cid:3)(cid:76)(cid:64)(cid:81)(cid:74)(cid:68)(cid:83)(cid:3)(cid:82)(cid:71)(cid:64)(cid:81)(cid:68)(cid:3)(cid:82)(cid:84)(cid:65)(cid:12)(cid:79)(cid:81)(cid:72)(cid:76)(cid:68)(cid:3)(cid:75)(cid:68)(cid:77)(cid:67)(cid:68)(cid:81)(cid:13)
During the third quarter of 2018, we
Enova Cumulative Originations1
47.5 M
43.2 M
39.3 M
35.5 M
31.9 M
27.4 M
22.5 M
$13.1 B
$ 10.5 B
17.9 M
13.9 M
$8.0 B
$6.0 B
9.1 M
5.7 M
$2.5 B
$3.9 B
$19.3
B
$21.5 B
$24.0 B
$17.3 B
$15.3 B
2008
2009
2010
2011
2012
2013
2014
2015
2016
2016
2016
2016
2017
2018
Cumulative Originations $
Cumulative Originations #
3.2 M
$1.3 B
2007
1(cid:37)(cid:81)(cid:78)(cid:76)(cid:3)(cid:37)(cid:56)(cid:3)(cid:17)(cid:15)(cid:15)(cid:18)(cid:3)(cid:83)(cid:71)(cid:81)(cid:78)(cid:84)(cid:70)(cid:71)(cid:3)(cid:35)(cid:68)(cid:66)(cid:68)(cid:76)(cid:65)(cid:68)(cid:81)(cid:3)(cid:18)(cid:16)(cid:11)(cid:3)(cid:17)(cid:15)(cid:16)(cid:23)
175 W. Jackson Blvd.
Chicago, IL 60604
NetCredit Cumulative
Originations1
(in millions)
$1,471
$1,055
Combined Receivables2
(in millions)
$1,053
$862
$693
$536
$427
$425
$900
$800
$700
$600
$500
$723
$400
$359
$300
$200
$100
$
2016
2017
2018
2012
2013
2014
2015
2016
2017
2018
Short-term loans
Line of credit accounts
Other installment loans
Small business
Near-prime installment loans
since 2016,
(cid:86)(cid:88)(cid:70)(cid:70)(cid:72)(cid:86)(cid:86)(cid:73)(cid:88)(cid:79)(cid:3)(cid:466)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:81)(cid:74)(cid:3)
transactions have
reduced cost of
funds by
190 basis
points
Our methodical approach to
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portfolio continued in 2018.
During the year, we saw
strengthening demand for small
(cid:65)(cid:84)(cid:82)(cid:72)(cid:77)(cid:68)(cid:82)(cid:82)(cid:3)(cid:75)(cid:78)(cid:64)(cid:77)(cid:82)(cid:3)(cid:64)(cid:83)(cid:3)(cid:64)(cid:83)(cid:83)(cid:81)(cid:64)(cid:66)(cid:83)(cid:72)(cid:85)(cid:68)(cid:3)
unit economics. As a result,
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assertive in expanding in this
(cid:82)(cid:79)(cid:64)(cid:66)(cid:68)(cid:13)(cid:3)(cid:50)(cid:76)(cid:64)(cid:75)(cid:75)(cid:3)(cid:65)(cid:84)(cid:82)(cid:72)(cid:77)(cid:68)(cid:82)(cid:82)(cid:3)(cid:78)(cid:81)(cid:72)(cid:70)(cid:72)(cid:77)(cid:64)(cid:83)(cid:72)(cid:78)(cid:77)(cid:82)(cid:3)
increased 3% year-over-year and
(cid:81)(cid:68)(cid:79)(cid:81)(cid:68)(cid:82)(cid:68)(cid:77)(cid:83)(cid:68)(cid:67)(cid:3)(cid:23)(cid:4)(cid:3)(cid:78)(cid:69)(cid:3)(cid:78)(cid:84)(cid:81)(cid:3)(cid:83)(cid:78)(cid:83)(cid:64)(cid:75)(cid:3)(cid:65)(cid:78)(cid:78)(cid:74)
at the end of the year.
(cid:51)(cid:84)(cid:81)(cid:77)(cid:72)(cid:77)(cid:70)(cid:3)(cid:83)(cid:78)(cid:3)(cid:78)(cid:84)(cid:81)(cid:3)(cid:33)(cid:81)(cid:64)(cid:89)(cid:72)(cid:75)(cid:3)(cid:65)(cid:84)(cid:82)(cid:72)(cid:77)(cid:68)(cid:82)(cid:82)(cid:11)(cid:3)(cid:86)(cid:68)(cid:3)
continue to experience strong
(cid:77)(cid:68)(cid:86)(cid:3)(cid:66)(cid:84)(cid:82)(cid:83)(cid:78)(cid:76)(cid:68)(cid:81)(cid:3)(cid:70)(cid:81)(cid:78)(cid:86)(cid:83)(cid:71)(cid:3)(cid:64)(cid:82)(cid:3)(cid:86)(cid:68)(cid:3)(cid:81)(cid:68)(cid:421)(cid:77)(cid:68)
our product and underwriting.
Originations rose 60% on a constant
(cid:66)(cid:84)(cid:81)(cid:81)(cid:68)(cid:77)(cid:66)(cid:88)(cid:3)(cid:65)(cid:64)(cid:82)(cid:72)(cid:82)(cid:3)(cid:72)(cid:77)(cid:3)(cid:17)(cid:15)(cid:16)(cid:23)(cid:11)(cid:3)(cid:67)(cid:81)(cid:72)(cid:85)(cid:72)(cid:77)(cid:70)(cid:3)(cid:64)
31% loan portfolio increase year-
over-year to $22 million at the end
of 2018.
Finally, our real-time Analytics-as-a-
(cid:50)(cid:68)(cid:81)(cid:85)(cid:72)(cid:66)(cid:68)(cid:3)(cid:65)(cid:84)(cid:82)(cid:72)(cid:77)(cid:68)(cid:82)(cid:82)(cid:11)(cid:3)(cid:36)(cid:77)(cid:78)(cid:85)(cid:64)(cid:3)(cid:35)(cid:68)(cid:66)(cid:72)(cid:82)(cid:72)(cid:78)(cid:77)(cid:82)(cid:11)
continued to gain momentum in
(cid:17)(cid:15)(cid:16)(cid:23)(cid:13)(cid:3)(cid:54)(cid:71)(cid:72)(cid:75)(cid:68)(cid:3)(cid:83)(cid:71)(cid:72)(cid:82)(cid:3)(cid:65)(cid:84)(cid:82)(cid:72)(cid:77)(cid:68)(cid:82)(cid:82)(cid:3)(cid:72)(cid:82)(cid:3)(cid:82)(cid:83)(cid:72)(cid:75)(cid:75)(cid:3)
1(cid:46)(cid:81)(cid:72)(cid:70)(cid:72)(cid:77)(cid:64)(cid:83)(cid:72)(cid:78)(cid:77)(cid:82)(cid:3)(cid:72)(cid:77)(cid:66)(cid:75)(cid:84)(cid:67)(cid:68)(cid:3)(cid:75)(cid:78)(cid:64)(cid:77)(cid:82)(cid:3)(cid:78)(cid:81)(cid:72)(cid:70)(cid:72)(cid:77)(cid:64)(cid:83)(cid:68)(cid:67)(cid:3)(cid:65)(cid:88)(cid:3)(cid:36)(cid:77)(cid:78)(cid:85)(cid:64)(cid:3)(cid:64)(cid:77)(cid:67)(cid:3)(cid:64)(cid:82)(cid:3)(cid:79)(cid:64)(cid:81)(cid:83)(cid:3)(cid:78)(cid:69)(cid:3)(cid:83)(cid:71)(cid:72)(cid:81)(cid:67)(cid:12)(cid:79)(cid:64)(cid:81)(cid:83)(cid:88)(cid:3)(cid:79)(cid:81)(cid:78)(cid:70)(cid:81)(cid:64)(cid:76)(cid:82)
2(cid:40)(cid:77)(cid:66)(cid:75)(cid:84)(cid:67)(cid:68)(cid:82)(cid:3)(cid:64)(cid:76)(cid:78)(cid:84)(cid:77)(cid:83)(cid:82)(cid:3)(cid:68)(cid:87)(cid:83)(cid:68)(cid:77)(cid:67)(cid:68)(cid:67)(cid:3)(cid:65)(cid:88)(cid:3)(cid:83)(cid:71)(cid:72)(cid:81)(cid:67)(cid:3)(cid:79)(cid:64)(cid:81)(cid:83)(cid:72)(cid:68)(cid:82)
(cid:437)(cid:435)(cid:436)(cid:443)(cid:3)(cid:72)(cid:81)(cid:82)(cid:89)(cid:68)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)
in the early stages, we are actively
(cid:65)(cid:84)(cid:72)(cid:75)(cid:67)(cid:72)(cid:77)(cid:70)(cid:3)(cid:78)(cid:84)(cid:83)(cid:3)(cid:78)(cid:84)(cid:81)(cid:3)(cid:79)(cid:72)(cid:79)(cid:68)(cid:75)(cid:72)(cid:77)(cid:68)(cid:3)(cid:64)(cid:66)(cid:81)(cid:78)(cid:82)(cid:82)(cid:3)
(cid:67)(cid:72)(cid:420)(cid:68)(cid:81)(cid:68)(cid:77)(cid:83)(cid:3)(cid:72)(cid:77)(cid:67)(cid:84)(cid:82)(cid:83)(cid:81)(cid:72)(cid:68)(cid:82)(cid:3)(cid:64)(cid:77)(cid:67)(cid:3)(cid:82)(cid:68)(cid:68)(cid:3)(cid:64)(cid:76)(cid:79)(cid:75)(cid:68)(cid:3)
growth opportunity moving forward.
Over the course of the year, we
continued to successfully access
(cid:421)(cid:77)(cid:64)(cid:77)(cid:66)(cid:72)(cid:77)(cid:70)(cid:3)(cid:76)(cid:64)(cid:81)(cid:74)(cid:68)(cid:83)(cid:82)(cid:3)(cid:83)(cid:78)(cid:3)(cid:79)(cid:81)(cid:78)(cid:85)(cid:72)(cid:67)(cid:68)(cid:3)(cid:77)(cid:68)(cid:86)(cid:3)
(cid:82)(cid:78)(cid:84)(cid:81)(cid:66)(cid:68)(cid:82)(cid:3)(cid:78)(cid:69)(cid:3)(cid:68)(cid:423)(cid:66)(cid:72)(cid:68)(cid:77)(cid:83)(cid:3)(cid:66)(cid:64)(cid:79)(cid:72)(cid:83)(cid:64)(cid:75)(cid:3)(cid:83)(cid:78)
support growth or re-ladder and
(cid:81)(cid:68)(cid:421)(cid:77)(cid:64)(cid:77)(cid:66)(cid:68)(cid:3)(cid:68)(cid:87)(cid:72)(cid:82)(cid:83)(cid:72)(cid:77)(cid:70)(cid:3)(cid:67)(cid:68)(cid:65)(cid:83)(cid:13)(cid:3)(cid:40)(cid:77)(cid:3)(cid:83)(cid:78)(cid:83)(cid:64)(cid:75)(cid:11)(cid:3)(cid:86)(cid:68)
raised $885 million of funding from
diverse sources at competitive costs,
lowering our cost of funds, despite
(cid:72)(cid:77)(cid:66)(cid:81)(cid:68)(cid:64)(cid:82)(cid:68)(cid:82)(cid:3)(cid:72)(cid:77)(cid:3)(cid:65)(cid:68)(cid:77)(cid:66)(cid:71)(cid:76)(cid:64)(cid:81)(cid:74)(cid:3)(cid:72)(cid:77)(cid:83)(cid:68)(cid:81)(cid:68)(cid:82)(cid:83)
rates. We expect our cost of funds
to continue to improve into 2019
(cid:64)(cid:82)(cid:3)(cid:86)(cid:68)(cid:3)(cid:81)(cid:68)(cid:66)(cid:78)(cid:70)(cid:77)(cid:72)(cid:89)(cid:68)(cid:3)(cid:83)(cid:71)(cid:68)(cid:3)(cid:66)(cid:78)(cid:82)(cid:83)(cid:3)(cid:65)(cid:68)(cid:77)(cid:68)(cid:421)(cid:83)(cid:82)(cid:3)(cid:78)(cid:69)(cid:3)
recent transactions.
$885
million
of funding raised
from diverse sources
at competitive
costs with laddered
maturities in 2018
(cid:42)(cid:85)(cid:82)(cid:90)(cid:87)(cid:75)(cid:15)(cid:3)(cid:39)(cid:76)(cid:89)(cid:72)(cid:85)(cid:86)(cid:76)(cid:425)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:53)(cid:72)(cid:87)(cid:88)(cid:85)(cid:81)(cid:86)1
(in millions)
$1,000
$800
$800
$600
$600
$400
$400
$200
$200
$0$0
25%
20%
15%
10%
5%
0%
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18
Gross A/R $
Short-Term Loan Mix %
Return on Equity %
1(cid:49)(cid:46)(cid:36)(cid:3)(cid:72)(cid:82)(cid:3)(cid:65)(cid:64)(cid:82)(cid:68)(cid:67)(cid:3)(cid:78)(cid:77)(cid:3)(cid:83)(cid:81)(cid:64)(cid:72)(cid:75)(cid:72)(cid:77)(cid:70)(cid:3)(cid:83)(cid:86)(cid:68)(cid:75)(cid:85)(cid:68)(cid:3)(cid:76)(cid:78)(cid:77)(cid:83)(cid:71)(cid:82)(cid:3)(cid:32)(cid:67)(cid:73)(cid:84)(cid:82)(cid:83)(cid:68)(cid:67)(cid:3)(cid:45)(cid:68)(cid:83)(cid:3)(cid:40)(cid:77)(cid:66)(cid:78)(cid:76)(cid:68)
175 W. Jackson Blvd.
Chicago, IL 60604
2018 Wins
earnings per
share rose
(cid:20)(cid:22)(cid:22)(cid:520)
(cid:543)(cid:20)(cid:17)(cid:22)B
in assets
total revenue
exceeded
(cid:543)(cid:20)B
From the previous year
Assets at highest level in
company history
(cid:41)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:425)(cid:85)(cid:86)(cid:87)(cid:3)(cid:87)(cid:76)(cid:80)(cid:72)(cid:3)(cid:11)(cid:7)(cid:20)(cid:17)(cid:20)(cid:37)(cid:12)(cid:15)(cid:3)(cid:68)(cid:81)(cid:3)
increase of 32% y/y
(cid:46)(cid:85)(cid:68)(cid:81)(cid:64)(cid:75)(cid:75)(cid:11)(cid:3)(cid:86)(cid:68)(cid:3)(cid:64)(cid:81)(cid:68)(cid:3)(cid:85)(cid:68)(cid:81)(cid:88)(cid:3)(cid:79)(cid:75)(cid:68)(cid:64)(cid:82)(cid:68)(cid:67)(cid:3)(cid:86)(cid:72)(cid:83)(cid:71)(cid:3)(cid:78)(cid:84)(cid:81)(cid:3)(cid:421)(cid:77)(cid:64)(cid:77)(cid:66)(cid:72)(cid:64)(cid:75)(cid:3)(cid:79)(cid:68)(cid:81)(cid:69)(cid:78)(cid:81)(cid:76)(cid:64)(cid:77)(cid:66)(cid:68)(cid:3)(cid:72)(cid:77)(cid:3)(cid:17)(cid:15)(cid:16)(cid:23)
(cid:64)(cid:77)(cid:67)(cid:3)(cid:83)(cid:71)(cid:68)(cid:3)(cid:66)(cid:78)(cid:77)(cid:82)(cid:72)(cid:67)(cid:68)(cid:81)(cid:64)(cid:65)(cid:75)(cid:68)(cid:3)(cid:76)(cid:78)(cid:76)(cid:68)(cid:77)(cid:83)(cid:84)(cid:76)(cid:3)(cid:86)(cid:68)(cid:3)(cid:71)(cid:64)(cid:85)(cid:68)(cid:3)(cid:68)(cid:77)(cid:83)(cid:68)(cid:81)(cid:72)(cid:77)(cid:70)(cid:3)(cid:17)(cid:15)(cid:16)(cid:24)(cid:13)(cid:3)(cid:54)(cid:68)(cid:3)(cid:81)(cid:68)(cid:76)(cid:64)(cid:72)(cid:77)
(cid:69)(cid:78)(cid:66)(cid:84)(cid:82)(cid:68)(cid:67)(cid:3)(cid:78)(cid:77)(cid:3)(cid:65)(cid:64)(cid:75)(cid:64)(cid:77)(cid:66)(cid:72)(cid:77)(cid:70)(cid:3)(cid:70)(cid:81)(cid:78)(cid:86)(cid:83)(cid:71)(cid:3)(cid:86)(cid:72)(cid:83)(cid:71)(cid:3)(cid:82)(cid:78)(cid:75)(cid:72)(cid:67)(cid:3)(cid:79)(cid:81)(cid:78)(cid:421)(cid:83)(cid:64)(cid:65)(cid:72)(cid:75)(cid:72)(cid:83)(cid:88)(cid:3)(cid:64)(cid:82)(cid:3)(cid:86)(cid:68)(cid:3)(cid:65)(cid:84)(cid:72)(cid:75)(cid:67)(cid:3)(cid:36)(cid:77)(cid:78)(cid:85)(cid:64)(cid:3)
(cid:69)(cid:78)(cid:81)(cid:3)(cid:75)(cid:78)(cid:77)(cid:70)(cid:12)(cid:83)(cid:68)(cid:81)(cid:76)(cid:3)(cid:82)(cid:84)(cid:66)(cid:66)(cid:68)(cid:82)(cid:82)(cid:13)(cid:3)(cid:46)(cid:84)(cid:81)(cid:3)(cid:79)(cid:81)(cid:78)(cid:67)(cid:84)(cid:66)(cid:83)(cid:3)(cid:78)(cid:420)(cid:68)(cid:81)(cid:72)(cid:77)(cid:70)(cid:82)(cid:3)(cid:64)(cid:81)(cid:68)(cid:3)(cid:81)(cid:68)(cid:82)(cid:78)(cid:77)(cid:64)(cid:83)(cid:72)(cid:77)(cid:70)(cid:3)(cid:85)(cid:68)(cid:81)(cid:88)(cid:3)(cid:86)(cid:68)(cid:75)(cid:75)(cid:3)
(cid:86)(cid:72)(cid:83)(cid:71)(cid:72)(cid:77)(cid:3)(cid:83)(cid:71)(cid:68)(cid:3)(cid:76)(cid:64)(cid:81)(cid:74)(cid:68)(cid:83)(cid:82)(cid:3)(cid:86)(cid:68)(cid:3)(cid:82)(cid:68)(cid:81)(cid:85)(cid:68)(cid:11)(cid:3)(cid:64)(cid:77)(cid:67)(cid:3)(cid:86)(cid:68)(cid:3)(cid:65)(cid:68)(cid:75)(cid:72)(cid:68)(cid:85)(cid:68)(cid:3)(cid:78)(cid:84)(cid:81)(cid:3)(cid:37)(cid:78)(cid:66)(cid:84)(cid:82)(cid:68)(cid:67)(cid:3)(cid:38)(cid:81)(cid:78)(cid:86)(cid:83)(cid:71)
(cid:82)(cid:83)(cid:81)(cid:64)(cid:83)(cid:68)(cid:70)(cid:88)(cid:11)(cid:3)(cid:78)(cid:77)(cid:70)(cid:78)(cid:72)(cid:77)(cid:70)(cid:3)(cid:67)(cid:72)(cid:85)(cid:68)(cid:81)(cid:82)(cid:72)(cid:421)(cid:66)(cid:64)(cid:83)(cid:72)(cid:78)(cid:77)(cid:3)(cid:64)(cid:77)(cid:67)(cid:3)(cid:82)(cid:66)(cid:64)(cid:75)(cid:64)(cid:65)(cid:75)(cid:68)(cid:3)(cid:78)(cid:77)(cid:75)(cid:72)(cid:77)(cid:68)(cid:3)(cid:76)(cid:78)(cid:67)(cid:68)(cid:75)(cid:11)(cid:3)(cid:66)(cid:78)(cid:84)(cid:79)(cid:75)(cid:68)(cid:67)
(cid:86)(cid:72)(cid:83)(cid:71)(cid:3)(cid:79)(cid:81)(cid:84)(cid:67)(cid:68)(cid:77)(cid:83)(cid:3)(cid:65)(cid:84)(cid:82)(cid:72)(cid:77)(cid:68)(cid:82)(cid:82)(cid:3)(cid:76)(cid:64)(cid:77)(cid:64)(cid:70)(cid:68)(cid:76)(cid:68)(cid:77)(cid:83)(cid:11)(cid:3)(cid:86)(cid:72)(cid:75)(cid:75)(cid:3)(cid:68)(cid:77)(cid:82)(cid:84)(cid:81)(cid:68)(cid:3)(cid:82)(cid:84)(cid:82)(cid:83)(cid:64)(cid:72)(cid:77)(cid:64)(cid:65)(cid:75)(cid:68)(cid:3)(cid:64)(cid:77)(cid:67)
(cid:79)(cid:81)(cid:78)(cid:421)(cid:83)(cid:64)(cid:65)(cid:75)(cid:68)(cid:3)(cid:70)(cid:81)(cid:78)(cid:86)(cid:83)(cid:71)(cid:13)
Thank you for your continued support and investment in Enova.
David Fisher
(cid:34)(cid:71)(cid:72)(cid:68)(cid:69)(cid:3)(cid:36)(cid:87)(cid:68)(cid:66)(cid:84)(cid:83)(cid:72)(cid:85)(cid:68)(cid:3)(cid:46)(cid:423)(cid:66)(cid:68)(cid:81)
Enova International, Inc.
(cid:437)(cid:435)(cid:436)(cid:443)(cid:3)(cid:72)(cid:81)(cid:82)(cid:89)(cid:68)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)
SE
ECURITIE
UNITE
ES AND E
Washing
ED STAT
XCHANG
gton, D.C. 20
TES
GE COMM
0549
MISSION
FO
K
ORM 10-K
ANNUAL RE
EPORT PURS
SECTION 13 O
SUANT TO S
or the fiscal yea
Fo
OR 15(d) OF T
ar ended Decem
mber 31, 2018
THE SECUR
RITIES EXCH
HANGE ACT O
OF 1934
OR
TRANSITIO
ON REPORT P
) OF THE SEC
CURITIES EX
XCHANGE A
ACT OF 1934
PURSUANT T
For the t
TO SECTION
transition perio
Commission
N 13 OR 15(d)
d from
n File Number 1
to
1-35503
(cid:95)
(cid:133)
Enova I
t name of regist
nternational,
trant as specifie
Inc.
ed in its charter
r)
(Exact
ware
Delaw
(State or other
of incorporation o
o
jurisdiction
or organization)
175 West Jac
Chicago,
dress of principa
(Ad
ckson Blvd.
Illinois
s)
l executive offices
ne number, inclu
trant’s telephon
Regist
12) 568-4200
(31
ursuant to Secti
s Registered Pu
Securities
uding area code
e:
ion 12(b) of the
Act:
45-319081
(I.R.S. Empl
Identification
13
loyer
n No.)
60604
e)
(Zip Code
Title of Ea
n Stock, $.0000
Common
ch Class
1 par value per
Securitie
r share
s Registered Pu
Each Exchange on
Name of E
ew York Stock
Ne
Act:
ion 12(g) of the
n Which Register
Exchange
red
ursuant to Secti
None
mark if the regis
dicate by check m
Ind
if the registrant i
dicate by check
Ind
mark whether th
dicate by check m
Ind
eding 12 months
e
d
during the prec
1934 d
r the past 90 day
requirements fo
filing
Ind
mark whether th
dicate by check m
T (§232.405 of th
T
f Regulation S-
405 of
f
ff
files). Yes
such f
(cid:95)
dicate by check m
Ind
n, and will not be
herein
II of this Form 1
Part II
dicate by check m
Ind
any. See definiti
compa
mark if disclosu
e contained, to th
0-K or any ame
mark whether th
ions of “large ac
No (cid:133)
Large
r
accelerated filer
Non-a
accelerated filer
(cid:95)
(cid:133)
strant is a well-k
is not required to
he registrant (1) h
(or for such sho
ys. Yes (cid:95) N
he registrant has
his chapter) duri
known seasoned
o file reports pur
has filed all repo
orter period that t
No (cid:133)
submitted electr
ing the preceding
ure of delinquent
he best of registr
ndment to this F
he registrant is a
celerated filer,”
t filers pursuant t
rant’s knowledge
Form 10-K. (cid:133)
large accelerate
“accelerated file
f the Securities A
ed in Rule 405 of
issuer, as define
1
15(d) of the Act.
n 13 or Section
n
rsuant to Section
on 13 or 15(d) o
be filed by Secti
orts required to b
le such reports),
as required to fil
the registrant wa
Act. Yes (cid:133)
. Yes (cid:133) No
of the Securities
and (2) has been
No (cid:95)
(cid:95)
Exchange Act o
f
h
n subject to such
ronically every I
g 12 months (or
File required to
Interactive Data
r
r time that the re
for such shorter
be submitted pu
gistrant was requqq
ursuant to Rule
uired to submit
to Item 405 of R
e, in definitive p
Regulation S-K (
proxy or informa
(§229.405 of this
ation statements
s chapter) is not
incorporated by
contained
y reference in
erated filer, a no
d filer, an accele
pm
r
r reporting com
er” and “smaller
on-accelerated fil
pany” in Rule 12
ler, or a smaller
2b-2 of the Excha
reporting
ange Act.
If a
any ne
Ind
Th
June 3
At
an emerging gro
ew or revised fin
dicate by check m
he aggregate mar
30, 2018 was app
t February 22, 20
owth company, i
nancial accountin
mark whether th
rket value of 32,
proximately $1,2
019 there were 3
indicate by chec
ng standards pro
he registrant is a
270,404 shares o
216,033,266.
33,490,724 share
DOCU
k mark if the reg
ovided pursuant t
shell company (
of the registrant’
gistrant has elec
to Section 13(a)
(as defined in RuRR
’s common stock
cted not to use th
of the Exchang
ule 12b-2 of the
k, par value $0.0
es of the registran
MENTS INCO
nt’s Common St
ORPORATED B
tock, $0.00001 p
BY REFERENC
par value per sha
CE
are, outstanding.
.
None
Accelerated
d filer
(cid:133)
(cid:133)
porting company
y
y
growth companyn
(cid:133)
h
t
r complying wi
r
r
nsition period fod
Smaller rep
Emerging g
he extended tran
e Act. (cid:133)
Act). Yes (cid:133)
00001 per share,
No (cid:95)
held by non-affff
ff
filiates on
ENOVA INTERNATIONAL, INC.
YEAR ENDED DECEMBER 31, 2018
INDEX TO FORM 10-K
PART I
Item 1.
Business ...............................................................................................................................................................
Item 1A. Risk Factors ..........................................................................................................................................................
Item 1B. Unresolved Staff Comments ................................................................................................................................
Properties .............................................................................................................................................................
Item 2.
Legal Proceedings ................................................................................................................................................
Item 3.
Mine Safety Disclosures .......................................................................................................................................
Item 4.
1
18
39
39
39
40
PART II
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity
a
Securities ..............................................................................................................................................................
41
43
Selected Financial Data..............................................................................................................................
..........
Item 6.
46
Management’s Discussion and Analysis of Financial Condition and Results of Operations ...............................
Item 7.
76
Item 7A. Quantitative and Qualitative Disclosures about Market Risk...............................................................................
Financial Statements and Supplementary Data ....................................................................................................
77
Item 8.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ............................... 116
Item 9.
Item 9A. Controls and Procedures ....................................................................................................................................... 116
116
Item 9B. Other Information..............................................................................................................................
...................
n
k
a
PART III
Item 10. Directors, Executive Officers and Corporate Governance .................................................................................(cid:17).
Item 11. Executive Compensation ...................................................................................................................................(cid:17)..
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters ..........(cid:17).
Item 13. Certain Relationships and Related Transactions, and Director Independence ..................................................(cid:17).
Item 14. Principal Accountant Fees and Services...........................................................................................................(cid:17)...
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117
117
117
118
PART IV
Item 15. Exhibits, Financial Statement Schedules ..............................................................................................................
Item 16. Form 10-K Summary ...........................................................................................................................................
119
123
SIGNATURES ..............................................................................................................................................................................
124
CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. You should not place undue reliance on these statements. These forward-looking statements give
current expectations or forecasts of future events and reflect the views and assumptions of senior management with respect to the
business, financial condition, operations and prospects of Enova International, Inc. and its subsidiaries (collectively, the “Company”).
When used in this report, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,”
“anticipates,” “may,” “forecast,” “project” and similar expressions or variations as they relate to the Company or its management are
intended to identify forward-looking statements. Forward-looking statements address matters that involve risks and uncertainties that
are beyond the ability of the Company to control and, in some cases, predict. Accordingly, there are or will be important factors that
could cause the Company’s actual results to differ materially from those indicated in these statements. Key factors that could cause the
Company’s actual financial results, performance or condition to differ from the expectations expressed or implied in such forward-aa
looking statements include, but are not limited to, the following:
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• the effect of laws and regulations targeting our industry that directly or indirectly regulate or prohibit our operations or render
them unprofitable or impractical;
• the effect of and compliance with domestic and international consumer credit, tax and other laws and government rules and
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regulations applicable to our business, including changes in such laws, rules and regulations, or changes in the interpretation or
enforcement thereof, and the regulatory and examination authority of the Consumer Financial Protection Bureau with respect to
providers of consumer financial products and services in the United States and the Financial Conduct Authority in the United
Kingdom;
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• changes in our U.K. business practices in response to the requirements of the Financial Conduct Authority;
• the effect of and compliance with enforcement actions, orders and agreements issued by applicable regulators, such as the
January 2019 Consent Order issued by the Consumer Financial Protection Bureau;
• our ability to process or collect loans and finance receivables through the Automated Clearing House system;
• the deterioration of the political, regulatory or economic environment in countries where we operate or in the future may
operate;
• the actions of third parties who provide, acquire or offer products and services to, from or for us;
• public and regulatory perception of the consumer loan business, small business financing and our business practices;
• the effect of any current or future litigation proceedings and any judicial decisions or rulemaking that affects us, our products or
the legality or enforceability of our arbitration agreements;
• changes in demand for our services, changes in competition and the continued acceptance of the online channel by our
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customers;
• changes in our ability to satisfy our debt obligations or to refinance existing debt obligations or obtain new capital to finance
growth;
• a prolonged interruption in the operations of our facilities, systems and business functions, including our information technology
and other business systems;
• our ability to maintain an allowance or liability for estimated losses that is adequate to absorb credit losses;
• compliance with laws and regulations applicable to our international operations, including anti-corruption laws such as the
Foreign Corrupt Practices Act and the U.K. Bribery Act 2010 and international anti-money laundering, trade and economic
sanctions laws;
• our ability to attract and retain qualified officers;
• cyber-attacks or security breaches;
• acts of God, war or terrorism, pandemics and other events;
• the ability to successfully integrate newly acquired businesses into our operations;
• interest rate and foreign currency exchange rate fluctuations;
• changes in the capital markets, including the debt and equity markets;
• the effect of any of the above changes on our business or the markets in which we operate; and
• other risks and uncertainties described herein
The foregoing list of factors is not exhaustive and new factors may emerge or changes to these factors may occur that would imp
act
the Company’s business and cause actual results to differ materially from those expressed in any of our forward-looking statements.
Additional information regarding these and other factors may be contained in the Company’s filings with the Securities and Exchange
Commission (the “SEC”), including on Forms 10-Q and 8-K. Readers of this report are encouraged to review all of the Risk Factors
contained in Part I, Item 1A. Risk Factors to obtain more detail about the Company’s risks and uncertainties. All forward-looking
statements involve risks, assumptions and uncertainties. The occurrence of the events described, and the achievement of the expected
results, depends on many events, some or all of which are not predictable or within the Company’s control. If one or more events
related to these or other risks or uncertainties materialize, or if management’s underlying assumptions prove to be incorrect, actual
results may differ materially from what the Company anticipates. The forward-looking statements in this report are made as of thet
date of this report, and the Company disclaims any intention or obligation to update or revise any forward-looking statements to
reflect events or circumstances occurring after the date of this report. All forward-looking statements in this report are expressly
qualified in their entirety by the foregoing cautionary statements.
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PART I
ITEM 1.
BUSINESS
Overview
We are a leading technology and analytics company focused on providing online financial services. In 2018, we extended
approximately $2.5 billion in credit or financing to borrowers. As of December 31, 2018, we offered or arranged loans or draws on
lines of credit to consumers in 32 states in the United States and in the United Kingdom and Brazil. We also offered financing to small
businesses in all 50 states and Washington D.C. in the United States. We use our proprietary technology, analytics and customer
service capabilities to quickly evaluate, underwrite and fund loans or provide financing, allowing us to offer consumers and small
businesses credit or financing when and how they want it. Our customers include the large and growing number of consumers who
and small businesses which have bank accounts but use alternative financial services because of their limited access to more
traditional credit from banks, credit card companies and other lenders. We were an early entrant into online lending, launching our
online business in 2004, and through December 31, 2018, we have completed over 47.5 million customer transactions and collected
approximately 26 terabytes of currently accessible consumer behavior data, allowing us to better analyze and underwrite our specific
customer base. We have significantly diversified our business over the past several years having expanded the markets we serve and
the financing products we offer. These financing products include short-term loans, line of credit accounts, installment loans and
receivables purchase agreements (“RPAs”).
We believe our customers highly value our products and services as an important component of their personal or business finances
because our products are convenient, quick and often less expensive than other available alternatives. We attribute the success of our
business to our advanced and innovative technology systems, the proprietary analytical models we use to predict the performance of
loans and finance receivables, our sophisticated customer acquisition programs, our dedication to customer service and our talented
employees.
We have developed proprietary underwriting systems based on data we have collected over our more than 14 years of experience.
These systems employ advanced risk analytics to decide whether to approve financing transactions, to structure the amount and terms
of the financings we offer pursuant to jurisdiction-specific regulations and to provide customers with their funds quickly and
efficiently. Our systems closely monitor collection and portfolio performance data that we use to continually refine the analytical
models and statistical measures used in making our credit, purchase, marketing and collection decisions.
Our flexible and scalable technology platforms allow us to process and complete customers’ transactions quickly and efficiently. In
2018, we processed approximately 4.3 million transactions, and we continue to grow our loan and finance receivables portfolio and
increase the number of customers we serve through desktop, tablet and mobile platforms. Our highly customizable technology
platforms allow us to efficiently develop and deploy new products to adapt to evolving regulatory requirements and consumer
preference, and to enter new markets quickly. In 2012, we launched a new product in the United States designed to serve near-prime
customers. In April 2014, we launched On Stride Financial, an installment loan product, in the United Kingdom. In June 2014, we
launched our business in Brazil, where we arrange financing for borrowers through a third-party lender. In addition, in July 2014, we
introduced a new line of credit product in the United States to serve the needs of small businesses. In June 2015, we further expanded
our product offering by acquiring certain assets of a company that provides financing and installment loans to small businesses by
offering RPAs (see Note 2 in the Notes to Consolidated Financial Statements). These new products have allowed us to further
diversify our product offerings, customer base and geographic scope. In 2018, we derived 85.0% of our total revenue from the United
States and 15.0% of our total revenue internationally, with 84.4% of international revenue (representing 12.7% of our total revenue)
generated in the United Kingdom.
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We have been able to consistently acquire new customers and successfully generate repeat business from returning customers when
they need financing. We believe our customers are loyal to us because they are satisfied with our products and services. We acquire
new customers from a variety of sources, including visits to our own websites, mobile sites or applications, and through direct
marketing, affiliate marketing, lead providers and relationships with other lenders. We believe that the online convenience of our
products and our 24/7 availability to accept applications with quick approval decisions are important to our customers.
Once a potential customer submits an application, we quickly provide a credit or purchase decision. If a loan or financing is approved,
we or our lending partner typically fund the loan or financing the next business day or, in some cases, the same day. During the entire
process, from application through payment, we provide access to our well-trained customer service team. All of our operations, from
customer acquisition through collections, are structured to build customer satisfaction and loyalty, in the event that a customer has a
need for our products in the future. We have developed a series of sophisticated proprietary scoring models to support our various
products. We believe that these models are an integral component of our operations and allow us to complete a high volume of
customer transactions while actively managing risk and the related credit quality of our loan and finance receivable portfolios. We
believe our successful application of these technology innovations differentiates our capabilities relative to competitive platforms as
evidenced by our history of strong growth and stable credit quality.
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1
Products and Services
Our online financing products and services provide customers with a deposit of funds to their bank account in exchange for a
commitment to repay the amount deposited plus fees, interest and/or revenue on the receivables purchased. We originate, arrange,
guarantee or purchase short-term consumer loans, line of credit accounts, installment loans and RPAs. We also offer an analytics-as-a-
service solution for businesses. We have one reportable segment that includes all of our online financial services.
Short-term consumer loans. Short-term consumer loans are unsecured loans written by us or by a third-party lender through our credit
services organization and credit access business programs, which we refer to as our CSO programs, that we arrange and guarantee. As
in the United States and the United Kingdom.
of December 31, 2018, we offered or arranged short-term consumer loans in 17 states
Short-term consumer loans generally have terms of seven to 90 days, with proceeds typically deposited promptly in the customer’
s
a
bank account in exchange for a pre-authorized debit from their account or debit card. Due to the credit risk and high transaction costs
of serving our customer segment, the interest and/or fees we charge are generally consid
ered to be higher than the interest or fees
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charged to consumers with superior credit histories by banks and similar lenders who are typically unwilling to make unsecured loans
to non-prime credit consumers. Our short-term consumer loans contributed approximately 19.7% of our total revenue in 2018, 23.4%
in 2017, and 26.3% in 2016.
d
Line of credit accounts. We offer new consumer line of credit accounts in seven states (and continue to service existing line of credit
accounts in one additional state) in the United States and business line of credit accounts in 36 states in the United States, which allow
customers to draw on their unsecured line of credit in increments of their choosing up to their credit limit. Customers may pay off their
account balance in full at any time or make required minimum payments in accordance with their terms of the line of credit account.
As long as the customer’s account is in good standing and has credit available, customers may continue to borrow on their line of
credit. Our line of credit accounts contributed approximately 32.6% of our total revenue in 2018, 31.1% in 2017, and 29.6% in 2016.
y
Installment loans. Installment loans are longer-term loans that generally require the outstanding principal balance to be paid down in
multiple installments. We offer, or arrange through our CSO programs, as defined below, multi-payment unsecured consumer
installment loan products in 17 states in the United States and small business installment loans in 18 states. We also offer or arrange
multi-payment unsecured consumer installment loan products in the United Kingdom and Brazil. Terms for our installment loan
products range between two and 60 months. These loans generally have higher principal amounts than short-term loans. The loan may
be repaid early at any time with no prepayment charges. Our installment loans contributed approximately 46.4% of our total revenue
in 2018, 43.6% in 2017, and 41.4% in 2016.
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We have been investing and will continue to invest in the growth of our near-prime installment lending portfolio.
Receivables purchase agreements. Under RPAs, small businesses receive funds in exchange for a portion of the business’s future
receivables at an agreed upon discount. In contrast, lending is a commitment to repay principal and interest and/or fees. A small
business customer who enters into an RPA commits to delivering a percentage of its receivables through ACH or wire debits or by
splitting credit card receipts until all purchased receivables are delivered. We offer RPAs in all 50 states and in Washington D.C. in
the United States. RPAs contributed approximately 1.2% of our total revenue in 2018, 1.8% in 2017, and 2.5% in 2016.
CSO programs. Through our CSO programs, we provide services related to third-party lenders’ short-term and installment loan
products by acting as a credit services organization or credit access business on behalf of consumers in accordance with applicable
state laws. Services offered under our CSO programs include credit-related services such as arranging loans with independent third-
party lenders and assisting in the preparation of loan applications and loan documents (“CSO loans”). When a consumer executes an
agreement with us under our CSO programs, we agree, for a fee payable to us by the consumer, to provide certain services, one of
which is to guarantee the consumer’s obligation to repay the loan received by the consumer from the third-party lender if the
consumer fails to do so. For CSO loans, each lender is responsible for providing the criteria by which the consumer’s application is
underwritten and, if approved, determining the amount of the consumer loan. We, in turn, are responsible for assessing whether or not
we will guarantee such loan. The guarantee represents an obligation to purchase specific short-term loans, which generally have terms
of less than 90 days, and specific installment loans, which have terms of four to 12 months, if they go into default.
As of December 31, 2018, 2017 and 2016, the outstanding amount of active short-term consumer loans originated by third-party
lenders under the CSO programs was $25.4 million, $28.9 million and $26.1 million, respectively, which were guaranteed by us. The
outstanding amount of active installment loans originated by third-party lenders under the CSO programs was $4.3 million, $5.2
million and $6.1 million as of December 31, 2018, 2017 and 2016, respectively, which were guaranteed by us.
Bank program. In March 2016, we launched a program with a state-chartered bank where we provide technology, loan servicing and
marketing services to the bank (the “Bank Program”). Our bank partner offered unsecured consumer installment loans with an APR at
or below 36%. We also had the ability to purchase loans originated through this program. In May 2018, as a result of a change in the
law in Ohio, our bank partner suspended lending and we suspended purchasing loans through this program. We plan to continue and
2
grow
the ye
this program i
ears ended Dec
in the future by
cember 31, 201
y adding new p
18, 2017 and 2
partners and ex
016 was 1.7%,
xpanding into a
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additional state
% of our total
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(“dmPaaS”)
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including, but
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50 sta
at ww
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ed States. We b
ates and Wash
ww.netcredit.co
ed States repres
began our onlin
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om, Headway
sented 85.0% o
ne business in
We market our
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of our total rev
the United Sta
ates in May 20
ducts under the
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apital.com and
a
ww.headwayca
and 84.1% of o
enue in 2018 a
004. As of Dece
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The Business
our total revenu
ember 31, 201
NetUSA at ww
s Backer at ww
ue in 2017.
8, we provided
ww.cashnetusa.
ww.businessba
ll
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it
com, NetCredi
e
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at ww
busin
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pril 2014. The U
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07, our Pounds
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s to Pocket inst
om represented
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d 12.7% of our
under the nam
ww.onstride.co
business in Sep
total revenue i
mes QuickQuid
.uk. We began
ptember 2010,
in 2018 and 13
d at www.quick
n our QuickQu
and our On Str
.6% of our tota
kquid.co.uk, Po
uid short-term
ride installmen
al revenue in 2
et
ounds to Pocke
consumer loan
n
s
nt loan busines
2017.
Brazi
instal
repres
014, we launch
il.ii In June 20
llment loans foff
or a third party
f
f total revenue
sented 2.3% of
hed our busin
lender. We pl
in 2018 and 2.
ness in Brazil
an to continue
.2% of total rev
ame Simplic a
under the na
to invest in an
nd expand our
.
venue in 2017.
at www.simpli
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ere we arrang
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n Brazil. Brazi
FF
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have achieved
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nagement’s Dis
significant gro
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owth since we
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began our on
ur business us
nd finance rec
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sing several fin
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as we have ex
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tanding, in ad
of Operations
xpanded both o
perating metri
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.”
ht
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ff
our product of
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metrics includ
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This g
growth in prod
duct offerings a
and geographic
c markets has r
resulted in sign
nificant revenue
e diversificatio
on, as set forth
below:
Year ended December 31, 2018
Revenue by Geography
Year ended December 31, 2018
Revenue by Product
International
15%
Domestic
85%
Short-Term
20%
Line of Credit
33%
Installment
and RPAs
47%
Addit
provi
tional financia
ded in Note 17
al information
7 in the Notes t
g
gment and eac
r operating se
r
regarding our
atements, inclu
d Financial Sta
to Consolidated
ch of the geo
uded in Part II,
graphic areas
Item 8 of this
in which we
report.
is
do business i
3
Our Industry
The internet has transformed how consumers and small businesses shop for and acquire products and services. According to a study d
by the United Nations, 51.2% of the world’s population had access to the internet in 2018, a 7% increase from 2015. International
Data Corporation reported that global internet usage is expected to increase at a pace of 2% annually through 2020. Accompanying the
rise in internet usage is the continued disruption of storefront retail by e-commerce companies like Amazon, as consumers flock tok
purchase goods and interact with businesses online. According to the U.S. Census Bureau, e-commerce sales as a percent of total
quarterly retail sales in the United States more than doubled from the first quarter of 2009 to the third quarter of 2018, reaching 9.1%.
In addition, a number of traditional financial services, such as banking, bill payment and investing, have become widely available
online. A March 2018 report by the Consumer and Community Development Research Section of the Federal Reserve Board’s
Division of Consumer and Community Affairs found that approximately 50% of bank customers in a U.S. sample have used mobile
banking as a means of accessing banking services. This level of use highlights the extent to which consumers now accept the internet
for conducting their financial transactions and are willing to entrust their financial information to online companies. We believe the
increased acceptance of online financial services has led to an increased demand for online lending and financing, the benefits of
which include customer privacy, easy access, security, 24/7 availability to apply for a loan or financing, speed of funding and
transparency of fees and interest.
a
We use the internet to serve the large and growing number of underbanked consumers and small businesses that have bank accounts
but use alternative financial services because of their limited access to more traditional credit
from banks, credit card companies and
other lenders. Demand from consumers has been fueled by several demographic and socioeconomic trends, including an overall
increase in the population and stagnant to declining growth in the household income for working-class individuals. The necessity for
alternative financial services was highlighted by a May 2018 report from the Federal Reserve, which found that 41% of respondents
could not cover an emergency expense of $400, or would cover it by selling something or borrowing money. The report also found a
sizeable portion of the population (23%) is unbanked or underbanked, with half of unbanked consumers turning to alternative financial
services options in the prior year. Approximately 32% of respondents who applied for credit were denied credit or were offered less
credit than they desired, and 4% of respondents desired credit but did not apply for fear of denial.
d
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Small businesses are also suffering from lack of access to credit from traditional lenders. Among a sample of small businesses
surveyed for the National Small Business Association’s 2017 Year-End Economic Report, 20% reported that lack of available capital
is one of the three most significant challenges to the future growth and survival of their business. Similarly, according to a
2017 study
by the Federal Reserve Banks, only 34% of nonemployer firms that were
approved for financing received the full amount requested.
Online lending and funding options are emerging as a solution for small businesses that are seeking capital. According to a 2017
report from the Cambridge Centre for Alternative Finance, online alternative finance platforms in the United States facilitated more
than $6.9 billion of loans to small and medium enterprises in 2015, up 145% from the previous year. The Federal Reserve found that
24% of small businesses surveyed applied for credit from online lenders. Aside from the need for capital, businesses seek out online
lenders for their often faster, easier application process. In the Federal Reserve study, approved applicants cited the long wait for a
credit decision and the difficult application process as top reasons for their dissatisfaction with banks, whereas online lenders
performed the best in these areas.
d
f
f
t
We believe that consumers and small businesses seek online lending services for numerous reasons, including because they often:
• prefer the simplicity, transparency and convenience of these services;
• require access to financial services outside of normal financial services storefront hours;
• have an immediate need for cash for financial challenges and unexpected expenses;
aa
• have been unable to access certain traditional lending or other credit services;
• seek an alternative to the high cost of bank overdraft fees, credit card and other late payment fees and utility late payment fees or
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disconnect and reconnection fees; and
• wish to avoid potential negative credit consequences of missed payments with traditional creditors.
With increasing competition across industries, tightening regulations and higher expectations from consumers, businesses are seeking
solutions for faster, more accurate decision making. In 2016, we launched a product that uses our proprietary technology and analytics
capabilities to offer businesses a solution for real-time decisioning at scale. The analytics-as-a-service market was valued at more than
$7 billion, and, according to a report by Orbis Research, the market is expected to experience a CAGR of 30% between 2017 and
2022, reaching a value of $49 billion by the end of 2022.
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4
Our Customers
of
Our subprime consumer customer base is comprised largely of individuals living in households that earn an average annual income
$41,000 in the United States and £25,000 in the United Kingdom, and our U.S. near-prime customers earn an average annual income
of $58,000. Based on our analysis of industry data, we believe our addressable markets are approximately 68 million and 7 million
individuals in the United States and the United Kingdom, respectively. The short-term lending market is sizable in the United States,
the United Kingdom and Brazil. We estimate there is a $69 billion consumer lending opportunity market in the United States and a $9
billion lending market in the United Kingdom. In Brazil, we estimate there to be an $80 billion consumer loans market. Small business
lending is also an attractive market opportunity, with a total U.S. small business loan market of $82 billion. Tighter banking
regulations forced banks to vacate the market for loans under $1 million. Loans under $100 thousand are the fastest growing loanaa
segment and over 50% of all small business loan growth. Our small business customers who enter into RPAs average approximately
$1.3 million in annual sales and 12 years of operating history, while those who obtain a line of credit account average approximately
$495 thousand in annual sales and 6 years of operating history.
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Our Competitive Strengths
We believe that the following competitive strengths position us well for continued growth:
• Significant operating history and first mover advantage. As an early entrant in the online lending sector, we have accumulated
approximately 26 terabytes of currently accessible consumer behavior data from more than 47 million transactions in our more
than 14 years of experience. This database allows us to market to a customer base with an established borrowing history as well
as to better evaluate and underwrite new customers, leading to better loan performance. In order to develop a comparable
database, we believe that competitors would need to incur high marketing and customer acquisition costs, overcome customer
brand loyalties and have sufficient capital to withstand higher early losses associated with unseasoned loan portfolios.
Additionally, we are licensed in all jurisdictions that require licensing and believe that it would be difficult and time-consuming
for a new entrant to obtain such licenses. We have also created strong brand recognition over our more than 14 years of
operating history and we continue to invest in our brands, such as CashNetUSA, NetCredit, QuickQuid, On Stride Financial,
Headway Capital, The Business Backer, Simplic and Enova Decisions, to further increase our visibility.
• Proprietary analytics, data and underwriting. We have developed a fully integrated decision engine that evaluates and rapidly
makes credit and other determinations throughout the customer relationship, including automated decisions regarding marketing,
underwriting, customer contact and collections. Our decision engine currently handles more than 100 algorithms and over 1,000
variables. These algorithms are constantly monitored, validated, updated and optimized to continuously improve our operations.
Our proprietary models are built on over 14 years of lending history, using advanced statistical methods that take into account
our experience with the millions of transactions we have processed during that time and the use of data from numerous third-
party sources. Since we designed our system specifically for our specialized products, we believe our system provides more
predictive assessments of future loan behavior than traditional credit assessments, such as the Fair Isaac Corporation score
(“FICO score”), and therefore, results in better evaluation of our customer base.
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• Scalable and flexible technology platforms. Our proprietary technology platforms are designed to be powerful enough to
handle the large volume of data required to evaluate customer applications and flexible enough to capitalize on changing
customer preferences, market trends and regulatory requirements. These platforms have enabled us to achieve significant growth
over more than 14 years as we have expanded both our product offerings and the geographic markets we serve. We began
offering installment loans in the United States and United Kingdom in 2008 and 2010, respectively, and added line of credit
products in the United States in 2010. We have experienced significant growth in these products, with revenue contribution from
installment and line of credit products increasing from 11.7% of total revenue in 2010 to 80.2% of total revenue in 2018.
Similarly, total revenue contribution from our international operations, primarily in the United Kingdom, grew from $40.5
million, or 15.9% of total revenue in 2009, to $335.1 million, or 41.4% of total revenue in 2014. Due to regulatory changes in
the United Kingdom, international revenue decreased during 2015 and 2016 to $142.4 million and $122.6 million, respectively.
However, international revenue increased to $134.2 million in 2017 and to $167.6 million, or 15.0% of total revenue, in 2018.
Due to the scalability of our platform, we were able to achieve this growth without significant investment in additional
only 1.8% of revenue per year. We expect our
infrastructure, and over the past three years, capital expenditures have averaged
advanced technology and underwriting platform to help continue to drive significant growth in our business.
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• Focus on customer experience. We believe that non-prime credit consumers and small businesses are not adequately served by
traditional lenders. To better serve these consumers and small businesses, we use customer-focused business practices, including
extended-hours availability of our customer service team by phone, email, fax and web chat. We continuously work to improve
customer satisfaction by evaluating information from website analytics, customer surveys, call center feedback and focus groups.
Our call center teams receive training on a regular basis and are monitored by quality assurance managers. We believe
customers who wish to access credit or financing again often return to us because of our dedica
tion to customer service, the
transparency of our fees and interest charges and our adherence to trade association “best practices.”
n
5
• Diligent regulatory compliance. We conduct our business in a highly regulated industry. We are focused on regulatory
compliance and have devoted significant resources to comply with laws that apply to us, while we believe many of our online
competitors have traditionally not done so. We tailor our lending products and services to comply with the specific requirements
of each of the jurisdictions in which we operate, including laws and regulations relating to interest, fees, loan durations and
renewals or extensions, loan amounts, disclosures and underwriting requirements. Our compliance experience and proprietary
technology platform allow us to launch new products and to enter new geographic regions with a focus on compliance with
applicable laws and customer protection. We are members of industry trade groups, including the Online Lenders Alliance in the
United States and the Consumer Finance Association in the United Kingdom, which have promulgated “best practices” for our
industry that we have adopted. The flexibility of our online platform enables us to rapidly adapt our products as necessary to
comply with changes in regulation, without the need for costly and time-consuming retraining of store-based employees and
other expenses faced by our storefront competitors.
• Proven history of growth and profitability. Over the last eight years, we grew our net loan and finance receivables, which are
the gross outstanding balances for our loan and finance receivables carried on the consolidat
ed balance sheets net of the
allowance for estimated losses, at a compound annual growth rate of 26.8%, from $163.0 million as of December 31, 2011 to
compound annual growth rate of 12.8%,
$859.9 million as of December 31, 2018. Over the same period, our revenue grew at a
from $480.3 million in 2011 to $1,114.1 million in 2018, while Adjusted EBITDA grew at a compound annual growth rate of
13.3%, from $87.7 million to $210.6 million. Adjusted EBITDA margin has remained steady, increasing slightly from 18.3% of
revenue in 2011 to 18.9% of revenue in 2018. See note (a) in “Selected Financial Data—Part II, Item 6” of this report for a
reconciliation of Adjusted EBITDA to net income and Adjusted EBITDA as a percentage of total revenue (which is Adjusted
EBITDA margin).
a
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• Talented, highly educated employees. We believe we have one of the most skilled and talented teams of professionals in the
industry. Our employees have exceptional educational backgrounds, with numerous post-graduate and undergraduate degrees in
science, technology, engineering and mathematics fields. We hire and develop top talent from graduate and undergraduate
programs at institutions such as Carnegie Mellon University, Northwestern University and the University of Chicago. The
extensive education of our team is complemented by the experience our leadership team obtained at leading financial services
companies and technology firms such as optionsXpress, HSBC, Discover Financial Services, First American Bank, JPMorgan
Chase and Groupon.
Our Growth Strategy
• Increase penetration in existing markets through direct marketing. We believe that we have reached only a small number of
the potential customers for our products and services in the markets in which we currently operate. We continue to focus on our
direct customer acquisition channels, with direct marketing (traditional and digital) generating approximately 54% of our new
consumer transactions in 2018, as compared to 32% in 2009. We believe these channels allow us to reach a larger customer base
at a lower acquisition cost than the traditional online lead purchasing model. Additionally, as our smaller and less sophisticated
competitors, both online and storefront, struggle to adapt to both regulatory developments and evolving customer preference, we
believe we have the opportunity to gain significant market share.
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• Expand globally to reach new markets. We are building on our global reach by entering new markets. In June 2014, we
launched our business in Brazil, where we arrange loans for borrowers through a third party lender. We also operated a pilot
program in China in 2014 and 2015 where we arranged loans for borrowers through a third party lender but in 2016 decided to
address the Chinese market as an analytics provider going forward. We believe that these countries have significant populations
of underserved consumers. When pursuing geographic expansion, factors we consider include, among others, whether there is
(i) widespread internet usage, (ii) an established and interconnected banking system and (iii) government policy that promotes
the extension of credit. Our business in Brazil and our previous pilot in China, as well as our launches into the United Kingdom
in 2007 and Australia and Canada in 2009, demonstrate that we can quickly and efficiently enter and explore new markets. Our
revenue from international operations has increased from $1.6 million in 2007, or 0.9% of our total revenue, to $167.6 million,
or 15.0% of our total revenue in 2018.
• Introduce new products and services. We plan to attract new categories of consumers and small businesses not served by
traditional lenders through the introduction of new products and services. We have introduced new products to expand our
businesses from solely single-payment consumer loans to installment loans, line of credit accounts and small business loans and
financing, using our analytics expertise and our flexible and scalable technology platform. In 2012, we launched NetCredit, a
longer duration installment loan product for near-prime consumers in the United States. In April 2014, we launched On Stride
Financial, an installment loan product, in the United Kingdom. In July 2014, we launched Headway Capital, a line of credit
product in the United States that serves the needs of small businesses. In June 2015, we completed the purchase of certain assets
of a company operating as The Business Backer, which allows us to provide short-term financing to small businesses throughout
the United States through RPAs, and in 2017, The Business Backer began offering an installment loan product. In 2016, we
launched a program with a state-chartered bank where we provide technology, loan servicing and marketing services to the bank
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7
The key elements of our technology platforms include:
• Scalable Information Technology infrastructure. Our Information Technology infrastructure allows us to meet customer
demand and accommodate business growth. Our services rely on accessing, evaluating and creating large volumes of data
including, for example, information collected from approximately 89 million credit reports during 2018. This rich dataset has
grown significantly over our more than 14-year history and will continue to grow as our business expands. We believe that our
scalable IT infrastructure enables us to meet substantial growth demands.
• Flexible software and integration systems. Our software system is designed to allow us to enter new markets and launch new
products rapidly, modify our business operations quickly and account for complex regulatory requirements imposed in the
jurisdictions in which we operate. We have developed a proprietary software solution that allows us to innovate quickly and to
improve the customer experience. Our integration system allows us to easily interface with banks and other strategic partners in
order to deliver the best financial products and services possible. Our software and integration systems and their flexibility allow
us much more control over the continually evolving aspects of our business.
• Rapid development processes. Our software development life cycle is rapid and iterative to increase the efficiency of our
platform. We are able to implement software updates while maintaining our system stability.
• Security. We collect and store personally identifiable customer information, including names, addresses, social security numbers
and bank account information. We have safeguards designed to protect this information. We also created controls to limit
employee access to that information and to monitor that access. Our safeguards and controls have been independently verified
through regular and recurring audits and assessments.
• Redundant disaster recovery. Certain key parts of our technology platform, such as our phone system for handling U.S. and
U.K. customer service on consumer loans, are distributed across two different locations. In addition, critical components of our
platform are redundant. This provides redundancy, fault tolerance and disaster recovery functionality in case of a catastrophic
outage.
Proprietary Data and Analytics
Decision Engine
We have developed a fully integrated decision engine that evaluates and rapidly makes credit and other determinations throughout the
customer relationship, including automated decisions regarding marketing, underwriting, customer contact and collections. Our
decision engine currently handles more than 100 algorithms and over 1,000 variables. The algorithms in use are constantly monitored,
validated, updated and optimized to continuously improve our operations. In order to support the daily running and ongoing
improvement of our decision engine, we have assembled a highly skilled team of over 60 data and analytics professionals as of
December 31, 2018.
Proprietary Data, Models and Underwriting
Our proprietary models are built on more than 14 years of history, using advanced statistical methods that take into account our
experience with the millions of transactions we have processed during that time and the use of data from numerous third-party
sources. We continually update our underwriting models to manage risk of defaults and to structure loan and financing terms. Our
system completes these assessments within seconds of receiving the customer’s data.
Our underwriting system is able to assess risks associated with each customer individually based on specific customer information and
historical trends in our portfolio. We use a combination of numerous factors when evaluating a potential customer, which can include
a consumer’s income, rent or mortgage payment amount, employment history, external credit reporting agency scores, amount and
status of outstanding debt and other recurring expenditures, fraud reports, repayment history, charge-off history and the length of time
the customer has lived at his or her current address. While the relative weight or importance of the specific variables that we consider
when underwriting a loan changes from product to product, generally, the key factors that we consider for loans include monthly gross
income, disposable income, length of employment, duration of residency, credit report history and prior loan performance history if
the applicant is a returning customer. Similar factors are considered for small business applicants and also include length of time in
business, online business reviews, and sales volumes. Our customer base for consumer loans is predominantly in the low to fair range
of FICO scores, with scores generally between 500 and 680 for most of our loan products. We generally do not take into account a
potential customer’s FICO score when deciding whether to make a loan. A Vantage score is one of the factors in our credit models for
our near-prime installment product in the United States. Since we designed our system specifically for our specialized products, we
believe our system provides more predictive assessments of future payment behavior and results in better evaluation of our customer
base when compared to traditional credit assessments, such as a FICO score.
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8
Fraud Prevention
Our robust fraud prevention system is built from in-depth analysis of previous fraud incidences and information from third party data
sources. To ensure sustainable growth, our fraud prevention team has built rigorous systems and processes to detect fraud trend
s,
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identify fraudulent applications and learn from past fraudulent cases.
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Working together with multiple vendors, our systems first determine whether customer information submitted matches other
indicators regarding the application and that the applicant can authorize transactions for the submitted bank account. To prevent more
organized and systematic fraud, we have developed predictive models that incorporate signals from various sources that we have
found to be useful in identifying fraud. These models utilize advanced data mining algorithms and recent technologies to effectively
identify fraudulent applications with a very low false positive rate. In addition, we have built strong loan processing teams that handle
suspicious activities efficiently while minimizing friction in customer experience. Our fraud prevention system incorporates
algorithms to differentiate customers in an effort to identify suspected fraudulent activity and to reduce our risks of loss fr
om fraud.
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We continuously develop and implement ongoing improvements to these systems and, while no system can completely protect against
losses from fraud, we believe our systems provide protection against significant fraud losses.
Marketing
We use a multi-channel approach to marketing our online loans and financing products, with both broad-reach and highly-targeted
channels, including television, digital, direct mail, telemarketing and partner marketing (which includes lead providers, independent
brokers and marketing affiliates). The goal of our marketing is to promote our brands and products in the online lending marketplace
and to directly acquire new customers at low cost. Our marketing has successfully built strong awareness of and preference for our
brands, as our products have achieved market leadership through the following:
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• Traditional advertising. We use television, direct mail, radio and outdoor advertisements, supported by technology
infrastructure and key vendors, to drive and optimize website traffic and loan volume. We believe our investments through these
channels have helped create strong brand awareness and preference in the customer segments and markets we serve.
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• Digital acquisition. Our online marketing efforts include pay-per-click, keyword advertising, search engine optimization,
marketing affiliate partnerships, social media programs and mobile advertising integrated with our operating systems and
technology from vendors that allow us to optimize customer acquisition tactics within the daily operations cycle.
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• Partner marketing. We purchase qualified leads for prospective new customers from a number of online lead providers and
independent brokers and through marketing affiliate partnerships. We believe that our rapid decision making on lead purchases,
strong customer conversion rate and significant scale in each of our markets make us a preferred partner for lead providers,
brokers and affiliates while at the same time our technology and analytics help us determine the right price for the right leads.
• User experience and conversion. We measure and monitor website visitor usage metrics and regularly test website design
strategies to improve customer experience and conversion rates.
Our brand, technology and analytics-powered approach to marketing has enabled us to increase the percentage of consumer loans
sourced through direct marketing (where we have more visibility and control than in the lead purchase or affiliate channels) from
approximately 32% in 2009 to 54% in 2018, and we believe we have also improved customer brand loyalty during the same period.
Customer Service
We believe that our in-house call center and our emphasis on superior customer service are significant contributors to our growth. To
best serve our consumers and small businesses, we use customer-oriented business practices, such as offering extended-hours
customer service. We continuously work to improve our customers’ experience and satisfaction by evaluating information from
website analytics, customer satisfaction surveys, call center feedback, call monitoring and focus groups. Our call center teams receive
training on a regular basis, are monitored by quality assurance managers and adhere to rigorous internal service-level agreements. We
do not outsource our call center operations, except in Brazil. We have two call center facilities to support our U.S. and U.K.
operations, one in our corporate offices in Chicago and another in Gurnee, Illinois, a Chicago suburb. As of December 31, 2018, we
had approximately 600 employees in our call centers supporting our customers.
r
Collections
We operate centralized collection teams within our two call centers to coordinate a consistent approach. We have implemented loan
and financing collection policies and practices designed to optimize regulatory compliant loan and financing repayment, while also
providing excellent customer service. Our collections employees are trained to help the customer understand available payment
9
alternatives and make arrangements to repay the loan or financing. We use a variety of collection strategies to satisfy a delinquent
loan, such as settlements and payment plans, or to adjust the delivery of finance receivables.
Call center employees contact customers following the first missed payment and periodically thereafter. Our primary methods of
contacting past due customers are through phone calls, letters and emails. At times, we sell loans that we are unable to collect to debt
collection companies or place the debt for collection with debt collection companies.
Competition
We have many competitors. Our principal competitors are consumer loan and finance companies, CSOs, online lenders, credit card
companies, auto title lenders, pawnshops and other financial institutions that offer similar financial products and services, including
loans on an unsecured as well as a secured basis. We believe that there is also indirect competition to some of our products, i
ncluding
bank overdraft facilities and banks’ and retailers’ insufficient funds policies, many of which may be more expensive alternative
approaches for consumers and small businesses to cover their bills and expenses than the consumer and small business loan and
financing products we offer. Some of our U.S. competitors operate using other business models, including a “tribal model” where the
lender follows the laws of a Native American tribe regardless of the state in which the customer resides.
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We believe that the principal competitive factors in the consumer and small business loan and financing industry consist of the
ability
to provide sufficient loan or financing size to meet customers’ financing requests, speed of funding, customer privacy, ease of access,
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transparency of fees and interest and customer service. We believe we have a significant competitive advantage as an early move
many of the markets that we serve. New entrants face obstacles typical to launching new lending operations, such as successfully
implementing underwriting and fraud prevention processes, incurring high marketing and customer acquisition costs, overcoming
customer brand loyalty and having or obtaining sufficient capital to withstand early losses associated with unseasoned loan portfolios.
In addition, there are substantial regulatory and compliance costs, including the need for expertise to customize products and obtain
licenses to lend in various states in the United States and in international jurisdictions. Our proprietary technology, analytics expertise,
scale, international reach, brand recognition and regulatory compliance would be difficult for a new competitor to duplicate.
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Because numerous competitors offer consumer and small business loan and financing products, and many of our competitors are
privately held, it is difficult for us to determine our exact competitive position in the market. However, we believe our principal online
competitors in the United States include Avant, Curo, Elevate, and LendUp. Storefront consumer loan lenders that offer loans online
or in storefronts are also a source of competition in some of the markets where we offer consumer loans, including Ace Cash Exp
ress,
Check Into Cash, Check ‘n Go and One Main Financial. For online small business financing, we believe our main competitors are
CAN Capital, OnDeck and Kabbage. In the United Kingdom, we believe that our principal online competitors include 118 118
Money, Amigo, Avant, Elevate, Lending Stream, Mr. Lender, PaydayUK, and Satsuma.
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Intellectual Property
Protecting our rights to our intellectual property is critical, as it enhances our ability to offer distinctive services and products to our
customers, which differentiates us from our competitors. We rely on a combination of trademark laws and trade secret protections in
the United States and other jurisdictions, as well as confidentiality procedures and contractual provisions, to protect the intellectual
property rights related to our proprietary analytics, predictive underwriting models, tradenames and marks and software systems. We
have several registered trademarks, including CashNetUSA, QuickQuid and our “e” logo. These trademarks have varying expiration
dates, and we believe they are materially important to us and we anticipate maintaining them and renewing them.
Seasonality
Demand for our consumer loan products and services in the United States has historically been highest in the third and fourth quarters
qq
of each year, corresponding to the holiday season, and lowest in the first quarter of each year, corresponding to our customers
’ receipt
of income tax refunds. Typically, our cost of revenue for our consumer loan products, which represents our loan loss provision, is
lowest as a percentage of revenue in the first quarter of each year, corresponding to our customers’ receipt of income tax refunds, and
increases as a percentage of revenue for the remainder of each year. Consequently, we experience seasonal fluctuations in our
domestic operating results and cash needs.
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Financial Information on Segments and Areas
Additional financial information regarding our operating segment and each of the geographic areas in which we do business is
provided in “Item 8. Financial Statements and Supplementary Data—Note 17” of this report.
10
Operations
Management and Personnel
Executive Officers
Our executive officers, and information about each as of December 31, 2018, are listed below.
NAME
David Fisher ........................................... Chief Executive Officer
Greg Zeeman.......................................... Chief Operating Officer
Kirk Chartier .......................................... Chief Marketing Officer
Steven Cunningham ............................... Chief Financial Officer
Sean Rahilly ........................................... General Counsel, Secretary & Chief Compliance Officer
POSITION WITH ENOVA
AGE
49
50
55
49
45
There are no family relationships among any of the officers named above. Each officer of Enova holds office from the date of
appointment until removal or termination of employment with Enova. Set forth below is additional information regarding the
executive officers identified above.
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David Fisher has served as our Chief Executive Officer
Enova. Mr. Fisher has also served as
r
since January 29, 2013 when he joined
our Director since February 11, 2013. Prior to joining Enova, Mr. Fisher was Chief Executive Officer of optionsXpress Holdings, Inc.,
or optionsXpress, from October 2007 until The Charles Schwab Corporation (“Schwab”), acquired the business in September 2011.
Following the acquisition, Mr. Fisher served as President of optionsXpress until March 2012. Mr. Fisher also served as the President
of optionsXpress from March 2007 to October 2007 and as the Chief Financial Officer of optionsXpress from August 2004 to March
2007. Prior to joining optionsXpress, Mr. Fisher served as Chief Financial Officer of Potbelly Sandwich Works from February 2001 to
July 2004, and before that in the roles of Chief Financial Officer and General Counsel for Prism Financial Corporation. In addition,
Mr. Fisher has served on the Board of Directors of InnerWorkings, Inc. since November 2011 and has served on the Board of
Directors of GrubHub, Inc. since May 2012. Mr. Fisher also served on the Boards of Directors of optionsXpress from October 2007
until September 2011 and CBOE Holdings, Inc. from January 2007 until October 2011. Mr. Fisher received a Bachelor of Science
degree in Finance from the University of Illinois and a law degree from Northwestern University School of Law.
Greg Zeeman has served as our Chief Operating Officer since October 2015. From September 2014 to October 2015, Mr. Zeeman
served as Chief Executive Officer of Main Street Renewal, a firm specializing in the acquisition and leasing of single-family
properties. From March 2012 to July 2014, Mr. Zeeman served as Chief Operating Officer and Senior Executive Vice President of
HSBC USA. From March 2011 to March 2012, Mr. Zeeman served as Executive Vice President and Head, Change Delivery, HSBC
Americas, and from January 2009 to March 2011, Mr. Zeeman served as Deputy Chief Executive Officer, HSBC Singapore. From
1999 to 2010, Mr. Zeeman held various roles with Household Credit Card Services and HSBC Consumer & Mortgage Lending. From
1995 to 1999, Mr. Zeeman was a consultant with Boston Consulting Group. Mr. Zeeman holds a Master of Business Administration
degree from Harvard University and a Bachelor of Arts degree in Economics and Political Science from the University of North
Carolina – Chapel Hill.
r
r
Kirk Chartier has served as our Chief Marketing Offi
cer since he joined Enova in April 2013. Prior to joining Enova, Mr. Chartier
was the Executive Vice President & Chief Marketing Officer of optionsXpress Holdings from January 2010 until Schwab acquired th
e
business in September 2011. Following the acquisition, Mr. Chartier served as Vice President of Schwab through May 2012. From
2004 to 2010, Mr. Chartier was the Senior Managing Principal and Business Strategy Practice Leader for the Zyman Group, a
marketing and strategy consultancy owned by MDC Partners, where he also served in interim senior marketing executive roles for
Fortune 500 companies, including Safeco Insurance. Mr. Chartier has held executive roles at technology companies including as
Senior Vice President of Business Services & eCommerce for CommerceQuest, as Vice President of Online Marketing & Strategy for
THINK New Ideas and as a Corporate Auditor for the General Electric Company. He started his career as a combat pilot with the U.S.
Marine Corps and is a veteran of Desert Storm. Mr. Chartier received a Master of Business Administration from Syracuse University,
a Bachelor of Arts in Economics from the College of the Holy Cross, and a Bachelor of Science in Engineering from Worcester
Polytechnic Institute.
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11
Steven Cunningham has served as our Chief Financial Officer since he joined Enova in June 2016. Mr. Cunningham joined Enova
from Discover Financial Services, where he most recently served as Executive Vice President and Chief Risk Officer for Discover’s
$8.7 billion direct banking and payment services business. He joined Discover as its Corporate Treasurer in 2010. Prior to Discover,
Mr. Cunningham was the CFO of Harley-Davidson Financial Services, a $7 billion receivables business, and spent eight years at
Capital One Financial in various corporate and line of business finance leadership positions, including CFO for the Auto Finance
segment, a $20 billion receivables business, and CFO for the company’s banking segment. Mr. Cunningham also has experience as a
bank regulator with the FDIC. Mr. Cunningham received a bachelor’s degree in Corporate Finance and Investment Management from
the University of Alabama and a Master of Business Administration from George Washington University. He also holds the
professional designation of Chartered Financial Analyst.
Sean Rahilly has served as our General Counsel, Secretary and Chief Compliance Officer since June 2018. Mr. Rahilly joined Enova
in October 2013 as Chief Compliance Officer. Mr. Rahilly previously served as Assistant General Counsel and Compliance Officer of
First American Bank from September 2006 to September 2013. He also served as First American Bank’s Vice President—Community
Reinvestment Act and Compliance Officer from January 2006 to September 2006, Vice President—Compliance Manager from
November 2003 to January 2006 and Assistant Vice President—Compliance and Community Reinvestment Act from July 2002 to
November 2003. Prior to joining First American Bank, Mr. Rahilly served as an attorney with the Law Offices of Victor J. Cacciatore,
a project assistant with Schiff Hardin & Waite and in various roles with Pullman Bank and Trust Company. He received a Bachelor
r
of
Science in Accountancy from DePaul University College of Commerce and a Juris Doctor from DePaul University College of Law.
k
Personnel
As of December 31, 2018, we had 1,218 employees.
Market and Industry Data
The market and industry data contained in this Annual Report on Form 10-K, including trends in our markets and our position wit
hin
n
such markets, are based on a variety of sources, including our good faith estimates, which are derived from our review of internal
surveys, information obtained from customers and publicly available information, as well as from independent industry publications,
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reports by market research firms and other published independent sources. Although we believe these sources are reliable, we ha
ve not
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independently verified the information. None of the independent industry publications used in this report were prepared on our behalf.
REGULATION
Our operations are subject to extensive regulation, supervision and licensing under various federal, state, local and international
statutes, ordinances and regulations.
U.S. Federal Regulation
Consumer Lending Laws. Our consumer loan business is subject to the federal Truth in Lending Act (“TILA”), and its underlying
regulations, known as Regulation Z, and the Fair Credit Reporting Act (“FCRA”). These laws require us to provide certain disclosures
to prospective borrowers and protect against unfair credit practices. The principal disclosures required under TILA are intended to
promote the informed use of consumer credit. Under TILA, when acting as a lender, we are required to disclose certain material terms
related to a credit transaction, including, but not limited to, the annual percentage rate, finance charge, amount financed, total of
payments, the number and amount of payments and payment due dates to repay the indebtedness. The FCRA regulates the collection,
dissemination and use of consumer information, including consumer credit information. The federal Equal Credit Opportunity Act
(“ECOA”), prohibits us from discriminating against any credit applicant on the basis of any protected category, such as race, color,
religion, national origin, sex, marital status or age, and requires us to notify credit applicants of any action taken on the individual’s
credit application.
Consumer Reports and Information. The use of consumer reports and other personal data used in credit underwriting is governed by
the FCRA and similar state laws governing the use of consumer credit information. The FCRA establishes requirements that apply to
the use of “consumer reports” and similar data, including certain notifications to consumers where their loan application has been
denied because of information contained in their consumer report. The FCRA requires us to promptly update any credit information
reported to a credit reporting agency about a consumer and to allow a process by which consumers may inquire about credit
information furnished by us to a consumer reporting agency.
Information-Sharing Laws. We are also subject to the federal Fair and Accurate Credit Transactions Act, which limits the sharing of
information with affiliates for marketing purposes and requires us to adopt written guidance and procedures for detecting, preventing
and responding appropriately to mitigate identity theft and to adopt various policies and procedures and provide training and materials
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that address the importance of protecting non-public personal information and aid us in detecting and responding to suspicious
activity, including suspicious activity that may suggest a possible identity theft red flag, as appropriate.
Marketing Laws. Our advertising and marketing activities are subject to several federal laws and regulations including the Federal
Trade Commission Act (the “FTC Act”), which prohibits unfair or deceptive acts or practices and false or misleading advertisements
in all aspects of our business. As a financial services company, any advertisements related to our products must also comply with the
advertising requirements set forth in TILA. Also, any of our telephone marketing activities must comply with the Telephone
Consumer Protection Act (the “TCPA”) and the Telemarketing Sales Rule (the “TSR”). The TCPA prohibits the use of automatic
telephone dialing systems for communications with wireless phone numbers without express consent of the consumer, and the TSR
established the Do Not Call Registry and sets forth standards of conduct for all telemarketing. Our advertising and marketing a
ctivities
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are also subject to the CAN-SPAM Act of 2003, which establishes certain requirements for commercial email messages and specifies
penalties for the transmission of commercial email messages that are intended to deceive the recipient as to the source of content.
Protection of Military Members and Dependents. The Military Lending Act (“MLA”) is a federal law that limits the annual percentage
rate to 36% on certain consumer loans made to active duty members of the U.S. military, reservists and members of the National
Guard and their immediate families. The MLA’s implementing regulation also contains various disclosure requirements, limitations
on renewals and refinancing, as well as restrictions on the use of prepayment penalties, arbitration provisions and certain wai
vers of
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rights.
The 36% annual percentage rate cap applies to a variety of consumer loan products, including short-term consumer loans.
Therefore, due to these rate restrictions, we are unable to offer certain short-term consumer loans to active duty military personnel,
active reservists and members of the National Guard and their immediate dependents. Federal law also limits the annual percentage
rate on existing loans when the borrower, or spouse of the borrower, becomes an active-duty member of the military during the life of
a loan. Pursuant to federal law, the interest rate must be reduced to 6% per year on amounts outstanding during the time in which the
servicemember is on active duty.
Funds Transfer and Signature Authentication Laws. The consumer loan business is also subject to the federal Electronic Funds
Transfer Act (“EFTA”), and various other laws, rules and guidelines relating to the procedures and disclosures required in debiting or
crediting a debtor’s bank account relating to a consumer loan (i.e., Automated Clearing House (“ACH”) funds transfer). Furthermore,
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we are subject to various state and federal e-signature rules mandating that certain disclosures be made and certain steps be f
ollowed
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in order to obtain and authenticate e-signatures.
Debt Collection Practices. We use the Fair Debt Collection Practices Act (“FDCPA”) as a guide in connection with operating our
other collection activities. We are also required to comply with all applicable state collection practices laws.
Privacy and Security of Non-Public Customer Information. We are also subject to various federal and state laws and regulations
relating to privacy and data security. Under these laws, including the federal Gramm-Leach-Bliley Act (“GLBA”), we must disclose to
consumers our privacy policy and practices, including those policies relating to the sharing of consumers’ nonpublic personal
information with third parties. This disclosure must be made to consumers when the customer relationship is established and, in some
cases, at least annually thereafter. These regulations also require us to ensure that our systems are designed to protect the
confidentiality of consumers’ nonpublic personal information. These regulations also dictate certain actions that we must take to notify
consumers if their personal information is disclosed in an unauthorized manner.
Anti-Money Laundering and Economic Sanctions. We are also subject to certain provisions of the USA PATRIOT Act and the Bank
Secrecy Act under which we must maintain an anti-money laundering compliance program covering certain of our business activities.
In addition, the Office of Foreign Assets Control (“OFAC”) prohibits us from engaging in financial transactions with specially
designated nationals. Certain of our subsidiaries are also registered as money services businesses with the U.S. Department of the
Treasury (“Treasury Department”) and must re-register with the Treasury Department’s Financial Crimes Enforcement Network
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(“FinCEN”) at least every two years if conducting money services business.
Anticorruption. We are also subject to the U.S. Foreign Corrupt Practices Act (the “FCPA”), which generally prohibits companies and
their agents or intermediaries from making improper payments to foreign officials for the purpose of obtaining or keeping business
and/or other benefits.
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CFPB
In July 2010, the U.S. Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and
Title X of the Dodd-Frank Act created the Consumer Financial Protection Bureau (the “CFPB”), which regulates consumer financial
products and services, including consumer loans that we offer. The CFPB has regulatory, supervisory and enforcement powers over
providers of consumer financial products and services, including explicit supervisory authority to examine and require registration of
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such providers. Pursuant to these powers, the CFPB has examined our lending products, services and practices, and we expect to
continue to be examined on a regular basis by the CFPB.
On November 20, 2013, Cash America International, Inc. (“Cash America”), our parent company at the time
, consented to the
issuance of a Consent Order by the CFPB pursuant to which it agreed, without admitting or denying any of the facts or conclusions
made by the CFPB from its 2012 examination of Cash America and us, to pay a civil money penalty of $5 million. The Consent Order
relates in part to issues self-disclosed to the CFPB by us, including the making of a limited number of loans to consumers who may
have been active-duty members of the military at the time of the loan at rates in excess of the annual percentage rate permitted by the
federal Military Lending Act, and for which we made refunds of approximately $33,500, and for certain failures to timely provide and
preserve records and information in connection with the CFPB’s examination of us. In addition, as a result of the CFPB’s review, we
enhanced and continue to enhance our compliance management system and implemented additional policies and procedures to address
the issues identified by the CFPB. These policies, procedures and other initiatives are in many cases subject to review and potential
objection by the CFPB. We remain subject to the restrictions and obligations of the Consent Order, including the CFPB’s order that
we ensure compliance with federal consumer financial laws and develop more robust compliance policies and procedures.
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On July 10, 2017, the CFPB issued a final rule prohibiting the use of mandatory arbitration clauses and class action waiver provisions
in consumer financial services contracts. On November 1, 2017, President Trump signed a joint resolution passed by the House and
Senate pursuant to the Congressional Review Act disapproving the CFPB arbitration rule and blocking it from taking effect. The joint
resolution also precludes an agency from reissuing a rule in substantially the same form unless the reissued rule is specifically
authorized by a law enacted subsequent to the President signing the joint resolution of disapproval.
On October 6, 2017, the CFPB issued its Final Rule (the “Final Rule”) on Payday, Vehicle Title, and Certain High-Cost Installment
Loans. The Final Rule would impose significant limitations on all short-term loans and longer-term loans with balloon payments.
Among other provisions, the Final Rule requires lenders to conduct a specific assessment regarding a borrower’s ability to repay,
including a requirement to verify borrowers’ income and major financial obligations. The Final Rule also includes limitations on the
number of loans that certain borrowers can have within a specified time frame and requires additional disclosures in loan documents
and notices and limitations regarding payments. The Final Rule was published in the Federal Register on November 17, 2017 and
would apply to loan contracts entered into beginning August 19, 2019. On January 16, 2018, the CFPB issued a statement that it
intends to engage in a rulemaking process to reconsider the Final Rule. On February 6, 2019, the CFPB issued two notices of proposed
rulemaking: (1) to rescind the Final Rule’s mandatory underwriting provisions, including the ability to repay requirements and (2) to
delay the August 19, 2019 compliance date for those provisions until November 19, 2020. The proposed rescission of the underwriting
provisions is open to public comment for 90 days after the date of publication in the Federal Register. The delay is open to public
comment for 30 days. The provisions relating to payments are still scheduled to take effect on August 19, 2019. It is likely that there
will be legal challenges to the Final Rule before it goes into effect.
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For further discussion of the CFPB and its regulatory, supervisory and enforcement powers, see “Risk Factors—Risks Related to Our
Business and Industry— The Consumer Financial Protection Bureau has examination authority over our U.S. consumer lending
business that could have a significant impact on our U.S. business” in Part I, Item 1A of this report.
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U.S. State Regulation
Our consumer lending business is regulated under a variety of enabling state statutes, all of which are subject to change and which
may impose significant costs or limitations on the way we conduct or expand our business. As of the date of this report, we offer or
arrange consumer loans in 32 states that have specific statutes and regulations that enable us to offer economically viable products.
We currently do not offer consumer loans in the remaining states or in the District of Columbia because we do not believe it is
economically feasible to operate in those jurisdictions due to specific statutory or regulatory restrictions, such as interest rate ceilings,
caps on the fees that may be charged, or costly operational requirements. However, we may later offer our consumer products or
services in any of these states or the District of Columbia if we believe doing so may become economically viable because of changes
in applicable statutes or regulations or if we determine we can broaden our product offerings to operate under existing laws and
regulations.
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The scope of state regulation of consumer loans, including the fees and terms of our products and services, varies from state to state.
The terms of our products and services vary from state to state in order to comply with the laws and regulations of the states in which
we operate. In addition, our advertising and marketing activities and disclosures are subject to review under various state consumer
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protection laws and other applicable laws and regulations. The states with laws that specifically regulate our consumer products and
services may limit the principal amount of a consumer loan and set maximum fees or interest rates customers may be charged. Some
states also limit a customer’s ability to renew a short-term consumer loan and require various disclosures to consumers. State statutes
often specify minimum and maximum maturity dates for short-term consumer loans such as ours and, in some cases, specify
mandatory cooling-off periods between transactions. Our collection activities regarding past due amounts may be subject to consumer
protection laws and state regulations relating to debt collection practices. In addition, some states require certain disclosures or content
to accompany our advertising or marketing materials. Also, some states require us to report short-term consumer loan activity to state-
wide databases and restrict the number and/or principal amount of loans a consumer may have outstanding at any particular time or
over the course of a particular period of time, typically twelve months.
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In Texas and Ohio, where we offer our CSO programs, we comply with the applicable jurisdiction’s Credit Services Organization Act
or a similar statute. These laws generally define the services that we can provide to consumers and require us to provide a contract to
the customer outlining our services and the cost of those services to the customer. In addition, these laws may require additional
disclosures to consumers and may require us to be registered with the jurisdiction and/or be bonded.
We must also comply with state restrictions on the use of lead providers. Over the past few years, several states have taken actions that
have caused us to discontinue the use of lead providers in those states. Other states may propose or enact similar restrictions on lead
providers in the future. In October 2018, Ohio enacted House Bill 123. The law has an implementation date of April 27, 2019, and
places new restrictions on companies operating under the Ohio Credit Services Organization Act, the Ohio Small Loan Act, and the
Ohio General Loan Law. We are considering our options after the implementation date of the law because we are currently offering
services under the Credit Services Organization Act.
Over the last few years, legislation that prohibits or severely restricts our consumer loan products and services has been introduced or
adopted in a number of states. As a result, we have ceased making consumer loans in several states where we formerly made such
loans, and we have also modified our business operations in other states where restrictive legislation has been enacted. For ex
ample,
Maryland passed a law in 2017 that limits the total fees, charges and interest that can be assessed on unsecured revolving credit plans
with Maryland consumers to an effective rate of 33% per year. The law went into effect on July 1, 2017 with regard to new revolving
credit plans. Additional legislation or regulations targeting or otherwise directly affecting our products and services have also been
recently passed in several states. We regularly monitor proposed legislation or regulations that could affect our business.
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Local Regulation—United States
In addition to state and federal laws and regulations, the short-term loan industry is subject to various local rules and regulations. These
local rules and regulations are subject to change and vary widely from city to city. Local jurisd
ictions’ efforts to restrict short-term
lending have been increasing. Typically, these local ordinances apply to storefront operations, however, local jurisdictions could attempt
to enforce certain business conduct and registration requirements on online lenders lending to residents of that jurisdiction. Actions taken
in the future by local governing bodies to impose other restrictions on short-term lenders such as us could impact our business.
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International Regulation
United Kingdom
In the United Kingdom, we are subject to regulation by the Financial Conduct Authority (“FCA”), and must comply with the FCA’s
rules and regulations set forth in the FCA Handbook, the Financial Services and Markets Act 2000 (“FSMA”), the Consumer Credit
Act 1974, as amended (the “CCA”), and secondary legislation passed under the CCA, among other rules and regulations. We must
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also follow the Irresponsible Lending Guidance, or the Guidance, of the Office of Fair Trading (the “OFT”), which provides grea
clarity for lenders as to business practices that the OFT (and the FCA) believes constitute irresponsible lending under the CCA. In
January 2016, we received full authorization from the FCA to provide consumer credit and to perf
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orm related activities. We will
required to continue to satisfy certain minimum standards set out in the FSMA, which will result in additional costs to us.
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The FCA regulates consumer credit and related activities in accordance with the guidance of the FSMA and the FCA Handbook,
which includes prescriptive regulations and carries across many of the standards set out in the CCA and its secondary legislation as
well as the Guidance. The FSMA gives the FCA the power to authorize, supervise, examine and bring enforcement actions against
providers of consumer credit such as us, as well as to make rules for the regulation of consumer credit. On February 28, 2014, the
FCA issued the Consumer Credit Sourcebook (“CONC”), which incorporates prescriptive regulations for lenders such as us, including
mandatory affordability checks on borrowers, limiting the number of rollovers on short-term loans to two, restricting how lende
rs can
advertise, banning advertisements that the FCA deems misleading, and introducing a limit of two unsuccessful attempts on the use of
continuous payment authority (which provides a creditor the ability to directly debit a customer’s account for payment when
authorized by the customer to do so) to pay off a loan. Certain provisions of the CONC took effect on April 1, 2014, and other
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provisions for high-cost short-term credit providers such as us, such as the limits on rollovers, continuous payment authority and
advertising, took effect on July 1, 2014.
After issuing a Call for Input on November 29, 2016, the FCA issued findings on July 31, 2017 deciding to maintain the high-cost
short-term credit price cap at its current level and committing to review it within three years to ensure that it remains effective. The
FCA found that regulation of high-cost short-term credit, including the price cap, has led to substantial benefits to consumers. The
FCA also highlighted its priorities for the next stage of the review, which will focus on overdrafts, rent-to-own, home-collected credit
and catalog credit. In November 2018, the FCA issued a consultation on its proposed price cap on rent-to-own (“RTO”) products. In
December 2018, the FCA issued final rules and guidance concerning rent-to-own good, home-collected credit, catalogue credit and
store cards, and Buy Now Pay Later (“BNPL”) products. Also in December, the FCA issued a consultation paper proposing new rules
on overdrafts. None of the new or proposed rules applies to high-cost short-term credit (payday loans).
The FCA previously stated that measures taken by it with respect to the payday loan industry would likely force about a quarter of the
firms out of the industry in the United Kingdom. For recent developments related to the FCA, including serious concerns that were
previously expressed by the FCA regarding our compliance with U.K. legal and regulatory requirements, such as the requirement that our
business be capable of being effectively supervised by the FCA and compliance with FCA rules and principles and our affordabili
ty
assessment and debt forbearance practices, see “Risk Factors—Risks Related to Our Business and Industry— Our primary regulators in
the United Kingdom previously expressed serious concerns about our compliance with applicable U.K. regulations, which caused us
to make significant changes to our U.K. business that negatively impacted our operations and results, and future changes to our
operations as a result of regulator concerns could have a material adverse effect on our U.K. business.,” “— The United Kingdom has
imposed, and continues to impose, increased regulation of the short-term high-cost credit industry and previously stated its expectation
that some firms will exit the market,” and “— Competition regulators in the United Kingdom have reviewed and may in the future again
review our industry and, together with the FCA, could require lenders to implement changes to their operations, which could have a
negative effect on our operations in the United Kingdom. in Part I, Item 1A of this report.
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Furthermore, we are subject to the Bribery Act, which prohibits the giving or receiving of a bribe to any person, including but not
limited to public officials, and makes failing to prevent bribery by relevant commercial organizations a criminal offense. This offense
applies when any person associated with the organization offers or accepts bribes anywhere in the world intending to obtain or retain a
business advantage for the organization or in the conduct of business. The Bribery Act is applicable to businesses that operate in the
United Kingdom such as us. The Bribery Act is broader in scope than the FCPA in the United States in that it directly addresses
commercial bribery in addition to bribery of government officials and it does not recognize certain exceptions, notably facilitation
payments that are permitted by the U.S. FCPA.
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On July 30, 2018, the FCA published Policy Statement 18/19: assessing creditworthiness in consumer credit: feedback on CP 17/27 and
final rules and guidance ("PS 18/19”) and went into effect on November 1, 2018. PS 18/19 introduced new rules and guidance the
purpose of which was to clarify existing rules and guidance in CONC regarding responsible lending, post-contractual requirements, and
the application of the general requirements on firms in the Senior Management Arrangements, Systems and Controls sourcebook
(“SYSC”). The new rules set forth in PS 18/19 went into effect on November 1, 2018. There are also some minor consequential changes
to other parts of CONC, and the Handbook Glossary. In following the new rules and guidance, the FCA states that firms should use their
judgement to decide what is appropriate in the circumstances. There may be multiple ways in which firms can comply with the new rules,
and it wants firms to have a reasonable degree of flexibility according to the nature of the product and customer base. Given the broad
nature of PS 18/19, if in the future, the FCA interprets PS 18/19’s guidance in a manner inconsistent with how we interpreted the
guidance, there may be a potential risk for redress.
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HM Treasury issued a consultation on proposals for “breathing space” for borrowers struggling with repayment. The consultation sets out
proposals for a statutory debt repayment plan. The deadline for responses to the consultation is January 29, 2019. We think any statutory
breathing space for debt repayment may limit or alter our collection procedures.
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On July 26, 2017, the FCA issued a Consultation Paper on proposed changes to its rules and guidance on individual accountability. The
Senior Managers and Certification Regime currently applies to deposit taking institutions and, following the Bank of England and
Financial Services Act 2016, is now being extended to FCA solo-regulated firms. The Senior Managers and Certification Regime would
replace the Approved Persons Regime, changing how individuals working in financial services are regulated. The objective of the new
Senior Managers and Certification Regime is to reduce harm to consumers and strengthen market integrity by making individuals more
accountable for their conduct and competence. In July 2018, the FCA issued Policy Statement PS 18/14 titled “Extending the Senior
Managers & Certification Regime to FCA Firms – Feedback to CP 17/25 and CP 17/40, and near final rules.” The vast majority of
responses supported the FCA’s proposals or asked for clarification of the proposals. Therefore, the FCA intends to implement the
proposals set out in CP 17/40 largely as proposed. PS 18/14 is effective December 9, 2019.
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The Criminal Finance Act 2017, which became effective in January 2018, amends the Proceeds of Crime Act 2002, to expand
provisions for confiscating funds associated with Terrorist Property and proceeds of tax evasion. This act creates the corporate
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offenses of failure of a company to prevent facilitation of U.K. and foreign tax evasion. This has required us to enhance our systems
and controls to prevent such facilitation.
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We are also subject to anti-money laundering and counter terrorist financing requirements that require us to develop and maintain
associated policies and procedures, including, but not limited to, customer due diligence, politically exposed person (“PEP”) and
sanction screening and training and awareness of staff, as well as reporting suspicious activity, pursuant to the Proceeds of Crime Act
2002 and the Terrorism Act 2000. The National Crime Agency (“NCA”) is a law enforcement agency created in 2013 to reduce the
harm caused to people and communities in the United Kingdom by serious and organized crime. The NCA replaced the Serious
Organised Crime Agency (“SOCA”) and is charged with strengthening the U.K.’s borders, fighting fraud and cyber-crime and
protecting children and young people from sexual abuse and exploitation. The NCA has the mandate and powers to work in
partnership with other law enforcement organizations and has an international role of liaising with overseas law enforcement agencies.
It has a “four pillars” approach to fighting crime: pursue, prevent, protect and prepare. On June 26, 2017, the European Union’s Fourth
Anti-Money Laundering Directive came into force, with an emphasis on employing a risk-based approach to money laundering. While
the European Union’s Fifth Anti Money Laundering Directive was published in June 2018, it does not become effective until January
2020 and is considered to have little impact on us. In the United Kingdom, we are also subject to the requirements of the Data
Protection Act 2018 (“DPA”) and are required to be fully registered as a data-controller under the DPA. The DPA controls how
organizations, businesses and/or the government use personal data and how they should process it. The current Data Protection regime
aligns with the E.U. General Data Protection Regulation (“GDPR”), a regulation by which the European Parliament, the European
Council and the European Commission intend to strengthen and unify data protection for individuals within the European Union. I
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also addresses export of personal data outside the European Union. The primary objectives of the GDPR are to give citizens back the
control of their personal data and to simplify the regulatory environment for international business by unifying the regulation within
the European Union. When the GDPR takes effect, it will replace the previous data protection directive. The GDPR contains a number m
of new protections for E.U. data subjects and threatens significant fines and penalties for non-compliant data controllers and
processors once it comes into effect. The regulation was adopted on April 27, 2016. It is effective May 25, 2018 after a two-year
transition period and, unlike a directive, it does not require any enabling legislation to be passed by national governments.
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On February 2, 2016, the European Commission and the United States agreed on a new framework for transatlantic data flows, the
“E.U.-U.S. Privacy Shield”, which will replace the invalidated Safe Harbor framework. The E.U.-U.S. Privacy Shield is a framework
designed by the U.S. Department of Commerce (the “Commerce Department”) and European Commission to provide companies on
both sides of the Atlantic with a mechanism to comply with E.U. personal data from the European Union to the United States in
support of transatlantic commerce. On July 12, 2016, the European Commission adopted the E.U.-U.S. Privacy Shield, which consists
of four components: (i) the privacy shield principles, which is a code of conduct outlining protections for the handling of personal
data; (ii) oversight and enforcement; (iii) ombudsperson mechanism; and (iv) safeguards and limitations. The Commerce Department
began accepting certifications to the E.U.-U.S. Privacy Shield on August 1, 2016. Although we are exploring the possibility of
applying for certification to the E.U.-U.S. Privacy Shield, we continue to believe we are exempt from and/or are in compliance with
all E.U. and U.K. privacy laws and regulations and will continue to be so under the GDPR.
In the United Kingdom, we are also subject to specific anti-money laundering and counter terrorist financing requirements that require
us to develop and maintain anti-money laundering and counter terrorist financing policies and procedures including reporting
suspicious activity, pursuant to the Proceeds of Crime Act 2002 and the Terrorism Act 2000. The National Crime Agency (“NCA”) is
a law enforcement agency created in 2013 to reduce the harm caused to people and communities in the United Kingdom by serious
and organized crime. The NCA replaced the Serious Organised Crime Agency and is charged with strengthening the U.K.’s borders,
fighting fraud and cyber-crime and protecting children and young people from sexual abuse and exploitation. The NCA has the
mandate and powers to work in partnership with other law enforcement organizations and has an international role of liaising with
overseas law enforcement agencies. It has a “four pillars” approach to fighting crime: pursue, prevent, protect and prepare. On June
26, 2017, the European Union’s Fourth Anti-Money Laundering Directive came into force, with an emphasis on employing a risk-
based approach to money laundering.
Our U.K. operations are also overseen by the Financial Ombudsman Service (“FOS”), a public body established by the U.K.
Parliament to carry out statutory functions on a non-commercial, not-for-profit basis. The FOS is the statutory dispute-resolution
scheme set up under the FSMA. The FOS works closely with other U.K. regulators governing the financial services market.
On June 23, 2016, the United Kingdom voted to exit the European Union. On March 29, 2017, U.K. Prime Minister Theresa May
invoked Article 50 of the Lisbon Treaty, thereby setting March 29, 2019 as the date the United Kingdom will leave the European
Union. This date can be extended if all E.U. members agree to such extension. No further details of the exit have been finalized. When
the United Kingdom exits the European Union, it is expected that the United Kingdom will establish a new framework for data flo
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between the United Kingdom and the United States or will agree to continue the protections of the GDPR for the transfer of personal
data into and out of the United Kingdom. We expect to comply with any framework established by the United Kingdom for the
transfer of personal data into and out of the United Kingdom.
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In international jurisdictions where we operate, our advertising and marketing activities and disclosures are subject to regulation under
various consumer protection laws and other applicable laws and regulations.
Company and Website Information
Our principal executive offices are located at 175 West Jackson Blvd., Chicago, Illinois 60604, and our telephone number is
(312) 568-4200.
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Our website is located at www.enova.com. Through our website, we provide free access to our Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports filed or furnished pursuant to
Sections 13(a) and 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after such reports are electronically
filed with or furnished to the SEC.
ITEM 1A. RISK FACTORS
Our business and future results may be affected by a number of risks and uncertainties that shou
ld be considered carefully in
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evaluating us. In addition, this report also contains forward-looking statements that involve risks and uncertainties. Our actual results
could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including the risks
faced by us described below. The occurrence of one or more of the events listed below could also have a material adverse effect ont
our business, prospects, results of operations, financial condition and cash flows.
Risks Related to Our Business and Industry
Our business is highly regulated, and if we fail to comply with applicable laws, regulations, rules and guidance, our business could
be adversely affected.
Our products and services are subject to extensive regulation, supervision and licensing under various federal, state, local and
international statutes, ordinances, regulations, rules and guidance. For example, our loan products may be subject to requirements that
generally mandate licensing or authorization as a lender or as a credit services organization or credit access business (“CSO”),
establish limits on the amount, duration, renewals or extensions of and charges for (including interest rates and fees) various
categories of loans, direct the form and content of our loan contracts and other documentation, restrict collection practices, outline
underwriting requirements and subject us to periodic examination and ongoing supervision by regulatory authorities, among other
things. We must comply with federal laws, such as TILA, ECOA, FCRA, EFTA, GLBA and Title X of the Dodd-Frank Act, among
other laws, as well as regulations adopted to implement those laws. In addition, our marketing and disclosure efforts and the
representations made about our products and services are subject to unfair and deceptive practi
ce statutes, including the FTC Act, the
TCPA and the CAN-SPAM Act of 2003 in the United States and analogous state statutes under which the Federal Trade Commission
(the “FTC”), the CFPB, state attorneys general or private plaintiffs may bring legal actions.
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We are also subject to various international laws, licensing or authorization requirements in connection with the products or services
we offer in Brazil and the United Kingdom, which are discussed below. Compliance with applicable laws, regulations, rules and
guidance requires forms, processes, procedures, training, controls and the infrastructure to support these requirements. Compliance
may also create operational constraints, be costly or adversely affect operating results. See “Business—Regulation” of Part I, Item 1 of
this report for further discussion of the laws applicable to us.
The regulatory environment in which we conduct our business is extensive and complex. From time to time we become aware of
instances where our products and services have not fully complied with requirements under applicable laws and regulations or
applicable contracts. Determinations of compliance with applicable requirements or contracts, such as those discussed above, can be
highly technical and subject to varying interpretations. When we become aware of such an instance, whether as a result of our
compliance reviews, regulator inquiry, customer complaint or otherwise, we generally conduct a review of the activity in question and
determine how to address it, such as modifying the product, making customer refunds or providing additional disclosure. We also
evaluate whether reports or other notices to regulators are required and provide notice to regulators whenever required. In some cases
we have decided and will decide to take corrective action even after applicable statutory or regu
latory cure periods have expired, and
in some cases we have notified regulators even where such notification may not have been required. Regulators or customers
reviewing such incidents or remedial activities may interpret the laws, regulations and customer contracts differently than we have, or
may choose to take regulatory action against us or bring private litigation against us notwithstanding the corrective measures we have
taken. This may be the case even if we no longer offer the product or service in question.
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State, federal and international regulators, as well as the plaintiffs’ bars, have subjected our industry to intense scrutiny in recent years.
in which
In addition, our contracts for certain products and services are governed by the law applicable in a state other than the state
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the customer resides. If a court were to reject our choice of law and determine that a
contract was governed by the laws of another
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state, the contract may be unenforceable. Failure to comply with applicable laws, regulations, rules and guidance, or any finding that
our past forms, practices, processes, procedures, controls or infrastructure were insufficient or not in compliance, could subject us to
regulatory enforcement actions, result in the assessment against us of civil, monetary, criminal or other penalties (some of which could
be significant in the case of knowing or reckless violations), result in the issuance of cease and desist orders (which can include orders
for restitution, as well as other kinds of affirmative relief), require us to refund payments, interest or fees, result in a determination that
certain financial products are not collectible, result in a suspension or revocation of licenses or authorization to transact business,
result in a finding that we have engaged in unfair and deceptive practices, limit our access to services provided by third-party financial
institutions or cause damage to our reputation, brands and valued customer relationships. We may also incur additional, substan
tial
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expenses to bring those products and services into compliance with the laws of various jurisdictions or stop offering certain products
and services in certain jurisdictions.
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Our failure to comply with any regulations, rules or guidance applicable to our business could have a material adverse effect on our
business, prospects, results of operations, financial condition and cash flows and could prohibit or directly or indirectly impair our
ability to continue current operations.
The lending and financing industry continues to be targeted by new laws or regulations in many jurisdictions that could restrict
the lending and financing products and services we offer, impose additional compliance costs on us, render our current operatio
ns
unprofitable or even prohibit our current operations.
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Governments at the national, state and local levels, as well as international governments, may seek to impose new laws, regulatory
restrictions or licensing requirements that affect the products or services we offer, the terms on which we may offer them, and the
disclosure, compliance and reporting obligations we must fulfill in connection with our lending and financing business. They may also
interpret or enforce existing requirements in new ways that could restrict our ability to continue our current methods of operation or to
expand operations, impose significant additional compliance costs, and may have a negative effect on our business, prospects, results
of operations, financial condition and cash flows. In some cases, these measures could even directly prohibit some or all of our current
business activities in certain jurisdictions, or render them unprofitable and/or impractical to continue.
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In recent years, consumer loans, and in particular the category commonly referred to as “payday loans,” which includes certain of our
short-term loan products, have come under increased regulatory scrutiny that has resulted in increasingly restrictive regulations and
legislation that makes offering such loans in certain states in the United States or the international countries where we operate (as
further described below) less profitable or unattractive. Laws or regulations in some states in the United States require that all
borrowers of certain short-term loan products be reported to a centralized database and limit the number of loans a borrower mayaa
receive or have outstanding. Other laws prohibit us from providing some of our consumer loan products in the United States to active
duty military personnel, active members of the National Guard or members on active reserve duty and their spouses and immediate
dependents.
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Certain consumer advocacy groups and federal and state legislators and regulators have advocated that laws and regulations should be
tightened so as to severely limit, if not eliminate, the type of loan products and services we offer to consumers, and this has
resulted in
both the executive and legislative branches of the U.S. federal government and state governmental bodies exhibiting an interest in
debating legislation that could further regulate consumer loan products and services such as those that we offer. The U.S. Congress, as
well as other similar federal, state and local bodies and similar international governmental authorities, have debated, and may in the
future adopt, legislation or regulations that could, among other things, place a cap (or decrease a current cap) on the interest or fees
that we can charge or a cap on the effective annual percentage rate that limits the amount of interest or fees that may be charged, ban
or limit loan renewals or extensions of short-term loans (where the customer agrees to pay the current finance charge on a loan for the
right to make payment of the outstanding principal balance of such loan at a later date plus an additional finance charge), including the
rates to be charged for loan renewals or extensions, require us to offer an extended payment plan, limit origination fees for loans,
require changes to our underwriting or collections practices, require lenders to be bonded or to report consumer loan activity to
databases designed to monitor or restrict consumer borrowing activity, impose “cooling off” periods between the time a loan is paid
off and another loan is obtained or prohibit us from providing any of our consumer loan products in the United States to active duty
members of the U.S. military, reservists and members of the National Guard and their immediate families.
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We cannot currently assess the likelihood of any future unfavorable federal, state, local or international legislation or regulations being
proposed or enacted that could affect our products and services. We closely monitor proposed legislation in jurisdictions where we
offer our loan products. Additional legislative or regulatory provisions could be enacted that could severely restrict, prohibit or
eliminate our ability to offer a consumer or small business loan or financing product. In addition, under statutory authority, U.S. state
regulators have broad discretionary power and may impose new licensing requirements, interpret or enforce existing regulatory
requirements in different ways or issue new administrative rules, even if not contained in state statutes, that could adversely affect the
way we do business and may force us to terminate or modify our operations in particular states or affect our ability to obtain new
licenses or renew the licenses we hold.
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Significant new laws and regulations have also been adopted in the United Kingdom, and further new laws and regulations will
continue to be imposed. See “— The United Kingdom has imposed, and continues to impose, increased regulation of the short-term
high-cost credit industry and previously stated its expectation that some firms will exit the market” for additional information.
Furthermore, legislative or regulatory actions may be influenced by negative perceptions of us and our industry, even if such negative
perceptions are inaccurate, attributable to conduct by third parties not affiliated with us (such as other industry members), o
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attributable to matters not specific to our industry.
—
Any of these or other legislative or regulatory actions that affect our lending and financing business at the national, state, international
and local level could, if enacted or interpreted differently, have a material adverse impact on our business, prospects, results of
operations, financial condition and cash flows and could prohibit or directly or indirectly impair our ability to continue current
operations.
The Consumer Financial Protection Bureau has examination authority over our U.S. consumer lending business that could have a
significant impact on our U.S. business.
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In July 2010, the U.S. Congress passed the Dodd-Frank Act, and Title X of the Dodd-Frank Act created the CFPB, which regulates
U.S. consumer financial products and services, including consumer loans offered by us. The CFPB has regulatory, supervisory and
enforcement powers over providers of consumer financial products and services, such as us, including explicit supervisory authority to
examine and require registration of such providers.
The CFPB exercises supervisory review over and examines certain non-bank providers of consumer financial products and services,
including providers of consumer loans such as us. The CFPB has examined our lending products, services and practices, and we
expect to continue to be examined on a regular basis by the CFPB. The CFPB’s examination authority permits CFPB examiners to
inspect the books and records of providers of short-term, small dollar lenders, and ask questions about their business practices, and the
examination procedures include specific modules for examining marketing activities; loan application and origination activities;
payment processing activities and sustained use by consumers; collections, accounts in default, and consumer reporting activities as
well as third-party relationships. As a result of these examinations, we could be required to change our products, services or practices,
whether as a result of another party being examined or as a result of an examination of us, or we could be subject to monetary
penalties, which could materially adversely affect us.
The CFPB also has broad authority to prohibit unfair, deceptive and abusive acts and practices and to investigate and penalize
financial institutions that violate this prohibition. In addition to having the authority to obtain monetary penalties for violations of
applicable federal consumer financial laws (including the CFPB’s own rules), the CFPB can require remediation of practices, pursue
administrative proceedings or litigation and obtain cease and desist orders (which can include orders for restitution or rescission of
contracts, as well as other kinds of affirmative relief). Also, where a company has violated Title X of the Dodd-Frank Act or CFPB
regulations implemented thereunder, the Dodd-Frank Act empowers state attorneys general and state regulators to bring civil actions
to remedy violations of state law. If the CFPB or one or more state attorneys general or state regulators believe that we have violated
any of the applicable laws or regulations, they could exercise their enforcement powers in ways that could have a material adverse
effect on our business, prospects, results of operations, financial condition and cash flows.
We are subject to a Consent Order issued by the Consumer Financial Protection Bureau, and any noncompliance would materially
adversely affect our business.
On January 25, 2019, we consented to the issuance of a Consent Order by the CFPB pursuant to which we agreed, without admitting
or denying any of the facts or conclusions, to pay a civil money penalty of $3.2 million. The Consent Order relates to issues self-
disclosed to the CFPB in 2014, including failure to provide loan extensions to 308 consumers and debiting approximately 5,500
consumers from the wrong bank account. We remain subject to the restrictions and obligations of the Consent Order, including a
prohibition from engaging in certain conduct. Any noncompliance with the Consent Order or similar orders or agreements from other
regulators could lead to further regulatory penalties and could have a material adverse impact on our business, prospects, results of
operations, financial condition and cash flows and could prohibit or directly or indirectly impair our ability to continue current
operations.
The CFPB recently finalized a new rule that may affect the consumer lending industry, and this rule could have a material adver
effect on our U.S. consumer lending business.
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On October 6, 2017, the CFPB issued its final rule on payday and certain high-cost installment loans, also known as the “Small Dollar
Rule,” which would cover some of the loans we offer. The Small Dollar Rule requires that lenders who make short-term loans and
longer-term loans with balloon payments reasonably determine consumers’ ability to repay the loans according to their terms beforeff
issuing the loans. The Small Dollar Rule also introduces new limitations on repayment processes for those lenders as well as lenders
of other longer-term loans with an annual percentage rate greater than 36 percent that include an ACH authorization or similar
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payment provision. If a consumer has two consecutive failed payment attempts, the lender must obtain the consumer’s new and
specific authorization to make further withdrawals from the consumer’s bank account. For loans covered by the Small Dollar Rule,
lenders must provide certain notices to consumers before attempting a first payment withdrawal or an unusual withdrawal and after
two consecutive failed payment attempts. The Small Dollar Rule has a compliance date of August 19, 2019, but was stayed
indefinitely by a Texas federal district court. On October 26, 2018, the CFPB under then-acting Director Mick Mulvaney announced
that the CFPB would reconsider the Small Dollar Rule. In December 2018, Kathy Kraninger was confirmed by the Senate as the
CFPB’s new director. Following her confirmation, the CFPB announced that it would revisit the Small Dollar Rule. On February 6,
2019, the CFPB issued two notices of proposed rulemaking: (1) to rescind the Small Dollar Rule’s mandatory underwriting provisions,
including the ability to repay requirements and (2) to delay the August 19, 2019 compliance date for those provisions until November
19, 2020. The proposed rescission of the underwriting provisions is open to public comment for 90 days after the date of publication in
the Federal Register. The delay is open to public comment for 30 days. It is also likely that there will be legal challenges to the Small
Dollar Rule before it goes into effect. We cannot currently assess the likelihood that the CFPB will make additional changes to the
Small Dollar Rule, nor whether the Small Dollar Rule will become effective. If the Small Dollar Rule does become effective in its
current proposed form, we will need to make certain changes to our payment processes and customer notifications in our U.S.
consumer lending business. If we are not able to execute these changes effectively because of unexpected complexities, costs or
otherwise, we cannot guarantee that the Small Dollar Rule will not have a material adverse impact on our business, prospects, results
of operations, financial condition and cash flows.
The United Kingdom has imposed, and continues to impose, increased regulation of the short-term high-cost credit industry and
previously stated its expectation that some firms will exit the market.
In the United Kingdom, the FCA regulates consumer credit and related activities pursuant to the FSMA and the FCA Handbook,
which includes prescriptive rules and regulations and carries across many of the standards set out in the CCA and its secondary
legislation as well as previous guidance initially set out by the OFT. The regulations under the FCA consumer credit regime are more
prescriptive than the former U.K. consumer credit regime. The FSMA gives the FCA the pow
er to authorize, supervise, examine and
bring enforcement actions against providers of consumer credit, as well as to make rules for the regulation of consumer credit.
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In 2014, the FCA issued the CONC contained in the FCA Handbook. The CONC incorporates prescriptive regulations for consumer
loans such as those that we offer, including mandatory affordability checks on borrowers, limiting the number of rollovers on short-
term loans to two, restricting how lenders can advertise, banning advertisements that the FCA deems misleading, and introducing a
limit of two unsuccessful attempts on the use of continuous payment authority (which provides a creditor the ability to directly debit a
customer’s account for payment when authorized by the customer to do so) to pay off a loan. The provisions of the CONC took effect
in 2014. As a result of the FCA’s requirements, we made significant adjustments to many of our business practices in the United
Kingdom, as discussed below under “— Our primary regulators in the United Kingdom previously expressed serious concerns about
our compliance with applicable U.K. regulations, which caused us to make significant changes to our U.K. business that negatively
impacted our operations and results, and future changes to our operations as a result of regulator concerns could have a material
adverse effect on our U.K. business.”
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On January 2, 2015, the FCA implemented a cap on the total cost of high-cost short-term credit. In 2015, the FCA also conducted a d
consultation and implemented a provision that requires providers of high-cost short-term credit include a risk warning in all financial
promotions. In 2016, the FCA reviewed the loan price cap that was implemented in 2015 and decided not to change the price cap but
to review it again in three years. In July 2017, the FCA issued a Consultation Paper on proposed changes to its rules and guidance on
assessing creditworthiness in consumer credit. The FCA requested responses to the consultation by October 31, 2017 and expects to
publish its findings in the second quarter of 2018. We do not currently know whether or how the FCA may amend its rules and
guidance on assessing creditworthiness in consumer credit or how it will affect our business operations. If any new rules or guidance
significantly restrict the conduct of our business, such implementation could have a material adverse effect on our business, prospects,
results of operations, financial condition and cash flows.
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The FCA also plans to investigate unarranged overdrafts, the long-term use of high-cos
t credit, rent-to-own, home-collected credit and
catalog credit markets and to issue a Consultation Paper on proposed solutions in the spring of 2018. We do not currently know what
solutions the FCA may implement as a result or how any changes may affect our business operations. If any new rules or guidance
significantly restrict the conduct of our business, such implementation could have a material adverse effect on our business, prospects,
results of operations, financial condition and cash flows.
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The FCA may review and implement regulatory activities in the future that may impact our U.K. business, and we cannot give any
assurances that the result will not have a material impact on our U.K. products and services.
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Our primary regulators in the United Kingdom previously expressed serious concerns about our compliance with applicable U.K.
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regulations, which caused us to make significant changes to our U.K. business that negatively impacted our operations and results,
and future changes to our operations as a result of regulator concerns could have a material adverse effect on our U.K. business.
In February 2012, the OFT launched a review of the payday lending sector and conducted examinations of a number of payday lenders
in the United Kingdom, including us. In May 2013, the OFT sent us a letter of findings related to its examination of our U.K. short
term consumer loan (or payday) business, which indicated that we may not have been in full compliance with all relevant laws and
guidance. In July 2013, we provided the OFT with an independent audit report setting out the steps taken to address each concern the
OFT had identified.
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On April 1, 2014, the FCA assumed the supervision and regulation of us, and we are subject to ongoing examination and review by
the FCA. In 2014, the FCA informed us that it had serious concerns regarding our compliance with the FCA’s rules and principles,
including those with respect to our affordability assessment process and our debt forbearance practices (or our practices regarding
customers who have indicated they are experiencing financial difficulty). The FCA also noted concerns regarding certain of our
advertising practices. The FCA appointed an independent auditor to undertake a review of certain of our practices as well as our
ability to be effectively supervised. That review identified activities that were deemed to have potentially caused consumer detriment
or were not in full compliance with the FCA’s rules and guidance. On November 4, 2015, the FCA announced the final redress
program, in which we provided 3,940 customers total redress of approximately $2.6 million through a combination of loan balance
waivers and cash refunds of interest and fees paid. The skilled person oversaw the execution of the redress program, which was
concluded in the fourth quarter of 2015.
We made significant adjustments to many of our business practices, including modifying our affordability assessments and
underwriting standards, reducing certain maximum loan amounts, changing our collections processes (including our practices relating
to continuous payment authority) and debt forbearance practices and altering certain advertising practices, all of which resulted in a
significant year-over-year decrease in our U.K. loan volume, U.K. loan balances and U.K. revenue in the second half of 2014 and the
first half of 2015. The implementation of stricter affordability assessments and underwriting standards resulted in a decrease in the
number of consumer loans written, the average consumer loan amount and the total amount of consumer loans written to new and
returning customers. Additionally, we experienced and will continue to experience an increase in compliance- and administrative-
related costs for our U.K. operations. In addition, the FCA, in its supervisory role, could subject us to periodic or ongoing examination
and review by the FCA, and as such, the FCA could require us to make additional changes to our business that could further
negatively affect future results for our U.K. operations. We are continuing to assess the impact of the changes we have made to our
U.K. operations, but the impact of these changes was significant, and future changes to our operations as a result of FCA oversight of
our business could result in a material adverse effect on our U.K. business and our prospects, results of operation, financial condition
and cash flows.
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Competition regulators in the United Kingdom have reviewed and may in the future again review our industry and, together with
the FCA, could require lenders to implement changes to their operations, which could have a negative effect on our operations inii
the United Kingdom.
In June 2013, the OFT referred the payday lending industry in the United Kingdom to the Competition Commission, which is now the
Competition & Markets Authority (“CMA”), for a market investigation. The CMA gathered data from industry participants, including
us, in connection with its review of the U.K. payday lending industry to determine whether certain features of the payday lending
industry prevent, restrict or distort competition (which is also referred to as having an adverse effect on competition) and, if so, what
remedial action should be taken.
On June 11, 2014, the CMA released a provisional findings report in which it indicated that it believed that many payday lenders fail
to compete on price and that it would look at potential ways to increase price competition. On August 13, 2015, the CMA published its
final order that required online lenders to provide details of their products on at least one price comparison website. The CMA also
required online and storefront lenders to provide existing customers with a summary of their cost of borrowing as of August 13, 2016.
The impact of the CMA’s August 13, 2015 order on our operations has not been significant. However, we do not know whether future
actions by the CMA and the FCA could impact consumer acceptance of our products or the
consumer experience in obtaining loans or
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if any future actions could otherwise significantly restrict the conduct of our business or otherwise have a material adverse effect on
our business, prospects, results of operations, financial condition and cash flows.
The Financial Ombudsman Service (“FOS”) was created by Parliament in 2000 to act as an independent arbitral body to resolve
complaints between businesses and consumers. Customer complaints to the FOS could increase, which could have a negative
effect on our operations in the United Kingdom.
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We continue to experience an increased volume of complaints about loans issued both before and after the changes we implemented in
2014, and the FOS has taken a very consumer-friendly approach to its complaint handling process and dispute resolutions. We have
been required to make significant payments to customers to resolve these complaints. We have also incurred significant costs in the
form of FOS administrative fees associated with each individual complaint submitted
to FOS, as well as operational costs necessary to
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manage the large volume of complaints. The FOS has evidenced signs of expanding its consumer-focused approach through changes
in the FOS’s interpretation of its complaint handling rights and obligations. We also observed the FOS interpreting FCA rules and
guidance in a manner that is stricter than, and sometimes in direct conflict with, the FCA’s own interpretation of its rules and
guidance. If the FOS continues to issue findings in this manner, and we are required to continue making significant payments to
resolve complaints, such findings could again have a material adverse effect on our business, prospects, results of operations, financial
condition and cash flows.
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We further expect an increase in complaints-related costs due to recent FOS findings effectively eliminating a time bar for claimants
to raise complaints.
Much of the increased overall volume of complaints can be attributed to submissions by third party Claims Management Companies
(“CMCs”) on behalf of borrowers. We have been forced to expend significant resources handling this volume of complaints and
determining defense strategies where appropriate. CMC activity is regulated by the Claims Management Regulator; however, effective
April 1, 2019, CMC regulation will be transferred to the FCA. CMCs must register with the FCA for authorization by March 31, 2019
and are now eligible to apply for temporary authorization. We believe that this shift in regulator will be beneficial to us as CMCs will
be required to meet stricter authorization requirements under the FCA. FCA regulation of CMCs may lower complaints volume but
we are not able to know that at this time.
Our advertising and marketing materials and disclosures have been and continue to be subject to regulatory scrutiny, particularly rr
in the United Kingdom.
In the jurisdictions where we operate, our advertising and marketing activities and disclosures are subject to regulation under various
industry standards, consumer protection laws, and other applicable laws and regulations. Consistent with the consumer lending
industry as a whole, our advertising and marketing materials have come under increased scrutiny. In the United Kingdom, for
example, consumer credit firms are subject to the financial promotions regime set out in the FSMA (Financial Promotions) Order 2005
and specific rules in the CONC, such as the inclusion of a risk warning on certain advertising materials. The FCA has also decided to
adopt certain elements of industry codes as FCA rules on a case-by-case basis. Our advertising and marketing materials in the United
Kingdom are reviewed both by the FCA and the Advertising Standards Authority. We have in some cases been ordered to withdraw,
amend or add disclosures to such materials, or have done so voluntarily in response to inquiries or complaints. In addition, th
e FCA
now requires that providers of high-cost short-term credit include a risk warning in all financial promotions, including previously
exempted size-limited ads like SMS text messages and pay-per-click ads.
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Going forward, there can be no guarantee that we will be able to advertise and market our business in the United Kingdom or
elsewhere in a manner we consider effective. Any inability to do so could have a material adverse effect on our business, prospects,
results of operations, financial condition and cash flows.
The consequences of the United Kingdom leaving the European Union are yet unknown, but could indirectly affect our operations.
The United Kingdom is scheduled to withdraw from the European Union on March 29, 2019 (“Brexit”). On January 15, 2019, Prime
Minister Theresa May’s proposal for how the United Kingdom is to withdraw from the European Union was defeated in the House of
Commons. We do not believe Brexit, or the uncertainty surrounding Brexit, poses a direct risk to our U.K. business. Brexit may
indirectly affect our business through the impact that it has on the value of the British Pound and the U.K. economy as a whole, but, at
this time, we are not able to reasonably quantify that risk or the likelihood of Brexit indirectly impacting our U.K. business.
Significant changes in international laws or regulations or a deterioration of the political, regulatory or economic environment of
the United Kingdom or Brazil, or any other country in which we begin operations, could affect our operations in these countries.
We offer, arrange and/or service online consumer loans to customers in Brazil and the United Kingdom. The United Kingdom
regularly evaluates the regulation of our industry and introduces new regulations and is likely to continue to do so. New legislation or
regulations could further restrict the consumer loan products we offer.
Significant changes in international laws or regulations or a deterioration of the political, regulatory or economic environment of
Brazil or the United Kingdom could restrict our ability to sustain or expand our operations in these countries. Similarly, a significant
change in laws, regulations or overall treatment (including an interpretation or application of such laws and regulations not a
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nticipated
when exploring or initiating business) or a deterioration of the political, regulatory or economic environment of any other country in
which we may decide to do business, could also materially adversely affect our prospects and could restrict our ability to initiate a
pilot program or develop a pilot program into full business operations.
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The election of a new president in Brazil could significantly change regulatory, legal or other policies that could affect our
business.
In October 2018, President Jair Bolsonaro was elected in Brazil. As a result of this election and certain political and regulatory
reforms involving the Social Security System and fintech companies expected in 2019, Brazil faces instability that may affect our
business.
We have previously ceased business in certain jurisdictions due to regulatory restrictions and, if we are forced to exit many key
jurisdictions due to regulatory restrictions, it could adversely affect our business as a whole.
In the past we have ceased business in, restricted our operations in, or chosen not to begin business in, certain jurisdictions due to
regulatory restrictions which render our operations impermissible, unprofitable or impractical. In addition, because we are in some
cases subject to state/provincial and local regulation in addition to federal/national regulation, we may restrict or discontinue business
in certain jurisdictions within countries where we are otherwise active. For example, as of December 31,
2018, we did not offer or
arrange consumer loans in 18 U.S. states because we do not believe it is economically feasible to operate in those jurisdictions due to
specific statutory or regulatory restrictions, such as interest rate ceilings or caps on the fees that may be charged.
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The adoption of state regulatory measures cannot be predicted, but we expect that other states may propose or enact similar
restrictions impacting our consumer or small business loan or financing products in the future, which could affect our operations in
such states. Legislation or regulations targeting or otherwise directly affecting our products and services have been introduced or
adopted in a number of states over the last few years, and we regularly monitor proposed legislation or regulations that could affect
our business. For more information, see “Regulation and Legal Proceedings—U.S. State Regulation.”
If we are forced to exit many key jurisdictions due to such concerns, we cannot guarantee that we will be able to find suitably
attractive additional business opportunities elsewhere, which could have a material adverse effect on our business, prospects,
results of
operations, financial condition and cash flows.
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Our access to payment processing systems to disburse and collect loan and financing proceeds and repayments, including the
Automated Clearing House, is critical to our business, and any interruption or limitation on our ability to utilize any of the
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available means of processing deposits or payments could materially adversely affect our business.
When making loans and providing financing in the United States, we use several means of depositing proceeds into and collecting
repayments from our customers’ bank accounts, including the use of ACH. Our business, including loans made through the CSO
programs, depends on payment processing systems to collect amounts due by repayments from our customers’ bank accounts when
we have obtained authorization to do so from the customer. Our transactions are processed by banks, and if these banks cease to
provide any of the available means of payment processing services, we would have to materially alter, or possibly discontinue, some
or all of our business if alternative processing methods are not as effective or not available.
Previous heightened regulatory scrutiny by the U.S. Department of Justice, the Federal Deposit Insurance Corporation and other
regulators, in an action referred to as Operation Choke Point, caused banks and ACH payment processors to cease doing business with
certain short-term consumer lenders who were operating legally, without regard to whether those lenders were complying with
applicable laws, simply to avoid the risk of heightened scrutiny or even litigation.
Our access to payment processing systems could be impaired as a result of actions by regulators to cut off the access to payment
processing systems to payday lenders or by rule changes by the National Automated Clearinghouse Association (“NACHA”), which
oversees the ACH network. The limited number of financial institutions we depend on may choose to discontinue providing ACH
processing, remotely created check processing and similar services to us. If our access to any of these means of payment processing is
impaired, we may find it difficult or impossible to continue some or all of our business, which could have a material adverse effect on
our business, prospects, results of operations, financial condition and cash flows. If we are unable to maintain access to needed
services on favorable terms, we would have to materially alter, or possibly discontinue, some or all of our business if alternative
processors are not available.
The failure to comply with debt collection regulations could subject us to fines and other liabilities, which could harm our
reputation and business.
The FDCPA regulates persons who regularly collect or attempt to collect, directly or indirectly, consumer debts owed or asserted to be
owed to another person. Many states impose additional requirements on persons collecting or attempting to collect consumer debts
owed to them and on debt collection communications, and some of those requirements may be more stringent than the federal
requirements. Moreover, regulations governing debt collection are subject to changing interpretations that differ from jurisdiction to
jurisdiction.
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In addition, in 2016, the CFPB issued an outline of proposals intended to increase consumer protection pertaining to third-party debt
collectors and others covered by the FDCPA, which would apply to our attempts to collect debt originated by other lenders, including
under our CSO programs. The proposals would not apply to our attempts to collect debt that we originate; however, the CFPB has
announced that it plans to address consumer protection issues involving first-party debt collectors and creditors separately. The CFPB
outline does not include proposed or final rules, and any future rules could be significantly different from those in the outline. The
CFPB has not yet defined a date for any proposed rules related to debt collection nor has it defined the effective date for the
ur U.S.
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implementation of final rules. We cannot give any assurances that the effect of such rules will not have a material impact on o
products and services.
Non-U.S. jurisdictions also regulate debt collection. For example, in the United Kingdom, due to changes to rules under the CONC,
we previously made adjustments to our collections processes, which resulted in lower collections on loans made by us. In addition, the
concerns previously expressed to us by the OFT and the FCA related in part to debt collection. We could be subject to fines, written
orders or other penalties if we, or parties working on our behalf, are determined to have violated the FDCPA, the CONC or analogous
state or international laws, which could have a material adverse effect on our reputation, business, prospects, results of operations,
financial condition and cash flows.
We use lead providers and marketing affiliates to assist us in obtaining new customers, and if lead providers or marketing affiliates
do not comply with an increasing number of applicable laws and regulations, or if our ability to use such lead providers or
marketing affiliates is otherwise impaired, it could adversely affect our business.
ii
We are dependent on third parties, referred to as lead providers (or lead generators) and marketing affiliates, as a source of new
customers. Our marketing affiliates place our advertisements on their websites that direct potential customers to our websites.
Generally, lead providers operate, and also work with their own marketing affiliates who operate, separate websites to attract
prospective customers and then sell those “leads” to online lenders. As a result, the success of our business depends substantially on
the willingness and ability of lead providers or marketing affiliates to provid
t
e us customer leads at acceptable prices.
d
If regulatory oversight of lead providers or marketing affiliates is increased, through the implementation of new laws or regulations or
the interpretation of existing laws or regulations, our ability to use lead providers or marketing affiliates could be restricted or
eliminated. For example, the CFPB has indicated its intention to examine compliance with federal laws and regulations by lead
providers and to scrutinize the flow of non-public, private consumer information between lead providers and lead buyers, such as us.
Over the past few years, several states have taken actions that have caused us to discontinue the use of lead providers in those states.
While these discontinuations did not have a material adverse effect on us, other states may propose or enact similar restrictions on lead
providers and potentially on marketing affiliates in the future, and if other states adopt similar restrictions, our ability to use lead
providers or marketing affiliates in those states would also be interrupted. We also expect that the ongoing regulatory review of
consumer lending in the United Kingdom may lead to increased restrictions on the operations and/or use of lead providers.
Lead providers’ or marketing affiliates’ failure to comply with applicable laws or regulations, or any changes in laws or regulations
applicable to lead providers or marketing affiliates’ or changes in the interpretation or implementation of such laws or regulations,
could have an adverse effect on our business and could increase negative perceptions of our business and industry. Additionally, the
use of lead providers and marketing affiliates could subject us to additional regulatory cost and expense. If our ability to use lead
generators or marketing affiliates were to be impaired, our business, prospects, results of operations, financial condition and cash
flows could be materially adversely affected.
d
The use of personal data for credit underwriting is highly regulated.
In the United States, the FCRA regulates the collection, dissemination and use of consumer information, including consumer credit
information. Compliance with the FCRA and related laws and regulations concerning consumer reports has recently been under
regulatory scrutiny. The FCRA requires us to provide a Notice of Adverse Action to a consumer loan applicant when we deny an
application for credit, which, among other things, informs the applicant of the action taken regarding the credit application and the
specific reasons for the denial of credit. The FCRA also requires us to promptly update any credit information reported to a consumer
reporting agency about a consumer and to allow a process by which consumers may inquire about credit information furnished by us
to a consumer reporting agency. Historically, the FTC has played a key role in the implementation, oversight, enforcement and
interpretation of the FCRA. Pursuant to the Dodd-Frank Act, the CFPB has primary supervisory, regulatory and enforcement authority
of FCRA issues, although the FTC also retains its enforcement role regarding the FCRA. The CFPB has taken a more active approach
than the FTC, including with respect to regulation, enforcement and supervision of the FCRA. Changes in the regulation, enforcement
or supervision of the FCRA may materially affect our business if new regulations or interpretati
ons by the CFPB or the FTC require us
to materially alter the manner in which we use personal data in our credit underwriting. In 2018, the State of California enacted the
California Consumer Privacy Act of 2018 (“CCPA”), which will come into effect on January 1, 2020 and expands the privacy rights
of California residents and regulates the sale of the consumer information of California residents. California legislators have stated
that they intend to propose amendments to the CCPA and it remains unclear what, if any, modifications will be made to the CCPA or
how it will be interpreted. Compliance with the CCPA may increase the cost of conducting business in California and we could see
25
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increased litigation costs once the law goes into effect. Several other states have proposed legislation regarding data privacy and use,
which, if passed, could create more risks and potential costs.
In the United Kingdom, we are also subject to the requirements of the Data Protection Act 2018 (the “DPA”) and are required to be
fully registered as a data-controller under the DPA. The DPA controls how organizations, businesses and/or the government use
personal data and how they should process it. The current Data Protection regime aligns with the E.U. General Data Protection
Regulation (“GDPR”), a regulation by which the European Parliament, the European Council and the European Commission intend to
strengthen and unify data protection for individuals within the European Union. It also addresses export of personal data outside the
European Union. The GDPR contains a number of new protections for E.U. data subjects and threatens significant fines and penalties
for non-compliant data controllers and processors. Should the United Kingdom exit the European Union, it is expected that the United
Kingdom would establish a new framework for data flow between the United Kingdom and the United States or will agree to continue
the protections of the GDPR for the transfer of personal data into and out of the United Kingdom. We expect to comply with any
framework established by the United Kingdom for the transfer of personal data into and out of the United Kingdom.
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We previously had Safe Harbor certification, which evidenced compliance with the DPA and the European Union Data Protection
Directive and allowed companies to pass E.U. data to non-E.U. countries if certain certification requirements were met by the
company. Although the European Court of Justice invalidated the Safe Harbor framework in 2015, there are other circumstances under
which a company is exempt from complying with those laws and regulations. In addition, in 2016, the European Commission and the
United States agreed on a new framework for transatlantic data flows called the E.U.-U.S. Priv
acy Shield, which will replace the
invalidated Safe Harbor framework. Although we are exploring the possibility of applying for certification to the E.U.-U.S. Privacy
Shield and, despite the invalidation of the Safe Harbor framework, we believe that we are exempt from and/or are in compliance with
all E.U. and U.K. privacy laws and regulations and will continue to be so under the GDPR.
a
The oversight of the FCRA by both the CFPB and the FTC and any related investigation or enforcement activities or our failure to
comply with the DPA may have a material adverse impact on our business, including our operations, our mode and manner of
conducting business and our financial results.
Negative public perception of our business could cause demand for our products to significantly decrease.
In recent years, consumer advocacy groups and some media reports have advocated governmental action to prohibit or place severe
restrictions on short-term and high-cost consumer loans. Such consumer advocacy groups and media re
ports generally focus on the
annual percentage rate for this type of consumer loan, which is compared unfavorably to the interest typically charged by banks to
consumers with top-tier credit histories. The fees and/or interest charged by us and others in the industry attract media publicity about
the industry and can be perceived as controversial. If the negative characterization of these types of loans becomes increasing
ly
accepted by consumers, demand for any or all of the consumer loan products that we offer could significantly decrease, which could
materially affect our business, prospects, results of operations, financial condition and cash flows. Additionally, if the negative
characterization of these types of loans is accepted by legislators and regulators, we could become subject to more restrictive laws and
regulations applicable to short-term loans or other consumer loan products that we offer that could materially adversely affect our
business, prospects, results of operations, financial condition and cash flows and could impair our ability to continue current
operations.
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In addition, our ability to attract and retain customers is highly dependent upon the external perceptions of our level of serv
ice,
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trustworthiness, business practices, financial condition and other subjective qualities. Negative perceptions or publicity regarding
these matters—even if related to seemingly isolated incidents, or even if related to practices not specific to short-term loans, such as
debt collection—could erode trust and confidence and damage our reputation among existing and potential customers, which could
r
make it difficult for us to attract new customers and retain existing customers and could significantly decrease the demand for
our
products, could materially adversely affect our business, prospects, results of operations, financial condition and cash flows and could
impair our ability to continue current operations.
aa
ff
Democratic control of the U.S. House of Representatives could reduce the likelihood that significant financial services legislation
will be passed in the new Congress.
In January 2019, the Democratic party took control of the House of Representatives. Both members of the Democratic party, Nancy
Pelosi was elected as the Speaker of the House of Representatives and Maxine Waters was appointed the Chairwoman of the U.S.
House Committee on Financial Services. We expect this may lead to a heightened degree of oversight from the House of
Representatives, particularly with respect to the CFPB, and additional legislation relating to consumer financial services generated by
the House of Representatives. Continued Republican control of the U.S. Senate and Presidency makes it unlikely that any material
legislation will be enacted.
26
Current and future litigation or regulatory proceedings could have a material adverse effect on our business, prospects, result
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s of
operations, financial condition and cash flows.
e
We have been and are currently subject to lawsuits (including purported class actions) that could cause us to incur substantial
expenditures, generate adverse publicity and could significantly impair our business, force us to cease doing business in one or more
jurisdictions or cause us to cease offering or alter one or more products. We are also likely to be subject to further litigation in the
future. An adverse ruling in or a settlement of any current or future litigation against us or another provider or loans or financings
could cause us to have to refund fees and/or interest collected, forego collection of the principal amount of loans or the delivery of
purchased receivables, pay treble or other multiple damages, pay monetary penalties and/or modify or terminate our operations in
particular jurisdictions.
Defense of any lawsuit, even if successful, could require substantial time and attention of our management and could require the
expenditure of significant amounts for legal fees and other related costs. We and others are also subject to regulatory proceedings, and
we could suffer losses as a result of interpretations of applicable laws, rules and regulations in those regulatory proceedings, even if
we are not a party to those proceedings. Any of these events could have a material adverse effect on our business, prospects, results of
operations, financial condition and cash flows and could impair our ability to continue current operations.
Judicial decisions, CFPB rulemaking or amendments to the Federal Arbitration Act could render the arbitration agreements we
use illegal or unenforceable.
We include arbitration provisions in our consumer and business loan and financing agreements. These provisions are designed to
allow us to resolve any customer disputes through individual arbitration rather than in court and explicitly provide that all a
rbitrations
will be conducted on an individual and not on a class basis. Thus, our arbitration agreements, if enforced, have the effect of shielding
us from class action liability. Our arbitration agreements do not generally have any impact on regulatory enforcement proceedings. We
take the position that the arbitration provisions in loan and financing agreements, including class action waivers, are valid and
enforceable; however, the enforceability of arbitration provisions is often challenged in court. If those challenges are successful, our
arbitration and class action waiver provisions could be unenforceable, which could subject us to additional litigation, includi
ng
additional class action litigation.
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In addition, the U.S. Congress has considered legislation that would generally limit or prohibit mandatory arbitration agreements in
consumer contracts and has enacted legislation with such a prohibition with respect to certain mortgage loan agreements and also
certain consumer loan agreements to members of the military on active duty and their dependents. Further, the Dodd-Frank Act
directed the CFPB to study consumer arbitration and report to the U.S. Congress, and it authorized the CFPB to adopt rules limiting or
prohibiting consumer arbitration, consistent with the results of its study.
The CFPB did issue a final rule on arbitration, which would have prohibited class action waivers in certain consumer financial
services contracts. However, the House and Senate each passed a resolution of disapproval of the rule, pursuant to their powers under
the Congressional Review Act, and the President signed the bill. Because the rule was disapproved, it cannot be reissued in
substantially the same form, and the CFPB cannot issue a substantially similar rule unless the new rule is specifically authorized by a
law enacted after the date of the joint resolution disapproving the original rule.
Any judicial decisions, legislation or other rules or regulations that impair our ability to enter into and enforce consumer arbitration
agreements and class action waivers will increase our exposure to class action litigation as well as litigation in plaintiff-friendly
jurisdictions, which would be costly and could have a material adverse effect on our business, prospects, results of operations,
financial condition and cash flows.
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The failure of third parties who provide products, services or support to us to maintain their products, services or support co
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disrupt our operations or result in a loss of revenue.
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part on the willingness and ability of unaffiliated
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A portion of our short-term consumer loan and installment loan revenue depends in
third-party lenders, through the CSO programs, to make loans to customers. We also utilize many other third parties to provide
services to facilitate our lending and financing, including in our underwriting and payment processing. In addition, we rely on a third
party lender in connection with our lending business in Brazil. The loss of the relationship with any of these third parties, and an
inability to replace them or the failure of these third parties to maintain quality and consistency in their programs or services or to have
the ability to provide their products and services, could cause us to lose customers and substantially decrease the revenue and earnings
of our business. Our revenue and earnings could also be adversely affected if any of those third-party providers make material changes
to the products or services that we rely on. We also use third parties to support and maintain certain of our communication systems
and information systems. If a third-party provider fails to provide its products or services, makes material changes to such products
and services, does not maintain its quality and consistency or fails to have the ability to provide its products and services, our
d
27
operations could be disrupted. Any of these events could result in a loss of revenue and could have a material adverse effect on our
business, prospects, results of operations, financial condition and cash flows.
Our business depends on the uninterrupted operation of our systems and business functions, including our information technology
and other business systems, as well as the ability of such systems to support compliance with
applicable legal and regulatory
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requirements.
Our business is highly dependent upon our employees’ ability to perform, in an efficient and uninterrupted fashion, necessary business
functions, such as internet support, call center activities, and processing and servicing of our loans and receivables purchase
agreements. A shut-down of or inability to access the facilities in which our internet operations and other technology infrastructure are
based, such as a power outage, a failure of one or more of our information technology, telecommunications or other systems, or
sustained or repeated disruptions of such systems could significantly impair our ability to perform such functions on a timely
basis and
could result in a deterioration of our ability to underwrite, approve and process loans and finance receivables, provide customer
service, perform collections activities, or perform other necessary bu
siness functions. Any such interruption could have a materially
adverse effect on our business, prospects, results of operations, financial condition and cash flows.
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In addition, our systems and those of third parties on whom we rely must consistently be capable of compliance with applicable legal
and regulatory requirements and timely modification to comply with new or amended requirements. Any such systems problems going
forward could have a material adverse effect on our business, prospects, results of operations, financial conditions and cash flows and
could impair or prohibit our ability to continue current operations.
ff
Decreased demand for our products and specialty financial services and our failure to adapt to such decrease could result in a loss
of revenue and could have a material adverse effect on us.
The demand for a particular product or service may decrease due to a variety of factors, such as regulatory restrictions that reduce
customer access to particular products, the availability of competing or alternative products or changes in customers’ financial
conditions. Should we fail to adapt to a significant change in our customers’ demand for, or access to, our products, our revenue could
decrease significantly. Even if we make adaptations or introduce new products to fulfill customer demand, customers may resist or
may reject products whose adaptations make them less attractive or less available. In any event, the effect of any product chan
ge on
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the results of our business may not be fully ascertainable until the change has been in effect for some time. In particular, we have
changed, and will continue to change, some of our operations and the products we offer. Any of these events could result in a loss of
revenue and could have a material adverse effect on our business, prospects, results of operations, financial condition and cash flows.
Potential union activities could have an adverse effect on our relationship with our workforce.
ff
None of our employees are currently covered by a collective bargaining agreement or represented by an employee union. Occasionally
we experience union organizing activities. If our employees become represented by an employee union or become subject to a
collective bargaining agreement, it may make it more difficult for us to manage our business and to attract and retain new employees
and may increase our cost of doing business. Having our employees become represented by an employee union, having a collective
bargaining agreement or having additional requirements related to our employees imposed on us could result in work stoppages and
higher employee costs and could have a material adverse effect on our business, prospects, results of operations, financial condition
and cash flows and could impair our ability to continue current operations.
If our allowance for losses on loans and finance receivables and liability for estimated losses on third-party lender-owned
consumer loans is not adequate or if we do not successfully manage our credit risk, our business, prospects, results of operations,
financial condition and cash flows may be adversely affected.
As more fully described under Note 1 to our consolidated financial statements for the year ended December 31, 2018 included in Part
II, Item 8, Financial Statements and Supplementary Data in this report, we utilize a variety of underwriting criteria, monitor the
performance of our loan portfolios and maintain either an allowance or liability for estimated losses on loans (including fees and
interest) at a level estimated to be adequate to absorb credit losses inherent in the receivables portfolio and expected losses from loans
guaranteed under the CSO programs. The allowance deducted from the carry
ing value of loans and finance receivables was $163.3
million at December 31, 2018, and the liability for estimated losses on third-party lender-owned consumer loans was $2.2 million at
December 31, 2018. These reserves are estimates, and if actual loan losses or losses on our receivables purchase agreements are
materially greater than our reserves, our results of operations and financial condition could be adversely affected. In addition, if we do
not successfully manage credit risk for our unsecured loans and receivables purchase agreements through our underwriting, we could
incur substantial credit losses due to customers being unable to repay their loans or financings. Any failure to manage credit risk could
materially adversely affect our business, prospects, results of operations, financial condition and cash flows.
a
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We are subject to impairment risk.
At December 31, 2018, we had goodwill totaling $267.0 million on our consolidated balance sheets, all of which represents assets
capitalized in connection with acquisitions and business combinations. Accounting for goodwill requires significant management
estimates and judgment. Events may occur in the future, and we may not realize the value of our goodwill. Management performs
periodic reviews of the carrying values of our goodwill to determine whether events and circumstances indicate that impairment in
red.
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value may have occurred. A variety of factors could cause the carrying value of goodwill or an intangible asset to become impai
Should a review indicate impairment, a write-down of the carrying value of the goodwill or intangible asset would occur, resulting in a
non-cash charge, which could adversely affect our results of operations and could also lead to our inability to comply with certainrr
covenants in our financing documents, which could cause a default under those agreements.
We are subject to anticorruption laws including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010, anti-money e
laundering laws and economic sanctions laws, and our failure to comply therewith, particularly as we continue to expand
internationally, could result in penalties that could harm our reputation and have a material adverse effect on our business,
prospects, results of operations, financial condition and cash flows.
Anticorruption Laws. We are subject to the FCPA, which generally prohibits companies and their agents or intermediaries from
making improper payments to foreign officials for the purpose of obtaining or keeping business and/or other benefits. Although we
comply with the FCPA and other
have policies and procedures designed to ensure that we, our employees, agents and intermediaries
ctions taken
anticorruption laws, such policies or procedures may not work effectively all of the time or protect us against liability for a
by our employees, agents and intermediaries with respect to our business or any businesses that we may acquire. In the event that we
believe, or have reason to believe, that our employees, agents or intermediaries have or may have violated applicable anti-corruption
laws, including the FCPA, we may be required to investigate or have a third party investigate the relevant facts and circumstances,
which can be expensive and require significant time and attention from senior management. Our continued operation and expansion
outside the United States could increase the risk of such violations in the future.
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We are subject to other anti-corruption laws, such as the Bribery Act, which prohibit the giving or receiving of a bribe to any person,
including but not limited to public officials, and make failing to prevent bribery by relevant commercial organizations a criminal
offense. This offense applies when any person associated with the organization offers or accepts bribes anywhere in the world
intending to obtain or retain a business advantage for the organization or in the conduct of business. The Bribery Act is applicable to
businesses that operate in the United Kingdom such as us. The Bribery Act is broader in scope than the FCPA in that it directly
addresses commercial bribery in addition to bribery of government officials and it does not allow certain exceptions, notably
facilitation payments that are permitted by the FCPA.
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Other countries in which we operate or have operated, including Brazil and other countries where we intend to operate also have
anticorruption laws, which we are, have been or will be subject to.
If we are not in compliance with the FCPA, the Bribery Act and other laws governing the conduct of business with government
entities (including local laws), we may be subject to criminal and civil penalties and other remedial measures, which could have an
adverse effect on our business, reputation, results of operations and financial condition. Any investigation of any potential violations
of the FCPA, the Bribery Act or other anticorruption laws by U.S. or foreign authorities could harm our reputation and could have a
material adverse effect on our business, reputation, prospects, results of operations, financial condition and cash flows.
aa
Anti–Money Laundering Laws. We are also subject to anti-money laundering laws and related compliance obligations in the United
States and other jurisdictions in which we do business. In the United States, the USA PATRIOT Act and the Bank Secrecy Act require
us to maintain an anti-money laundering compliance program covering certain of our business activities. The program must include:
(1) the development of internal policies, procedures and controls; (2) designation of a compliance officer; (3) an ongoing employee
training program; and (4) an independent audit function to test the program. If we are not in compliance with U.S. or other anti-money
laundering laws, we may be subject to criminal and civil penalties and other remedial measures, which could have an adverse effect on
our business, results of operations, financial condition and cash flows. Any investigation of any potential violations of anti-money
laundering laws by U.S. or international authorities could harm our reputation and could have a material adverse effect on our
business, prospects, results of operations, financial condition and cash flows. In the United Kingdom, we are also subject to specific
anti-money laundering and counter terrorist financing requirements that require us to develop and maintain anti-money laundering and
counter terrorist financing policies and procedures, including reporting suspicious activity to the National Crime Agency pursuant to
the Proceeds of Crime Act 2002 and the Terrorism Act 2000. On July 9, 2018, the European Union’s Fifth Anti-Money Laundering
Directive came into force, which introduced four key changes to the anti-money laundering regime but are not applicable to us.
ff
Economic Sanctions Laws. The United States has imposed economic sanctions that affect transactions with designated foreign
countries, nationals and others. In particular, the United States prohibits U.S. persons from engaging with individuals and entities
ed by the
identified as “Specially Designated Nationals,” such as terrorists and narcotics traffickers. These prohibitions are administer
ff
29
Treasury Department’s Office of Foreign Assets Control (“OFAC”). OFAC rules prohibit U.S. persons from engaging in financial
transactions with or relating to the prohibited individual, entity or country, require the blocking of assets in which the individual,
entity or country has an interest. Blocked assets (e.g., property or bank deposits) cannot be paid out, withdrawn, set off or transferred
in any manner without a license from OFAC. Other countries in which we operate also maintain economic and financial sanctions
regimes. In the event that we believe, or have reason to believe, that our employees, agents or intermediaries have or may have
violated applicable laws or regulations, we may be required to investigate or have a third party investigate the relevant facts and
circumstances, which can be expensive and require significant time and attention from senior management. If we are not in
compliance with OFAC regulations and other economic and financial sanctions regulations, we may be subject to criminal and civil
penalties and other remedial measures, which could have an adverse effect on our business, prospects, results of operations, financial
condition and cash flows. Any investigation of any potential violations of OFAC regulations or other economic sanctions by U.S.
or
foreign authorities could harm our reputation and could have a material adverse effect on our business, prospects, results of operations,
financial condition and cash flows.
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Our continued international expansion could increase the risk of violations of FCPA, the Bribery Act, anti-money laundering laws,
OFAC regulations, or similar applicable laws and regulations in the future.
Increased competition from banks, credit card companies, other consumer lenders, an
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products and services could adversely affect our business, prospects, results of operations, financial condition and cash flows
d other entities offering similar financial
d
.
We have many competitors. Our principal competitors are consumer loan and finance companies, CSOs, online lenders, credit card
companies, consumer finance companies, pawnshops and other financial institutions that offer similar financial services. Many other
financial institutions or other businesses that do not now offer products or services directed toward our traditional customer base,
many of whom may be much larger than us, could begin doing so. Significant increases in the number and size of competitors for our
business could result in a decrease in the number of loans that we fund, resulting in lower levels of revenue and earnings in these
categories.
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Competitors of our business may operate, or begin to operate, under business models less focused on legal and regulatory compliance,
which could put us at a competitive disadvantage. Some of our U.S. competitors operate using other business models, including a
“tribal model” where the lender follows the laws of a Native American tribe regardless of the state in which the customer resides.
Competitors using these models may be able to lend in jurisdictions where we do not and may have higher revenue per customer and
significantly less burdensome compliance requirements, among other advantages. Additionally, negative perceptions about these
models could cause legislators or regulators to pursue additional industry restrictions that could affect the business model under which
we operate. To the extent that these models or other new lending models gain acceptance among consumers, small businesses and
investors or that they face less onerous regulatory restrictions than we do, we may be unable to replicate their business practices or
otherwise compete with them effectively, which could cause demand for our products
to decline substantially. We may be unable to
compete successfully against any or all of our current or future competitors. As a result, we could lose market share and our revenue
could decline, thereby affecting our ability to generate sufficient cash flow to service our indebtedness and fund our operations. Any
such changes in our competition could materially adversely affect our business, prospects, results of operations, financial con
dition
t
and cash flows.
ff
Our success is dependent, in part, upon our officers, and if we are not able to attract and retain qualified officers, our business
could be materially adversely affected.
ii
Our success depends, in part, on our officers, which are a relatively small group of individuals. Many members of the senior
management team have significant industry experience, and we believe that our senior management would be difficult to replace, if
necessary. Because the market for qualified individuals is highly competitive, we may not be able to attract and retain qualified
officers or candidates. In addition, increasing regulations on and negative publicity about the consumer financial services industry
could affect our ability to attract and retain qualified officers. If we are unable to attract or retain qualified officers, it
could materially
adversely affect our business.
dd
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Our international operations subject us to foreign exchange risk.
We are subject to the risk of unexpected changes in foreign currency exchange rates by virtue of our loans to residents of Brazil and
the United Kingdom. In 2018, 15.0% of our total revenue was derived from our international operations. Our results of operations and
certain of our intercompany balances associated with our Brazil and United Kingdom businesses are denominated in their respective
currencies and are, as a result, exposed to foreign exchange rate fluctuations. Upon consolidation, as exchange rates vary, gross profit
and other operating results may differ materially from expectations, and we may record significant gains or losses on the
remeasurement of intercompany balances.
30
A sustained deterioration in the economy could reduce demand for our products and services and result in reduced earnings.
A sustained deterioration in the economy could cause deterioration in the performance of our loan and finance receivables portfolios.
An economic slowdown could result in a decreased number of loans and financing being made to customers due to higher
unemployment or an increase in defaults in our products. During an economic slowdown, we could be required to tighten our
underwriting standards, which would likely reduce loan and finance receivable balances, and we could face more difficulty in
collecting defaulted receivables, which could lead to an increase in losses.
ff
We may be unable to protect our proprietary technology and analytics or keep up with that of our competitors.
The success of our business depends to a significant degree upon the protection of our software, fraud defenses, underwriting
algorithms and other proprietary intellectual property rights. We may be unable to deter misappropriation of our proprietary
information, detect unauthorized use or take appropriate steps to enforce our intellectual property rights. In addition, competitors
could, without violating our proprietary rights, develop technologies that are as good as or better than our technology. Our failure to
protect our software and other proprietary intellectual property rights or to develop technologies that are as good as our competitors’
could put us at a disadvantage relative to our competitors. Any such failures could have a material adverse effect on our business.
We may be subject to intellectual property disputes, which are costly to defend and could harm our business and operating results.
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From time to time, we face, and we expect to face in the future, allegations that we have infringed the trademarks, copyrights, patents
or other intellectual property rights of third parties, including from our competitors or non-practicing entities. Patent and other
intellectual property litigation may be protracted and expensive, and the results are difficult to predict and may require us to stop
offering certain products or product features, acquire licenses, which may not be available at a commercially reasonable price or at all,
or modify our products, product features, processes or websites while we develop non-infringing substitutes.
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In addition, we use open source software in our technology platform and plan to use open source software in the future. From ti
time, we may face claims from parties claiming ownership of, or demanding release of, the source code, potentially including ou
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valuable proprietary code, or derivative works that were developed using such software, or otherwise seeking to enforce the terms of
the applicable open source license. These claims could also result in litigation, require us to purchase a costly license or require us to
devote additional research and development resources to change our platform, any of which could have a negative effect on our
business and operating results.
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We are subject to cyber security risks and security breaches and may incur increasing costs in an effort to minimize those risks and
to respond to cyber incidents.
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Our business involves the storage and transmission of consumers’ and businesses’ proprietary information, and security breaches
could expose us to a risk of loss or misuse of this information, litigation, and potential liability. We are entirely dependent on the
secure operation of our websites and systems as well as the operation of the internet generally. While we have incurred no material
cyber-attacks or security breaches to date, a number of other companies have disclosed cyber-attacks and security breaches, some of
which have involved intentional attacks. Attacks may be targeted at us, our customers, or both. Although we devote significant
resources to maintain and regularly upgrade our systems and processes that are designed to protect the security of our computer
systems, software, networks and other technology assets and the confidentiality, integrity and availability of information belonging to
us and our customers, our security measures may not provide absolute security. Despite our efforts to ensure the integrity of our
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systems, it is possible that we may not be able to anticipate or to implement effective preventive measures against all securit
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of these types, especially because the techniques used change frequently or are not recognized until launched, and because cybe
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attacks can originate from a wide variety of sources, including third parties outside the company such as persons who are involved
with organized crime or associated with external service providers or who may be linked to terrorist organizations or hostile foreign
governments. These risks may increase in the future as we continue to increase our mobile and other internet-based product offerings
and expand our internal usage of web-based products and applications or expand into new countries. If an actual or perceived breach
of security occurs, customer and/or supplier perception of the effectiveness of our security measures could be harmed and could result
in the loss of customers, suppliers or both. Actual or anticipated attacks and risks may cause us to incur increasing costs, including
costs to deploy additional personnel and protection technologies, train employees, and engage third party experts and consultants.
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A successful penetration or circumvention of the security of our systems could cause
serious negative consequences, including
significant disruption of our operations, misappropriation of our confidential information or that of our customers, or damage to our
computers or systems or those of our customers and counterparties, and could result in violations of applicable privacy and other laws,
financial loss to us or to our customers, loss of confidence in our security measures, customer dissatisfaction, significant litigation
exposure, and harm to our reputation, all of which could have a material adverse effect on us. In addition, our applicants provide
sensitive information, including bank account information when applying for loans or financing. We rely on encryption and
authentication technology licensed from third parties to provide the security and authentication to effectively secure transmission of
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confidential information, including customer bank account and other personal information. Advances in computer capabilities, new
discoveries in the field of cryptography or other developments may result in the technology used by us to protect transaction data
being breached or compromised. Data breaches can also occur as a result of non-technical issues. In addition, federal and some state
regulators are considering rules and standards to address cybersecurity risks and many U.S. states and the United Kingdom have
already enacted laws requiring companies to notify individuals of data security breaches involving their personal data. These
mandatory disclosures regarding a security breach are costly to implement and may lead to widespread negative publicity, which may
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cause customers to lose confidence in the effectiveness of our data security measures.
Our servers are also vulnerable to computer viruses, physical or electronic break-ins, and similar disruptions, including denial-of-
service attacks. We may need to expend significant resources to protect against security breaches or to address problems caused by
breaches. Security breaches, including any breach of our systems or by persons with whom we have commercial relationships that
result in the unauthorized release of consumers’ personal information or businesses’ proprietary information, could damage our
reputation and expose us to a risk of loss or litigation and possible liability. In addition, many of the third parties who provide
products, services or support to us could also experience any of the above cyber risks or security breaches, which could impact our
customers and our business and could result in a loss of customers, suppliers or revenue.
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Any of these events could result in a loss of revenue and could have a material adverse effect on our business, prospects, results of
operations, financial condition and cash flows.
Our ability to collect payment on loans and maintain the accuracy of accounts may be adversely affected by computer viruses,
electronic break-ins, technical errors and similar disruptions.
The accessibility and automated nature of our platform may make for an attractive target for hacking, computer viruses, physical or
electronic break-ins and similar disruptions. Despite efforts to ensure the integrity of our platform, it is possible that we may not be
able to anticipate or to implement effective preventive measures against all security breaches of these types, in which case th
ere would
be an increased risk of fraud or identity theft, and we may experience losses on, or delays in the collection of amounts owed on, a
fraudulently induced loan. In addition, the software that we have developed is highly complex and may contain undetected technical
errors that could cause our computer systems to fail. Because each loan and financing provided involves our proprietary underwriting
and fraud scoring models, and the applications are highly automated, any failure of our computer systems involving our proprietary
credit and fraud scoring models and any technical or other errors contained in the software pertaining to our proprietary underwriting
and fraud scoring models could compromise the ability to accurately evaluate potential customers, which would negatively impact our
results of operations. Furthermore, any failure of our computer systems could cause an interruption in operations that may result in
disruptions or reductions in the amount of collections from the loans and financings we provide to customers. If any of these risks
were to materialize, it could have a material adverse effect on our business, prospects, results of operations, financial condition or cash
flows.
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If internet search engine providers change their methodologies for organic rankings or paid search results, or our organic
rankings or paid search results decline for other reasons, our new customer growth or volume from returning customers could
decline.
Our new customer acquisition marketing and our returning customer relationship management is partly dependent on search engines
such as Google, Bing and Yahoo! to direct a significant amount of traffic to our desktop and mobile websites via organic ranking and
paid search advertising. Our competitors’ paid search activities, pay per click or search engine marketing may result in their sites
receiving higher paid search results than ours and significantly increasing the cost of such advertising for us.
Our paid search activities may not produce (and in the past have not always produced) the desired results. Internet search engines
often revise their methodologies, which could adversely affect our organic rankings or paid search results, resulting in a decl
ine in our
new customer growth or existing customer retention, difficulty for our customers in using our web and mobile sites, more successful
organic rankings, paid search results or tactical execution efforts for our competitors than for us, a slowdown in overall growth in our
customer base and the loss of existing customers, and higher costs for acquiring returning customers, which could adversely impact
our business. In addition, search engines could implement policies that restrict the ability of consumer finance companies such as us to
advertise their services and products, which could preclude companies in our industry from appearing in a favorable location or any
location in the organic rankings or paid search results when certain search terms are used by the consumer. For example, in 2016,
Google implemented a new policy that prohibits lenders, lead providers and affiliates from advertising certain financial products on
Google AdWords. Advertisements for personal loans that require repayment within 60 days, or U.S. loans with an APR of 36 percent
or more, are no longer allowed on Google paid search advertising. In addition, Google requires that advertisements for personal loans
contain or link to information about the features, fees, risks and benefits of the advertised loan product.
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Our online marketing efforts are also susceptible to actions by third parties that could negatively impact our search results. Our sites
have experienced meaningful fluctuations in organic rankings and paid search results in the past, and we anticipate similar fluctuations
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in the future. Any reduction in the number of consumers or small businesses directed to our web and mobile sites could harm our
business and operating results.
Our operations could be subject to natural disasters and other business disruptions, which could adversely impact our future
revenue and financial condition and increase our costs and expenses.
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Our services and operations are vulnerable to damage or interruption from tornadoes, hurricanes, earthquakes, fires, floods, po
losses, telecommunications failures, terrorist attacks, acts of war, human errors and similar events. A significant natural disaster, such
as a tornado, hurricane, earthquake, fire or flood, could have a material adverse impact on our ability to conduct business, and our
insurance coverage may be insufficient to compensate for losses that may occur. Acts of terrorism, war, civil unrest, violence or
human error could cause disruptions to our business or the economy as a whole. Any of these events could cause consumer and small
business confidence to decrease, which could result in a decreased number of loans and financing being made to customers. Any of
these occurrences could have a material adverse effect on our business, prospects, results of operations, financial condition and cash
flows.
Failure to keep up with the rapid changes in e-commerce and the uses and regulation of the internet could harm our business.
The business of providing products and services such as ours over the internet is dynamic and relatively new. We must keep pace with
rapid technological change, consumer and small business use habits, internet security risks, risks of system failure or inadequacy, and
governmental regulation and taxation, and each of these factors could adversely impact our business. In addition, concerns about
fraud, computer security and privacy and/or other problems may discourage additional consumers and small businesses from adopting
or continuing to use the internet as a medium of commerce. In countries such as the United States and the United Kingdom, where e-
commerce generally has been available for some time and the level of market penetration of our online financial services is relatively
high, acquiring new customers for our services may be more difficult and costly than it has been in the past. In order to expand our
customer base, we must appeal to and acquire customers who historically have used traditional means of commerce to conduct their
financial services transactions. If these customers prove to be less profitable than our previous customers, and we are unable to gain
efficiencies in our operating costs, including our cost of acquiring new customers, our business could be adversely impacted.
Our business is subject to complex and evolving U.S. and international laws and regulations regarding privacy, data protection,
and other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in
claims, changes to our business practices, monetary penalties, increased cost of operations, or declines in user growth or
engagement, or otherwise harm our business.
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Our business is subject to a variety of laws and regulations in the United States and internationally that involve user privacy issues,
data protection, advertising, marketing, disclosures, distribution, electronic contracts and other communications, consumer protection
and online payment services. The introduction of new products or expansion of our activities in certain jurisdictions may subject us to
additional laws and regulations. In addition, international data protection, privacy, and other laws and regulations can be more
restrictive than those in the United States. U.S. federal and state and international laws and regulations, which can be enforced by
private parties or government entities, are constantly evolving and can be subject to significant change, and the U.S. government,
including the FTC and the Commerce Department, has announced that it is reviewing the need for greater regulation of the collection
of information concerning consumer behavior on the internet, including regulation aimed at restricting certain targeted advertising
practices. In addition, the application and interpretation of these laws and regulations are often uncertain, particularly in the new and
rapidly evolving e-commerce industry in which we operate, and may be interpreted and applied inconsistently from country to cou
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ntry
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and inconsistently with our current or past policies and practices. A number of proposals are pending before federal, state, and
international legislative and regulatory bodies that could significantly affect our business. There have been a number of recent
legislative proposals in the United States, at both the federal and state level, that could impose new obligations in areas such as
privacy. In addition, some countries are considering legislation requiring local storage and processing of data that, if enacted, would
increase the cost and complexity of delivering our services. These existing and proposed laws and regulations can be costly to comply
with and can delay or impede the development of new products, the expansion into new markets, result in negative publicity, increase
our operating costs, require significant management time and attention, and subject us to inquiries or investigations, claims or other
remedies, including demands that we modify or cease existing business practices or pay fines, penalties or other damages.
Growth may place significant demands on our management and our infrastructure and could be costly.
We have experienced substantial growth in our business. This growth has placed and may continue to place significant demands on
our management and our operational and financial infrastructure. Expanding our products or entering into new jurisdictions with new
or existing products can be costly and require significant management time and attention. Additionally, as our operations grow in size,
scope and complexity and our product offerings increase, we will need to enhance and upgrade our systems and infrastructure to offer
an increasing number of enhanced solutions, features and functionality. The expansion of our systems and infrastructure will require
us to commit substantial financial, operational and technical resources in advance of an increase in the volume of business, with no
33
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assurance that the volume of business will increase. Continued growth could also strain our ability to maintain reliable service levels
for our customers, develop and improve our operational, financial and management controls, develop and enhance our legal and
compliance controls and processes, enhance our reporting systems and procedures and recruit, train and retain highly skilled
personnel. Competition for these personnel is intense and is particularly intense for technology and analytics professionals. We may
not be successful in attracting and retaining qualified personnel. We have from time to time in the past experienced, and we expect to
experience in the future, difficulty in hiring and retaining highly skilled employees with appropriate qualifications. Many of the
companies with which we compete for experienced personnel have greater resources or more attractive compensation mixes than we
have had. Managing our growth will require significant expenditures and allocation of valuable management resources. Failure to
achieve the necessary level of efficiency in our organization as it grows could materially adversely affect our business, prospects,
results of operations, financial condition and cash flows and could impair our ability to continue current operations.
New top-level domain names may allow the entrance of new competitors or dilution of our brands, which may reduce the value of
our domain name assets.
We have invested heavily in promoting our brands, including our website addresses. The Internet Corporation for Assigned Names
and Numbers, the entity responsible for administering internet protocol addresses, has introduced additional new domain name
suffixes in different formats, many of which may be more attractive than the formats held by us and which may allow the entrance of
new competitors at limited cost. It may also permit other operators to register websites with addresses similar to ours, causing
customer confusion and dilution of our brands, which could materially adversely affect our business, prospects, results of operations,
financial condition and cash flows. Any defensive domain registration strategy or attempts to protect our trademarks or brands could
become a large and recurring expense and may not be successful.
Future acquisitions could disrupt our business and harm our financial condition and operating results.
Our success will depend, in part, on our ability to expand our product and service offerings and markets and grow our business in
response to changing customer demands, regulatory environments, technologies and competitive pressures. In some circumstances, we
may expand our offerings through the acquisition of complementary businesses, solutions or technologies rather than through internal
development. The identification of suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able
to successfully complete identified acquisitions. Furthermore, even if we successfully complete an acquisition, we may not be able to
successfully assimilate and integrate the business, technologies, solutions, personnel or operations of the business that we acquire,
particularly if key personnel of an acquired company decide not to work for us. In addition, we may issue equity securities to complete
an acquisition, which would dilute our stockholders’ ownership and could adversely affect the price of our common stock.
Acquisitions may also involve the entry into geographic or business markets in which we have little or no prior experience or may
expose us to additional material liabilities. Consequently, we may not achieve anticipated benefits of the acquisitions, which could
harm our operating results.
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We may incur property, casualty or other losses not covered by insurance.
We maintain a program of insurance coverage for various types of property, casualty and other risks. The types and amounts of
insurance that we obtain will vary from time to time, depending on availability, cost and management’s decisions with respect to risk
retention. The policies are subject to deductibles and exclusions that could result in our retention of a level of risk on a self-insurance
basis. Losses not covered by insurance could be substantial and may increase our expenses, which could harm our results of operations
and financial condition.
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The preparation of our financial statements and certain tax positions taken by us require the judgment of management, and we
implementation of new, or changes
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could be subject to risks associated with these judgments or could be adversely affected by the
in the interpretation of existing, accounting principles, financial reporting requirements or tax rules.
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The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amountsuu
of assets and liabilities, and disclosure of contingent assets and liabilities, at the dates of the consolidated financial statements and the
reported amounts of revenue and expenses during the reporting periods. In addition, management’s judgment is required in
determining the provision for income taxes, the deferred tax assets and liabilities and any valuation allowance recorded against
deferred tax assets. Management’s judgment is also required in evaluating whether tax benefits meet the more-likely-than-not
threshold for recognition under Accounting Standards Codification 740-10-25, Income Taxes. Upon audit, if the ultimate
determination of the taxes owed by us is for an amount in excess of amounts prev
iously accrued, we could be required to make certain
additional tax payments, which could materially adversely affect our financial condition, results of operations and cash flows.
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On December 22, 2017, the U.S. government enacted comprehensive Federal tax legislation commonly referred to as the U.S. Tax
Cuts and Jobs Act of 2017 (the “Tax Act”). The Tax Act made changes to the corporate tax rate, business-related deductions, among
other items, effective for taxable years beginning after December 31, 2017. In accordance with SEC Staff Accounting Bulletin No.
118 (“SAB 118”), the Company included certain adjustments, related to the finalization of computations related to the Tax Act, in
income tax expense as of December 31, 2018. As of December 22, 2018, the Company considers the one-year period provided for
under SAB 118 to be closed. Although our accounting for the effects of the Tax Act is finalized under SAB 118, there may be futuret
adjustments based on potential changes in the interpretation of the Tax Act, related regulations, or any subsequent guidance that may
be issued. While U.S. tax reform has reduced our effective tax rate, additional guidance or interpretations of the Tax Act could
negatively impact our financial results.
In addition, we prepare our financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) and its
interpretations are subject to change over time. If new rules or interpretations of existing rules require us to change our financial
reporting, our results of operations and financial condition could be materially adversely affected, and we could be required to restate
historical financial reporting.
Our U.S. consumer loan businesses are seasonal in nature, which causes our revenue an
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d earnings to fluctuate.
Our U.S. consumer loan businesses are affected by fluctuating demand for our products and services and fluctuating collection rates
throughout the year. Demand for our consumer loan products in the United States has historically been highest in the third and fourth
quarters of each year, corresponding to the holiday season, and lowest in the first quarter of each year, corresponding to our
customers’ receipt of income tax refunds. Typically, our cost of revenue for our consumer loan products in the United States, which
represents our loan loss provision, is lowest as a percentage of revenue in the first quarter of
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each year, corresponding to ou
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customers’ receipt of income tax refunds, and increases as a percentage of revenue for the remainder of each year. This seasonality
requires us to manage our cash flows over the course of the year. If our revenue or collections were to fall substantially below what we
would normally expect during certain periods, our ability to service debt and meet our other liquidity requirements may be adversely
affected, which could have a material adverse effect on our business, prospects, results of operations, and financial condition.
Risks Related to the Spin-Off
Enova International, Inc. was formed on September 7, 2011. Prior to November 13, 2014, we were a wholly-owned subsidiary of Cash
America. Since 2011, we have owned all of the assets and incurred all of the liab
ilities related to Cash America’s e-commerce
business, with some limited exceptions, in which case such assets were transferred to us and such liabilities were assumed by us
pursuant to a separation and distribution agreement (the “Separation and Distribution Agreement”) upon completion of a tax-free spin-
off (the “Spin-off”), which occurred on November 13, 2014. Following the Spin-off, we became an independent, publicly traded
company, and our shares of common stock are listed on the New York Stock Exchange under the symbol “ENVA.” On September 1,
2016, Cash America merged with First Cash Financial Services, Inc. and is now known as FirstCash, Inc. (“First Cash”).
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In connection with our Spin-off from Cash America, we and Cash America (and
our successors) agreed to indemnify each other
for certain liabilities. If we are required to act on our indemnities, we may need to divert cash to meet those obligations, and Cash
America’s (or its successors) indemnity could be insufficient or Cash America (or its successors) could be unable to satisfy its tt
indemnification obligations.
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Pursuant to the Separation and Distribution Agreement and other agreements with Cash America, Cash America (and any successor)
agreed to indemnify us for certain liabilities related to tax, regulatory, litigation or other liabilities, and we agreed to indemnify Cash
America (and any successor) for certain similar liabilities, in each case for uncapped amounts. Indemnities that we may be required to
provide Cash America (and any successor) are not subject to any cap, may be significant and could negatively impact our business,
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particularly indemnities relating to our actions that could impact the tax-free nature of the distribution. Third parties could
also seek to
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hold us responsible for any of the liabilities that Cash America (and any successor) agreed to retain. Further, the indemnity from Cash
America (and any successor) could be insufficient to protect us against the full amount of such liabilities, or Cash America (and any
successor) may be unable to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in recovering from
Cash America (and any successor) any amounts for which we are held liable, we may be temporarily required to bear these losses
ourselves and could suffer reputational risks if the losses are related to regulatory, litigation or other matters. Each of these risks could
have a material adverse effect on our business, prospects, results of operations, financial condition and cash flows.
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The Spin-off may expose us to potential liabilities arising out of state and federal fraudulent conveyance laws and legal
distribution requirements.
The Spin-off could be challenged under various state and federal fraudulent conveyance laws. An unpaid creditor or an entity vested
with the power of such creditor (such as a trustee or debtor-in-possession in a bankruptcy) could claim that the distribution left Cash
America insolvent or with unreasonably small capital or that Cash America intended or believed it would incur debts beyond its ability
to pay such debts as they mature and that Cash America did not receive fair consideration or reasonably equivalent value in the Spin-
off. If a court were to agree with such a claim, then such court could void the distribution as a fraudulent transfer and could impose a
number of different remedies, including without limitation, returning our assets or the distributed shares of our stock to Cash America,
voiding our liens and claims against Cash America, or providing Cash America with a claim for money damages against us in an
amount equal to the difference between the consideration received by Cash America and the fair market value of our Company at the
time of the distribution.
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The measure of insolvency for purposes of the fraudulent conveyance laws will vary depending on which jurisdiction’s law is applied.
Generally, however, an entity would be considered insolvent if either the fair saleable value of its assets is less than the amount of its
liabilities (including the probable amount of contingent liabilities), or it is unlikely to be able to pay its liabilities as they become due.
We do not know what standard a court would apply to determine insolvency. Further, a court could determine that Cash America was
insolvent at the time of or after giving effect to the distribution of Enova common stock.
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Under the Separation and Distribution Agreement, we are responsible for the debts, liabilities and other obligations related to the
business or businesses which we own and operate. Although we do not expect to be liable for any obligations not expressly assumed
by us pursuant to the Separation and Distribution Agreement, it is possible that we could be required to assume responsibility for
certain obligations retained by Cash America should Cash America (or its successor) fail to pay or perform its retained obligations.
Risks Related to our Indebtedness
We have incurred significant indebtedness, which could adversely affect our financ
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obligations under anticipated agreements governing our indebtedness.
ial condition and prevent us from fulfilling our
As of December 31, 2018 we had approximately $857.9 million of total debt outstanding. Interest expense on our indebtedness totaled
$80.5 million during the year ended December 31, 2018. Our level of debt could have important consequences to our stockholders,
including:
• limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other
general corporate requirements;
• requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby
reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate
purposes;
• increasing our vulnerability to general adverse economic and industry conditions;
• exposing us to the risk of increased interest rates to the extent that our borrowings are at variable rates of interest;
• limiting our flexibility in planning for and reacting to changes in the industry in which we compete;
• placing us at a disadvantage compared to other, less leveraged competitors or competitors with comparable debt and more
favorable terms and thereby affecting our ability to compete; and
• increasing our cost of borrowing.
We and our subsidiaries may incur significant additional indebtedness in the future. If new indebtedness is added to our current
indebtedness levels, the related risks that we face would increase.
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The terms of the agreements governing our indebtedness restrict our current and future operations, particularly our ability to
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respond to changes or to take certain actions, which could harm our long-term interests.
The agreements governing our indebtedness (including the indenture governing the 2024 Senior Notes, the 2025 Senior Notes and the
2017 Credit Agreement, as defined under “Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Liquidity and Capital Resources” in Part II, Item 7 of this report) contain various restrictive covenants and, in the case of
the 2017 Credit Agreement, require that we maintain certain financial ratios that impose operating and financial restrictions on us and
limit our ability to engage in actions that may be in our long-term best interests. These restrictive covenants, among other things,
restrict our ability to:
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• incur additional debt;
• incur or permit certain liens to exist;
• make certain investments;
• merge or consolidate with or into, or convey, transfer, lease or dispose of all or substantially all of our assets to, another
company;
• make certain dispositions;
• make certain payments; and
• engage in certain transactions with affiliates.
As a result of all of these covenants and restrictions, we may be:
• limited in how we conduct our business;
• unable to raise additional debt or equity financing to operate during general economic or business downturns; or
• unable to compete effectively or to take advantage of new business opportunities.
Any failure to comply with any of these financial and other affirmative and negative covenants could constitute an event of def
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ault
under our debt agreements, entitling the lenders to, among other things, terminate future credit availability under our 2017 Credit
Agreement, and/or increase the interest rate on outstanding debt, and/or accelerate the maturity of outstanding obligations under our
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debt agreements. Any such default could materially adversely affect our business, prospects, results of operations, financial c
and cash flows and could impair our ability to continue current operations. See “Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Liquidity and Capital Resources” in Part II, Item 7 of this report for additional information
concerning our indebtedness.
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We may not be able to generate sufficient cash to service our indebtedness and may be forced to take other actions to satisfy our
obligations under our indebtedness, which may not be successful.
Our ability to make scheduled payments on or refinance our debt obligations will depend on our financial condition and operating
performance and our ability to enter into other debt financings, which are subject to prevailing economic and competitive conditions
and to financial, business, legislative, regulatory, capital markets and other factors beyond our control. We might not be able to
maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our
indebtedness. For information regarding the risks to our business that could impair our ability to satisfy our obligations under our
indebtedness, see “Risk Factors—Risks Related to Our Business and Industry.” If our cash flows and capital resources are insufficient
to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments
and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance
our indebtedness. We may not be able to affect any such alternative measures on commercially reasonable terms or at all and, even if
successful, those alternative actions may not allow us to meet our scheduled debt service obligations. If we cannot make scheduled
payments on our debt, we will be in default, and lenders could declare all outstanding principal and interest to be due and payable, the
lenders under our 2017 Credit Agreement could terminate their commitments to loan money and we could be forced into bankruptcy
or liquidation. The agreements governing our indebtedness restrict our ability to dispose of assets and use the proceeds from those
dispositions and also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. We
may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations
then due. Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on
commercially reasonable terms or at all, would materially and adversely affect our financial condition, liquidity, results of operations
and cash flows and our ability to satisfy our obligations under our indebtedness.
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Changes in our financial condition or a potential disruption in the capital markets could reduce available capital.
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If funds are not available from our operations and any excess cash or from our 2017 Credit Agreement, we may be required to access
the banking and credit markets to meet our financial commitments and short-term liquidity needs. We also expect to periodically
access the debt capital markets to obtain capital to finance growth. Efficient access to
the debt capital markets will be critical to our
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ongoing financial success; however, our future access to the debt capital markets could become restricted due to a variety of factors,
including a deterioration of our earnings, cash flows, balance sheet quality, or overall business or industry prospects, adverse
regulatory changes, a disruption to or deterioration in the state of the capital markets or a negative bias toward our industry by market
participants. Disruptions and volatility in the capital markets may cause banks and other credit providers to restrict availability of new
credit. Due to the negative bias toward our industry, commercial banks and other lenders have restricted access to available credit to
participants in our industry, and we may have more limited access to commercial bank lending than other businesses. Our ability toy
obtain additional financing in the future will depend in part upon prevailing capital market conditions, and a potential disruption in the
capital markets may adversely affect our efforts to arrange additional financing on terms that are satisfactory to us, if at all. If adequate
funds are not available, or are not available on acceptable terms, we may not have sufficient liquidity to fund our operations, make
future investments, take advantage of acquisitions or other opportunities, or respond to competitive challenges and this, in turn, could
adversely affect our ability to advance our strategic plans. Additionally, if the capital and credit markets experience volatility, and the
availability of funds is limited, third parties with whom we do business may incur increased costs or business disruption and this could
adversely affect our business relationships with such third parties.
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Risks Related to our Common Stock and the Securities Market
Certain provisions of our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law may
discourage takeovers.
Our amended and restated certificate of incorporation authorizes our Board of Directors to issue preferred stock and to determine the
designations, powers, preferences, and relative, participating, optional, or other special rights, if any, and the qualifications,
limitations, or restrictions of our preferred stock, including the number of shares, in any series, without any further vote or action by
the stockholders. The rights of the holders of our common stock will be subject to the rights of the holders of any preferred stock that
may be issued in the future. The issuance of preferred stock could delay, deter, or prevent a change in control and could adversely
affect the voting power or economic value of our stock.
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In addition, some provisions of our amended and restated certificate of incorporation and amended and restated bylaws could make it
more difficult for a third party to acquire control of us, even if the change of control would be beneficial to our stockholders, including:
• limitations on the ability of our stockholders to call special meetings;
• limitations on the ability of our stockholders to act by written consent;
• a separate vote of 80% of the voting power of the outstanding shares of capital stock in order for stockholders to amend the
bylaws; and
• advance notice provisions for stockholder proposals and nominations for elections to the Board of Directors to be acted upon at
meetings of stockholders.
The market price of our shares may fluctuate widely.
The market price of our common stock may be influenced by many factors, some of which are beyond our control, including, among
other things:
• changes in federal, state or international laws and regulations affecting our industry;
• actual or anticipated variations in quarterly and annual operating results;
• changes in financial estimates and recommendations by research analysts following our common stock or the failure of research
analysts to cover our common stock;
• actual or anticipated changes in the United States or international economies;
• terrorist acts or wars;
• announcements by us or our competitors of significant acquisitions, strategic partnerships, divestitures, joint ventures, or other
t
strategic initiatives;
38
• the trading volume of our common stock; and
• the other risks and uncertainties described herein.
The stock markets have experienced price and volume fluctuations that have affected and continue to affect the market price of equity
securities of many companies. These fluctuations have often been unrelated or disproportionate to the operating performance of these
companies. These broad market fluctuations, as well as general economic, systemic, political, and market conditions, such as
recessions, loss of investor confidence or interest rate changes, may negatively affect the market price of our common stock.
If securities or industry analysts publish research that is unfavorable about our business, our stock price and trading volume
decline.
ff
could
The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about
us or our business. We currently have a limited number of analysts who are publishing research about us. In the event that one or more
of our analysts downgrades our stock or publishes misleading or unfavorable research about our business, our stock price could
decline. If one or more of these analysts ceases coverage of our company, demand for our stock may decrease, which could cause our
stock price or trading volume to decline.
We do not anticipate paying any dividends on our common stock in the foreseeable future. As a result, stockholders will need to
sell their shares of common stock to receive any income or realize a return on their investment.
We do not anticipate paying any dividends on our common stock in the foreseeable future. Any declaration and payment of future
dividends to holders of our common stock may be limited by the provisions of the Delaware General Corporation Law (“DGCL”) and
are limited by the terms of the 2017 Credit Agreement, 2024 Senior Notes, 2025 Senior Notes and our consumer loan securitizations.
The future payment of dividends, if permitted, will be at the sole discretion of our Board of Directors and will depend on many
factors, including our earnings, capital requirements, financial condition, and other considerations that our Board of Directors deem
relevant. As a result, to receive any income or realize a return on their investment, our stockhol
ders will need to sell their shares of
common stock.
uu
Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the exclusive
forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a
favorable judicial forum for disputes with us.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the sole
and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a
fiduciary duty owed to us or our stockholders by any of our directors, officers, employees or agents, (iii) any action asserting a claim
against us arising under the DGCL or (iv) any action asserting a claim against us that is governed by the internal affairs doctrine. Our
stockholders are deemed to have notice of and have consented to the provisions of our amended and restated certificate of
incorporation related to choice of forum. The choice of forum provision in our amended and restated certificate of incorporation may
limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.
a
f
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
PROPERTIES
We lease our corporate headquarters, which is located in Chicago, Illinois. We also maintain a leased office in Gurnee, Illinois for one
of our call center operations, Blue Ash, Ohio for The Business Backer operations, London, for our U.K. operations and São Paulo, for
will be
our Brazilian operations. We believe that our leased facilities are adequate to support our operations and that, as needed, we
able to obtain suitable additional facilities on commercially reasonable terms.
r
ITEM 3.
LEGAL PROCEEDINGS
Information concerning legal proceedings is incorporated herein by reference to Note 10, “Commitments and Contingencies,” to the
Consolidated Financial Statements.
39
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
40
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Principal Market
The principal market for our common stock is the New York Stock Exchange (“NYSE”), and our shares of common stock are listed
under the symbol “ENVA.”
Stockholders
There were 312 registered stockholders of record of Enova common stock as of February 22, 2019.
Dividends
We do not anticipate paying any dividends on our common stock in the foreseeable future. We currently intend to retain our future u
earnings for use in the operation and expansion of our business. The declaration and amount of any future dividends, however, will be
determined by our Board of Directors and will depend on our financial condition, earnings and capital requirements, covenants
associated with our debt obligations and any other factors that our Board of Directors believes are relevant. There can be no assurance,
however, that we will pay any cash dividends on our common stock in the future. In addition, the terms of our 2017 Credit Agreement,
2024 Senior Notes, 2025 Senior Notes and our consumer loan securitizations. limit our ability to pay future dividends. See
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in Part
II, Item 7 of this report.
Performance Graph
The following graph shows a comparison of the cumulative total shareholder return for our common stock to the total shareholder
return for the S&P SmallCap 600® Index and with our peer group from November 13, 2014 (the date our common stock began
trading on the NYSE) through December 31, 2018. This data assumes an investment of $100 in each of our common stock and the two
indices on November 13, 2014 and that all dividends were reinvested. Our peer group index is comprised of CBOE Holdings, Inc.,
CoreLogic, Inc., CoStar Group Inc., EZCORP, Inc., Fair Isaac Corporation, Green Dot Corporation, Investment Technology Group
Inc., Liquidity Services, Inc., Nelnet, Inc., OneMain Holdings, Inc., Regional Management Corp., Shutterfly, Inc., SS&C
Technologies Holdings, Inc., TripAdvisor Inc. and World Acceptance Corp.
f
$200
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0
1 1/1 3/1 4
1 2/3 1/1 4
3/3 1/1 5
6/3 0/1 5
9/3 0/1 5
1 2/3 1/1 5
3/3 1/1 6
6/3 0/1 6
9/3 0/1 6
1 2/3 1/1 6
3/3 1/1 7
6/3 0/1 7
9/3 0/1 7
1 2/3 1/1 7
3/3 1/1 8
6/3 0/1 8
9/3 0/1 8
1 2/3 1/1 8
Enova International, Inc. (ENVA)
S&P SmallCap 600 ®
Peer Group
41
Unregistered Sales of Equity Securities
We did not sell any unregistered securities during the three years ended December 31, 2018.
Issuer Purchases of Equity Securities
The following table provides the information with respect to purchases made by us of shares of our common stock.
Total
Number of
Shares
Purchased
as Part of
Publicly
Announced
Plan(b)
Total
Number of
Shares
Purchased(a)
Average
Price Paid
Per Share
Period
...............................................................
....
......
2018
October 1 – October 31, 2018
....
.............................................................
November 1 – November 30, 2018
....
.............................................................
December 1 – December 31, 2018
Total (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
— $
136,764
645,320
782,084
$
—
22.55
19.63
20.14
— $
128,499
622,738
751,237
Approximate
Dollar Value
of Shares that
May Yet Be
Purchased
Under the
Plan(b)
(in thousands)
21,454
18,563
6,360
6,360
$
(a) Includes shares withheld from employees as tax payments for shares issued under the Company’s stock-based compensation plans
of 8,265 and 22,582 shares for the months of November and December, respectively. See Note 12 in the Notes to Consolidated
Financial Statements for additional details on the Company’s stock-based compensation plans.
(b) On September 15, 2017, the Company announced the Board of Directors had authorized a share repurchase program for the
((
repurchase of up to $25.0 million of the Company’s common stock through December 31, 2019. The $25.0 million limit was
reached in January 2019, with all share repurchases having been through open market transactions. On January 31, 2019, the
Company announced the Board of Directors had authorized a share repurchase program for the repurchase of up to $50.0 million
of the Company’s common stock through December 31, 2020.
42
ITEM 6.
SELECTED FINANCIAL DATA
(In thousands, except per share)
Statement of Income Data:
Revenue
Cost of revenue
. ........................................
..................................
.
.................................................................
..........................................................................
.
Gross Profit
Expenses
Year Ended December 31,
2016
2015
2017
2014
$ 1,114,074
571,000
543,074
$ 843,741
396,632
447,109
$
745,569
327,966
417,603
$ 652,600
216,858
435,742
$ 809,837
266,787
543,050
Marketing
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)
Operations and technology (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
General and administrative
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)
Depreciation and amortization (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total Expenses(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)
Income from Operations (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Interest expense, net
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)
Foreign currency transaction (loss) gain, net (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
t
Loss on early extinguishment of debt
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)
Income before Income Taxes (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)
ff
Provision for income
taxes
t
Net Income (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $(cid:17)
Earnings Per Share:
Earnings per common share:
Basic
Diluted (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:3)(cid:3)(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
(cid:17)
d
(cid:17) $
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
(cid:17)
Dividends declared per common share
Weighted average common shares outstanding:
Basic(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)
Diluted(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
125,269
112,483
107,060
15,190
360,002
183,072
(79,348)
(2,320)
(24,991)
76,413
6,315
70,098
2.06
1.99
——
$
$
$
$
101,429
95,155
101,723
14,388
312,695
134,414
(74,003)
384
(22,895)
37,900
8,660
29,240
0.87
0.86
——
$
$
$
$
97,404
85,202
97,956
15,564
296,126
121,477
(65,603)
1,562
— —
57,436
22,834
34,602
1.04
1.03
— —
$
$
$
$
116,882
74,012
102,073
18,388
311,355
124,387
(52,883)
(985)
——
70,519
26,527
43,992
127,862
73,573
107,875
18,732
328,042
215,008
(38,474)
(35)
——
176,499
64,828
$ 111,671
1.33
1.33
——
$
$
$
3.38
3.38
3.71
33,993
35,176
33,523
34,132
33,192
33,462
33,006
33,026
33,000
33,008
Other Financial Data:
d
EBIT
DA (a) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 210,555
16,079
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Capital expenditures
(cid:17)
Gross profit ff margin (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Adjusted EBIT
d
(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Domestic revenue(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 946,515
(cid:17)
International revenue(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 167,559 $ 134,204 $
(cid:17)(cid:17)
Number of employees (at period end)(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
DA margin (a)
53.0%
18.7%
48.7%
18.9%
$ 709,537
$ 157,751
16,528
$
1,218
1,109
(cid:17)(cid:17)(cid:17)(cid:17)
$ 142,263
14,396
$
56.0 %
19.1%
$ 155,675
32,241
$
$ 235,819
13,284
$
67.1%
29.1%
$ 474,715
122,578 $ 142,358 $ 335,122
1,151
1,132
66.8%
23.9%
$ 510,242
1,099
$ 622,991
Balance Sheet Data (at period end):
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
52,917
Loans and finance receivables, net(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
859,946
Total assets(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) 1,328,185
857,929
Long-term debt(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)
347,768
y
Total stockholders' equity (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)
Other Operating Data:
Short-term loans (b) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
(cid:17)
Line of credit accounts (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Installment loans and RPAs (b)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)
93,113
227,563
732,282
gross (b)(cid:17)(cid:17)(cid:17) $ 1,052,958
Total combined loa
Combined loan and finance receivable originations
ns and finance receivables,
d
a
Short-term loans (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 1,223,700
393,547
Line of credit accounts(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) (cid:17)(cid:17)(cid:17)
925,786
Installment loans and RPAs
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 2,543,033
(cid:17)
Total combined originations (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
d
43
$
68,684
704,705
1,159,460
788,542
281,687
$
39,934
561,550
977,879
649,911
241,699
$
42,066
434,633
840,537
541,909
205,968
$
75,106
323,611
721,315
480,726
153,984
$ 102,547
170,068
589,268
$ 861,883
$
89,097
144,183
459,414
$ 692,694
$
83,944
100,855
351,279
$ 536,078
$
92,561
118,680
213,588
$ 424,829
$ 1,127,790
301,255
712,002
$ 2,141,047
$ 1,115,891
318,385
622,877
2,057,153
$
$ 1,178,359
237,325
516,953
$ 1,932,637
$ 1,303,231
439,562
461,432
$ 2,204,225
(a)The table below shows a reconciliation of Adjusted EBITDA, a non-GAAP measure, to Net Income and Adjusted EBITDA as a
percentage of total revenue, which is Adjusted EBITDA margin (dollars in thousands):
Net Income(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
ortization expenses(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Depreciation and amd
Interest expense, net
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Foreign currency transaction loss (gain), net (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
taxes (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
ff
Provision for income
Stock-based cod mpensation expense (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
$
$
70,098
15,190
79,348
2,320
6,315
11,660
Adjustments:
$
Year Ended December 31,
2016
34,602 $
15,564
65,603
(1,562)
22,834
8,522
2017
29,240
14,388
74,003
(384)
8,660
11,307
2015
43,992
18,388
52,883
985
26,527
9,630
2014
$ 111,671
18,732
38,474
35
64,828
664
bt(1) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Loss on ea yrly ext ginguishment of def
(2) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
d
Acquisition-related costs
Lease termination and relocation costs(3) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Regulatory settlement(4)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
DA(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Adjusted EBIT
d
Adjusted EBITDA margin calculated as follows:
A
24,991
—
——
633
$ 210,555
22,895
(2,358)
——
—
$ 157,751
$
— —
(3,300 )
— —
—
142,263
——
—
3,270
—
$ 155,675
———
—
1,415
—
$ 235,819
Total revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Adjusted EBIT
DA (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
d
Adjusted EBITDA as a percentage of total revenue (cid:3)(cid:17)(cid:17)(cid:17)
$ 1,114,074
$ 210,555
$ 843,741
$ 157,751
745,569
$
$ 652,600
$ 142,263 $ 155,675
18.9%
18.7%
19.1%
23.9%
$ 809,837
$ 235,819
29.1%
(1) For the years ended December 31, 2018 and 2017, the Company recorded $25.0 million ($19.6 million net of tax) and $22.9
n
million ($17.7 million net of tax) losses on early extinguishment of debt, respectively, related to the repurchase of $345.0
million of principal amount of senior notes in 2018 and the repurchase of $155.0 million principal amount of senior notes
and the redemption of $160.9 million of securitization notes in 2017.
(2) For the years ended December 31, 2017 and 2016, the Company recorded a $2.4 million ($1.8 million net of tax) and a $3.3
million ($2.0 million net of tax) fair value adjustment to contingent consideration, respectively, related to a prior year
acquisition.
(3) In May 2015, the Company relocated its headquarters and as a result incurred $3.3 million of facility cease-use charges
($2.1 million net of tax) consisting of remaining lease obligations and disposal costs on its prior headquarters. In June 2014
the Company incurred $1.4 million ($0.9 million net of tax) of early lease termination charges on our prior headquarters.
(4) For the year ended December 31, 2018, the Company consented to the issuance of a Consent Order by the CFPB, pursuant
to which it agreed, without admitting or denying any of the facts or conclusions made by the CFPB from its 2014 review of
the Company, to pay a civil money penalty of $3.2 million, which is nondeductible for tax purposes.
f
44
(b)See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial
Measures—Combined Consumer Loans” in Part II, Item 7 of this report for additional information about combined consumer
loans. The table below shows combined consumer loan balances, a non-GAAP measure, which is composed of Company-owned
consumer loan balances as reported on our consolidated balance sheets and consumer loans originated by third party lenders
through the CSO programs that are not included in our financial statements but are disclosures required by GAAP (in thousands):
(cid:17)
67,725
25,388
93,113
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Short-term loan balances, gross:
Company owned
Guaranteed by the Company (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Combined (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Line of credit account balances, gross:
Company owned (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Guaranteed by the Company (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Combined (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Installment loan and finance receivable balances, gross:
Company owned (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Guaranteed by the Company (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Combined (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Total loan and finance receivable balances, gross:
Company owned (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 1,023,254
29,704
Guaranteed by the Company (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 1,052,958
d
Combined (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
727,966
4,316
732,282
227,563
—
227,563
Year Ended December 31,
2016
2015
2017
$
$
$
$
$
$
$
$
73,672
28,875
102,547
170,068
—
170,068
584,009
5,259
589,268
827,749
34,134
861,883
$
$
$
$
$
$
$
$
63,005 $
26,092
89,097 $
58,793
25,151
83,944
144,183 $ 100,855
—
100,855 $ 100,855
—
453,307 $ 342,307
8,972
459,414 $ 351,279
6,107
660,495 $ 501,955
34,123
692,694 $ 536,078
32,199
$
$
$
$
$
$
$
$
2014
56,298
36,263
92,561
118,680
—
118,680
213,581
7
213,588
388,559
36,270
424,829
45
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
RECENT REGULATORY DEVELOPMENTS
Consumer Financial Protection Bureau
On October 6, 2017, the CFPB issued its final rule on payday and certain high-cost installment loans (“Final Rule”), which would
cover some of the loans we offer. The rule requires that lenders who make short-term loans and longer-term loans with balloon
payments reasonably determine consumers’ ability to repay the loans according to their terms before issuing the loans. The rule also
introduces new limitations on repayment processes for those lenders as well as lenders of other longer-term loans with an annual
percentage rate greater than 36 percent that include an ACH authorization or similar payment provision. If a consumer has two
consecutive failed payment attempts, the lender must obtain the consumer’s new and specific authorization to make further
withdrawals from the consumer’s bank account. For loans covered by the rule, lenders must provide certain notices to consumers
before attempting a first payment withdrawal or an unusual withdrawal and after two consecutive failed payment attempts. The rule
will apply to loan contracts entered into beginning in mid-2019. However, under the Congressional Review Act, Congress has 60
legislative days after publication of the rule in the Federal Register (which occurred on November 17, 2017) to overturn it by a
majority vote in both Houses of Congress. On January 16, 2018, the CFPB issued a statement that it intends to engage in a rulemaking
process to reconsider the Final Rule. On February 6, 2019, the CFPB issued two notices of proposed rulemaking: (1) to rescind the
Final Rule’s mandatory underwriting provisions, including the ability to repay requirements and (2) to delay the August 19, 2019
compliance date for those provisions until November 19, 2020. The proposed rescission of the underwriting provisions is open to
public comment for 90 days after the date of publication in the Federal Register. The delay is open to public comment for 30 days. It is
also likely that there will be legal challenges to the Final Rule before it goes into effect.
tt
RESULTS OF OPERATIONS
Our financial results for the year ended December 31, 2018 (“2018”) are summarized below.
• Revenue increased $270.4 million, or 32.0%, to $1,114.1 million in 2018 compared to $843.7 million in the year ended
December 31, 2017 (“2017”). A $237.0 million, or 33.4%, increase in domestic revenue to $946.5 million in 2018 from $709.5
million for 2017 and a $33.4 million, or 24.9%, increase in international revenue to $167.6 million in 2018 from $134.2 million
in 2017 both contributed to the total increase.
• Gross Profit increased $96.0 million, or 21.5%, to $543.1 million in 2018 compared to $447.1 million in 2017.
• Income from Operations increased $48.7 million, or 36.2%, to $183.1 million in 2018, compared to $134.4 million in 2017.
• Net Income was $70.1 million in 2018, compared to $29.2 million in 2017. Diluted earnings per share were $1.99 in 2018
compared to $0.86 in 2017.
46
The following tables reflect our results of operations for the periods indicated, both in dollars and as a percentage of total revenue
(dollars in thousands, except per share data):
Year Ended December 31,
2017
2016
Revenue
Loans and finance receivables revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 1,112,701 $
Other(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
r
Total Revenue
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
e
Cost of Revenue
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
t
Gross Profit
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Expenses
1,373
1,114,074
571,000
543,074
p
Total Expenses
s
Income from Operations
Marketing (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Operations and technology (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
General and administrative (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Depreciation and amortization (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Interest expense, net (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Foreign currency transaction (loss) gain, net (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Loss on early extinguishment of debt (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Income before Income Taxes (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
ff
taxes (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Provision for income
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Net Income
e
Diluted earnings per share
Revenue
g p
Loans and finance receivables revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Other (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total Revenue
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Cost of Revenue(cid:3)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross Profit (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Expenses
Total Expenses
Income from Operations
Marketing (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Operations and technology (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
General and administrative (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Depreciation and amortization (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Interest expense, net (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Foreign currency transaction (loss) gain, net (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
bt (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Loss on early extinguishment of def
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
ff
taxes (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Provision for income
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
s
Income before Income Taxes
Net Income
125,269
112,483
107,060
15,190
360,002
183,072
(79,348)
(2,320)
(24,991)
76,413
6,315
70,098 $
1.99 $
$
$
99.9%
0.1
100.0
51.3
48.7
11.2
10.1
9.6
1.4
32.3
16.4
(7.1)
(0.2)
(2.2)
6.9
0.6
6.3%
842,851 $ 744,092
1,477
745,569
327,966
417,603
890
843,741
396,632
447,109
101,429
95,155
101,723
14,388
312,695
134,414
(74,003 )
384
(22,895 )
37,900
8,660
29,240 $
0.86 $
97,404
85,202
97,956
15,564
296,126
121,477
(65,603)
1,562
——
57,436
22,834
34,602
1.03
99.9%
0.1
100.0
47.0
53.0
12.0
11.3
12.1
1.7
37.1
15.9
(8.7 )
0.0
(2.7 )
4.5
1.0
3.5%
99.8%
0.2
100.0
44.0
56.0
13.1
11.4
13.1
2.1
39.7
16.3
(8.8)
0.2
0.0
7.7
3.1
4.6%
NON-GAAP FINANACIAL MEASURES
In addition to the financial information prepared in conformity with generally accepted accounting principles (“GAAP”), we provide
historical non-GAAP financial information. We believe that presentation of non-GAAP financial information is meaningful and useful
in understanding the activities and business metrics of our operations. We believe that these non-GAAP financial measures reflect an
additional way of viewing aspects of our business that, when viewed with our GAAP results, provide a more complete understanding
of factors and trends affecting our business.
We provide non-GAAP financial information for informational purposes and to enhance understanding of our GAAP consolidated
financial statements. Readers should consider the information in addition to, but not instead of or superior to, our consolidated
47
financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated
differently by other companies, limiting the usefulness of those measures for comparative purposes.
Adjusted Earnings Measures
In addition to reporting financial results in accordance with GAAP, we have provided adjusted earnings and adjusted earnings pe
r share,
or, collectively, the Adjusted Earnings Measures, which are non-GAAP measures. We believe that the presentation of these measures
provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with
varying capital structures, compensation strategies, derivative instruments and amortization methods, which provides a more completemm
understanding of our financial performance, competitive position and prospects for the future. We also believe that investors regularly
rely on non-GAAP financial measures, such as the Adjusted Earnings Measures, to assess operating performance and that such measures
may highlight trends in our business that may not otherwise be apparent when relying on financial measures calculated in accord
ance
aa
with GAAP. In addition, we believe that the adjustments shown below are useful to investors in order to allow them to compare our
financial results during the periods shown without the effect of each of these income or expense items.
aa
The following table provides reconciliations between net income and diluted earnings per share calculated in accordance with GAAP
to the Adjusted Earnings Measures, which are shown net of tax (in thousands, except per share data):
Net Income(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Adjustments:
Loss on early extinguishment of debt(a)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
qAcquisition-related costs(b) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Intangible asset amortization (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Stock-based compensation expense (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Foreign currency transaction loss (gain), net (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Cumulative tax effect of adjustments (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Discrete tax adjustments(c) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Regulatory settlement(d) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Adjusted earnings (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
t
g
y
Year Ended December 31,
2017
2016
70,098 $
29,240 $
34,602
24,991
——
1,070
11,660
2,320
(8,885)
(11,237)
633
90,650 $
22,895
(2,358 )
1,080
11,307
(384)
(7,435 )
(7,452 )
——
46,893 $
—
(3,300)
1,137
8,522
(1,562)
(1,907)
—
——
37,492
Diluted earn
d
Adjustments:
ings per share (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
1.99 $
0.86 $
1.03
bt(a)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Loss on early extinguishment of def
qAcquisition related costs(b) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Intangible asset amortization (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Stock-based cod mpensation expense (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Foreign currency transaction loss (gain), net (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Cumulative tax effect of adjustments(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Discrete tax adjustments(c) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Regulatory settlement(d) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Adjusted earnings per share (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
g
y
0.71
——
0.03
0.33
0.07
(0.25)
(0.32)
0.02
2.58 $
0.67
(0.07 )
0.03
0.33
(0.01 )
(0.22 )
(0.22 )
——
1.37 $
—
(0.10)
0.04
0.26
(0.05)
(0.06)
—
——
1.12
(a) For the years ended December 31, 2018 and 2017, we recorded $25.0 million ($19.6 million net of tax) and $22.9 million ($17.7
million net of tax) losses on early extinguishment of debt, respectively, related to the repurchase of $345 million of principal
amount of senior notes in 2018 and the repurchase of $155.0 million principal amount of senior notes and the redemption of
$160.9 million of securitization notes in 2017.
aa
(b) For the years ended December 31, 2017 and 2016, we recorded a $2.4 million ($1.8 million net of tax) and a $3.3 million ($2
d
.0
million net of tax) fair value adjustment to contingent consideration, respectively, related to a prior year acquisition.
(c) For the years ended December 31, 2018 and 2017, we recorded income tax benefits of $11.2 million and $7.5 million, respectively,
from the U.S. Tax Cuts and Jobs Act.
(d) For the year ended December 31, 2018,
tt
we consented to the issuance of a Consent Order by the CFPB, pursuant to which it
agreed, without admitting or denying any of the facts or conclusions made by the CFPB from its 2014 review of us, to pay a civil
money penalty of $3.2 million, which is nondeductible for tax purposes.
48
Adjusted EBITDA
The table below shows Adjusted EBITDA, which is a non-GAAP measure that we define as earnings excluding depreciation,
amortization, interest, foreign currency transaction gains or losses, taxes and stock-based compensation expense. We believe Adjusted
EBITDA is used by investors to analyze operating performance and evaluate our ability to incur and service debt and our capacity for
making capital expenditures. Adjusted EBITDA is also useful to investors to help assess our estimated enterprise value. In addition,
we believe that the adjustments for loss on early extinguishment of debt, acquisition-related costs and the regulatory settlement shown
below are useful to investors in order to allow them to compare our financial results during the periods shown without the effect of the
income or expense items. The computation of Adjusted EBITDA as presented below may differ from the computation of similarly-
titled measures provided by other companies (dollars in thousands):
d
tt
Net Income (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Depreciation and amd
ortization expenses (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Interest expense, net (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Foreign currency transaction loss (gain), net (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Provision for income
taxes (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
ff
Stock-based cod mpensation expense (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Adjustments:
Year Ended December 31,
2017
29,240 $
14,388
74,003
(384)
8,660
11,307
70,098 $
15,190
79,348
2,320
6,315
11,660
2016
34,602
15,564
65,603
(1,562)
22,834
8,522
bt(a) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Loss on early extinguishment of def
(b) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Acquisition-related costs
d
Regulatory settlement(d) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
d
Adjusted EBIT
DA (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
24,991
—
633
210,555 $
22,895
(2,358 )
— —
——
(3,300)
——
157,751 $ 142,263
Adjusted EBITDA margin calculated as follows:
Total Revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 1,114,074 $
210,555 $
DA (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
d
Adjusted EBIT
18.9%
Adjusted EBITDA as a percentage of total revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
843,741 $ 745,569
157,751 $ 142,263
18.7%
19.1%
Refer to footnotes in previous table for explanation of (a), (b), and (d)
Constant Currency Basis
In addition to reporting financial results in accordance with GAAP, we have provided certain other non-GAAP financial information on a
constant currency basis. Outside of the United States, we currently operate in the United Kingdom and Brazil. During 2018, 2017 and
2016, 15.0%, 15.9% and 16.4% of our revenue, respectively, originated in currencies other than the U.S. Dollar, principally the British
Pound Sterling and Brazilian Real. As a result, changes in our reported revenue and profits include the impacts of changes in foreign
ff
currency exchange rates. We provide constant currency assessments in the following discussion and analysis to isolate the impac
t of the
fluctuation in foreign exchange rates and utilize constant currency results in our analysis of performance. Our constant currency
me as in the prior fiscal year periods. All
n
assessment assumes foreign exchange rates in the current fiscal periods remained the sa
conversion rates below are based on the U.S. Dollar equivalent to one of the applicable foreign currencies:
aa
British Pound (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Brazilian Real (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
British Pound (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Brazilian Real (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Year Ended December 31,
2018
1.3353
0.2753
2017
1.2891
0.3134
% Change
3.6%
(12.2)%
Year Ended December 31,
2017
1.2891
0.3134
2016
1.3554
0.2884
% Change
(4.9)%
8.6%
We believe that our non-GAAP constant currency assessments are a useful measure, indicating the actual growth and profitability of
our operations.
49
Combined Loans and Finance Receivables
Combined loans and finance receivables is a non-GAAP measure that includes both loans and RPAs we own and loans we guarantee,
which are either GAAP items or disclosures required by GAAP. We believe this non-GAAP measure provides investors with
important information needed to evaluate the magnitude of potential receivable losses and the opportunity for revenue performance of
the loans and finance receivables portfolio on an aggregate basis. We also believe that the comparison of the aggregate amounts from
period to period is more meaningful than comparing only the amounts reflected on our consolidated balance sheets since both revenue
and cost of revenue are impacted by the aggregate amount of receivables we own and those we guarantee as reflected in our
consolidated financial statements.
YEAR ENDED 2018 COMPARED TO YEAR ENDED 2017
Revenue and Gross Profit
Revenue increased $270.4 million, or 32.0%, to $1,114.1 million for 2018 as compared to $843.7 million for 2017. On a constant
currency basis, revenue increased by $269.7 million, or 32.0%, for 2018 compared to 2017. The change in revenue was driven by an
increase in revenue of $237.0 million from our domestic operations, primarily resulting from a 38.4% increase in domestic line of
credit accounts revenue in 2018 and a 38.2% increase in domestic installment loan and RPA revenue compared to 2017 driven by
growth in these products. Additionally, revenue from international operations increased $33.4 million (or an increase of $32.7 million
on a constant currency basis), due primarily to a 39.7% increase in international installment loan revenue and a 10.6% increase in
international short-term loan revenue in 2018 compared to 2017.
Our gross profit increased by $96.0 million or 21.5% to $543.1 million for 2018 from $447.1 million for 2017. On a constant currency
basis, gross profit increased by $94.5 million for 2018 compared to 2017. Our gross profit as a percentage of revenue (“gross profit
margin”) decreased to 48.7% in 2018 from 53.0% in 2017. The decrease in gross profit margin was primarily driven by the strong new
customer growth of our domestic and international installment portfolios resulting in a higher mix of new customers overall, which
require higher loss provisions as new customers default at a higher rate than returning customers with a successful history of loan
performance. Growth in our domestic near-prime installment portfolio also contributed to the lower gross profit margin, as thes
e
ff
products typically have a lower margin than our short-term products. However, as the portfolio continues to scale and the underlying
longer-term loans continue to season, we expect to achieve increased marginal profitability.
The following tables set forth the components of revenue and gross profit, separated between domestic and international for 2018 and
2017 (dollars in thousands):
Year Ended December 31,
2018
2017
$ Change
% Change
Revenue by product:
Short-term loans (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Line of credit accounts (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Installment loans and RPAs (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total loan and finance receivable revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Other (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
219,210
363,495
529,996
1,112,701
1,373
$
Total revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 1,114,074 $
$
197,408
262,760
382,683
842,851
890
21,802
100,735
147,313
269,850
483
843,741 $ 270,333
11.0%
38.3%
38.5%
32.0%
54.3%
32.0%
Revenue by product (% to total):
Short-term loans (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Line of credit accounts (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Installment loans and RPAs
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total loan and finance receivable revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Other (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
d
19.7%
32.6%
47.6%
99.9%
0.1%
100.0%
23.4 %
31.1%
45.4 %
99.9%
0.1 %
100.0%
50
Year Ended December 31,
2018
2017
$ Change
% Change
Domestic:
Revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Cost of revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross profit (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross profit ff margin (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
$ 946,515
485,382
$ 709,537
335,454
$
$ 461,133 $ 374,083 $
236,978
149,928
87,050
48.7%
52.7%
(4.0 )%
International:
Revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Cost of revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross profit (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross profit ff margin (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
$ 167,559 $ 134,204 $
$
85,618
81,941 $
48.9%
61,178
73,026 $
54.4%
33,355
24,440
8,915
(5.5 )%
Total:
Revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Cost of revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross profit (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross profit ff margin (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
$ 1,114,074
571,000
$ 843,741
$
396,632
$ 543,074 $ 447,109 $
270,333
174,368
95,965
48.7%
53.0%
(4.3 )%
33.4%
44.7%
23.3%
(7.6)%
24.9%
39.9%
12.2%
(10.1)%
32.0%
44.0%
21.5%
(8.1)%
Loan and Finance Receivable Balances
The outstanding combined portfolio balance of loans and finance receivables, net of allowance and liability for estimated losses,
increased $150.9 million, or 20.5%, to $887.5 million as of December 31, 2018 from $736.6 million as of December 31, 2017, due
primarily to increased demand for our domestic near-prime installment product and an increase in international loan balances (upu
17.3% on a constant currency basis). The outstanding loan balance for our domestic near-prime product increased 26.7% as of
December 31, 2018 compared to December 31, 2017, resulting in a domestic near-prime portfolio balance that comprises
approximately 45% of our total loan and finance receivables portfolio balance while short-term loans comprise approximately 9%. We
expect this trend to continue as we expand our near-prime installment product offering in 2019. We expect the loan balances for our
domestic near-prime installment loan product will continue to comprise a larger percentage of the total loan and finance receivable
portfolio, due to consumer demand for the product and its longer loan term. See “—Non-GAAP Financial Measures—Combined
Loans and Finance Receivables” above for additional information related to combined loans and finance receivables.
aa
r
The combined loan and finance receivable balance includes $1,023.3 million and $827.7 million as of December 31, 2018 and 2017,
respectively, of our Company-owned receivables balances before the allowance for
losses of $163.3 million and $123.0 million provided
in the consolidated financial statements for December 31, 2018 and 2017, respectively. The combined loan and finance receivable
balance also includes $29.7 million and $34.1 million as of December 31, 2018 and 2017, respectively, of loan and finance receivable
balances that are guaranteed by us, which are not included in our consolidated balance sheets, with the exception of the liability for
estimated losses of $2.2 million and $2.3 million, which is included in “Accounts payable and accrued expenses” as of December 31,
2018 and 2017, respectively.
a
The following tables summarize loan and finance receivable balances outstanding as of December 31, 2018 and 2017 (dollars in
thousands):
f
Ending loans and finance receivables:
As of December 31,
Company
Owned(a)
Guaranteed
by the
Company(a)
Combined(b)
Company
Owned(a)
2017
Guaranteed
by the
Company(a)
Combined(b)
93,113 $ 73,672 $ 28,875 $ 102,547
Short-term loans (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
170,068
Line of credit accounts (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
589,268
Installment loans and RPAs (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
861,883
Total ending loans and finance receivables, gross (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)
Less: Allowance and liabilities for losses(a) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(125,302)
Total ending loans and finance receivables, net (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 859,946 $ 27,538 $ 887,484 $ 704,705 $ 31,876 $ 736,581
Allowance and liability for losses as a % of loans
227,563
727,966
1,023,254
(163,308)
227,563
732,282
1,052,958
(165,474)
170,068
584,009
827,749
(123,044)
—
4,316
29,704
(2,166)
—
5,259
34,134
(2,258)
67,725 $ 25,388 $
and finance receivables, gross (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
16.0%
7.3%
15.7%
14.9%
6.6%
14.5%
51
As of December 31,
Company
Owned(a)
Guaranteed
by the
Company(a)
Combined(b)
Company
Owned(a)
2017
Guaranteed
by the
Company(a)
Combined(b)
Ending loans and finance receivables:
Total domestic, gross (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total international, gross (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total ending loans and finance receivables, gross (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)
s
$ 902,447
120,807
$1,023,254
$ 29,704
—
$ 29,704
$ 932,151
120,807
$1,052,958
$ 716,555 $ 34,134
—
$ 827,749 $ 34,134
111,194
$ 750,689
111,194
$ 861,883
(a) GAAP measure. The loan and finance receivable balances guaranteed by us relate to loans originated by third-party lenders
d
through the CSO programs and are not included in our consolidated balance sheets.
(b) Except for allowance and liability for estimated losses, amounts represent non-GAAP measures.
tt
Average Amount Outstanding per Loan
The average amount outstanding per loan is calculated as the total combined loans, gross balance at the end of the period divided by
the total number of combined loans outstanding at the end of the period. The following table shows the average amount outstanding
per loan by product at December 31, 2018 and 2017:
Average amount outstanding per loan (in ones)(a)
Short-term loans(b) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Line of credit accounts (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Installment loans(b)(c)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)
Total loans(b)(c) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
As of December 31,
2017
467 $
1,577
2,189
1,553 $
492
1,384
2,174
1,431
(a) The disclosure regarding the average amount per loan is statistical data that is not included in our consolidated financial
statements.
(b) Includes loans guaranteed by us, which represent loans originated by third-party lenders through the CSO programs and are not
included in our consolidated balance sheets.tt
(c) Excludes RPAs.
The average amount outstanding per loan increased to $1,553 from $1,431 during 2018 compared to 2017, mainly due to a greater mix m
of installment loans and line of credit accounts, which have higher average amounts outstanding per loan relative to short-term loans,
in 2018 compared to 2017.
m
Average Loan Origination
The average loan origination amount is calculated as the total amount of combined loans originated, renewed and purchased for the
period divided by the total number of combined loans originated, renewed and purchased for the period. The following table shows the
average loan origination amount by product for 2018 compared to 2017:
tt
Average loan origination amount (in ones)(a)
Short-term loans(b)
Line of credit accounts(c)
Installment loans(b)(d)
Total loans(b)(d)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
$
$
461 $
342
1,644
573 $
457
303
1,651
537
Year Ended
2017
(a) The disclosure regarding the average loan origination amount is statistical data that is not included in our consolidated financial
ff
statements.
(b) Includes loans guaranteed by us, which represent loans originated by third-party lenders through the CSO programs and are not
included in our consolidated balance sheets.
(c) Represents the average amount of each incremental draw on line of credit accounts.
(d) Excludes RPAs.
52
The average loan origination amount increased to $573 from $537 during 2018 compared to 2017, mainly due to a greater mix of
installment loans, which have a higher origination amount than short-term loans and line of credit accounts.
Loans and Finance Receivables Loss Experience
The allowance and liability for estimated losses as a percentage of combined loans and RPAs increased to 15.7% as of December 3
1,
f
2018 compared to 14.5% as of December 31, 2017, due primarily to a greater concentration of loans to new customers in the
installment loan and line of credit account portfolios. New customers require a greater reserve as these loans default at a higher rate
than returning customers with a successful history of loan performance.
The cost of revenue in 2018 was $571.0 million, which was composed of $571.1 million related to our Company-owned loans and
finance receivables and partially offset by a $0.1 million decrease in the liability for estimated losses related to loans we guaranteed
through the CSO programs. The cost of revenue in 2017 was $396.6 million, which was composed of $396.4 million related to our
Company-owned loans and finance receivables, and a $0.2 million increase in the liability for estimated losses related to loans we
guaranteed through the CSO programs. Total charge-offs, net of recoveries, were $529.3 million and $373.4 million in 2018 and 2017,
respectively.
The following tables show loan and finance receivable balances and fees receivable and the relationship of the allowance and liability
for losses to the combined balances of loans and finance receivables for each of the last eight quarters (dollars in thousands):
Loans and finance receivables:
Gross - Company owned
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross - Guaranteed by the Company(a)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Combined loans and finance receivables, gross(b)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Allowance and liability for losses on loans and finance
2018
Second
Quarter
Third
Quarter
Fourth
Quarter
$ 817,359 $ 871,915
28,681
900,596
26,594
843,953
$
990,368
30,106
1,020,474
$ 1,023,254
29,704
1,052,958
receivables (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
123,876
Combined loans and finance receivables, net(b)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 728,260 $ 776,720
Allowance and liability for losses as a % of loans and
115,693
153,829
866,645
$
165,474
887,484
$
finance receivables, gross(b)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
13.7%
13.8%
15.1 %
15.7%
2017
Second
Quarter
Third
Quarter
Fourth
Quarter
Loans and finance receivables:
Gross - Company owned
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross - Guaranteed by the Company(a)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Combined loans and finance receivables, gross(b)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Allowance and liability for losses on loans and finance
$ 598,717 $ 647,835 $ 742,796 $ 827,749
34,134
861,883
22,546
621,263
28,943
771,739
28,013
675,848
receivables (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
85,780
Combined loans and finance receivables, net(b)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 536,822 $ 590,068
Allowance and liability for losses as a % of loans and
84,441
107,077
664,662
$
125,302
736,581
$
finance receivables, gross(b)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
13.6%
12.7%
13.9 %
14.5%
(a) Represents loans originated by third-party lenders through the CSO programs, which are not included in our consolidated
financial statements.
(b) Non-GAAP measure.
Loans and Finance Receivables Loss Experience by Product
We evaluate loss rates for all financing products in our portfolio to determine credit quality and evaluate trends. For our products, we
evaluate loans and finance receivables losses as a percentage of the average loan and finance receivable balance outstanding or the
average combined loan and finance receivable balance outstanding, whichever is applicable, for each portfolio.
r
53
Short-term Loans
Demand for our short-term loan product in the United States has historically been highest in the third and fourth quarters of each year,
and lowest in the first quarter of each year, corresponding to our customers’ receipt of income tax refunds. The higher allowance and
liability for losses as a percentage of combined loan balance in 2018 was attributable to strong customer demand for short-term loans
in both the United States and the United Kingdom. This led to higher short-term consumer loan balances, which also led to year-over-
year increases in the average and ending short-term loan balances for much of 2018.
m
Our gross profit margin for short-term loans is typically highest in the first quarter of each year, corresponding to the seaso
nal decline
in consumer loan balances outstanding. The cost of revenue as a percentage of the average combined loan balance for short-term loans
outstanding is typically lower in the first quarter and generally peaks in the second half of the year with higher loan demand.
t
The following table includes information related only to short-term loans and shows our loss experience trends for short-term loans for
each of the last eight quarters (dollars in thousands):
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Short-term loans:
Cost of revenue ........................................................................ $
Charge-offs (net of recoveries)
Average short-term combined loan balance, gross:
Company owned(a)
Guaranteed by the Company(a)(b)
Average short-term combined loan balance, gross(a)(c)
Ending short-term combined loan balance, gross:
Company owned (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Guaranteed by the Company(b)
y
y
Ending short-term combined loan balance, gross(c)
Ending allowance and liability for losses
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
$
$
$
Short-term loan ratios:
Cost of revenue as a % of average short-term combined
loan balance, gross(a)(c)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Charge-offs (net of recoveries) as a % of average short-term
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross profit margin
Allowance and liability for losses as a % of combined loan
combined loan balance, gross(a)(c)
balance, gross(c)(d)
2018
Second
Quarter
Third
Quarter
Fourth
Quarter
20,323 $
22,213
20,386
19,626
$
26,174
21,835
$
25,386
26,822
71,442
26,383
97,825 $
66,171
23,638
89,809 $
73,476
25,913
99,389
65,858 $
21,409
87,267 $
20,397 $
78,508
67,255 $
25,533
24,764
92,019 $ 104,041
24,981
$
20,744
72,952
25,286
98,238
67,725
25,388
93,113
23,384
$
$
$
$
20.8%
22.7%
26.3%
25.8%
22.7%
61.9%
21.9%
59.5%
22.0 %
54.8%
27.3%
56.0%
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
23.4%
22.5%
24.0 %
25.1%
54
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Short-term loans:
Cost of revenue ....................................................................... $
Charge-offs (net of recoveries) ..............................................
Average short-term combined loan balance, gross:
Company owned(a)
Guaranteed by the Company(a)(b)
Average short-term combined loan balance, gross(a)(c)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Ending short-term combined loan balance, gross:
Company owned (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Guaranteed by the Company(b)
y
y
Ending short-term combined loan balance, gross(c)
$
Ending allowance and liability for losses ............................... $
Short-term loan ratios:
Cost of revenue as a % of average short-term combined
...............................................
..........
loan balance, gross(a)(c)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Charge-offs (net of recoveries) as a % of average short-term
combined loan balance, gross(a)(c) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross profit margin .................................................................
Allowance and liability for losses as a % of combined loan
2017
Second
Quarter
Third
Quarter
Fourth
Quarter
15,602
18,975
$
16,584
15,539
$
23,849
20,439
$
22,129
21,201
58,729
23,153
81,882 $
57,653
21,368
79,021 $
65,949
25,787
91,736
53,205 $
18,854
72,059 $
16,205 $
61,565 $
24,123
85,688 $
$
17,449
67,719
24,248
91,967
21,047
70,040
26,785
96,825
73,672
28,875
102,547
22,022
$
$
$
$
19.1%
21.0%
26.0%
22.9%
23.2%
67.1%
19.7%
64.5%
22.3 %
52.2%
21.9%
58.5%
balance, gross(c)(d) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
22.5%
20.4%
22.9 %
21.5%
(a) The average short-term combined loan balance is the average of the month-end balances during the period.
(b) Represents loans originated by third-party lenders through the CSO programs, which are not included in our consolidated balance
ll
sheets.
(c) Non-GAAP measure.
c
(d) Allowance and liability for losses as a % of combined loan balance, gross, is determined using period-end balances.
Line of Credit Accounts
The cost of revenue as a percentage of average loan balance for line of credit accounts exhibits a similar quarterly seasonal trend to
short-term loan loss rates as the ratio is typically lower in the first quarter and increases throughout the remainder of the year, peaking
in the second half of the year with higher loan demand.
tt
The gross profit margin is generally lower for line of credit accounts as compared to short-term loans because the highest levels of
default are exhibited in the early stages of the account, while the revenue is recogni
zed over the term of the account. As a result,
f
particularly in periods of higher growth for line of credit account portfolios, the gross profit margin will be lower for this product than
for our short-term loan products. During 2018, we experienced lower gross profit margin and/or higher cost of revenue as a percentage
of the average combined loan balance for line of credit accounts outstanding than we experienced in the prior year quarters as a result
of the strong growth in the line of credit account portfolios.
55
The following table includes information related only to line of credit accounts and shows our loss experience trends for line of credit
accounts for each of the last eight quarters (dollars in thousands):
Line of credit accounts:
Cost of revenue ...................................................................... $
Charge-offs (net of recoveries)
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Average loan balance(a)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Ending loan balance (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Ending allowance for losses balance .................................... $
Line of credit account ratios:
Cost of revenue as a % of average loan balance ..................
Charge-offs (net of recoveries) as a % of average loan
g
(a)
balance(a)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross profit margin ...............................................................
Allowance for losses as a % of loan balance .....................
(b)
(a)
Line of credit accounts:
Cost of revenue ...................................................................... $
Charge-offs (net of recoveries) .............................................
Average loan balance ..........................................................
Ending loan balance (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Ending allowance for losses balance .................................... $
Line of credit account ratios:
Cost of revenue as a % of average loan balance .................
Charge-offs (net of recoveries) as a % of average loan
(a)
.
2018
Second
Quarter
Third
Quarter
Fourth
Quarter
25,383 $
29,411
168,118
160,923
27,120 $
31,211
27,281
168,881
181,134
31,050
$
$
46,749
36,321
200,710
216,624
41,478
$
$
59,632
50,102
221,721
227,563
51,008
15.1%
18.5%
23.3%
26.9%
17.5%
67.6%
16.9%
16.2%
60.8%
17.1%
2017
18.1 %
52.6%
19.1 %
22.6%
44.2%
22.4%
Second
Quarter
Third
Quarter
Fourth
Quarter
19,831 $
24,660
135,621
124,498
21,765 $
19,868
18,786
128,348
134,154
22,847
$
$
23,439
19,476
145,398
154,689
26,810
$
$
30,278
25,940
161,905
170,068
31,148
14.6%
15.5%
16.1%
18.7%
balance(a) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross profit margin ................................................................
Allowance for losses as a % of loan balance .....................
(b)
18.2%
66.6%
17.5%
14.6%
66.2%
17.0%
13.4 %
66.0%
17.3 %
16.0%
59.9%
18.3%
(a) The average loan balance for line of credit accounts is the average of the month-end balances during the period.
(b) Allowance for losses as a % of loan balance is determined using period-end balances.
Installment Loans and RPAs
more
y
For installment loans and RPAs, the cost of revenue as a percentage of average loan and finance receivable balance is typically
f
consistent throughout the year as compared to short-term loans and line of credit acc
ounts. Due to the scheduled regular payments that
d
are inherent with installment loans and RPAs, we do not experience the higher level of repayments in the first quarter for these
receivables as we experience with short-term loans and, to a lesser extent, line of credit accounts.
The gross profit margin is generally lower for the installment loan and RPA products than for other products, primarily because the
highest levels of default are exhibited in the early stages of the loan or RPA, while revenue is recognized over the term of the loan or
estimated delivery term. In addition, installment loans and RPAs typically have higher average amounts per receivable. Another
factor
contributing to the lower gross profit margin is that the yield for installment loans and RPAs is typically lower than the yield for the
other products we offer. As a result, particularly in periods of higher growth for the installment loan and RPA portfolios, which has
been the case in recent years, the gross profit margin is typically lower for this product than for our short-term loan products. Our
installment loan and RPA portfolio balance outstanding at December 31, 2018 increased $143.0 million, or 24.3%, compared to
December 31, 2017. During 2018, we generally experienced lower gross profit margin than
we experienced in the prior year quarters
y
as a result of the continued growth in our domestic near-prime installment and RPA portfolios.
r
56
The following table includes information related only to our installment loans and RPAs and shows our loss experience trends for
installment loans for each of the last eight quarters (dollars in thousands):
Installment loans and RPAs:
Cost of revenue ...............................................(cid:17)...............
Charge-offsff (net of
overies) ......................................
f
Average installment and RPA combined loan and
rec
t
finance receivable balance, gross:
Company owned(a) .............................................(cid:17)(cid:17)...........
Guaranteed by the Company(a)(b) ....................................
Average installment and RPA combined loan and
finance receivable balance, gross (a)(c) ....................
Ending installment and RPA combined loan and finance
receivable balance, gross:
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
2018
$
62,847
67,081
$
69,897 $
64,878
90,840
75,261
$
92,172
88,429
591,739
5,760
605,025
4,500
663,387
4,325
713,821
4,279
$ 597,499
$ 609,525
$ 667,712
$
718,100
Company owned ........................................(cid:17)(cid:17)(cid:17)..................
Guaranteed by the Company(b) .......................................
Ending installment and RPA combined loan and finance
receivable balance, gross (c) ...................................
Ending allowance and liability for losses ......................
Installment and RPA loan ratios:
Cost of revenue as a % of average installment and RPA
loan and finance receivable balance, gross(a)(c)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Charge-offs (net of recoveries) as a % of average
combined
$ 590,578
5,185
$ 623,526 $ 695,236
4,573
3,917
$ 595,763
68,176
$
$ 627,443
$
72,082 $
$ 699,809
87,370
$
$
$
727,966
4,316
732,282
91,082
10.5%
11.5%
13.6 %
12.8%
installment and RPA combined loan and finance
receivable balance, gross (a)(c) (cid:3)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)
Gross profit ff margin ............................................(cid:17)(cid:17)(cid:17).........
Allowance and liability for losses as a % of combined loan
and fid nance receivable balance, gross(c)(d) .................
11.2%
48.5%
10.6%
43.2%
11.3 %
33.7 %
12.3%
37.6%
11.4%
11.5%
12.5 %
12.4%
57
Installment loans and RPAs:
Cost of revenue (cid:3)(cid:3)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
f
Charge-offsff (net of
overies) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Average installment and RPA combined loan and
rec
t
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
2017
$
46,451
55,179
$
43,410
44,443
$
60,053
46,598
$
75,138
62,116
finance receivable balance, gross:
Company owned(a) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Guaranteed by the Company(a)(b) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Average installment and RPA combined loan and
440,886
4,874
433,698
3,631
487,436
4,628
552,003
5,025
finance receivable balance, gross (a)(c) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 445,760
$ 437,329
$ 492,064
$
557,028
Ending installment and RPA combined loan and finance
receivable balance, gross:
Company owned (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 421,014
Guaranteed by the Company(b) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
3,692
Ending installment and RPA combined loan and finance
receivable balance, gross (c) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 424,706
$ 452,116 $ 520,388
4,695
3,890
$ 456,006
$ 525,083
59,220
46,471 $
45,484 $
$
$
$
584,009
5,259
589,268
72,132
Ending allowance and liability for losses (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Installment and RPA loan ratios:
Cost of revenue as a % of average installment and RPA
combined loan and finance receivable balance, gross(a)(c)
(cid:17)(cid:17)(cid:17)
Charge-offs (net of recoveries) as a % of average
installment and RPA combined loan and finance
receivable balance, gross (a)(c)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross profit ff margin (cid:3) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Allowance and liability for losses as a % of combined loan
and fid nance receivable balance, gross(c)(d) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
10.4%
9.9%
12.2 %
13.5%
12.4%
45.4%
10.2%
48.4%
9.5%
39.3 %
11.2%
34.4%
10.9%
10.0%
11.3 %
12.2%
(a) The average loan and finance receivable balance for installment loans is the average of the month-end balances during the period.
(b) Represents loans originated by third-party lenders through the CSO programs, which are not included in our consolidated balance
ll
sheets.
(c) Non-GAAP measure.
(d) Allowance and liability for losses as a % of combined loan and finance receivable balance, gross, is determined using period-end
balances.
Total Expenses
Total expenses increased $47.3 million, or 15.1%, to $360.0 million in 2018, compared to $312.7 million in 2017. On a constant
r
currency basis, total expenses increased $47.7 million, or 15.3%, to $360.4 million for 2018 compared to 2017.
Marketing expense increased $23.9 million, or 23.5%, to $125.3 million in 2018 compared to $101.4 million in 2017, primarily due to
higher direct mail and television advertising for our domestic brands and higher lead purchase and digital marketing costs for both our
domestic and international businesses.
Operations and technology expense increased to $112.5 million in 2018 from $95.2 million in 2017, due primarily to higher call center
headcount to support our growth, higher underwriting costs primarily related to growth in loan originations and higher selling expense,
which includes ongoing expenses associated with complaints in the United Kingdom.
General and administrative expense increased $5.3 million, or 5.2%, to $107.0 million in 2018 compared to $101.7 million in 2017,
due primarily to higher incentive expenses resulting from our strong financial performance.
Depreciation and amortization expense increased to $15.2 million in 2018 compared to $14.4 million in 2017 primarily related to
software development projects and amortization thereof.
d
58
Interest Expense, Net
Interest expense, net increased $5.4 million, or 7.2%, to $79.4 million in 2018 compared to $74.0 million in 2017. The increase was due
to an increase in the average amount of debt outstanding of $116.2 million to $810.7 million during 2018 from $694.5 million during
2017, partially offset by a decrease in the weighted average interest rate on our outstanding debt to 9.78% in 2018 from 10.63% in
2017.The increase in average debt outstanding was due primarily to additional principal amounts outstanding under our securitization
facilities and the issuance of $375.0 million in senior notes in September 2018, partially offset by the early paydown of our 9.75% senior
notes due 2021. See “—Liquidity and Capital Resources—Consumer Loan Securitizations” below for further information.
uu
Provision for Income Taxes
Provision for income taxes decreased $2.4 million, or 27.1%, to $6.3 million in 2018 compared to $8.7 million in 2017. The decrease
was attributable to the estimated tax effects of optimizing the timing of certain income tax deductions for prior year loan and fixed
asset related deferred tax items, coupled with the overall decrease in the federal tax rate from 35% to 21% resulting from the Tax Cuts
and Jobs Act, which was enacted into law on December 22, 2017. Refer to Note 9 in the Notes to Consolidated Financial Statements
for additional discussion.
d
The balance of unrecognized tax benefits recorded in our Consolidated Balance Sheet as of Decembe
r 31, 2018 was $13.3 million, all
of which, if recognized, would favorably affect the effective tax rate in the period of recognition. We believe it is reasonably possible
that, within the next twelve months, unrecognized domestic tax benefits will change by a significant amount. The principal
uncertainties are related to the timing of recognition of income and losses related to our loan portfolio. We anticipate a Joint
Committee on Taxation review of certain tax returns that were filed during 2018 in conjunction with the refunds claimed on those
returns. Depending upon the outcome of the review and any related agreements or settlements with the relevant taxing authorities, the
amount of the uncertainty, including amounts that would be recognized as a component of the effective tax rate, could change
significantly. While the total amount of uncertainty to be resolved is not clear, it is reasonably possible that the uncertainties pertaining
to this matter will be resolved in the next twelve months.
d
YEAR ENDED 2017 COMPARED TO YEAR ENDED 2016
Revenue and Gross Profit
Revenue increased $98.1 million, or 13.2%, to $843.7 million for 2017 as compared to $745.6 million for 2016. On a constant
currency basis, revenue increased by $102.2 million, or 13.7%, for 2017 compared to 2016. The change in revenue was driven by an
increase in revenue of $86.5 million from our domestic operations, primarily resulting from a 19.5% increase in domestic line of credit
accounts revenue in 2017 and a 16.9% increase in domestic installment loan and RPA revenue compared to 2016 driven by growth in
these products. Additionally, revenue from international operations increased $11.6 million (or an increase of $15.6 million on a
constant currency basis), due primarily to a 17.1% increase in international installment loan revenue and a 4.9% increase in
international short-term loan revenue in 2017 compared to 2016.
Our gross profit increased by $29.5 million or 7.1% to $447.1 million for 2017 from $417.6 million for 2016. On a constant currency
basis, gross profit increased by $33.1 million for 2017 compared to 2016. Our gross profit margin decreased to 53.0% in 2017 from
56.0% in 2016. The decrease in gross profit margin was driven primarily by the strong new customer growth of our domestic and
international installment portfolios resulting in a higher mix of new customers overall, which require higher loss provisions as new
customers default at a higher rate than returning customers with a successful history of loan performance.
Although the growth in our
domestic near-prime installment portfolio contributed to the lower gross profit margin, as the portfolio continues to scale and the
underlying longer term loans continue to season, we expect to achieve increased marginal profitability.
d
f
59
The following tables set forth the components of revenue and gross profit, separated between domestic and international for 2017 and
2016 (dollars in thousands):
Year Ended December 31,
2017
2016
$ Change
% Change
Revenue by product:
Short-term loans(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Line of credit accounts (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Installment loans and RPAs
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total loan and finance receivable revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Other (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
d
$
$
197,408
262,760
382,683
842,851
890
843,741
$
$
196,255 $
220,462
327,375
744,092
1,477
745,569 $
1,153
42,298
55,308
98,759
(587 )
98,172
0.6%
19.2%
16.9%
13.3%
(39.7)%
13.2%
Revenue by product (% to total):
Short-term loans(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Line of credit accounts (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Installment loans and RPAs
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total loan and finance receivable revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Other (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total revenue (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
d
23.4%
31.1%
45.4%
99.9%
0.1%
100.0%
26.3%
29.6%
43.9%
99.8%
0.2%
100.0%
Domestic:
Year Ended December 31,
2017
2016
$ Change
% Change
Revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 709,537 $ 622,991 $
Cost of revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross profit (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 374,083 $ 331,727 $
Gross profit ff margin (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
291,264
335,454
53.2%
52.7%
International:
Revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 134,204 $ 122,578 $
Cost of revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross profit (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Gross profit margin
36,702
85,876 $
70.1%
61,178
73,026 $
54.4%
Total:
Revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 843,741 $ 745,569 $
Cost of revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross profit (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 447,109 $ 417,603 $
Gross profit ff margin (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
327,966
396,632
56.0%
53.0%
86,546
44,190
42,356
(0.5 )%
11,626
24,476
(12,850)
(15.7 )%
98,172
68,666
29,506
(3.0 )%
13.9%
15.2%
12.8%
(0.9)%
9.5%
66.7%
(15.0)%
(22.4)%
13.2%
20.9%
7.1%
(5.4)%
Loan and Finance Receivable Balances
The outstanding combined portfolio balance of loans and finance receivables, net of allowance and liability for estimated losses,
increased $144.8 million, or 24.5%, to $736.6 million as of December 31, 2017 from $591.8 million as of December 31, 2016, due
primarily to increased demand for our domestic near-prime installment product and an increase in international loan balances (upu
23.7% on a constant currency basis). The outstanding loan balance for our domestic near-prime product increased 32.9% as of
December 31, 2017 compared to December 31, 2016, resulting in a domestic near-prime portfolio balance that comprises
approximately 43% of our total loan and finance receivables portfolio balance while short-term loans comprise approximately 12%.
We expect this trend to continue as we expand our near-prime installment product offering in 2018. We expect the loan balances for
our domestic near-prime installment loan product will continue to comprise a larger percentage of the total loan and finance receivable
portfolio, due to consumer demand for the product and its longer loan term. See “—Non-GAAP Financial Measures—Combined
Loans and Finance Receivables” above for additional information related to combined loans and finance receivables.
aa
60
The combined loan and finance receivables balance includes $827.7 million and $660.5 million as of December 31, 2017 and 2016,
respectively, of Company-owned receivables balances before the allowance for losses of $123.0 million and $98.9 million provided in the
consolidated financial statements for December 31, 2017 and 2016, respectively. The combined loan and finance receivables balance also
s that
includes $34.1 million and $32.2 million as of December 31, 2017 and 2016, respectively, of loan and finance receivable balance
aa
are guaranteed by us, which are not included in our consolidated balance sheets, with the exception of the liability for estima
aa
ted losses of
$2.3 million and $2.0 million, which is included in “Accounts payable and accrued expenses” in th
e consolidated balance sheets for
December 31, 2017 and 2016, respectively.
d
aa
The following tables summarize combined loan and finance receivable balances outstanding as of December 31, 2017 and 2016
(dollars in thousands):
Ending loans and finance receivables:
As of December 31,
2017
Guaranteed
by the
Company(a)
Owned(a)
Combined(b)
Company
Owned(a)
2016
Guaranteed
by the
Company(a)
Combined(b)
d
Short-term loans (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 73,672 $ 28,875 $ 102,547
170,068
Line of credit accounts (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
589,268
Installment loans and RPAs
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
861,883
gross (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)
a
Total ending loans and finance receivables,
ilities for losses(a) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(125,302)
Less: Allowance and liab
Total ending loans and finance receivables, net (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 704,705 $ 31,876 $ 736,581
Allowance and liability for losses as a % of loans and
finance receivables, gross (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
170,068
584,009
827,749
(123,044)
—
5,259
34,134
(2,258)
14.9%
6.6%
d
14.5%
$ 63,005 $ 26,092 $
89,097
144,183
459,414
692,694
(100,941)
$ 561,550 $ 30,203 $ 591,753
144,183
453,307
660,495
(98,945 )
—
6,107
32,199
(1,996)
15.0 %
6.2%
14.6%
Ending loans and finance receivables:
2017
Guaranteed
by the
Company(a)
Owned(a)
As of December 31,
Combined(b)
Company
Owned(a)
2016
Guaranteed
by the
Company(a)
Combined(b)
Total domestic, gross (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 716,555 $
Total international, gross (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
gross (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)
111,194
$ 827,749 $
Total ending loans and finance receivables,
a
34,134 $ 750,689 $ 576,992 $ 32,199 $ 609,191
83,503
83,503
34,134 $ 861,883 $ 660,495 $ 32,199 $ 692,694
111,194
—
—
(a) GAAP measure. The loan and finance receivable balances guaranteed by us relate to loans originated by third-party lenders
d
through the CSO programs and are not included in our consolidated balance sheets.
(b) Except for allowance and liability for estimated losses, amounts represent non-GAAP measures.
tt
Average Amount Outstanding per Loan
The average amount outstanding per loan is calculated as the total combined loans, gross balance at the end of the period divided by
the total number of combined loans outstanding at the end of the period. The following table shows the average amount outstanding
per loan by product at December 31, 2017 and 2016:
Average amount outstanding per loan (in ones)(a)
Short-term loans(b) (cid:3)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856) $
Line of credit accounts (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Installment loans(b)(c) (cid:3) (cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)
Total loans(b)(c) (cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856) $
As of December 31,
2017
2016
492 $
1,384
2,174
1,431 $
484
1,289
1,888
1,254
(a) The disclosure regarding the average amount per loan is statistical data that is not included in our consolidated financial
statements.
(b) Includes loans guaranteed by us, which represent loans originated by third-party lenders through the CSO programs and are not
included in our consolidated balance sheets.tt
(c) Excludes RPAs.
61
The average amount outstanding per loan increased to $1,431 from $1,254 during 2017 compared to 2016, mainly due to a greater mixm
of installment loans, which have higher average amounts per loan relative to short-term loans, in 2017 compared to 2016.
Average Loan Origination
The average loan origination amount is calculated as the total amount of combined loans originated, renewed and purchased for the
period divided by the total number of combined loans originated, renewed and purchased for the period. The following table shows the
average loan origination amount by product for 2017 compared to 2016:
tt
Average loan origination amount (in ones)(a)
Short-term loans(b) (cid:3)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856) $
Line of credit accounts(c) (cid:3)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)
Installment loans(b)(d) (cid:3)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)
Total loans(b)(d) (cid:3)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856) $
457 $
303
1,651
537 $
454
306
1,734
517
Year Ended
December 31,
2017
2016
(a) The disclosure regarding the average loan origination amount is statistical data that is not included in our consolidated financial
ff
statements.
(b) Includes loans guaranteed by us, which represent loans originated by third-party lenders through the CSO programs and are not
included in our consolidated balance sheets.tt
(c) Represents the average amount of each incremental draw on line of credit accounts.
(d) Excludes RPAs.
The average loan origination amount increased to $537 from $517 during 2017 compared to 2016, mainly due to a greater mix of
installment loans, which have a higher origination amount than short-term loans and line of credit accounts.
Loans and Finance Receivables Loss Experience
The allowance and liability for estimated losses as a percentage of combined loans and RPAs remained relatively flat at 14.5% a
December 31, 2017 compared to 14.6% as of December 31, 2016.
f
s of
The cost of revenue in 2017 was $396.6 million, which was composed of $396.4 million related to our owned loans and finance
receivables and a $0.2 million increase in the liability for estimated losses related to loans we guaranteed through the CSO programs.
The cost of revenue in 2016 was $328.0 million, which was composed of $327.7 million related to our owned loans and finance
receivables, and a $0.3 million increase in the liability for estimated losses related to loans we guaranteed through the CSO programs.
Total charge-offs, net of recoveries, were $373.4 million and $295.5 million in 2017 and 2016, respectively.
The following tables show loan and finance receivable balances and fees receivable and the relationship of the allowance and liability
for losses to the combined balances of loans and finance receivables for each of the last eight quarters (dollars in thousands):
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
2017
Loans and finance receivables:
Gross - Company owned (cid:3)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856) $ 598,717 $ 647,835
Gross - Guaranteed by the Company(a) (cid:3)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)
28,013
Combined loans and finance receivables, gross(b) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
675,848
Allowance and liability for losses on loans and finance
22,546
621,263
receivables (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
85,780
Combined loans and finance receivables, net(b)(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 536,822 $ 590,068
Allowance and liability for losses as a % of loans and
84,441
$
$ 742,796
28,943
771,739
827,749
34,134
861,883
107,077
$ 664,662
$
125,302
736,581
finance receivables, gross(b) (cid:3)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)
13.6%
12.7%
13.9 %
14.5%
62
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
2016
Loans and finance receivables:
Gross - Company owned (cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856) $ 495,906
Gross - Guaranteed by the Company(a) (cid:3)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)
Combined loans and finance receivables, gross(b) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Allowance and liability for losses on loans and finance
27,114
523,020
$ 563,810
31,227
595,037
$ 637,612
29,700
667,312
$
660,495
32,199
692,694
receivables(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
75,653
Combined loans and finance receivables, net(b) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 454,134 $ 519,384
Allowance and liability for losses as a % of loans and
68,886
96,474
$ 570,838
$
100,941
591,753
finance receivables, gross(b) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
13.2%
12.7%
14.5 %
14.6%
(a) Represents loans originated by third-party lenders through the CSO programs, which are not included in our consolidated
financial statements.
(b) Non-GAAP measure.
Loans and Finance Receivables Loss Experience by Product
We evaluate loss rates for all financing products in our portfolio to determine credit quality and evaluate trends. For our products, we
evaluate loans and finance receivables losses as a percentage of the average loan and finance receivable balance outstanding or the
average combined loan and finance receivable balance outstanding, whichever is applicable, for each portfolio.
r
Short-term Loans
Demand for our short-term loan product in the United States has historically been highest in the third and fourth quarters of each year,
and lowest in the first quarter of each year, corresponding to our customers’ receipt of income tax refunds. The higher allowance and
liability for losses as a percentage of combined loan balance in 2017 was attributable to strong customer demand for short-term loans
in both the United States and the United Kingdom. This led to higher short-term consumer loan balances, which also led to year-over-
year increases in the average and ending short-term loan balances for much of 2017.
m
nal decline
Our gross profit margin for short-term loans is typically highest in the first quarter of each year, corresponding to the seaso
in consumer loan balances outstanding. The cost of revenue as a percentage of the average combined loan balance for short-term loans
outstanding is typically lower in the first quarter and generally peaks in the second half of the year with higher loan demand.
t
63
The following table includes information related only to short-term loans and shows our loss experience trends for short-term loans for
each of the last eight quarters (dollars in thousands):
t
rec
overies) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Short-term loans:
Cost of revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Charge-offsff (net of
f
Average short-term combined loan balance, gross:
Company owned(a) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Guaranteed by the Company(a)(b) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Average short-term combined loan balance, gross(a)(c) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Ending short-term combined loan balance, gross:
Company owned (cid:3) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Guaranteed by the Company(b) (cid:3) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Ending short-term combined loan balance, gross(c) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Ending allowance and liability for losses (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Short-term loan ratios:
Cost of revenue as a % of average short-term combined
loan balance, gross(a)(c)(cid:3)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)
Charge-offs (net of recoveries) as a % of average short-term
combined loan balance, gross(a)(c) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross profit ff margin (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Allowance and liability for losses as a % of combined loan
balance, gross(c)(d)(cid:3)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)
t
rec
overies) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Short-term loans:
Cost of revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Charge-offsff (net of
)
f
Average short-term combined loan balance, gross:
Company owned(a)(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Guaranteed by the Company(a)(b)(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Average short-term combined loan balance, gross(a)(c)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Ending short-term combined loan balance, gross:
Company owned (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Guaranteed by the Company(b)(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Ending short-term combined loan balance, gross(c) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
$
Ending allowance and liability for losses (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Short-term loan ratios:
Cost of revenue as a % of average short-term combined
s
loan balance, gross(a)(c)(cid:3)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)
Charge-offs (net of recoveries) as a % of average short-term
combined loan balance, gross(a)(c)(cid:3)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)
Gross profit ff margin (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Allowance and liability for losses as a % of combined loan
balance, gross(c)(d)(cid:3)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)
n
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
2017
15,602 $
18,975
16,584 $
15,539
23,849
20,439
$
22,129
21,201
58,729
23,153
81,882 $
57,653
21,368
79,021 $
65,949
25,787
91,736
53,205 $
18,854
72,059 $
16,205 $
61,565 $
24,123
85,688 $
17,449 $
67,719
24,248
91,967
21,047
70,040
26,785
96,825
73,672
28,875
102,547
22,022
$
$
$
$
19.1%
21.0%
26.0 %
22.9%
23.2%
67.1%
19.7%
64.5%
22.3 %
52.2 %
21.9%
58.5%
22.5%
20.4%
22.9 %
21.5%
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
2016
13,276 $
16,540
14,214 $
11,720
20,531
15,956
$
21,600
21,021
55,839
25,151
80,990 $
54,324
21,443
75,767 $
60,761
24,678
85,439
52,381 $
20,534
72,915 $
12,598 $
58,798 $
24,451
83,249
$
14,746 $
60,124
23,379
83,503
19,184
59,728
24,709
84,437
63,005
26,092
89,097
19,486
$
$
$
$
16.4%
18.8%
24.0 %
25.6%
20.4%
72.1%
15.5%
69.5%
18.7 %
60.5 %
24.9%
56.8%
17.3%
17.7%
23.0 %
21.9%
(a) The average short-term combined loan balance is the average of the month-end balances during the period.
(b) Represents loans originated by third-party lenders through the CSO programs, which are not included in our consolidated balance
ll
sheets.
(c) Non-GAAP me
c
(d) Allowance and liability for losses as a % of combined loan balance, gross, is determined using period-end balances.
asure.
64
Line of Credit Accounts
The cost of revenue as a percentage of average loan balance for line of credit accounts exhibits a similar quarterly seasonal trend to
short-term loan loss rates as the ratio is typically lower in the first quarter and increases throughout the remainder of the year, peaking
in the second half of the year with higher loan demand.
tt
The gross profit margin is generally lower for line of credit accounts as compared to short-term loans because the highest levels of
default are exhibited in the early stages of the account, while the revenue is recogni
zed over the term of the account. As a result,
f
particularly in periods of higher growth for line of credit account portfolios, the gross profit margin will be lower for this product than
for our short-term loan products. Our gross margin, as well as, our cost of revenue as a percentage of average loan balance have
demonstrated consistent year-over-year improvement as the portfolio has shown stable credit quality through strong loan growth in
2017.
The following table includes information related only to line of credit accounts and shows our loss experience trends for line of credit
accounts for each of the last eight quarters (dollars in thousands):
t
rec
Line of credit accounts:
Cost of revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Charge-offsff (net of
overies) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
f
Average loan balance(a) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Ending loan balance (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Ending allowance for losses balance (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Line of credit account ratios:
Cost of
t
Charge-offs (net of recoveries) as a % of average loan
erage loan balance(a)(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
revenue as a % of avf
balance(a) (cid:3)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)
Gross profit ff margin (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Allowance for losses as a % of loan balance(b) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:856)(cid:856)
t
rec
Line of credit accounts:
Cost of revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Charge-offsff (net of
overies) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
f
Average loan balance(a) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Ending loan balance (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Ending allowance for losses balance (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Line of credit account ratios:
Cost of
t
Charge-offs (net of recoveries) as a % of average loan
erage loan balance(a) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
revenue as a % of avf
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
2017
19,831 $
24,660
135,621
124,498
19,868 $
18,786
128,348
134,154
23,439 $
19,476
145,398
154,689
21,765 $
22,847 $
26,810 $
30,278
25,940
161,905
170,068
31,148
14.6%
15.5%
16.1 %
18.7%
18.2%
66.6%
17.5%
14.6%
66.2%
17.0%
2016
13.4 %
66.0 %
17.3 %
16.0%
59.9%
18.3%
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
16,471 $
16,914
100,648
98,351
15,284 $
17,251 $
14,506
105,553
118,030
29,739 $
20,973
126,371
132,388
18,029 $
26,795 $
25,028
25,229
138,259
144,183
26,594
16.4%
16.3%
23.5 %
18.1%
balance(a) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross profit ff margin (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Allowance for losses as a % of loan balance(b) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
16.8%
66.4%
15.5%
13.7%
65.7%
15.3%
16.6 %
49.7 %
20.2 %
18.2%
59.7%
18.4%
(a) The average loan balance for line of credit accounts is the average of the month-end balances during the period.
(b) Allowance for losses as a % of loan balance is determined using period-end balances.
Installment Loans and RPAs
more
y
For installment loans and RPAs, the cost of revenue as a percentage of average loan and finance receivable balance is typically
f
consistent throughout the year as compared to short-term loans and line of credit acc
ounts. Due to the scheduled regular payments that
d
are inherent with installment loans and RPAs, we do not experience the higher level of repayments in the first quarter for these
receivables as we experience with short-term loans and, to a lesser extent, line of credit accounts.
The gross profit margin is generally lower for the installment loan and RPA products than for other products, primarily because the
highest levels of default are exhibited in the early stages of the loan or RPA, while revenue is recognized over the term of the loan or
65
estimated delivery term. In addition, installment loans and RPAs typically have higher average amounts per receivable. Another
factor
contributing to the lower gross profit margin is that the yield for installment loans and RPAs is typically lower than the yield for the
other products we offer. As a result, particularly in periods of higher growth for the installment loan and RPA portfolios, which has
been the case in recent years, the gross profit margin is typically lower for this product than for our short-term loan products. Our
installment loan and RPA portfolio balance outstanding at December 31, 2017 increased $129.9 million, or 28.3%, compared to
December 31, 2016. During 2017, we experienced lower gross profit margin than we experienced in the prior year quarters as a re
sult
of the continued growth in our domestic near-prime installment and RPA portfolios.
d
r
The following table includes information related only to our installment loans and RPAs and shows our loss experience trends for
installment loans for each of the last eight quarters (dollars in thousands):
Installment loans and RPAs:
Cost of revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Charge-offsff (net of
f
Average installment and RPA combined loan and
overies) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
rec
t
finance receivable balance, gross:
Company owned(a) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Guaranteed by the Company(a)(b) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Average installment and RPA combined loan and
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
2017
46,451 $
55,179
43,410 $
44,443
60,053
46,598
$
75,138
62,116
440,886
4,874
433,698
3,631
487,436
4,628
552,003
5,025
finance receivable balance, gross (a)(c)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 445,760 $ 437,329
$ 492,064
$
557,028
Ending installment and RPA combined loan and finance
receivable balance, gross:
Company owned (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 421,014 $ 452,116 $ 520,388
Guaranteed by the Company(b) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
4,695
Ending installment and RPA combined loan and finance
3,692
3,890
receivable balance, gross (c) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 424,706 $ 456,006
46,471 $
45,484 $
$ 525,083
59,220
$
$
$
584,009
5,259
589,268
72,132
Ending allowance and liability for losses (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Installment and RPA loan ratios:
Cost of revenue as a % of average installment and RPA
combined
loan and fin nce receivable balance,
aa
Charge-offs (net of recoveries) as a % of average
gross(a)(c)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
10.4%
9.9%
12.2 %
13.5%
installment and RPA combined loan and finance
receivable balance, gross (a)(c) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross profit ff margin (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Allowance and liability for losses as a % of combined loan
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
and fid nance receivable balance, gross(c)(d)
12.4%
45.4%
10.2%
48.4%
9.5%
39.3 %
11.2%
34.4%
10.9%
10.0%
11.3 %
12.2%
66
Installment loans and RPAs:
Cost of revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Charge-offsff (net of
f
Average installment and RPA combined loan and
overies) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
rec
t
finance receivable balance, gross:
Company owned(a) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Guaranteed by the Company(a)(b) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Average installment and RPA combined loan and
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
2016
39,830 $
36,541
33,988
32,332
$
45,121
37,383
$
50,917
46,411
344,330
7,476
362,222
6,094
419,225
6,600
448,953
6,093
finance receivable balance, gross (a)(c)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 351,806 $ 368,316
$ 425,825
$
455,046
Ending installment and RPA combined loan and finance
receivable balance, gross:
Company owned (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 345,174 $ 386,982 $ 445,100
Guaranteed by the Company(b)
6,321
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Ending installment and RPA combined loan and finance
6,580
6,776
receivable balance, gross (c) (cid:3)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856) $ 351,754 $ 393,758
41,004 $
42,878 $
$ 451,421
50,495
$
$
$
453,307
6,107
459,414
54,861
Ending allowance and liability for losses (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Installment and RPA loan ratios:
Cost of revenue as a % of average installment and RPA
combined
loan and finance receivable balance, gross(a)(c) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Charge-offs (net of recoveries) as a % of average
installment and RPA combined loan and finance
receivable balance, gross (a)(c) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross profit ff margin (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Allowance and liability for losses as a % of combined loan
and fid nance receivable balance, gross(c)(d) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)
11.3%
9.2%
10.6 %
11.2%
10.4%
48.6%
8.8%
54.7%
8.8%
46.8 %
10.2%
43.5%
11.7%
10.9%
11.2 %
11.9%
(a) The average loan and finance receivable balance for installment loans is the average of the month-end balances during the period.
(b) Represents loans originated by third-party lenders through the CSO programs, which are not included in our consolidated balance
ll
sheets.
(c) Non-GAAP measure.
(d) Allowance and liability for losses as a % of combined loan and finance receivable balance, gross, is determined using period-end
balances.
Total Expenses
Total expenses increased $16.6 million, or 5.6%, to $312.7 million in 2017, compared to $296.1 million in 2016. On a constant
currency basis, total expenses increased $17.4 million, or 5.9%, to $313.5 million for 2017 compared to 2016.
Marketing expense increased $4.0 million, or 4.1%, to $101.4 million in 2017 compared to $97.4 million in 2016. Higher direct mail
and lead purchase costs were partially offset by lower digital marketing and revenue-sharing costs.
Operations and technology expense increased to $95.2 million in 2017 from $85.2 million in 2016, due primarily to underwriting and
transaction costs and software costs primarily related to growth in loan originations.
General and administrative expense increased $3.7 million, or 3.8%, to $101.7 million in 2017 compared to $98.0 million in 2016, due
primarily to higher personnel and incentive expenses from an increase in corporate headcount.
Depreciation and amortization expense decreased to $14.4 million in 2017 compared to $15.5 million in 2016 due primarily to the
acceleration of depreciation in the prior year resulting from our exit from the Australian and Canadian markets and the relocation of a
datacenter in 2016.
67
Interest Expense, Net
Interest expense, net increased $8.4 million, or 12.8%, to $74.0 million in 2017 compared to $65.6 million in 2016. The increase was due
to an increase in the average amount of debt outstanding, resulting from additional principal amounts outstanding under our securitization
facilities (see “—Liquidity and Capital Resources—Consumer Loan Securitizations” below for further information) and the issuance of
the 8.50% Senior Unsecured Notes Due 2024 on September 1, 2017 (see “—Liquidity and Capital Resources—8.50% Senior
Unsecured Notes Due 2024” below for further information), which increased the average amount of debt outstanding by $79.3 million
to $694.5 million during 2017 from $615.2 million during 2016, partially offset by a decrease in the weighted average interest rate on our
outstanding debt to 10.63% in 2017 from 10.71% in 2016.
Provision for Income Taxes
Provision for income taxes decreased $14.1 million, or 62.1%, to $8.7 million in 2017 compared to $22.8 million in 2016. The
decrease was due primarily to a 34.0% decrease in income before income taxes, and a decrease in the effective tax rate to 22.9% in
2017 from 39.8% in 2016. The decrease in the effective tax rate is mainly due to the Tax Cuts and Jobs Act, and an adjustment related
to share based compensation deferred tax.
LIQUIDITY AND CAPITAL RESOURCES
Capital Funding Strategy
Historically, we have generated significant cash flow through normal operating activities for funding both long-term and short-term
needs. Our near-term liquidity is managed to ensure that adequate resources are available to f
growth,
ff
und our seasonal working capital
which is driven by demand for our loan and financing products, and to meet the continued growth in the demand for our near-prime
installment products. On May 30, 2014, we issued and sold $500.0 million in aggregate principal amount of 9.75% senior notes due
2021 (the “2021 Senior Notes”). On September 1, 2017, we issued and sold $250.0 million in aggregate principal amount of 8.50%
Senior Notes due 2024 (the “2024 Senior Notes”) and used the net proceeds, in part, to retire $155.0 million in 2021 Senior Notes. On
January 21, 2018, we redeemed an additional $50.0 million in principal amount of the outstanding 2021 Senior Notes. On September
19, 2018, we issued and sold $375.0 million in aggregate principal amount of 8.50% Senior Notes due 2025 (the “2025 Senior Notes”)
and used the net proceeds, in part, to retire the remaining $295.0 million in principal amount of the outstanding 2021 Senior N
otes.
aa
On June 30, 2017, we entered into a secured revolving credit agreement (as amended, the “Credit Agreement”) which replaced our
previous credit agreement that was terminated on June 30, 2017. On April 13, 2018 and October 5, 2018, we and certain of our
operating subsidiaries entered into amendments of our Credit Agreement, as further described below. As of February 22, 2019, our
available borrowings under the Credit Agreement were $76.4 million. On January 15, 2016 and December 1, 2016, we entered into thett
2016-1 and 2016-2 Securitization Facilities, respectively, as further described below under “Consumer Loan Securitizations.” On
October 20, 2017, we amended and restated the 2016-1 Securitization Facility, as further described below. On July 23, 2018 and
October 23, 2018, we and several of our subsidiaries entered into the 2018-1 and 2018-2 Securitization Facilities, respectively, as
further described below. On October 31, 2018, we issued asset-backed notes through an indirect subsidiary, as further described below.
As of February 22, 2019, the outstanding balance under our securitization facilities was $225.2 million. We expect that our operating
needs, including satisfying our obligations under our debt agreements and funding our working capital growth, will be satisfied by a
combination of cash flows from operations, borrowings under the Credit Agreement, or any refinancing, replacement thereof or
increase in borrowings thereunder, and securitization or sale of loans and finance receivables under our consumer loan securitization
facilities.
d
d
As of December 31, 2018, we were in compliance with all financial ratios, covenants and other requirements set forth in our debt
agreements. Unexpected changes in our financial condition or other unforeseen factors may result in our inability to obtain third-party
financing or could increase our borrowing costs in the future. To the extent we experience short-term or long-term funding
disruptions, we have the ability to adjust our volume of lending and financing to consumers and small businesses that would reduce
cash outflow requirements while increasing cash inflows through repayments. Additional alternatives may include the securitization or
thereof, and reductions in capital
r
sale of assets, increased borrowings under the Credit Agreement, or any refinancing or replacement
spending which could be expected to generate additional liquidity.
d
8.50% Senior Unsecured Notes Due 2025
On September 19, 2018, we issued and sold the 2025 Senior Notes. The 2025 Senior Notes were sold to qualified institutional buyers
in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and outside the United States
pursuant to Regulation S under the Securities Act. The 2025 Senior Notes bear interest at a rate of 8.50% annually on the principal
amount payable semi-annually in arrears on March 15 and September 15 of each year, beginning on March 15, 2019. The 2025 Senior
Notes were sold at a price of 100%. The 2025 Senior Notes will mature on September 15, 2025. The 2025 Senior Notes are unsecured
68
debt obligations of ours, and are unconditionally guaranteed by certain of our domestic subsidiaries. As of December 31, 2018, the
aa
total liabilities of our subsidiaries (other than the guarantors) were $321.3 million, including trade payables.
The 2025 Senior Notes are redeemable at our option, in whole or in part, (i) at any time prior to September 15, 2021 at 100% of the
aggregate principal amount of 2025 Senior Notes redeemed plus the applicable “make whole” premium specified in the indenture that
governs our 2025 Notes (the “2025 Senior Notes Indenture”), plus accrued and unpaid interest, if any, to the redemption date and (ii)
at any time on or after September 15, 2021 at the premium, if any, specified in the 2025 Senior Notes Indenture that will decrease over
time, plus accrued and unpaid interest, if any, to the redemption date. In addition, prior to September 15, 2021, at our option, we may
redeem up to 40% of the aggregate principal amount of the 2025 Senior Notes at a redemption price of 108.5% of the aggregate
principal amount of 2025 Senior Notes redeemed, plus accrued and unpaid interest, if any, to the redemption date, with the proceeds
of certain equity offerings as described in the 2025 Senior Notes Indenture.
f
The 2025 Senior Notes and the related guarantees have not been and will not be registered under the Securities Act, or the securities
laws of any state or other jurisdiction, and may not be offered or sold in the United States without registration or an applicable
exemption from the registration requirements of the Securities Act and applicable state securities or blue sky laws and foreign
securities laws.
a
We used a portion of the net proceeds of the 2025 Senior Notes offering to retire the remaining outstanding 2021 Senior Notes balance
of $295.0 million, to pay the related accrued interest, premiums, fees and expenses
associated therewith. The remaining amount is
rr
intended to be used for general corporate purposes, which may include working capital and future repurchases of our outstanding debt
securities.
8.50% Senior Unsecured Notes Due 2024
On September 1, 2017, we issued and sold the 2024 Senior Notes. The 2024 Senior Notes were sold to qualified institutional buyers in
accordance with Rule 144A under the Securities Act and outside the United States pursuant to Regulation S under the Securities Act.
The 2024 Senior Notes bear interest at a rate of 8.50% annually on the principal amount payable semi-annually in arrears on March 1
and September 1 of each year, beginning on March 1, 2018. The 2024 Senior Notes were sold at a price of 100%. The 2024 Senior
Notes will mature on September 1, 2024. The 2024 Senior Notes are unsecured debt obligations of ours, and are unconditionally
guaranteed by certain of our domestic subsidiaries. As of December 31, 2018, the total liabilities of our subsidiaries (other than the
guarantors) were $321.3 million, including trade payables.
The 2024 Senior Notes are redeemable at our option, in whole or in part, (i) at any time prior to September 1, 2020 at 100% of the
aggregate principal amount of 2024 Senior Notes redeemed plus the applicable “make whole” premium specified in the 2024 Senior
Notes Indenture, plus accrued and unpaid interest, if any, to the redemption date and (ii) at any time on or after September 1, 2020 at
the premium, if any, specified in the 2024 Senior Notes Indenture that will decrease over time, plus accrued and unpaid interes
t, if
tt
any, to the redemption date. In addition, prior to September 1, 2020, at our option, we may redeem up to 40% of the aggregate
principal amount of the 2024 Senior Notes at a redemption price of 108.5% of the aggregate principal amount of 2024 Senior Notes
redeemed, plus accrued and unpaid interest, if any, to the redemption date, with the proceeds of certain equity offerings as described in
the 2024 Senior Notes Indenture.
The 2024 Senior Notes and the related guarantees have not been and will not be registered under the Securities Act, or the securities
laws of any state or other jurisdiction, and may not be offered or sold in the United States without registration or an applicable
exemption from the registration requirements of the Securities Act and applicable state securities or blue sky laws and foreign
securities laws.
a
We used the net proceeds of the 2024 Senior Notes offering to retire a portion of our outstanding 2021 Senior Notes, to pay the related
accrued interest, premiums, fees and expenses associated therewith and for general corporate purposes
Consumer Loan Securitizations
We securitize consumer loan receivables originated by certain of our subsidiaries, which are sold to bankruptcy remote special
purpose subsidiaries. Each of these securitizations provides that (i) the lenders to a securitization subsidiaries have no recourse to seek
repayment or recovery from our operating entities for credit losses on the receivables; (ii) except for certain limited indemnities, such
lenders have recourse only to assets of the applicable securitization subsidiary to which they have lent; (iii) such lenders maintain a
security interest in all assets of the applicable securitization subsidiary; (iv) cash flows from the assets transferred to such
securitization subsidiaries represent the sole source of payment to such securitization subsidiaries. The collections on assets sold to
securitization subsidiaries are not available to satisfy the debts or other obligations of the Company unless such amounts have been
released from the lien of the lenders.
69
2018-A Notes
On October 31, 2018 (the “2018-A Closing Date”), we issued $95,000,000 Class A Asset Backed Notes (the “Class A Notes”) and
$30,400,000 Class B Asset Backed Notes (the “Class B Notes” and, collectively with the Class A Notes, the “2018-A Notes”),
through an indirect subsidiary. The Class A Notes bear interest at 4.20%, and the Class B Notes bear interest at 7.37%. The 2018-A
Notes are backed by a pool of unsecured consumer installment loans (“Securitization Receivables”) and represent obligations of the
issuer only. The 2018-A Notes are not guaranteed by us. Under the 2018-A Notes, Securitization Receivables are sold to a wholly-
owned subsidiary of ours and serviced by another subsidiary of ours.
The net proceeds of the offering of the 2018-A Notes on the 2018-A Closing Date were used to acquire the Securitization Receivables
from us, fund a reserve account and pay fees and expenses incurred in connection with the transaction.
a
The 2018-A Notes were offered only to “qualified institutional buyers” pursuant to Rule 144A under the Securities Act and to certain
persons outside of the United States in compliance with Regulation S under the Securities Act. The 2018-A Notes have not been
registered under the Securities Act, or the securities laws of any state or other jurisdiction, and may not be offered or sold in the
United States without registration or an applicable exemption from the Securities Act and applicable state securities or blue sky laws
and foreign securities laws.
2018-2 Facility
On October 23, 2018, we and several of our subsidiaries entered into a receivables funding agreement (the “2018-2 Facility”) with
Credit Suisse AG, New York Branch, as agent (the “Agent”). The 2018-2 Facility collateralizes Securitization Receivables that have
been and will be originated or acquired under our NetCredit brand by several of our subsidiaries and that meet specified eligibility
criteria in exchange for a revolving note. Under the 2018-2 Facility, Securitization Receivables are sold to a wholly-owned subsidiary
of ours (the “2018-2 Debtor”) and serviced by another subsidiary of ours.
The 2018-2 Debtor has issued a revolving note with an initial maximum principal balance of $150.0 million, which is required to be
secured by 1.25 times the drawn amount in eligible Securitization Receivables. The 2018-2 Facility is non-recourse to us and matures
on October 23, 2022.
The 2018-2 Facility is governed by a loan and security agreement, dated as of October 23, 2018, between the Agent, the 2018-2
Debtor and certain other lenders and agent parties thereto. The 2018-2 Facility bears interest at a rate per annum equal to one-month
LIBOR (subject to a floor) plus an applicable margin, which rate per annum is 3.75%. In addition, the 2018-2 Debtor paid certain
customary upfront closing fees to the Agent. Interest payments on the 2018-2 Facility will be made monthly. The 2018-2 Debtor shall
be permitted to prepay the 2018-2 Facility, subject to certain fees and conditions. Any remaining amounts outstanding will be payable
no later than October 23, 2022, the final maturity date.
All amounts due under the 2018-2 Facility are secured by all of the 2018-2 Debtor’s assets, which include the Securitization
Receivables transferred to the 2018-2 Debtor, related rights under the Securitization Receivables, a bank account and certain other
related collateral.
The 2018-2 Facility documents contain customary provisions for securitizations, including: representations and warranties as to the
eligibility of the Securitization Receivables and other matters; indemnification for specified losses not including losses due to the
inability of consumers to repay their loans; covenants regarding special purpose entity matters; and default and termination provisions
that provide for the acceleration of the 2018-2 Facility in circumstances including, but not limited to, failure to make payments when
due, servicer defaults, certain insolvency events, breaches of representations, warranties or covenants, failure to maintain the security
interest in the Securitization Receivables and defaults under other material indebtedness of the 2018-2 Debtor.
2018-1 Facility
On July 23, 2018, we and several of our subsidiaries entered into a receivables funding agreement (the “2018-1 Facility”) with Pacific
Western Bank, as lender (the “2018-1 Lender”). The 2018-1 Facility collateralizes Securitization Receivables that have been and will
be originated or acquired under our NetCredit brand by several of our subsidiaries and that meet specified eligibility criteria in
exchange for a revolving note. Under the 2018-1 Facility, Securitization Receivables are sold to a wholly-owned subsidiary of ours
(the “2018-1 Debtor”) and serviced by another subsidiary of ours.
d
The 2018-1 Debtor has issued a revolving note with an initial maximum principal balance of $150.0 million, which is required to be
secured by 1.25 times the drawn amount in eligible Securitization Receivables. The 2018-1 Facility is non-recourse to us and matures
on July 22, 2023.
The 2018-1 Facility is governed by a loan and security agreement, dated as of July 23, 2018, between the 2018-1 Lender and the
2018-1 Debtor. The 2018-1 Facility bears interest at a rate per annum equal to LIBOR (subject to a floor) plus an applicable margin,
70
which rate per annum is initially 4.00%. In addition, the 2018-1 Debtor paid certain customary upfront closing fees to the
2018-1 Lender. Interest payments on the 2018-1 Facility are made monthly. The 2018-1 Debtor is permitted to prepay the
2018-1 Facility, subject to certain fees and conditions. In the event of prepayment for the purposes of securitizations, no fees shall
apply. Any remaining amounts outstanding will be payable no later than July 22, 2023, the final maturity date.
All amounts due under the 2018-1 Facility are secured by all of the 2018-1 Debtor’s assets, which include the Securitization
Receivables transferred to the 2018-1 Debtor, related rights under the Securitization Receivables, a bank account and certain other
related collateral.
The 2018-1 Facility documents contain customary provisions for securitizations, including: representations and warranties as to the
eligibility of the Securitization Receivables and other matters; indemnification for specified losses not including losses due to the
inability of consumers to repay their loans; covenants regarding special purpose entity matters; and default and termination provisions
which provide for the acceleration of the 2018-1 Facility in circumstances including, but not limited to, failure to make payments
when due, servicer defaults, certain insolvency events, breaches of representations, warranties or covenants, failure to maintain the
security interest in the receivables and defaults under other material indebte
dness of the 2018-1 Debtor.
uu
2016-1 Facility
On January 15, 2016, we and certain of our subsidiaries entered into a receivables securitization (as amended, the “2016(cid:31)1 Securitization
st
Facility”) with certain purchasers, Jefferies Funding LLC, as administrative agent (the “Administrative Agent”) and Bankers Tru
d
izes
Company, as indenture trustee and securities intermediary (the “Indenture Trustee”). The 2016(cid:31)1 Securitization Facility securit
Securitization Receivables that have been, or will be, originated or acquired under our NetCredit brand and that meet specified eligibility
criteria. Under the 2016(cid:31)1 Securitization Facility, Securitization Receivables are sold to a wholly-owned special purpose subsidiary of
ours (the “2016-1 Issuer”) and serviced by another subsidiary of ours. The 2016-1 Securitization Facility, as amended, provided for a
maximum principal amount of $275 million, a variable funding notes maximum principal amount of $30 million per month and a
revolving period of the facility ending in October 2017.
uu
d
d
tt
On October 20, 2017 (the “Amendment Closing Date”), we and certain of our subsidiaries amended and restated the 2016(cid:31)1
Securitization Facility (the “Amended Facility”). The counterparties to the Amended Facility included certain purchasers, the
vables that have been and will
Administrative Agent and the Indenture Trustee. The Amended Facility relates to Securitization Recei
be originated or acquired under our NetCredit brand by several of our subsidiaries and that meet specified eligibility criteria. The
eligible Securitization Receivables that were owned by the 2016-1 Issuer remained in the Amended Facility and the ineligible
Securitization Receivables were removed. Under the Amended Facility, additional eligible Securitization Receivables may be sold to
the 2016-1 Issuer and serviced by another subsidiary of ours.
y
d
In connection with the amendment and restatement, all of the outstanding notes issued by the 2016-1 Issuer prior to the Amendment
Closing Date were redeemed and the 2016-1 Issuer issued an initial term note with an initial principal amount of $181.1 million (the
“2017 Initial Term Note”) and variable funding notes (the “2017 Variable Funding Notes”) with an aggregate committed availability
of $75 million per quarter with an option to increase the commitment to $90 million with the consent of the holders of the 2017
Variable Funding Notes. The Amended Facility also authorized the 2016-1 Issuer to issue term notes thereafter (the “2017 Quarterly
Term Notes” and, together with the 2017 Initial Term Note and the 2017 Variable Funding Notes, the “2017 Securitization Notes”) at
the end of each calendar quarter. The maximum principal amount of the 2017 Securitizatio
n Notes that may be outstanding at any time
f
under the Amended Facility is $275 million. The 2017 Securitization Notes are non-recourse to us and mature at various dates, the
latest of which will be April 15, 2022 (the “2017 Final Maturity Date”).
On October 31, 2018, the 2016-1 Issuer resold a substantial portion of the Securitization Receivables it owned to Enova International,
Inc., and used the proceeds to redeem all of the outstanding 2017 Quarterly Term Notes and to repay all amounts owed on the 2017
Variable Funding Notes.
The 2017 Securitization Notes are issued pursuant to an amended and restated indenture, dated as of the Amendment Closing Date,
between the 2016-1 Issuer and the Indenture Trustee. The 2017 Securitization Notes bear interest at a rate per annum equal to one-
month LIBOR (subject to a floor) plus 7.50%. In addition, the 2016-1 Issuer paid certain customary upfront closing fees to the
Administrative Agent and will pay customary annual commitment and other fees to the purchasers under the Amended Facility.
Subject to certain exceptions, the 2016-1 Issuer is not permitted to prepay or redeem any of the 2017 Securitization Notes prior to
April 15, 2019. Following such date, the 2016-1 Issuer is permitted to voluntarily prepay any of the 2017 Securitization Notes,
subject
to an optional redemption premium. Interest and principal payments on the 2017 Securitization Notes will be made monthly. Any
remaining amounts outstanding will be payable no later than the 2017 Final Maturity Date.
f
All amounts due under the 2017 Securitization Notes are secured by all of the 2016-1 Issuer’s assets, which include the Securitization
Receivables transferred to the 2016-1 Issuer, related rights under the Securitization Receivables, specified bank accounts and certain
other related collateral.
71
The Amended Facility documents contain customary provisions for securitizations, including: representations and warranties as to the
eligibility of the Securitization Receivables and other matters; indemnification for specified losses not including losses due to the
inability of consumers to repay their loans; covenants regarding special purpose entity matters and other subjects; and default and
termination provisions which provide for the acceleration of the 2017 Securitization Notes under the Amended Facility in
circumstances including, but not limited to, failure to make payments when due, servicer defaults, certain insolvency events, breaches
of representations, warranties or covenants, failure to maintain the security interest in the receivables, and defaults under other
material indebtedness. From time to time, we repurchase Securitization Receivables at our discretion or under the terms of the
Amended Facility.
t
On October 25, 2017, the 2016-1 Issuer and the Indenture Trustee amended the Amended Facility to permit a holder of a 2017 Term
Note or the 2017 Initial Term Note to exchange such notes for notes with an alternative structure with terms not materially different to
the 2016-1 Issuer than the exchanged Term Notes or Initial Term Notes.
ff
2016-2 Facility
On December 1, 2016, we and certain of our subsidiaries entered into a receivables securitization (the “2016(cid:31)2 Facility”) with
Redpoint Capital Asset Funding, LLC, as lender (the “Lender”). The 2016(cid:31)2 Facility securitized Securitization Receivables that were
originated or acquired under our NetCredit brand by several of our subsidiaries and that meet specified eligibility criteria, including
that the annual percentage rate for each securitized consumer loan was greater than or equal to
90%. Under the 2016(cid:31)2 Facility,
n
Securitization Receivables were sold to a wholly-owned subsidiary of ours and serviced by another subsidiary of ours. As of
December 31, 2018, there was no remaining outstanding balance under the 2016-2 Facility, the facility has been repaid in full and
there is no remaining amount available to be borrowed.
a
Revolving Credit Facility
On June 30, 2017, we and certain of our operating subsidiaries entered into a secured revolving credit agreement with a syndicate of
banks including TBK Bank, SSB (“TBK”), as administrative agent and collateral agent, Jefferies Fi
nance LLC and TBK as joint lead
aa
arrangers and joint lead bookrunners, and Green Bank, N.A., as lender. On April 13, 2018 and October 5, 2018, the Credit Agreement
was amended to include Pacific Western Bank and Axos Bank, respectively, as lenders, in the syndicate of lenders
aa
The Credit Agreement is secured by domestic receivables and matures on May 1, 2020. The borrowing limit in the Credit Agreement,
as amended on October 5, 2018, is $125 million, which is an increase from $75 million as provided by the first amendment to the
Credit Agreement. We had $22.0 million of borrowings under the Credit Agreement as of December 31, 2018.
f
The Credit Agreement provides for a revolving credit line with interest on borrowings under the facility at prime rate plus 1.00%. In
addition, the Credit Agreement provides for payment of a commitment fee calculated with respect to the unused portion of the line,
and ranges from 0.30% to 0.50% per annum depending on usage. A portion of the revolving credit facility, up to a maximum of $20
f
million, is available for the issuance of letters of credit. We had outstanding letters of credit under the Credit Agreement of $1.6
million as of December 31, 2018. The Credit Agreement provides for certain prepayment penalties if it is terminated on or befor
e its
first and second anniversary date, subject to certain exceptions.
f
The Credit Agreement contains certain limitations on the incurrence of additional indebtedness, investments, the attachment of liens to
our property, the amount of dividends and other distributions, fundamental changes to us or our business and certain other of our
activities. The Credit Agreement contains standard financial covenants for a facility of this type based on a leverage ratio and a fixed
charge coverage ratio. The Credit Agreement also provides for customary affirmative covenants, including financial reporting
requirements, and certain events of default, including payment defaults, covenant defaults and other customary defaults.
72
Cash Flows
Our cash flows and other key indicators of liquidity are summarized as follows (dollars in thousands):
Cash flows provided bd y operating activities (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Cash flows used in investing activities
Year Ended December 31,
2017
447,173 $
2018
684,840 $
2016
393,373
Loans and finance receivables (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Purchases of property and equipment (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Other investing activities (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(705,138)
(16,079)
284
(509,845)
(16,528 )
1,805
Total cash flows used in investing activities (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ (720,933) $ (524,568) $
Cash flows provided
104,582 $
Total debt to Adjusted EBITDA
activities (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
(a) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
22,479 $
4.1x
bd y financing
5.0x
d
ff
ff
(450,149)
(14,396)
95
(464,450)
99,880
4.6x
(a) Total debt to Adjusted EBITDA, a non-GAAP measure, is calculated using Adjusted EBITDA for the twelve months ended for the
respective period indicated. See “—Non-GAAP Financial Measures—Adjusted EBITDA.”
Cash Flows from Operating Activities
2018 comparison to 2017
Net cash provided by operating activities increased $237.7 million, or 53.1%, to $684.8 million for 2018 from $447.2 million for
2017. The increase was driven primarily by overall growth in the business with interest and fees paid by customers outpacing
operating cash outflows.
2017 comparison to 2016
Net cash provided by operating activities increased $53.8 million, or 13.7%, to $447.2 million for 2017 from $393.4 million for 2016.
The increase was driven primarily by a $68.6 million increase in cost of revenue, a non-cash expense, partially offset by a $5.4 million
decrease in net income, which reflects $22.9 million of losses on early extinguishment of debt in 2017.
r
Other significant changes in net cash provided by operating activities for 2017 compared to 2016 included cash flows from the
following activities:
• changes in accounts payable and accrued expenses resulted in a decrease of $13.8 million due primarily to changes in accrued
rent and accrued interest and
• changes in current income taxes payable resulted in a $10.2 million decrease in cash provided by operating activities, due
primarily to less estimated tax paid at both a federal and state level, and utilization of 2016 tax return carryforwards.
Cash Flows from Investing Activities
2018 comparison to 2017
Net cash used in investing activities increased $196.4 million, or 37.4%, for 2018 compared to 2017, due primarily to a $195.3 million
increase in net cash invested in loans and finance receivables, due to a 23.3% increase in loans and finance receivables originated or
purchased.
2017 comparison to 2016
Net cash used in investing activities increased $42.6 million, or 8.8%, for 2017 compared to 2016, due primarily to a $59.7 million
increase in net cash invested in loans and finance receivables, due to a 8.5% increase in loans and finance receivables originated or
purchased, a $17.5 million decrease in the amount invested in restricted cash resulting from activity related to the securitization
facilities and a. $2.1 million increase in property and equipment expenditures.
73
Cash Flows from Financing Activities
2018 comparison to 2017
Net cash provided by financing activities in 2018 was $22.5 million compared to $104.6 million in 2017. Cash flows provided by financing
activities for 2018 primarily reflects a net increase of $30.0 million in our senior notes facilities, $22.0 million in net borrowings under
the Credit Agreement and $15.9 million in net borrowings under our securitization facilities, partially offset by $18.8 million of early
termination fees paid in connection with the early payment of our 2021 Senior Notes, $17.3 million in treasury shares purchased and
$13.0 million of debt issuance costs paid in connection with the 2025 Senior Notes, the Credit Agreement and the 2018-1, 2018-2 and
2018-A Securitization Facilities. In regard to the treasury shares, in 2017, we announced that the Board of Directors had authorized a
share repurchase program for the repurchase of up to $25.0 million of our common stock through December 31, 2019 (the “2017
Authorization”). As a result of exhausting this amount in January 2019, our Board of Directors authorized a new share repurchase
program for the repurchase of up to $50.0 million of our common stock through December 31, 2020.
rr
2017 comparison to 2016
Net cash provided by financing activities in 2017 was $104.6 million compared to $99.9 million in 2016. Cash flows provided by financing
activities for 2017 primarily reflects $95.0 million in net borrowings under our senior notes facilities, $46.0 million in net borrowings
under our securitization facilities, a $16.7 million penalty paid in connection with the early payment of our 2021 Senior Notes and the
2016-1 Securitization Facility and $14.7 million of debt issuance costs paid in connection with the Credit Agreement, 2024 Senior
Notes and the 2017 Securitization Facility. Additionally, we paid $3.5 million to repurchase common stock under the 2017
Authorization.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
The following table summarizes our contractual obligations at December 31, 2018, and the effect such obligations are expected to
have on our liquidity and cash flow in future periods (in thousands):
2019
Revolving credit agreement (a) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ — $22,000 $ — $ — $ — $
tes (b) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
—
Senior nor
Interest on senior notes (c) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) 53,125
Securitization facilities (d) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
—
Non-cancelable leases (e)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
6,932
—
53,125
—
6,751
—
53,125
—
6,957
—
53,125
—
7,010
53,125
—
7,113
— 625,000
85,000
—
23,465
2020
2021
2022
2023
— $
Total (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 60,057 $59,876 $60,082 $60,135 $60,238 $733,465 $
— $
—
—
227,288
—
Total
22,000
625,000
350,625
227,288
58,228
227,288 $1,261,141
Thereafter Securitizations
(a) Revolving credit agreement may be repaid at any time prior to maturity in May 2020; as such, no interest payments have been
included in the table.
(b) Represents obligations under the 2024 Senior Notes and 2025 Senior Notes.
(c) Represents cash payments for interest on the 2024 Senior Notes and 2025 Senior Notes.
(d) Securitizations and related interest are not included in maturities by period due to their variable monthly payments.
(e) Represents obligations due under long-term operating leases.
e
OFF-BALANCE SHEET ARRANGEMENTS
In certain markets, we arrange for consumers to obtain consumer loan products from independent third-party lenders through our CSO
programs. For consumer loan products originated by third-party lenders under the CSO programs, each lender is responsible for
providing the criteria by which the customer’s application is underwritten and, if approved, determining the amount of the cons
umer
loan. We are responsible for assessing whether or not we will guarantee such loan. When a customer executes an agreement with us
under our CSO programs, we agree, for a fee payable to us by the customer, to provide certain services to the customer, one of which
is to guarantee the customer’s obligation to repay the loan received by the customer from the third-party lender if the customer fails to
do so. The guarantee represents an obligation to purchase specific loans if they go into default, which generally occurs after one
payment is missed. As of December 31, 2018 and 2017, the outstanding amount of active consumer loans originated by third-party
lenders under the CSO programs was $29.7 million and $34.1 million, respectively, which were guaranteed by us.
a
CRITICAL ACCOUNTING ESTIMATES
Allowance and Liability for Estimated Losses on Loans and Finance Receivables
We monitor the performance of our loan and finance receivable portfolios and maintain either an allowance or liability for estimated
and/or interest) at a level estimated to be adequate to absorb losses
losses on loans and finance receivables (including revenue, fees
74
a
inherent in the portfolio. The allowance for losses on our Company-owned loans and finance receivables reduces the outstanding loans
and finance receivables balance in the consolidated balance sheets. The liability for estimated losses related to loans guaranteed under
the CSO programs is initially recorded at fair value and is included in “Accounts payable and accrued expenses” in the consolidated
balance sheets.
In determining the allowance or liability for estimated losses on loans and finance receivables, we apply a documented systematic
methodology. In calculating the allowance or liability for receivable losses, outstanding loans and finance receivables are divided into
discrete groups of short-term loans, line of credit accounts, installment loans and RPAs and are analyzed as current or delinquent.
Increases in either the allowance or the liability, net of charge-offs and recoveries, are recorded as a “Cost of revenue” in the
consolidated statements of income.
The allowance or liability for short-term loans classified as current is based on historical loss rates adjusted for recent default trends
for current loans. For delinquent short-term loans, the allowance or liability is based on a six-month rolling average of loss
rates by
aa
stage of collection. For line of credit account, installment loan and RPA portfolios, we
generally use either a migration analysis or roll-
uu
rate based methodology to estimate losses inherent in the portfolio. The allowance or liability calculation under the migration analysis
and roll-rate methodology is based on historical charge-off experience and the loss emergence period, which represents the average
amount of time between the first occurrence of a loss event and the charge-off of a loan or RPA. The factors we consider to assess the
adequacy of the allowance or liability include past due performance, historical behavior of monthly vintages, underwriting changes
and recent trends in delinquency in the migration analysis. The roll-rate methodology is based on delinquency status, payment history
and recency factors to estimate future charge-offs.
ff
linquent
We fully reserve for loans and finance receivables once the receivable or a portion of the receiva
a
ble has been classified as de
a
for 60 consecutive days and generally charge-off loans and finance receivables between 60 to 65 days delinquent. If a loan or finance
ff
receivable is deemed uncollectible before it is fully reserved, it is charged off at that point. Loans and finance receivables classified as
delinquent generally have an age of one to 64 days from the date any portion of the
receivable became delinquent, as defined above.
aa
Recoveries on loans and finance receivables previously charged to the allowance are credited to the allowance when collected.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired
in each business combination. In accordance with Accounting Standards Codification (“ASC”) 350,
Goodwill, we test goodwill for
aa
potential impairment annually as of June 30 and between annual tests if an event occurs or circumstances change that would more
likely than not reduce the fair value below its carrying amount.
We first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test.
In assessing the qualitative factors, we consider relevant events and circumstances including but not limited to macroeconomic
conditions, industry and market environment, our overall financial performance, cash flow from operating activities, market
capitalization and stock price. If we determine that the two-step quantitative impairment test is required, we use the income approach
to complete our annual goodwill assessment. The income approach uses future cash flows and estimated terminal values that are
discounted using a market participant perspective to determine the fair value, which is then compared to the carrying value to
determine if there is impairment. The income approach includes assumptions about revenue growth rates, operating margins and
terminal growth rates discounted by an estimated weighted-average cost of capital derived from other publicly-traded companies that
are similar from an operational and economic standpoint. We completed our annual assessment of goodwill as of June 30, 2018 based
on qualitative factors and determined that the fair value of our goodwill exceeded carrying value, and, as a result, no impairment
existed at that date. A 10% decrease in the estimated fair value for the June 2018 assessment would not have resulted in a goodwill
impairment.
dd
Income Taxes
We account for income taxes under ASC 740, Income Taxes. As part of the process of preparing our consolidated financial statements,
we are required to estimate income taxes in each of the jurisdictions in which we operate. This process involves estimating the actual
current tax expense together with assessing temporary differences in recognition of income for tax and accounting purposes. These
differences result in deferred tax assets and liabilities and are included within the consolidated balance sheets. We must then assess the
likelihood that the deferred tax assets will be recovered from future taxable income and, to the extent we believe that recovery is not
likely, we must establish a valuation allowance. An expense or benefit is included within the tax provision in the statement of
operations for any increase or decrease in the valuation allowance for a given period.
n
rr
We perform an evaluation of the recoverability of our deferred tax assets on a quarterly basis. We establish a valuation allowance if it
nalyze
is more-likely-than-not (greater than 50 percent) that all or some portion of the deferred tax asset will not be realized. We a
several factors, including the nature and frequency of operating losses, our carryforward period for any losses, the reversal of future
75
t
taxable temporary differences, the expected occurrence of future income or loss and the feasibility of available tax planning strategies
to protect against the loss of deferred tax assets.
We account for uncertainty in income taxes in accordance with ASC 740, which requires that a more-likely-than-not threshold be met
before the benefit of a tax position may be recognized in the consolidated financial statements and prescribes how such benefit should
be measured. We must evaluate tax positions taken on our tax returns for all periods that are open to examination by taxing authorities
and make a judgment as to whether and to what extent such positions are more likely than not to be sustained based on merit. We
record interest and penalties related to tax matters as income tax expense in the consolidated statement of income.
t
tt
Our judgment is required in determining the provision for income taxes, the deferred tax assets and liabilities and any valuation
allowance recorded against deferred tax assets. Our judgment is also required in evaluating whether tax benefits meet the more-likely-
than-not threshold for recognition under ASC 740.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Refer to Note 1 in the Notes to the Consolidated Financial Statements in Part II, Item 8 “Financial Statements and Supplementaryrr
Data” in this report for a discussion of recently issued accoun
ting pronouncements.
f
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risks relating to our operations result primarily from changes in foreign currency exchange rates, specifically for our U.K. and
Brazilian operations. The net assets of our U.K. and Brazilian operations are exposed to foreign currency translation gains and losses,
which are generally included as a component of accumulated other comprehensive income or loss in stockholders’ equity. We have
periodically used forward currency exchange contracts to minimize risk of foreign currency exchange rate fluctuations for certain
transactions in Brazil. Our forward currency exchange contracts are non-designated derivatives. Any gain or loss resulting from these
contracts is recorded as income or loss and is included in “Foreign currency transaction (loss) gain, net” in our consolidated statements
of income. The following table sets forth, by each foreign currency hedged, the notional amounts of forward currency exchange
contracts as of December 31, 2018 and 2017, the total gains or losses recorded in 2018 and 2017, and sensitivity analysis of
hypothetical 10% declines in the exchange rates of the currencies (U.S. dollars in thousands).
m
Brazilian Real (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Total(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
— $
— $
Notional amount of
outstanding
contracts as of
December 31, 2018
Gain/(loss) recorded
in 2018(a)
Notional amount of
outstanding
contracts as of
December 31, 2017
Gain/(loss) recorded
in 2017(a)
Sensitivity Analysis(b)
—
—
243 $
243 $
Sensitivity Analysis(b)
(954)
(954)
(55) $
(55) $
Brazilian Real (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Total (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
12,039 $
12,039 $
(a)The gains (losses) on these derivatives substantially offset the (losses) gains on the hedged portion of international intercompany
m
balances.
(b)Represents the decrease to net income attributable to us due to a hypothetical 10% weakening of the foreign currency against the
U.S. dollar.
76
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm ..........................................................................................................
m
78
Consolidated Balance Sheets – December 31, 2018 and 2017.......................................................................................................
Consolidated Statements of Income – Years Ended December 31, 2018, 2017 and 2016 .............................................................
Consolidated Statements of Comprehensive Income – Years Ended December 31, 2018, 2017 and 2016 ............................(cid:17).....
Consolidated Statements of Stockholders’ Equity – Years Ended December 31, 2018, 2017 and 2016 ......................................
Consolidated Statements of Cash Flows – Years Ended December 31, 2018, 2017 and 2016 .....................................................
Notes to Consolidated Financial Statements ..................................................................................................................................
79
81
82
83
84
85
77
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Enova International, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Enova International, Inc. and its subsidiaries (the “Company”) as
of December 31, 2018 and December 31, 2017, and the related consolidated statements of income, comprehensive income,
stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2018, including the related n
(collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over
financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
otes
n
k
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
the Company as of December 31, 2018 and December 31, 2017, and the results of its operations and its cash flows for each of the
aa
three years in the period ended December 31, 2018 in conformity with accounting principles generally accepted in the United States of
America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as
of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
k
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Repo
Management on Internal Control over Financial Reporting, appearing under Item 9A. Our responsibility is to express opinions on the
Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
rr
and regulations of the Securities and Exchange Commission and the PCAOB.
rt of
f
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
dd
ff
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable
basis for our opinions.
t
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
ments in
company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial state
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
y
accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
a
f
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, p
rojections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
t
/s/ PricewaterhouseCoopers LLP
Chicago, IL
February 27, 2019
We have served as the Company’s auditor since 2011.
78
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
Assets
d
h equivalents(1) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Cash and cas
Restricted cash(1) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Loans and finance receivables, net(1)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Income taxes receivable (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Other receivables and prepaid expenses(1) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Property and equipment, net (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Goodwill (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Intangible assets, net (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Other assets(1) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total assets (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses(1)
Deferred tax liab
d
Long-term debt(1)
ilities, net (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total liabilities (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Commitments and contingencies (Note 10)
Stockholders' equity:
Common stock, $0.00001 par value, 250,000,000 shares authorized,
34,856,553 and 33,932,673 shares issued and 33,584,606 and 33,504,555
outstanding as of December 31, 2018 and 2017, respectively (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Preferred stock, $0.00001 par value, 25,000,000 shares authorized, no shares
d
issued and outstanding (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Additional paid in capital (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
ings (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Retained earn
Accumulated other comprehensive loss (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Treasury stock, at cost (1,271,947 and 428,118 shares as of December 31, 2018
and 2017, respectively) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total stockholders' equity(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total liabilities and std ockholders' equity (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
December 31,
2018
2017
$
$
$
52,917
24,342
859,946
28,914
29,983
49,553
267,013
3,255
12,262
1,328,185
89,317
33,171
857,929
980,417
—
—
48,175
336,415
(13,805 )
(23,017 )
347,768
1,328,185
$
68,684
29,460
704,705
4,092
23,817
48,525
267,015
4,325
8,837
1,159,460
77,123
12,108
788,542
877,773
—
—
29,781
264,695
(7,086)
(5,703)
281,687
1,159,460
(1) Includes amounts in consolidated variable interest entities (“VIEs”) presented separately in the table below.
79
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
The following table presents the aggregated assets and liabilities of consolidated VIEs, which are included in the Consolidated
Balance Sheets above. The assets in the table below may only be used to settle obligations of consolidated VIEs and are in excess of
those obligations. See Note 15 for additional information.
December 31,
2018
2017
210 $
22,168
318,961
2,712
2,544
346,595 $
3,087 $
223,368
226,455 $
—
21,696
259,996
—
178
281,870
1,671
208,135
209,806
Assets of consolidated VIEs, included in total assets above
d
h equivalents (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Cash and cas
Restricted cash (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Loans and finance receivables, net (includes allowance for losses of $27,255 and
$22,728 as of December 31, 2018 and 2017, respectively) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Other receivables and prepaid expenses (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Other assets (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total assets of cof
nsolidated VIEs
Liabilities of consolidated VIEs, included in total liabilities above
d
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Accounts payable and accrued expenses(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Long-term debt (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
s
Total liabilities of consolidated VIEs (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
See Notes to Consolidated Financial Statements
80
2016
745,569
327,966
417,603
97,404
85,202
97,956
15,564
296,126
121,477
(65,603)
1,562
—
57,436
22,834
34,602
1.04
1.03
33,192
33,462
101,429
95,155
101,723
14,388
312,695
134,414
(74,003)
384
(22,895)
37,900
8,660
29,240
0.87
0.86
33,523
34,132
$
$
$
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
2018
1,114,074
571,000
543,074
Year Ended December 31,
2017
$
$
843,741
396,632
447,109
Revenue (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Cost of Revenue (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross Profit (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Expenses
Marketing (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Operations and technology (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
General and administrative (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Depreciation and amortization (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total Expenses (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Income from Operations (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Interest expense, net (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Foreign currency transaction (loss) gain, net (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
bt (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Loss on early extinguishment of def
Income before Income Taxes (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
taxes (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
ff
Provision for income
Net Income (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:3) $
Earnings Per Share:
125,269
112,483
107,060
15,190
360,002
183,072
(79,348)
(2,320)
(24,991)
76,413
6,315
70,098
$
Basic (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Diluted (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
2.06
1.99
$
$
Weighted average common shares outstanding:
Basic (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Diluted (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
33,993
35,176
See Notes to Consolidated Financial Statements
81
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Net Income (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Other comprehensive gain (loss), net of tax:
Foreign currency translation (loss) gain(1)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Reclassification of certain deferred tax effects (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total other cor mprehensive (loss) gain, net of tf ax (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Comprehensive Income (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
2018
Year Ended December 31,
2017
2016
70,098
$
29,240
$
34,602
(5,097)
(1,622)
(6,719)
63,379
$
4,492
——
4,492
33,732
$
(6,956)
——
(6,956)
27,646
(1) Net of tax benefit (provision) of $974, $(2,517) and $3,939 for the years ended December 31, 2018, 2017 and 2016, respectively.
See Notes to Consolidated Financial Statements
82
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
Common Stock
Shares
Amount
Additional
Paid in
Capital
Accumulated
Other
Retained Comprehensive
Earnings
Loss
Treasury Stock,
at cost
Shares
Amount
Total
Stockholders'
Equity
(4,622 )
—
—
—
(6,956 )
—
(11,578 )
—
—
—
—
4,492
—
(7,086 )
—
—
—
—
(5,097 )
—
(187) $ 205,968
(29) $
8,522
—
—
—
—
—
34,602
—
—
(6,956)
—
—
(437)
(437)
(42)
(624) $ 241,699
(71) $
11,307
—
—
—
28
—
29,240
—
4,492
—
(357 )
(5,079)
(428 ) $ (5,703) $ 281,687
11,660
—
—
—
6,734
—
70,098
—
(5,097)
—
(17,314)
(844 ) (17,314)
—
—
—
—
—
(5,079)
—
—
—
—
—
(1,622 )
—
(13,805 ) (1,272 ) $ (23,017) $ 347,768
—
—
—
—
—
—
—
—
214
—
—
—
8,522
—
—
—
—
—
—
34,602
—
—
Balance at December 31, 2015 (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) 33,151 $ — $ 9,924 $200,853 $
Stock-based cod mpensation expense (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
d
Shares issued for vested RSUs
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Net income (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Foreign currency translation loss, net of tax (cid:17)(cid:17)
Purchases of treasury shares, at cost (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Balance at December 31, 2016 (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) 33,365 $ — $ 18,446 $235,455 $
Stock-based cod mpensation expense(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Shares issued for vested RSUs
d
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Shares issued for stock option exercises (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Net income
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Foreign currency translation gain, net of tax .
(cid:17)
Purchases of treasury shares, at cost
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Balance at December 31, 2017 (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) 33,933 $ — $ 29,781 $264,695 $
Stock-based cod mpensation expense (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
d
Shares issued for vested RSUs
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Shares issued for stock option exercises (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Net income (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Foreign currency translation loss, net of tax(cid:17)(cid:17)
Purchases of treasury shares, at cost (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Reclassification of certain deferred tax
— 11,307
—
—
28
—
—
—
—
—
—
—
— 11,660
—
—
6,734
—
—
—
—
—
—
—
—
—
—
70,098
—
—
—
—
—
29,240
—
—
—
604
320
—
—
—
—
564
4
—
—
—
t
effects(cid:3) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
—
—
—
1,622
Balance at December 31, 2018 (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) 34,857 $ — $ 48,175 $336,415 $
See Notes to Consolidated Financial Statements
83
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Cash Flows from Operating Activities
Net Income (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
70,098
$
29,240
$
34,602
2018
Year Ended December 31,
2017
2016
Adjustments to reconcile Net Income to net cash provided by
operating activities:
Depreciation and amortization (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Amortization of deferred loan costs and ded
bt discount (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Cost of revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Stock-based cod mpensation expense (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Fair value changes in contingent pt urchase consideration (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Loss on early extinguishment of def
bt (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Deferred income taxes, net (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Other (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Changes in operating assets and liabilities:
Finance and service charges on loans and finance receivables (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Other receivables and prepaid expenses (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Accounts payable and accrued expenses(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Current income taxes (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Net cash provided by operating activities (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Cash Flows from Investing Activities (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Loans and finance receivables originated or acquired (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Loans and finance receivables repaid (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Purchases of property and equipment (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Other investing activities(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
s
Net cash used in investing activities
f
Cash Flows from Financing Activities
redit (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Borrowings under rer
volving line of cf
Repayments under revolving line of cre
dit(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
f
Borrowings under securitization facilities (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Repayments under securitization facilities (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Issuance of senior notes (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Repayments of seni
or notes(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Debt issuance costs paid (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Debt prepayment penalty paid (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
romissory note (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Payment of pf
Proceeds from exercise of stock options (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Treasury shares purchased (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Net cash provided by financing activities (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Effect of exchange rates on cash (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Net (decrease) increase in cash, cash equivalents and restricted cash (cid:17)(cid:17)
Cash, cash equivalents and restricted cash at beginning of year (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Cash, cash equivalents and restricted cash at end of period (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
15,190
6,201
571,000
11,660
—
24,991
21,971
55
(22,698)
(6,572)
17,766
(24,822)
684,840
14,388
7,196
396,632
11,307
2,358
22,895
(4,742)
(55)
(19,056)
(3,310)
(5,306)
(4,374)
447,173
15,564
6,913
327,966
8,522
3,300
—
(2,201)
(151)
(16,232)
843
8,462
5,785
393,373
(1,750,507)
1,045,369
(16,079)
284
(720,933)
(1,419,399)
909,554
(16,528)
1,805
(524,568)
(1,308,197)
858,048
(14,396)
95
(464,450)
203,000
(181,000)
348,813
(332,916)
375,000
(345,000)
(13,010)
(18,828)
(3,000)
6,734
(17,314)
22,479
(7,271)
(20,885)
98,144
77,259
$
30,000
(30,000)
359,842
(313,853)
250,000
(155,000)
(14,662)
(16,694)
—
28
(5,079)
104,582
4,717
31,904
66,240
98,144
$
58,400
(116,800)
280,075
(114,656)
—
—
(6,702)
—
—
—
(437)
99,880
(12,008)
16,795
49,445
66,240
See Notes to Consolidated Financial Statements
84
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies
Nature of the Company
Enova International, Inc. (“Enova”), formed on September 7, 2011, is an independent, publicly traded company, and the Company’s
shares of common stock are listed on the New York Stock Exchange under the symbol “ENVA.” Enova and its subsidiaries
(individually and collectively referred to herein as the “Company”) operate an internet-based lending platform to serve customers in
need of cash to fulfill their financial responsibilities. Through a network of direct and indirect marketing channels, the Company offers
funds to its customers through a variety of unsecured loan and finance receivable products. The business is operated primarily through
the internet to provide convenient, fully-automated financial solutions to its customers. As of December 31, 2018, the Company
offered or arranged loans to consumers under the names “CashNetUSA” and “NetCredit” in 32 states in the United States, under the
names “QuickQuid,” “Pounds to Pocket” and “On Stride Financial” in the United Kingdom, and under the name “Simplic” in Brazil.
The Company also offered financing to small businesses in all 50 states and Washington D.C. in the United States under the names
“Headway Capital” and “The Business Backer.” During 2016, the Company also launched “Enova Decisions,” its analytics-as-a-
service business that leverages existing tools and technologies in order to help companies make decisions about their own customers.
The Company originates, guarantees or purchases consumer loans. Consumer loans provide customers with cash in their bank account,
typically in exchange for an obligation to repay the amount advanced plus fees and/or interest. Consumer loans include short-term
loans, line of credit accounts and installment loans. The Company provides financing to small businesses through either a line of credit
account, installment loan or a receivables purchase agreement product (“RPAs”). RPAs represent a right to receive future receivables
from a small business. Small businesses receive funds in exchange for a portion of the business’ future receivables at an agreed upon
discount. In contrast, lending is a commitment to repay principal and interest. “Loans and finance receivables” include consumer
loans, small business loans and RPAs.
Short-term loans include unsecured short-term loans written by the Company or by a third-party lender through the Company’s credit
services organization and credit access business programs (“CSO programs” as further described below) that the Company guarantees.
Line of credit accounts include draws made through the Company’s line of credit product. Installment loans are longer-term multi-
payment loans that generally require the outstanding principal balance to be paid down in multiple installments and are written by the
Company, by a third-party lender through the CSO programs or by a bank partner.
Through the Company’s CSO programs, the Company provides services related to a third-party lender’s consumer loan products in
some markets by acting as a credit services organization or credit access business on behalf of consumers in accordance with
applicable state laws. Services offered under the CSO programs include credit-related services such as arranging loans with
independent third-party lenders and assisting in the preparation of loan applications and loan documents (“CSO loans”). Under the
CSO programs, the Company guarantees consumer loan payment obligations to the third-party lender in the event that the customer
defaults on the loan. CSO loans are not included in the Company’s consolidated balance sheets with the exception of a liability for the
estimated losses related to the guarantee on these loans.
y
tt
The Company operates a program with a bank to provide technology, marketing services, and loan servicing for near-prime unsecured
consumer installment loans. Under the program, the Company receives marketing and servicing fees while the bank receives an
origination fee. The bank has the ability to sell the loans it originates to the Company. The Company does not guarantee the
performance of the loans originated by the bank.
Basis of Presentation
The consolidated financial statements of the Company included herein have been prepared on the basis of accounting principles
generally accepted in the United States (“GAAP”) and reflect the historical results of operations and cash flows of the Company
during each respective period. The consolidated financial statements include goodwill and intangible assets arising from businesses
previously acquired. The financial information included herein may not be indicative of the consolidated financial position, operating
results, changes in stockholders’ equity and cash flows of the Company in the future. Intercompany transactions are eliminated.
Certain prior period amounts have been reclassified to conform to the current year presentation.
f
The Company consolidates any variable interest entity (“VIE”) where it has determined the Company is the primary beneficiary. The
primary beneficiary is the entity which has both the power to direct the activities of the VIE that most significantly impact the VIE’s
economic performance as well as the obligation to absorb losses or receive benefits of the entity that could potentially be sig
nificant to
the VIE.
ff
85
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Use of Estimates
The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at
t
the dates of
a
the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. On an on-going
basis, management evaluates its estimates and judgments, including those related to revenue recognition, allowance for losses on loans
and finance receivables, goodwill, long-lived and intangible assets, income taxes, contingencies and litigation. Management bases its
estimates on historical experience, empirical data and on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual
results may differ from these estimates.
Foreign Currency Translations
The functional currencies for the Company’s subsidiaries that serve or have served residents of the United Kingdom, Australia,
Canada and Brazil are the British pound, the Australian dollar, the Canadian dollar and the Brazilian real, respectively. The assets and
liabilities of these subsidiaries are translated into U.S. dollars at the exchange rates in effect at each balance sheet date, and the
resulting adjustments are recorded in “Accumulated other comprehensive income (loss)” (“AOCI”) as a separate component of
stockholders’ equity. Revenue and expenses are translated at the monthly average exchange rates occurring during each period.
Cash and Cash Equivalents
The Company considers deposits in banks and short-term investments with original maturities of 90 days or less as cash and cash
equivalents.
Restricted Cash
The Company includes funds to be used for future debt payments relating to its securitization transactions and escrow deposits in
restricted cash and cash equivalents.
Cash, Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated
balance sheets (in thousands):
d
h equivalents (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Cash and cas
Restricted cash (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total cash, cash equivalents and restricted cash (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
2018
52,917 $
24,342
77,259 $
December 31,
2017
68,684 $
29,460
98,144 $
2016
39,934
26,306
66,240
Revenue Recognition
The Company recognizes revenue based on the financing products and services it offers and on loans it acquires. “Revenue” in the
consolidated statements of income includes: interest income, finance charges, fees for services provided through the Company’s CSO
programs (“CSO fees”), revenue on RPAs, service charges, draw fees, minimum billing fees, purchase fees, origination fees, late fees
and non-sufficient funds fees as permitted by applicable laws and pursuant to the agreement with the customer. For short-term loans
that the Company offers, interest and finance charges are recognized on an effective yield basis over the term of the loan. For line of
credit accounts, interest is recognized over the reporting period based upon the balance outstanding and the contractual interest rate,
draw fees are recognized on an effective yield basis over the estimated outstanding period of the draw, and minimum billing fees are
recognized when assessed to the customer. For installment loans, interest and origination fees are recognized on an effective yield
basis over the term of the loan. For RPAs, revenue and purchase fees are recognized on an effective yield basis over the projected
delivery term of the agreements and fees are recognized when assessed. CSO fees are recognized on an effective yield basis over the
term of the loan. Late and nonsufficient funds fees are recognized when assessed to the customer. Direct costs associated with
originating loans and purchasing RPAs, such as third-party customer acquisition costs, are deferred and amortized against revenue on
an effective yield basis over the term of the loan or the projected delivery term of the finance receivable. Short-term loans, line of
uded in
credit accounts, installment loans, RPAs, unpaid and accrued interest, fees and revenue and deferred origination costs are incl
“Loans and finance receivables, net” in the consolidated balance sheets.
a
r
r
86
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Current and Delinquent Loans and Finance Receivables
The Company classifies its loans and finance receivables as either current or delinquent. Short-term loans are considered delinquent
when payment of an amount due is not made as of the due date. If a line of credit account or installment loan customer misses one
t. If a line of credit account or
payment, that payment is considered delinquent, and the balance of the loan is considered curren
installment loan customer does not make two consecutive payments, the entire account or loan is classified as delinquent and placed
on a non-accrual status. The Company allows for normal payment processing time before considering a loan delinquent but does not
provide for any additional grace period.
f
Where permitted by law and as long as a loan is not considered delinquent, a customer may choose to renew a short-term loan or
installment loan or extend the due date on a short-term loan. In order to renew or extend a short-term loan, a customer must agree to
pay the current finance charge for the right to make a later payment of the outstanding principal balance plus an additional finance
charge. In order to renew an installment loan, the customer enters into a new installment loan contract and agrees to pay the principal
balance and finance charge in accordance with the terms of the new loan contract. If a short-term loan is renewed, but the customer
fails to pay that loan’s current finance charge as of the due date, the unpaid finance charge is classified as delinquent.
The Company does not accrue interest on delinquent loans and does not resume accrual of interest on a delinquent loan unless it
ist
returned to current status. In addition, delinquent loans generally may not be renewed, and if, during its attempt to collect on a
delinquent loan, the Company allows additional time for payment through a payment plan or a promise to pay, it is still considered
delinquent. Generally, all payments received are first applied against accrued but unpaid interest and fees and then against the
principal balance of the loan.
f
Allowance and Liability for Estimated Losses on Loans and Finance Receivables
The Company monitors the performance of its loan and finance receivable portfolios and maintains either an allowance or liability for
estimated losses on loans and finance receivables (including revenue, fees and/or interest) at a level estimated to be adequate to absorb
losses inherent in the portfolio. The allowance for losses on the Company’s owned loans and finance receivables reduces the
outstanding loans and finance receivables balance in the consolidated balance sheets. The liability for estimated losses related to loans
guaranteed under its CSO programs is initially recorded at fair value and is included in “Accounts payable and accrued expenses” in
the consolidated balance sheets.
In determining the allowance or liability for estimated losses on loans and finance receivables, the Company applies a documented
systematic methodology. In calculating the allowance or liability for receivable losses, outstanding loans and finance receivables are
divided into discrete groups of short-term loans, line of credit accounts, installment loans and RPAs and are analyzed as current or
delinquent. Increases in either the allowance or the liability, net of charge-offs and recoveries, are recorded as a “Cost of revenue” in
the consolidated statements of income.
The allowance or liability for short-term loans classified as current is based on historical loss rates adjusted for recent default trends
for current loans. For delinquent short-term loans, the allowance or liability is based on a six-month rolling average of loss
rates by
stage of collection. For line of credit account, installment loan and RPA portfolios, the Company generally uses either a migration
analysis or roll-rate based methodology to estimate losses inherent in the portfolio. The allowance or liability calculation under the
migration analysis and roll-rate methodology is based on historical charge-off experience and the loss emergence period, which
represents the average amount of time between the first occurrence of a loss event and the charge-off of a loan or RPA. The factors the
thly
a
Company considers to assess the adequacy of the allowance or liability include past due performance, historical behavior of mon
vintages, underwriting changes, delinquency status, payment history and recency factors.
aa
ff
The Company fully reserves for loans and finance receivables once the receivable or a portion of the receivable has been classified as
delinquent for 60 consecutive days and generally charges off loans and finance receivables between 60 and 65 days delinquent. If a
loan or finance receivable is deemed uncollectible before it is fully reserved, it is charged off at that point. Loans and finance
receivables classified as delinquent generally have an age of one to 64 days from the date any portion of
f
the receivable became
delinquent, as defined above. Recoveries on loans and finance receivables previously charged to the allowance are credited to the
allowance when collected.
m
a
tt
Property and Equipment
Property and equipment is recorded at cost. The cost of property retired or sold and the related accumulated depreciation are removed
from the accounts, and any resulting gain or loss is recognized in the consolidated statements of income. Costs associated with repair
h
87
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
and maintenance activities are expensed as incurred. Depreciation expense is generally provided on a straight-line basis, using
following estimated useful lives:
x
the
Computer hardware and software (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
uipment (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Furniture, fixtures and eqd
Leasehold improvements (1) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
3 to 5 years
3 to 7 years
3 to 10 years
(1) Leasehold improvements are depreciated over the lesser of the estimated useful life, remaining lease term, or 10 years.
Software Development Costs
The Company applies Accounting Standards Codification (“ASC”) 350-40, Internal Use Software (“ASC 350-40”), to its software
purchase and development activities. Under ASC 350-40, eligible internal and external costs incurred for the development of
computer software applications, as well as for upgrades and enhancements that result in additional functionality of the applications,
are capitalized to “Property and equipment” on the consolidated balance sheets. Internal and external training and maintenance costs
are charged to expense as incurred or over the related service period. When a software application is placed in service, the Company
begins amortizing the related capitalized software costs using the straight-line method based on its estimated useful life, which
generally ranges from one to five years.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired
in each business combination. In accordance with ASC 350, Intangibles—Goodwill and Other (“ASC 350”), the Company tests
goodwill for potential impairment annually as of June 30 and between annual tests if an event occurs or circumstances change that
would more likely than not reduce the fair value of a reporting unit below its carrying amount.
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The Company first assesses qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill
impairment test. In assessing the qualitative factors, management considers relevant events and circumstances including but not
limited to macroeconomic conditions, industry and market environment, overall financial performance of the Company, cash flow
from operating activities, market capitalization and stock price. If the Company determines that the two-step quantitative impairment
test is required, management uses the income approach to complete its annual goodwill assessment. The income approach uses future
cash flows and estimated terminal values for the Company that are discounted using a market participant perspective to determine the
fair value, which is then compared to the carrying value to determine if there is impairment. The income approach includes
assumptions about revenue growth rates, operating margins and terminal growth rates discounted by an estimated weighted-average
cost of capital derived from other publicly-traded companies that are similar but not identical from an operational and economic
standpoint.
Long-Lived Assets Other Than Goodwill
An evaluation of the recoverability of property and equipment and intangible assets subject to amortization is performed whenever the
facts and circumstances indicate that the carrying value may be impaired. An impairment loss is recognized if the future undisc
ounted
cash flows associated with the asset and the estimated fair value of the asset are less than the asset’s corresponding carrying value. The
amount of the impairment loss, if any, is the excess of the asset’s carrying value over its estimated fair value.
mm
The Company amortizes intangible assets subject to amortization on the basis of their expected periods of benefit, generally three to
20 years. The costs of start-up activities and organization costs are charged to expense as incurred.
Hedging and Derivatives Activity
The Company periodically uses foreign currency forward contracts, which are considered derivative instruments, to minimize the
effects of foreign currency risk in Brazil and the United Kingdom related to the operations of the Company. The forward contracts are
not designated as hedges as defined by ASC 815, Derivatives and Hedging; therefore, any changes in the fair value of the forward
contracts are recognized in “Foreign currency transaction (loss) gain, net” in the consolidated statements of income.
88
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Investment in Unconsolidated Investee
The Company has an equity ownership position in an investment without a readily determinable value. In accordance with ASC 321,
Investment – Equity Securities, the Company has elected to measure the investment at its cost minus impairment, if any, plus or minus
changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. At
each reporting date, the Company reassesses whether the investment still qualifies for this measurement alternative. Further, at each
reporting date, the Company performs a qualitative assessment to evaluate whether the investment is impaired. If the qualitative
assessment indicates that the investment is impaired and the fair value of the investment is less than its carrying value, the carrying
amount of the investment will be reduced and the resulting loss recognized in net income in the period the impairment is identified. As
of December 31, 2018 and 2017, the carrying value of the investment was $6.7 million, which the Company has included in “Other
assets” on the consolidated balance sheets. As of December 31, 2018, the Company concluded that the measurement alternative was
still appropriate and, as a result of its qualitative assessment, that an impairment charge was not warranted.
Marketing Expenses
Marketing expenses consist of digital costs, lead purchase costs and offline marketing costs such as
television and direct mail
advertising. Marketing costs directly related to loan and RPA originations are deferred and amortized against revenue. Marketing costs
not directly resulting in loan and RPA originations are expensed as incurred. The production costs associated with offline marketing
are expensed as incurred.
ff
Operations and Technology Expenses
Operations and technology expenses include all expenses related to the direct operations and technology infrastructure related to loan
underwriting and processing. This includes call center and operations personnel costs, software maintenance expense, underwriting
data from third-party vendors, bank and transaction fees and telephony costs.
General and Administrative Expenses
General and administrative expenses primarily include the Company’s corporate personnel costs, as well as legal, occupancy, and
other related costs.
Stock-Based Compensation
The Company accounts for its stock-based employee compensation plans in accordance with ASC 718, Compensation—Stock
Compensation (“ASC 718”). Under this guidance the fair value of share-based compensation is determined at the grant date and the
recognition of the related expense is recorded over the period in which the share-based compensation vests. However, with respect to
income taxes, the related deduction from taxes payable is based on the award’s intrinsic value at the time of exercise (for an
option) or
on the fair value upon vesting of the award (for restricted stock units), which can be either greater (creating an excess tax benefit) or
less (creating a tax deficiency) than the deferred tax benefit that is recorded as compensation cost is recognized in the conso
lidated
financial statements. Pursuant to Accounting Standards Update (“ASU”) 2016-09, Improvements to Employee Share-Based Payment
Accounting (“ASU 2016-09”), these excess tax benefits (deficiencies) are recognized in “Provision for income taxes” in the period
that the tax deduction arises. In the statement of cash flows, they are classified in operating activities in the same manner as other cash
flows related to income taxes.
g
n
t
89
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Reclassification of AOCI to Net Income
In 2009, the Company began providing services in Australia and Canada under the brand name DollarsDirect. Due to the small size of
the Australian and Canadian markets and our limited operations there, the Company decided to exit those markets in 2016 and
reallocate its resources to other existing businesses. As a result, the Company ceased loan originations in those countries and have
wound down our loan portfolios. During 2018, the Company continued the liquidation process of the legal entities related to Australia
and Canada and recorded a $2.3 million loss to “Foreign currency transaction (loss) gain” in the consolidated statements of income to
recognize the cumulative translation adjustment balance that had been previously recorded to “Accumulated other comprehensive
loss” on the consolidated balance sheets.
The following table sets forth the components of accumulated other comprehensive loss, net of tax, for the years ended December 31,
2018 and 2017 (in thousands):
Foreign
currency
translation
gain (loss)
Balance at December 31, 2016 (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Other cor mprehensive income, before reclassifications and tax (cid:17)(cid:17)
Tax impact (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Balance at December 31, 2017 (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Other comprehensive loss, before reclassifications and tax (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Tax impact (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Australia and Canada liquidation (1) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Tax impact (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Reclassification of certain deferred tax effects (2) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Balance at December 31, 2018 (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
(11,578) $
7,009
(2,517)
(7,086) $
(8,414)
1,501
2,343
(527)
(1,622)
(13,805) $
Total
(11,578)
7,009
(2,517 )
(7,086 )
(8,414 )
1,501
2,343
(527)
(1,622 )
(13,805)
(1)
(2)
Amount represents the reclassification of foreign currency translation losses from AOCI to the consolidated statements of
income due to the liquidation of the Company’s Australian and Canadian businesses.
Amount represents the reclassification of stranded tax effects from AOCI to reta
federal corporate income tax rate under the Tax Cuts and Jobs Act.
ined earnings resulting from the change in the
tt
Income Taxes
The provision for income taxes is based on income before income taxes as reported for financial statement purposes. Deferred income
taxes are provided for in accordance with the asset and liability method of accounting for income taxes in order to recognize the tax
effects of temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated financial
statements.
t
The Company accounts for uncertainty in income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), which requires that
a more-likely-than-not threshold (greater than 50 percent) be met before the benefit of a tax position may be recognized in the
consolidated financial statements and prescribes how such benefit should be measured. The Company records interest and penalties
related to tax matters as income tax expense in the consolidated statements of income.
The Company performs an evaluation of the recoverability of its deferred tax assets on a quarterly basis. The Company establishes a
valuation allowance if it is more likely than not that all or some portion of the deferred tax asset will not be realized. The Company
analyzes several factors, including the nature and frequency of operating losses, the Company’s carryforward period for any losses,
the reversal of future taxable temporary differences, the expected occurrence of future income or loss and the feasibility of available
tax planning strategies to protect against the loss of deferred tax assets. See Note 9 for further discussion.
Earnings Per Share
Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during
the year. Diluted earnings per share is calculated by giving effect to the potential dilution that could occur if securities or
r
other
ff
contracts to issue common shares were exercised and converted into common shares during the year. Restricted stock units issued
under the Company’s stock-based employee compensation plans are included in diluted shares upon the granting of the awards even
though the vesting of shares will occur over time.
90
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table sets forth the reconciliation of numerators and denominators of basic and diluted earnings per share computations
for the years ended December 31, 2018, 2017 and 2016 (in thousands, except per share amounts):
2018
Year Ended December 31,
2017
2016
Numerator:
Net income(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
70,098 $
29,240 $
34,602
Denominator:
c shares (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Shares applicable to stock-based compensation (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
ares (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total weighted average diluted shd
33,993
1,183
35,176
33,523
609
34,132
Earnings per share – basic (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
are – diluted (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
shr
2.06 $
1.99 $
0.87 $
0.86 $
33,192
270
33,462
1.04
1.03
For the years ended December 31, 2018, 2017 and 2016, 587,045, 1,563,975 and 1,622,331 shares of common stock underlying stock
options, respectively, and 82,929, 182,008 and 464,500 shares of common stock underlying restricted stock units, respectively,
were
f
excluded from the calculation of diluted net income per share because their effect would have been antidilutive.
Adopted Accounting Standards
In February 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-02, Income Statement – Reporting
Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU
2018-02”) which allows a reclassification from AOCI to retained earnings for stranded tax effects resulting from the newly enacted
federal corporate income tax rate under the Tax Cuts and Jobs Act. The amount of the reclassification would be the difference between
the historical corporate income tax rate and the newly enacted 21 percent corporate income tax rate. ASU 2018-02 is effective for
fiscal years, including interim periods within those fiscal years, beginning after December 15, 2018 with early adoption in any interim
period permitted. The Company adopted this ASU in the first quarter of 2018 and, as a result, reclassified $1.6 million of accumulated
other comprehensive income to retained earnings. The amount of the reclassification is reported as “Reclassification of certain
deferred tax effects” on the consolidated statements of comprehensive income and the consolidated statements of stockholders’ equity.
ff
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash (“ASU 2016-18”) , which
clarifies how entities should present restricted cash in the statement of cash flows. The guidance requires entities to show the changes
in the total of cash, cash equivalents and restricted cash in the statement of cash flows. In accordance with implementation guidance,
the Company adopted ASU 2016-18 as of January 1, 2018, which included retrospective application to previous periods presented in
the Consolidated Statements of Cash Flows. The adoption of ASU 2016-18 resulted in a $2.6 million decrease in net cash used in
investing activities and a $0.6 million change in the effect of exchange rates on cash for the year ended December 31, 2017 and a d
$20.1 million decrease in net cash used in investing activities and a $1.2 million change in the effect of exchange rates on cash for the
year ended December 31, 2016.
In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory
(“ASU 2016-16”), which requires entities to recognize the income tax impact of an intra-entity sale or transfer of an asset other than
inventory when the sale or transfer occurs, rather than when the asset has been sold to an outside party. ASU 2016-16 is effect
ive for
annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company adopted ASU
2016-16 as of January 1, 2018. The adoption of ASU 2016-16 did not have a material effect on the Company’s consolidated financial
statements.
d
In January 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement
of Financial Assets and Financial Liabilities (“ASU 2016-01”), which requires that equity investments, except for those accounted for
under the equity method or those that result in consolidation of the investee, be measured at fair value, with subsequent changes in fair
value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable
fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for
the identical or a similar investment of the same issuer. ASU 2016-01 also impacts the presentation and disclosure requirements for
financial instruments. The Company adopted ASU 2016-01 as of January 1, 2018, which did not have a material effect on the
Company’s consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which
supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU 2014-09 is based on the principle that
91
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature,
amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and
changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The Company adopted this ASU under
the modified-retrospective method effective January 1, 2018. As the Company’s loan and finance receivable contracts are excluded
from the scope of ASU 2014-09 adoption was not material to the Company’s consolidated financial statements.
Accounting Standards to be Adopted in Future Periods
t
In August 2018, the FASB issued ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing
Arrangement that is a Service Contract (“ASU 2018-15”). ASU 2018-15 requires implementation costs incurred by customers in
cloud computing arrangements to be deferred over the noncancellable term of the cloud computing arrangements plus any optional
renewal periods (1) that are reasonably certain to be exercised by the customer or (2) for which exercise of the renewal option is
controlled by the cloud service provider. The effective date of this pronouncement is for fiscal years beginning after December 15,
2019, and interim periods within those fiscal years, and early adoption is permitted. The standard can be adopted either using the
prospective or retrospective transition approach. The Company does not expect that the adoption of ASU 2018-15 will have a material
effect on its consolidated financial statements.
r
t
In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill
Impairment (“ASU 2017-04”) to simplify the accounting for goodwill im
mm
pairment. ASU 2017-04 removes Step 2 of the goodwill
impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a
reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for
annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted.
The
Company does not expect that the adoption of ASU 2017-04 will have a material effect on its consolidated financial statements.
m
In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The
t GAAP with a methodology that reflects
u
amendments in ASU 2016-13 replace the incurred loss impairment methodology in curren
lifetime expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform
credit loss estimates. ASU 2016-13 is effective for annual periods beginning after December 15, 2019, and interim periods within
those annual periods. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods within
those fiscal years. The Company is assessing the impact of ASU 2016-13, which at the date of adoption will increase the allowance for
credit losses with a resulting negative adjustment to retained earnings.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 requires lessee recognition on
the balance sheet of a right-of-use asset and a lease liability, initially measured at the present value of the lease payments. It further
requires recognition in the income statement of a single lease cost, calculated so that the cost of the lease is allocated over the lease
term on a generally straight-line basis. It also requires classification of all cash payments within operating activities in the statement of
cash flows. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”), which
provides targeted improvements to ASU 2016-02 by providing an additional optional transition method and a lessor practical
expedient for lease and nonlease components. ASU 2016-02 is effective for public business entities for annual and interim periods in
fiscal years beginning after December 15, 2018. The Company adopted ASU 2016-02 on January 1, 2019 and elected the optional
transition method permitted by ASU 2018-11. On the date of adoption, the Company recorded an increase in total assets of $22.3
million, an increase in total liabilities of $22.7 million and a decrease in retained earnings of $0.4 million.
r
2. Acquisitions
On June 23, 2015, the Company completed the purchase of certain assets and assumed certain liabilities of a company operating as
The Business Backer, LLC, which purchases discounted future accounts receivables from small businesses throughout the United
States through RPAs, which provide working capital for small businesses. The total consideration of $26.4 million was comprised of
$17.7 million in cash at closing, a $3.0 million promissory note (included in “Accounts payable and accrued expenses” in the
consolidated balance sheets) and estimated contingent consideration of $5.7 million based on future earn-out opportunities. The
promissory note and all accrued interest was paid on June 22, 2018. The contingent purchase consideration was recorded at its
estimated fair value at the date of acquisition based upon the Company’s assessment of the probable earnings attributable to th
e
business as defined in the purchase agreement. The contingent purchase consideration was revalued each reporting period with
changes in fair value of the contingent consideration obligations recognized as a gain or loss on fair value remeasurement in the
Company’s consolidated statements of income. The fair value of the contingent purchase consideration was remeasured as of
December 31, 2016 and a gain from the fair value remeasurement of $3.3 million was recognized in “General and administrative
expenses” in the consolidated statements of income. Based on future expected earnings, the Company did not expect to pay any
92
a
f
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
contingent consideration and recorded an adjustment to write-off the remaining liability of $2.7 million in 2017. As of December 31,
2018 the Company had not made and was no longer potentially liable for any contingent payments related to this acquisition.
3. Loans and Finance Receivables, Credit Quality Information and Allowances and Liabilities for Estimated Losses on Loans
and Finance Receivables
Revenue generated from the Company’s loans and finance receivables for the years ended December 31, 2018, 2017 and 2016 was as
follows (in thousands):
Short-term loans (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Line of credit accounts (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Installment loans and RPAs
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total loans and finance receivables revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Other (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total Revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 1,114,074 $
d
2018
219,210 $
363,495
529,996
1,112,701
1,373
Year Ended December 31,
2017
197,408 $
262,760
382,683
842,851
890
843,741 $
2016
196,255
220,462
327,375
744,092
1,477
745,569
The components of Company-owned loans and finance receivables at December 31, 2018 and 2017 were as follows (in thousands):
Current receivables (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Delinquent receivables:
Delinquent payment amounts(1) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Receivables on non-accrual status (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total delinquent receivables (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total loans and finance receivables, gross (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Less: Allowance for losses (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Loans and finance receivables, net (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Current receivables (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Delinquent receivables:
Delinquent payment amounts(1) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Receivables on non-accrual status (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total delinquent receivables (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total loans and finance receivables, gross (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Less: Allowance for losses (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Loans and finance receivables, net (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
As of December 31, 2018
Short-term
Loans
Line of Credit
Accounts
Installment
Loans and
RPAs
37,558 $
213,896
$ 672,538 $
Total
923,992
—
30,167
30,167
67,725
(21,420)
46,305 $
10,783
2,884
13,667
227,563
(51,008)
176,555
2,696
52,732
55,428
727,966
(90,880 )
$ 637,086 $
13,479
85,783
99,262
1,023,254
(163,308)
859,946
As of December 31, 2017
Short-term
Loans
Line of Credit
Accounts
Installment
Loans and
RPAs
45,552 $
161,070
$ 537,634 $
Total
744,256
—
28,120
28,120
73,672
(19,917)
53,755 $
7,696
1,302
8,998
170,068
(31,148)
138,920
3,635
42,740
46,375
584,009
(71,979 )
$ 512,030 $
11,331
72,162
83,493
827,749
(123,044)
704,705
(1) Represents the delinquent portion of installment loans and line of credit account balances for customers that have only missed one
payment. See Note 1 “Significant Accounting Policies-Current and Delinquent Loans and Finance Receivables” for additional
information.
93
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Changes in the allowance for losses for Company-owned loans and finance receivables and the liability for estimated losses on the
Company’s guarantees of third-party lender-owned loans through the CSO programs for the years ended December 31, 2018, 2017
and 2016 were as follows (in thousands):
t
Allowance for losses for Company-owned loans and
finance receivables:
Balance at beginning of pf eriod
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
(cid:17)(cid:17)
Cost of revenue(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Charge-offs
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)
Recoveries (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Effect of ff oreign
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)
currency translation
ff
Balance at end of period (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Liability for third-party lender-owned loans:
y
y
of pf eriod (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
(Decrease) increase in liability
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)
Balance at end of period (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
d
$
Allowance for losses for Company-owned loans and
finance receivables:
Balance at beginning of pf eriod
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
(cid:17)(cid:17)
Cost of revenue (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Charge-offs
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)
Recoveries (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
currency translation(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Effect of ff oreign
ff
Balance at end of period (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Liability for third-party lender-owned loans:
of pf eriod (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Increase (decrease) in liability(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)
Balance at end of period (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Allowance for losses for Company-owned loans and
finance receivables:
Balance at beginning of pf eriod (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Cost of revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Charge-offs (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Recoveries (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Effect of ff oreign
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)
currency translation (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
ff
Balance at end of period (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Liability for third-party lender-owned loans:
of pf eriod (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Increase (decrease) in liability (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Balance at end of period (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
94
Year Ended December 31, 2018
Installment
Loans and
RPAs
Line of Credit
Accounts
Total
Loans
$
19,917
92,410
(115,565)
25,069
(411)
21,420 $
$
31,148
162,975
(158,848)
15,733
——
51,008 $
71,979 $
315,707
(359,340)
63,691
(1,157 )
90,880 $
123,044
571,092
(633,753)
104,493
(1,568)
163,308
2,105 $
(141)
1,964 $
—
——
—
$
$
153 $
49
202 $
2,258
(92)
2,166
Year Ended December 31, 2017
Installment
Loans and
RPAs
Line of Credit
Accounts
Total
Loans
$
17,770
77,775
(98,243)
22,089
526
19,917 $
$
26,594
93,416
(102,725)
13,863
——
31,148 $
54,581 $
225,179
(254,109)
45,773
555
71,979 $
98,945
396,370
(455,077)
81,725
1,081
123,044
1,716 $
389
2,105 $
—
——
—
$
$
280 $
(127 )
153 $
1,996
262
2,258
Year Ended December 31, 2016
Installment
Loans and
RPAs
Line of Credit
Accounts
Total
Loans
$
14,652
69,202
(85,599)
20,362
(847)
17,770 $
$
15,727
88,489
(92,044)
14,422
——
26,594 $
36,943 $
170,035
(182,471)
29,804
270
54,581 $
67,322
327,726
(360,114)
64,588
(577)
98,945
1,298 $
418
1,716 $
—
——
—
$
$
458 $
(178 )
280 $
1,756
240
1,996
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In connection with its CSO programs, the Company guarantees consumer loan payment obligations to unrelated third-party lenders for
short-term and installment loans and is required to purchase any defaulted loans it has guaranteed. The guarantee represents an
obligation to purchase specific loans that go into default. As of December 31, 2018 and 2017, the amount of consumer loans
guaranteed by the Company was $29.7 million and $34.1 million, respectively, representing amounts due under consumer loans
originated by third-party lenders under the CSO programs. The estimated fair value of the liability for estimated losses on consumer
loans guaranteed by the Company of $2.2 million and $2.3 million as of December 31, 2018 and 2017, respectively, is included in
“Accounts payable and accrued expenses” in the consolidated balance sheets.
4. Property and Equipment
As a leading technology and analytics company, a significant amount of capital is invested in developing computer software and
systems infrastructure.
Major classifications of property and equipment at December 31, 2018 and 2017 were as follows (in thousands):
Computer software (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Furniture, fixtures and eqd
uipment (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Leasehold improvements (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
95,364 $
34,730
18,245
148,339 $
(64,565 ) $
(28,176 )
(6,045 )
(98,786 ) $
As of December 31, 2018
Accumulated
Depreciation
Cost
Computer software(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Furniture, fixtures and eqd
t
uipment (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Leasehold improvements (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
s
Total (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
82,757 $
33,834
25,196
141,787 $
(56,282 ) $
(25,912 )
(11,068 )
(93,262 ) $
As of December 31, 2017
Accumulated
Depreciation
Cost
Net
30,799
6,554
12,200
49,553
Net
26,475
7,922
14,128
48,525
The Company capitalized internal software development costs of $12.3 million, $12.0 million and $8.1 million during 2018, 2017 and
2016, respectively.
The Company recognized depreciation expense of $14.1 million, $13.3 million and $14.4 million during 2018, 2017 and 2016,
respectively.
5. Goodwill and Other Intangible Assets
Changes in the carrying value of goodwill for the years ended December 31, 2018 and 2017 were as follows (in thousands):
267,010
5
267,015
(2 )
267,013
Balance as of January 1, 2017 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Effect of ff oreign
ff
currency translation (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Balance as of December 31, 2017 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Effect of ff oreign
ff
currency translation (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Balance as of December 31, 2018 (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
95
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company completed its annual assessment of goodwill as of June 30, 2018 based on qualitative factors and determined that the
fair value of its goodwill exceeded carrying value; as such, no impairment existed at that date. The Company expects that its entire
goodwill balance will be deductible for tax purposes.
Acquired intangible assets that are subject to amortization as of December 31, 2
t
018 and 2017, were as follows (in thousands):
As of December 31, 2018
Accumulated
Amortization
Net
Cost
r
Customer relationships (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Lead provider and
broker relationships (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Trademarks (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Non-competition agreements (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
3,497 $
5,689
2,549
800
12,535 $
(3,257 ) $
(4,729 )
(734)
(560)
(9,280 ) $
240
960
1,815
240
3,255
As of December 31, 2017
Accumulated
Amortization
Net
Cost
r
Customer relationships (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Lead provider and
broker relationships (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Trademarks (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Non-competition agreements (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
3,536 $
5,689
2,595
800
12,620 $
(3,136 ) $
(4,089 )
(670)
(400)
(8,295 ) $
400
1,600
1,925
400
4,325
Customer, lead provider and broker relationships are generally amortized over three to five years based on the pattern of economic
benefits provided. Trademarks are generally amortized over three to 20 years on a straight-line basis. Non-competition agreements are
amortized over the applicable terms of the contract.
Amortization expense for acquired intangible assets was $1.1 million, for each of the years ended December 31, 2018, 2017 and 2016,
respectively.
Estimated future amortization expense for the years ended December 31, is as follows (in thousands):
Year
2019 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
2020 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
2021 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
2022 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
2023 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Amount
1,070
590
110
110
110
96
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses at December 31, 2018, 2017 were as follows (in thousands):
Trade accounts payable (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Accrued payroll and fringe benefits (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Accrued interest payable (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Deferred finish out allowance(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Accrual for consumer loan payments rejected for non-
t
sufficient fun
ds (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Deferred fees on third-party consumer loans (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Liability for losses on third-party lender owned consumer
loans (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Promissory note (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Other accrued liabilities (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
As of December 31,
2018
2017
32,584 $
18,202
16,976
7,103
6,555
5,608
2,166
—
123
89,317 $
25,579
14,877
11,064
7,979
5,096
7,074
2,258
3,000
196
77,123
7. Marketing Expenses
Marketing expenses for the years ended December 31, 2018, 2017 and 2016 were as follows (in thousands):
Advertising (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Customer procurement ext
pense including lead purchase costs
(cid:3)(cid:17)
Customer referral and revenue sharing expense (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
81,257 $
44,012
—
125,269 $
64,186 $
37,224
19
101,429 $
66,184
30,551
669
97,404
Year Ended December 31,
2017
2016
2018
8. Long-term debt
The Company’s long-term debt instruments and balances outstanding as of December 31, 2018 and 2017 were as follows (in
thousands):
December 31,
2018
2017
Securitization notes (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Revolving line of credit (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
9.75% senior nr otes due 2021 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
8.50% senior nr otes due 2024 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
8.50% senior nr otes due 2025 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Subtotal (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Less: Long-term debt issuance costs (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total long-term debt (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
227,288 $
22,000
—
250,000
375,000
874,288
(16,359)
857,929 $
211,406
—
342,558
250,000
—
803,964
(15,422 )
788,542
97
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.50% Senior Unsecured Notes Due 2025
On September 19, 2018, the Company issued and sold $375.0 million in aggregate principal amount of 8.50% senior notes due 2025
(the “2025 Senior Notes”). The 2025 Senior Notes were sold to qualified institutional buyers in accordance with Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”) and outside the United States pursuant to Regulation S under the Securities
Act. The 2025 Senior Notes bear interest at a rate of 8.50% annually on the principal amount payable semi-annually in arrears on
March 15 and September 15 of each year, beginning on March 15, 2019. The 2025 Senior Notes were sold at a price of 100%. The
2025 Senior Notes will mature on September 15, 2025. The 2025 Senior Notes are unsecured debt obligations of the Company, and
are unconditionally guaranteed by certain of its domestic subsidiaries.
r
The 2025 Senior Notes are redeemable at the Company’s option, in whole or in part, (i) at any time prior to September 15, 2021 at
100% of the aggregate principal amount of 2025 Senior Notes redeemed plus the applicable “make whole” premium specified in the
indenture that governs the Company’s 2025 Notes (the “2025 Senior Notes Indenture”), plus accrued and unpaid interest, if any, to the
redemption date and (ii) at any time on or after September 15, 2021 at the premium, if any, specified in the 2025 Senior Notes
Indenture that will decrease over time, plus accrued and unpaid interest, if any, to the redemption date. In addition, prior to September
15, 2021, at its option, the Company may redeem up to 40% of the aggregate principal amount of the 2025 Senior Notes at a
redemption price of 108.5% of the aggregate principal amount of 2025 Senior Notes redeemed, plus accrued and unpaid interest, if
any, to the redemption date, with the proceeds of certain equity offerings as described in the 2025 Senior Notes Indenture.
The 2025 Senior Notes and the related guarantees have not been and will not be registered under the Securities Act, or the securities
laws of any state or other jurisdiction, and may not be offered or sold in the United States without registration or an applicable
exemption from the registration requirements of the Securities Act and applicable state securities or blue sky laws and foreign
securities laws.
a
The Company used a portion of the net proceeds of the 2025 Senior Notes offering to retire $295.0 million of the remaining
outstanding 9.75% senior notes due 2021 (the “2021 Senior Notes”), to pay the related accrued interest, premiums, fees and expenses
associated therewith. The remaining amount is intended to be used for general corporate purposes, which may include working capital
and future repurchases of its outstanding debt securities.
8.50% Senior Unsecured Notes Due 2024
On September 1, 2017, the Company issued and sold $250.0 million in aggregate principal amount of 8.50% senior notes due 2024
(the “2024 Senior Notes”). The 2024 Senior Notes were sold to qualified institutional buyers in accordance with Rule 144A under the
Securities Act and outside the United States pursuant to Regulation S under the Securities Act. The 2024 Senior Notes bear interest at
aa
a rate of 8.50% annually on the principal amount payable semi-annually in arrears on March 1 and September 1 of each year,
beginning on March 1, 2018. The 2024 Senior Notes were sold at a price of 100%. The 2024 Senior Notes will mature on September 1,
2024. The 2024 Senior Notes are unsecured debt obligations of the Company, and are unconditionally guaranteed by certain of its
domestic subsidiaries.
r
The 2024 Senior Notes are redeemable at the Company’s option, in whole or in part, (i) at any time prior to September 1, 2020 at
100% of the aggregate principal amount of 2024 Senior Notes redeemed plus the applicable “make whole” premium specified in the
2024 Senior Notes Indenture, plus accrued and unpaid interest, if any, to the redemption date and (ii) at any time on or after
September 1, 2020 at the premium, if any, specified in the 2024 Senior Notes Indenture that will decrease over time, plus accru
ed and
m
unpaid interest, if any, to the redemption date. In addition, prior to September 1, 2020, at its option, the Company may redeem up to
40% of the aggregate principal amount of the 2024 Senior Notes at a redemption price of 108.5% of the aggregate principal amount of
2024 Senior Notes redeemed, plus accrued and unpaid interest, if any, to the redemption date, with the proceeds of certain equi
ty
offerings as described in the 2024 Senior Notes Indenture.
n
tt
The 2024 Senior Notes and the related guarantees have not been and will not be registered under the Securities Act, or the securities
laws of any state or other jurisdiction, and may not be offered or sold in the United States without registration or an applicable
exemption from the registration requirements of the Securities Act and applicable state securities or blue sky laws and foreign
securities laws.
a
The Company used the net proceeds of the 2024 Senior Notes offering to retire a portion of its outstanding 2021 Senior Notes, t
the related accrued interest, premiums, fees and expenses associated therewith and for general corporate purposes.
rr
o pay
98
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Consumer Loan Securitizations
2018-A Notes
On October 31, 2018 (the “2018-A Closing Date”), the Company issued $95,000,000 Class A Asset Backed Notes (the “Class A
Notes”) and $30,400,000 Class B Asset Backed Notes (the “Class B Notes” and, collectively with the Class A Notes, the “2018-A
Notes”), through an indirect subsidiary. The Class A Notes bear interest at 4.20% and the Class B Notes bear interest at 7.37%. The
2018-A Notes are backed by a pool of unsecured consumer installment loans (“Securitization Receivables”) and represent obligations
of the issuer only. The 2018-A Notes are not guaranteed by the Company. Under the 2018-A Notes, Securitization Receivables are
sold to a wholly-owned subsidiary of the Company and serviced by another subsidiary of the Company. As of December 31, 2018, the
total outstanding amount of the 2018-A Notes was $111.4 million.
The net proceeds of the offering of the 2018-A Notes on the 2018-A Closing Date were used to acquire the Securitization Receivables
from the Company, fund a reserve account and pay fees and expenses incurred in connection with the transaction.
a
The 2018-A Notes were offered only to “qualified institutional buyers” pursuant to Rule 144A under the Securities Act and to certain
persons outside of the United States in compliance with Regulation S under the Securities Act. The 2018-A Notes have not been
registered under the Securities Act, or the securities laws of any state or other jurisdiction, and may not be offered or sold in the
United States without registration or an applicable exemption from the Securities Act and applicable state securities or blue sky laws
and foreign securities laws.
2018-2 Facility
On October 23, 2018, the Company and several of its subsidiaries entered into a receivables funding agreement (the “2018-2 Facility”)
with Credit Suisse AG, New York Branch, as agent (the “Agent”). The 2018-2 Facility collateralizes Securitization Receivables that
have been and will be originated or acquired under the Company’s NetCredit brand by several of its subsidiaries and that meet
specified eligibility criteria in exchange for a revolving note. Under the 2018-2 Facility, Securitization Receivables are sold to a
wholly-owned subsidiary of the Company (the “2018-2 Debtor”) and serviced by another subsidiary of the Company.
d
t
The 2018-2 Debtor has issued a revolving note with an initial maximum principal balance of $150.0 million, which is required to be
secured by 1.25 times the drawn amount in eligible Securitization Receivables. The 2018-2 Facility is non-recourse to the Company
and matures on October 23, 2022. As of December 31, 2018, the outstanding amount of the 2018-2 Facility
was $25.0 million.
f
The 2018-2 Facility is governed by a loan and security agreement, dated as of October 23, 2018, between the Agent, the 2018-2
Debtor and certain other lenders and agent parties thereto. The 2018-2 Facility bears interest at a rate per annum equal to one-month
LIBOR (subject to a floor) plus an applicable margin, which rate per annum is 3.75%. In addition, the 2018-2 Debtor paid certain
customary upfront closing fees to the Agent. Interest payments on the 2018-2 Facility will be made monthly. The 2018-2 Debtor shall
be permitted to prepay the 2018-2 Facility, subject to certain fees and conditions. Any remaining amounts outstanding will be payable
no later than October 23, 2022, the final maturity date.
All amounts due under the 2018-2 Facility are secured by all of the 2018-2 Debtor’s assets, which include the Securitization
Receivables transferred to the 2018-2 Debtor, related rights under the Securitization Receivables, a bank account and certain other
related collateral.
The 2018-2 Facility documents contain customary provisions for securitizations, including: representations and warranties as to the
eligibility of the Securitization Receivables and other matters; indemnification for specified losses not including losses due to the
inability of consumers to repay their loans; covenants regarding special purpose entity matters; and default and termination provisions
that provide for the acceleration of the 2018-2 Facility in circumstances including, but not limited to, failure to make payments when
due, servicer defaults, certain insolvency events, breaches of representations, warranties or covenants, failure to maintain the security
interest in the Securitization Receivables and defaults under other material indebtedness of the 2018-2 Debtor.
2018-1 Facility
On July 23, 2018, the Company and several of its subsidiaries entered into a receivables funding agreement (the “2018-1 Facility”)
with Pacific Western Bank, as lender (the “2018-1 Lender”). The 2018-1 Facility collateralizes Securitization Receivables that have
been and will be originated or acquired under the Company’s NetCredit brand by several of its subsidiaries and that meet specified
eligibility criteria in exchange for a revolving note. Under the 2018-1 Facility, Securitization Receivables are sold to a wholly-owned
subsidiary of the Company (the “2018-1 Debtor”) and serviced by another subsidiary of the Company.
ff
tt
99
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The 2018-1 Debtor has issued a revolving note with an initial maximum principal balance of $150.0 million, which is required to be
secured by 1.25 times the drawn amount in eligible Securitization Receivables. The 2018-1 Facility is non-recourse to the Company
and matures on July 22, 2023. As of December 31, 2018, the carrying amount of the 2018-1 Facility
was $36.0 million.
t
The 2018-1 Facility is governed by a loan and security agreement, dated as of July 23, 2018, between the 2018-1 Lender and the
2018-1 Debtor. The 2018-1 Facility bears interest at a rate per annum equal to LIBOR (subject to a floor) plus an applicable margin,
which rate per annum is initially 4.00%. In addition, the 2018-1 Debtor paid certain customary upfront closing fees to the
2018-1 Lender. Interest payments on the 2018-1 Facility will be made monthly. The 2018-1 Debtor shall be permitted to prepay the
2018-1 Facility, subject to certain fees and conditions. In the event of prepayment for the purposes of securitizations, no fees shall
apply. Any remaining amounts outstanding will be payable no later than July 22, 2023, the final maturity date.
All amounts due under the 2018-1 Facility are secured by all of the 2018-1 Debtor’s assets, which include the Securitization
Receivables transferred to the 2018-1 Debtor, related rights under the Securitization Receivables, a bank account and certain other
related collateral.
The 2018-1 Facility documents contain customary provisions for securitizations, including: representations and warranties as to the
eligibility of the Securitization Receivables and other matters; indemnification for specified losses not including losses due to the
inability of consumers to repay their loans; covenants regarding special purpose entity matters; and default and termination provisions
which provide for the acceleration of the 2018-1 Facility in circumstances including, but not limited to, failure to make payments
when due, servicer defaults, certain insolvency events, breaches of representations, warranties or covenants, failure to maintain the
security interest in the receivables and defaults under other material indebte
dness of the 2018-1 Debtor.
uu
2016-1 Facility
On January 15, 2016, the Company and certain of its subsidiaries entered into a receivables securitization (as amended, the “2016-1
Securitization Facility”) with certain purchasers, Jefferies Funding LLC, as administrative agent (the “Administrative Agent”) and
Bankers Trust Company, as indenture trustee and securities intermediary (the “Indenture Trustee”). The 2016-1 Securitization Facility
securitizes Securitization Receivables that have been, or will be, originated or acquired under the Company’s NetCredit brand and that
aa
owned
meet specified eligibility criteria. Under the 2016-1 Securitization Facility, Securitization Receivables are sold to a wholly-
special purpose subsidiary (the “2016-1 Issuer”) and serviced by another subsidiary. The 2016-1 Securitization Facility, as amended,
provided for a maximum principal amount of $275 million, a variable funding notes maximum principal amount of $30 million per
month and a revolving period of the facility ending in October 2017.
uu
On October 20, 2017 (the “Amendment Closing Date”), the Company and certain of its subsidiaries amended and restated the 2016(cid:31)1
Securitization Facility (the “Amended Facility”). The counterparties to the Amended Facility included certain purchasers, the
Administrative Agent and the Indenture Trustee. The Amended Facility relates to Securitization Recei
vables that have been and will
be originated or acquired under the Company’s NetCredit brand by several of its subsidiaries and that meet specified eligibilitytt
criteria. The eligible Securitization Receivables that were owned by the 2016-1 Issuer remained in the Amended Facility and the
ineligible Securitization Receivables were removed. Under the Amended Facility, additional eligible Securitization Receivables may
be sold to the 2016-1 Issuer and serviced by another subsidiary of the Company.
y
In connection with the amendment and restatement, all of the outstanding notes issued by the 2016-1 Issuer prior to the Amendment
Closing Date were redeemed and the 2016-1 Issuer issued an initial term note with an initial principal amount of $181.1 million (the
“2017 Initial Term Note”) and variable funding notes (the “2017 Variable Funding Notes”) with an aggregate committed availability
of $75 million per quarter with an option to increase the commitment to $90 million with the consent of the holders of the 2017
Variable Funding Notes. The Amended Facility also authorized the 2016-1 Issuer to subsequently issue term notes thereafter and,
together with the 2017 Initial Term Note and the 2017 Variable Funding Notes the “2017 Securitization Notes”) at the end of each
calendar quarter. The maximum principal amount of the 2017 Securitization Notes that may be outstanding at any time under the
Amended Facility is $275 million. The 2017 Securitization Notes are non-recourse to the Company and mature at various dates, the
latest of which will be April 15, 2022 (the “2017 Final Maturity Date”). As of December 31, 2018 and 2017, the carrying amount of
the Amended Facility was $54.9 million and $196.3 million, respectively.
t
The 2017 Securitization Notes are issued pursuant to an amended and restated indenture, dated as of the Amendment Closing Date,
between the 2016-1 Issuer and the Indenture Trustee. The 2017 Securitization Notes bear
interest at a rate per annum equal to One-
Month LIBOR (subject to a floor) plus 7.50%. In addition, the 2016-1 Issuer paid certain customary upfront closing fees to the
Administrative Agent and will pay customary annual commitment and other fees to the purchasers under the Amended Facility.
Subject to certain exceptions, the 2016-1 Issuer is not permitted to prepay or redeem any of the 2017 Securitization Notes prio
r to
April 15, 2019. Following such date, the 2016-1 Issuer is permitted to voluntarily prepay any of the 2017 Securitization Notes, subject
to an optional redemption premium. Interest and principal payments on the 2017 Securitization Notes will be made monthly. Any
remaining amounts outstanding will be payable no later than the 2017 Final Maturity Date.
m
rr
100
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts due under the 2017 Securitization Notes are secured by all of the 2016-1 Issuer’s assets, which include the Securitization
Receivables transferred to the 2016-1 Issuer, related rights under the Securitization Receivables, specified bank accounts and certain
other related collateral.
The Amended Facility documents contain customary provisions for securitizations, including: representations and warranties as to the
eligibility of the Securitization Receivables and other matters; indemnification for specified losses not including losses due to the
inability of consumers to repay their loans; covenants regarding special purpose entity matters and other subjects; and default and
termination provisions which provide for the acceleration of the 2017 Securitization Notes under the Amended Facility in
circumstances including, but not limited to, failure to make payments when due, servicer defaults, certain insolvency events, breaches
of representations, warranties or covenants, failure to maintain the security interest in the receivables, and defaults under other
material indebtedness. From time to time, the Company repurchases Securitization Receivables at its discretion or under the terms of
the Amended Facility.
r
t
On October 25, 2017, the 2016-1 Issuer and the Indenture Trustee amended the Amended Facility to permit a holder of a 2017 Term
Note or the 2017 Initial Term Note to exchange such notes for notes with an alternative structure with terms not materially different to
the 2016-1 Issuer than the exchanged Term Notes or Initial Term Notes.
ff
2016-2 Facility
On December 1, 2016, the Company and certain of its subsidiaries entered into a receivables securitization (the “2016-2 Facility”)
with Redpoint Capital Asset Funding, LLC, as lender (the “Lender”). The 2016-2 Facility securitized Securitization Receivables that
were originated or acquired under the Company’s NetCredit brand by several of the Company’s subsidiaries (the “Originators”) and
that met specified eligibility criteria, including that the annual percentage rate for each securitized consumer loan was greater than or
equal to 90%. The average annual percentage rate for loans securitized under the 2016-2 Facility in 2016 was approximately 135%.
Under the 2016-2 Facility, Securitization Receivables are sold to a wholly-owned subsidiary of the Company (the “Debtor”) and
serviced by another subsidiary of the Company. As of December 31, 2018, there was no remaining outstanding balance under the
2016-2 Facility, as the facility had been repaid in full. There was no remaining amount available to be borrowed, at that date. As of
December 31, 2017, the carrying amount of the 2016-2 Facility was $15.1 million.
tt
Revolving Credit Facility
On June 30, 2017, the Company and certain of its operating subsidiaries entered into a secured revolving credit agreement with a
syndicate of banks including TBK Bank, SSB (“TBK”), as administrative agent and collateral agent, Jefferies Finance LLC and TBK as K
joint lead arrangers and joint lead bookrunners, and Green Bank, N.A., as lender (the “Credit Agreement”). On April 13, 2018 and
October 5, 2018, the Credit Agreement was amended to include Pacific Western Bank and Axos Bank, respectively, as lenders, in the
syndicate of lenders.
tt
The Credit Agreement is secured by domestic receivables and matures on May 1, 2020. The borrowing limit in the Credit Agreement,
as amended on October 5, 2018, is $125 million, which is an increase from $75 million as provided by the first amendment to the
Credit Agreement. The Company had $22.0 million and no borrowings outstanding under the Credit Agreement as of December 31,
2018 and 2017, respectively.
The Credit Agreement provides for a revolving credit line with interest on borrowings under the facility at prime rate plus 1.00%. In
addition, the Credit Agreement provides for payment of a commitment fee calculated with respect to the unused portion of the line,
and ranges from 0.30% per annum to 0.50% per annum depending on usage. A portion of the revolving credit facility, up to a
maximum of $20 million, is available for the issuance of letters of credit. The Company had outstanding letters of credit under the
Credit Agreement of $1.6 million as of December 31, 2018. The Credit Agreement provides for certain prepayment penalties if it is
terminated on or before its first and second anniversary date, subject to certain exceptions.
r
The Credit Agreement contains certain limitations on the incurrence of additional indebtedness, investments, the attachment of liens to
the Company’s property, the amount of dividends and other distributions, fundamental changes to the Company or its business and
certain other activities of the Company. The Credit Agreement contains standard financial covenants for a facility of this type based
on a leverage ratio and a fixed charge coverage ratio. The Credit Agreement also provides for customary affirmative covenants,
including financial reporting requirements, and certain events of default, including payment defaults, covenant defaults and other
customary defaults.
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101
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9.75% Senior Unsecured Notes Due 2021
On May 30, 2014, the Company issued and sold $500.0 million in aggregate principal amount of 9.75% Senior Notes due 2021 (the
“2021 Senior Notes”). The 2021 Senior Notes bore interest at a rate of 9.75% annually on the principal amount payable semi-annually
in arrears on June 1 and December 1 of each year, beginning on December 1, 2014. The 2021 Senior Notes were sold at a discount of
the principal amount to yield 10.0% to maturity and would have matured on June 1, 2021.
During the years ended December 31, 2018 and 2017 the Company repurchased $345 million and $155.0 million, respectively,
principal amount of the 2021 Senior Notes for aggregate cash consideration of $363.8 million and $166.3 million, respectively, plus
accrued interest. For the years ended December 31, 2018 and 2017 the Company recorded a loss on extinguishment of debt of
approximately $24.8 million ($19.1 million net of tax) and $14.9 million ($9.2 million net of tax), respectively, which is included in
“Loss on early extinguishment of debt” in the consolidated statements of income.
Weighted-average interest rates on long-term debt were 9.78% and 10.63% during 2018 and 2017, respectively.
As of December 31, 2018 and 2017, the Company was in compliance with all covenants and other requirements set forth in the
prevailing long-term debt agreements.
As of December 31, 2018, required principal payments under the terms of the long-term debt for each of the five years after
December 31, 2018 are as follows (in thousands):
Year
2019 (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
2020 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
2021 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
2022 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
2023 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Thereafter (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Securitization (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Amount
—
22,000
—
—
—
625,000 (1 )
227,304 (2 )
874,304
(1)The $250.0 million 8.50% senior unsecured notes and the $375.0 million senior unsecured notes mature September 1, 2024 and
September 15, 2025, respectively.
(2) The 2016-1 Securitization Facility matures at various dates, the latest of which will be April 15, 2022, the 2018-2 Facility matures
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on October 23, 2022, the 2018-1 Facility matures on July 22, 2023 and the 2018-A Notes mature on May 20, 2026.
102
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Income Taxes
The components of the Company’s deferred tax assets and liabilities as of December 31, 2018 and 2017 were as follows (in
thousands):
Deferred tax assets:
d
Loans and finance receivables, net (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Compensation and benefits (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Translation adjustments (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Accrued rent and ded
ferred fid nish out allowance (cid:3) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Foreign net operating loss carryforward (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Contingency reserves (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Other (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total deferred tax assets (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Deferred tax liabilities:
Amortizable intangible assets (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Property and equipment (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Other (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total deferred tax liabilities (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Net deferred tax liabilities before valuation
allowance (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Valuation allowance (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Net deferred tax liab
ilities (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
d
As of December 31,
2018
2017
8,209 $
4,272
4,645
3,392
4,679
1,462
2,375
29,034
45,549
8,824
2,702
57,075
27,444
4,423
2,531
2,786
2,164
373
1,068
40,789
42,334
7,760
153
50,247
(28,041)
(5,130)
(33,171) $
(9,458 )
(2,650 )
(12,108)
The components of the provision for income taxes and the income to which it relates for the years ended December 31, 2018, 2017
and 2016 are shown below (in thousands):
Income before income taxes:
Domestic (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
International (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Income before income taxes (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Current (benefit) provision: (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Federal (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
International (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
State and local (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total current (bt
Deferred pd rovision (benefit):
enefit) provision (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Federal (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
International (cid:3)(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
State and local (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total deferred provision (benefit) (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Total provision for income taxes (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Year Ended December 31,
2017
2016
2018
76,413 $
—
76,413 $
37,900 $
—
37,900 $
(15,074) $
42
(943)
(15,975) $
18,679 $
—
3,611
22,290 $
6,315 $
11,366 $
(3 )
2,045
13,408 $
(4,461 ) $
—
(287)
(4,748 ) $
8,660 $
57,422
14
57,436
22,656
94
2,347
25,097
(2,152)
—
(111)
(2,263)
22,834
103
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The effective tax rate on income differs from the federal statutory rate of 21% for the year ended December 31, 2018 and 35% for the
years ended December 31, 2017 and 2016, for the following reasons (dollars in thousands):
Tax provision computed at the federal statutory income tax
rate (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $(cid:17)
State and local income taxes, net of federal tax benefits (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Share-based compensation(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Foreign exchange gain (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Deferred tax adjustment from TCJA (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
A
162(m) limit on deductibility of exf
ecutive compensation (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Other (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
n
Total provision (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Effective tax rate (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Year Ended December 31,
2017
2016
2018
16,047 $
2,091
(1,790)
—
(10,284)
1,547
(1,296)
6,315 $
8.3%
13,265 $
1,440
(1,005 )
724
(7,491 )
—
1,727
8,660 $
22.9 %
20,103
1,401
1,656
—
—
—
(326)
22,834
39.8%
ed tax balances as of December 31, 2017 due to a change in thet
Federal income tax rate in the period as result of the enactment of the Tax Cuts and Jobs Act (“TCJA”). In accordance with SEC Staff
Accounting Bulletin No. 118 (“SAB 118”), the Company obtained further necessary information and incorporated published guidance
provided after year end. These items were utilized to prepare the Company’s federal and state income tax filings for the 2017 tax year.
Included in the Company’s income tax expense as of December 31, 2018 are certain adjustments related to the finalization of
computations related to the TCJA. As of December 22, 2018, the Company considers the one-year period provided for under SAB 118
to be closed.
d
The Company has state net operating loss carryforwards of $13.2 million at December 31, 2018 that, if unused, will expire between
calendar years 2023 and 2038. The Company has not recorded a valuation allowance related to the state net operating loss
carryforwards as they are more likely than not to be utilized. The Company has gross foreign net operating loss carryforwards fromff
Brazilian operations of $20.6 million, $10.7 million and $4.3 million as of December 31, 2018, 2017 and 2016, respectively. These net
operating loss carryforwards are subject to annual limitations and have an unlimited carryforward period. The Company has recorded
a full valuation allowance related to the foreign net operating loss carryforwards, as well as other foreign deferred tax assets, as they
are not more likely than not to be utilized.
The following table summarizes the valuation allowance activity for the years ended December
thousands):
y
31, 2018, 2017 and 2016 (in
Balance at beginning of pf eriod (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Additions (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Deductions(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Balance at end of period (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Year Ended December 31,
2017
2016
2018
2,650 $
2,480
—
5,130 $
1,807 $
843
—
2,650 $
1,220
587
—
1,807
A reconciliation of the activity related to unrecognized tax benefits follows for the years ended December 31, 2018, 2017 and 2016 (in
thousands):
Balance at beginning of pf eriod (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
727 $
351 $
Additions based on tax positions related to the current
year (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Additions for tax positions of prior years(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Balance at end of period (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
8,248
31,365
40,340 $
229
147
727 $
—
118
233
351
Year Ended December 31,
2017
2016
2018
Included in the balances of unrecognized tax benefits at December 31, 2018, 2017 and 2016 are potential benefits of $13.3 million,
$0.7 million and $0.4 million, respectively, that, if recognized, would favorably affect the effective tax rate in the period of
recognition. The balance of unrecognized tax benefits for temporary items as of December 31, 2018 was $27.1 million. There were no
unrecognized tax benefits for temporary items as of December 31, 2017 and 2016. The Company recognizes interest and penalties, if
104
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
any, related to unrecognized tax benefits in income tax expense. There were no expenses for interest and penalties related to
unrecognized tax benefits recorded in 2018, 2017, and 2016. The liability for unrecognized tax benefits included no amounts for
accrued interest and penalties related to unrecognized tax benefits as of December 31, 2018 and 2017.
The Company believes it is reasonably possible that, within the next twelve months, unrecognized domestic tax benefits will change
by a significant amount. The Company’s principal uncertainties are related to the timing of recognition of income and losses related to
its loan portfolio. The Company anticipates a Joint Committee on Taxation review of certain tax returns that were filed during 2018 in
conjunction with the refunds claimed on those returns. Depending upon the outcome of the review and any related agreements or
a
settlements with the relevant taxing authorities, the amount of the uncertainty, including amounts that would be recognized as
component of the effective tax rate, could change significantly. While the total amount of uncertainty to be resolved is not clear, it is
reasonably possible that the uncertainties pertaining to this matter will be resolved in the next twelve months.
aa
t
The Company’s U.S. tax returns are subject to examination by federal and state taxing authorities. The statute of limitations related to
the Company’s consolidated Federal income tax returns is closed for all tax years up to and including 2013. The years open to
examination by state, local and foreign government authorities vary by jurisdiction, but the statute of limitation is generally
y
three years
from the date the tax return is filed. For jurisdictions that have generated net operating losses, carryovers may be subject to the statute
of limitations applicable for the year those carryovers are utilized. In these cases, the period for which the losses may be adjusted will
extend to conform with the statute of limitations for the year in which the losses are utilized. In most circumstances, this is expected to
increase the length of time that the applicable taxing authority may examine the carryovers by one year or longer, in limited cases.
d
aa
10. Commitments and Contingencies
Leases
The Company leases certain assets, primarily office space, all of which are accounted for as operating leases. The remaining l
ease
f
terms range from one to nine years with certain rights to extend for additional periods. Future minimum rentals due under non-
cancelable leases, which excludes operating expenses and real estate taxes, as of December 31, 2018, are as follows for each of the
years ending December 31 (in thousands):
f
Year
2019 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
2020 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)
2021 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
2022 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)
2023 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Thereafter (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Amount
6,932
6,751
6,957
7,010
7,113
23,465
58,228
Rent expense was $5.7 million, $5.2 million and $5.8 million for the years ended December 31, 2018, 2017 and 2016, respectively.
Guarantees of Consumer Loans
In connection with its CSO programs, the Company guarantees consumer loan payment obligations to unrelated third-party lenders for
short-term and installment loans and is required to purchase any defaulted loans it has guaranteed. As of December 31, 2018 and 2017,
the amount of consumer loans guaranteed by the Company was $29.7 million and $34.1 million, respectively, representing amounts
due under consumer loans originated by third-party lenders under the CSO programs. The estimated fair value of the liability for
estimated losses on consumer loans guaranteed by the Company of $2.2 million and $2.3
,
respectively, is included in “Accounts payable and accrued expenses” in the accompanying consolidated balance sheets.
million, as of December 31, 2018 and 2017
m
d
Litigation
On April 23, 2018, the Commonwealth of Virginia, through Attorney General Mark R. Herring, filed a lawsuit in the Circuit Court for
it
f
the County of Fairfax, Virginia against NC Financial Solutions of Utah, LLC (“NC Utah”), a subsidiary of the Company. The lawsu
alleges violations of the Virginia Consumer Protection Act (“VCPA”) relating to NC Utah’s communications with customers,
collections of certain payments, its loan agreements, and the rates it charged to Virginia borrowers. The plaintiff is seeking to enjoin
NC Utah from continuing its current lending practices in Virginia, restitution, civil penalties, and costs and expenses in connection
with the same. Neither the likelihood of an unfavorable decision nor the ultimate liability, if any, with respect to this matter can be
determined at this time, and the Company is currently unable to estimate a range of reasonably possible losses, as defined by ASC
t
105
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
450-20-20, Contingencies–Loss Contingencies–Glossary, for this litigation. The Company carefully considered applicable Virginia
law before NC Utah began lending in Virginia and, as a result, believes that the Plaintiff’s claims in the complaint are without merit
and intends to vigorously defend this lawsuit.
The Company is also involved in certain routine legal proceedings, claims and litigation matters encountered in the ordinary course of
its business. Certain of these matters may be covered to an extent by insurance or by indemnification agreements with third par
ties.
t
The Company has recorded accruals in its consolidated financial statements for those matters in which it is probable that it has
incurred a loss and the amount of the loss, or range of loss, can be reasonably estimated. In the opinion of management, the resolution
of these matters will not have a material adverse effect on the Company’s financial position, results of operations or liquidity.tt
11. Employee Benefit Plans
The Company sponsors the Enova International, Inc. 401(k) Savings Plan (the “401(k) Plan”), which is open to all U.S. employees of
the Company and its subsidiaries. New employees are automatically enrolled in this plan unless they elect not to participate. Prior to
January 1, 2015, the Company made matching cash contributions of 50% of each participant’s contributions, based on participant
contributions of up to 5% of compensation. Effective January 1, 2015, the Company makes matching contributions of 100% of the
first 1% of pay and 50% of the next 5% of pay that each employee contributes to the 40
1(k) Plan. Company contributions made prior
to January 1, 2015 vest at the rate of 20% each year after one year of service; thus a participant is 100% vested after five years of
service. The Company’s matching contributions subsequent to January 1, 2015 fully vest after a participant’s second year of service
with the Company. The Company also offers the Enova International, Inc. Nonqualified Savings Plan (the “NQSP”) for certain
members of Company management. The Company’s consolidated contributions to the 401(k) Plan and the NQSP were $2.7 million,
$1.9 million and $2.2 million for the years ended December 31, 2018, 2017 and 2016, respectively.
rr
f
The Company sponsors the Enova International, Inc. Supplemental Executive Retirement Plan (“SERP”) in which certain officers and
certain other employees of the Company participate. Under this defined contribution plan, the Company makes an annual
supplemental cash contribution to the SERP based on the terms of the plan as approved by the Company’s Management Development
and Compensation Committee of the Board of Directors. The Company recorded compensation expense of $0.5 million, $0.5 million
and $0.2 million for SERP contributions for the years ended December 31, 2018, 2017 and 2016, respectively.
The NQSP and the SERP are non-qualified deferred compensation plans. Benefits under the NQSP and the SERP are unfunded. As of
December 31, 2018, 2017 and 2016, the Company held securities in rabbi trusts to pay benefits under these plans. These securities are
classified as trading securities, and the unrealized gains and losses on these securities are netted with the costs of the plans in “General
and administrative expenses” in the consolidated statements of income.
Amounts included in the consolidated balance sheets relating to the NQSP and the SERP were as follows (in thousands):
Prepaid expenses and other assets (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Accounts payable and accrued expenses (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
2,052 $
2,580 $
1,460
1,993
As of December 31,
2018
2017
12. Stock-Based Compensation
Under the Enova International, Inc. 2014 Second Amended and Restated Long-Term Incentive Plan (the “Enova LTIP”), the
Company is authorized to issue 12,500,000 shares of Common Stock pursuant to “Awards” granted as incentive stock options
(intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended), nonqualified stock options, restricted stock
units (“RSUs”), restricted stock, performance shares, stock appreciation rights or other stock-based awards. Since 2014, nonqualified
stock options and RSU awards have been the only stock-based awards granted under the Plan. As of December 31, 2018, there were
6,438,286 shares available for future grants under the Enova LTIP.
During the year ended December 31, 2018, the Company received 92,592 shares of its common stock valued at approximately $2.2
million as partial payment of taxes required to be withheld upon issuance of shares under RSUs.
Restricted Stock Units
During the years ended December 31, 2018, 2017 and 2016, the Company granted RSUs to Company officers, certain employees and
to the non-management members of the Board of Directors under the Enova LTIP. Each vested RSU entitles the holder to receive a
106
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
share of the common stock of the Company. For Company officers and certain employees, the shares are to be issued upon vesting of
the RSUs generally over a period of three or four years. Shares for RSU awards granted to members of the Board of Directors vest and
are issued twelve months after the grant date.
In accordance with ASC 718, the grant date fair value of RSUs is generally based on the Company’s closing stock price on the day a
before the grant date and is amortized to expense over the vesting periods. The agreements relating to awards provide that the vesting
and payment of awards would be accelerated if there is a change in control of the Company.
The following table summarizes the Company’s RSU activity during 2018, 2017 and 2016:
Year Ended December 31,
2018
Year Ended December 31,
2017
Year Ended December 31,
2016
Outstanding at beginning of year (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) 1,425,883 $
Units granted (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Shares issued (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Units forfeited (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Outstanding at end of year (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) 1,242,422 $
639,109
(604,116)
(218,454)
12.00
21.74
11.90
16.12
16.34
1,359,057 $
763,727
(563,689)
(133,212)
1,425,883 $
Weighted
Average
Fair Value
at Date of
Grant
Units
Weighted
Average
Fair Value
at Date of
Grant
Units
Weighted
Average
Fair Value
at Date of
Grant
20.55
6.67
19.65
15.65
9.49
Units
641,878 $
9.49
14.70 1,189,136
(213,437)
9.68
11.62
(258,520)
12.00 1,359,057 $
Compensation expense related to these RSUs totaling $8.8 million ($6.7 million net of related taxes), $7.3 million ($5.6 million net of
related taxes) and $5.2 million ($3.1 million net of related taxes) was recognized for the years ended December 31, 2018, 2017 and
2016, respectively. Total unrecognized compensation cost related to these RSUs at December 31, 2018 was $14.5 million, which will
be recognized over a weighted average period of approximately 2.7 years. The outstanding RSUs had an aggregate intrinsic value of
$24.2 million at December 31, 2018.
Stock Options
During the years ended December 31, 2018, 2017 and 2016, the Company granted stock options to purchase Enova stock to Company
officers and certain employees under the Enova LTIP. Stock options would allow the holder to purchase shares of the Company’s
common stock at a price not less than the fair market value of the shares as of the grant date, or the exercise price.
Stock options granted under the Enova LTIP become exercisable in equal increments on the first, second and third anniversaries of
their date of grant, and expire on the seventh anniversary of their date of grant. Exercise prices of these stock options are equal to the
closing stock price on the day before the grant date. In accordance with ASC 718, compensation expense on stock options is based on
the grant date fair value of the stock options and is amortized to expense over the vesting pe
riods. For the year ended December 31,
2018, the Company estimated the fair value of the stock option grants using the Black-Scholes option-pricing model based on the
following assumptions: risk-free interest rate ranging from 2.5% to 2.7% with a weighted average of 2.5%, expected term (life) of
options of 4.5 years, expected volatility ranging from 51.5% to 52.2% with a weighted average of 51.5% and no expected dividends.
d
Determining the fair value of options awards at their respective grant dates requires considerable judgment, including estimating
expected volatility and expected term (life). The Company based its expected volatility on a weighted average of the historical
volatility of the Company and the historical volatility of comparable public companies over the option’s expected term. The Companymm
calculated its expected term based on the simplified method, which is the mid-point between the weighted-average graded-vesting
term and the contractual term. The simplified method was chosen as a means to determine expected term as the Company has limited
historical option exercise experience as a public company. The Company derived the risk-free rate from a weighted-average yield for
the three-and five-year zero-coupon U.S. Treasury Strips. The Company estimates forfeitures at the grant date based on its historical
forfeiture rate and revises the estimate, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
d
107
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table summarizes the Company’s stock option activity during 2018, 2017 and 2016:
Year Ended December 31,
Year Ended December 31,
Year Ended December 31,
2018
2017
2016
Weighted
Average
Exercise
Price
Units
Weighted
Average
Exercise
Price
Units
Units
Weighted
Average
Exercise
Price
Outstanding at beginning of yf ear (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) 2,054,092 $
Options granted (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Options exercised (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Options forfeited (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Outstanding at end of year (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) 2,129,837 $
Exercisable options at end of year (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) 1,246,301
481,003
(319,764)
(85,494)
16.92
21.54
21.07
17.42
17.32
17.27
1,587,056 $
590,988
(4,459)
(119,493)
2,054,092 $
1,165,837
17.98 1,891,153 $
14.80
6.29
21.02
16.92 1,587,056 $
19.94
337,081
—
(641,178)
734,896
21.44
6.29
—
22.01
17.98
21.67
The weighted average fair value of options granted in 2018 was $9.65. Compensation expense related to stock options totaling $2.9
million ($2.2 million net of related taxes), $4.0 million ($3.1 million net of related taxes) and $3.3 million ($2.0 million net of related
taxes) was recognized for the years ended December 31, 2018, 2017 and 2016, respectively. Total unrecognized compensation cost
related to stock options at December 31, 2018 was $4.4 million, which will be recognized over a period of approximately 1.8 years. At
December 31, 2018, the intrinsic value of stock options outstanding was $17.4 million and the intrinsic value of stock options
exercisable was $8.3 million, respectively.
13. Derivative Instruments
The Company periodically uses derivative instruments to manage risk from changes in market conditions that may affect the
Company’s financial performance. The Company primarily uses derivative instruments to manage its foreign currency exchange rate
risk.
The Company periodically uses forward currency exchange contracts to minimize the effects of foreign currency risk in Brazil an
d the
United Kingdom. The forward currency exchange contracts are non-designated derivatives. Any gain or loss resulting from these
contracts is recorded as income or loss and is included in “Foreign currency transaction (loss) gain, net” in the Company’s
consolidated statements of income.
ff
The Company’s derivative instruments are presented in its financial statements on a net basis. The Company had no outstanding
derivative instruments as of December 31, 2018. The following table presents information related to the Company’s derivative
instruments as of December 31, 2017 (in thousands):
Non-designated derivatives:
As of December 31, 2017
Forward currency exchange contracts
Assets (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Liabilities (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Gross Amounts Gross Amounts Net Amounts of Assets
of Recognized
Financial
Offset in the
Consolidated Consolidated Balance
Presented in the
Instruments Balance Sheets(1)
Sheets(2)
Notional
Amount
— $
12,039 $
— $
55 $
— $
— $
—
55
(1) As of December 31, 2017, the Company had no gross amounts of recognized derivative instruments that the Company made an
accounting policy election not to offset. In addition, there was no financial collateral related to the Company’s derivatives. The
Company has no assets or liabilities that are subject to an enforceable master netting agreement or similar arrangement.
(2) Represents the fair value of forward currency contracts, which is recorded in “Accounts payable and accrued expenses” in the
consolidated balance sheets.
108
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table presents information on the effect of derivative instruments on the consolidated results of operations and AOCI
for years ended December 31, 2018, 2017 and 2016 (in thousands):
Gains (Losses)
Recognized in Income
Year Ended December 31,
2017
2018
Gains (Losses)
Recognized in AOCI
Year Ended December 31,
2017
2016
2018
2016
2018
Gains (Losses)
Reclassified From
AOCI into Income
Year Ended December 31,
2017
2016
Non-designated
derivatives:
exchange contracts(1)
$
Total (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
(cid:17)(cid:17)
243 $
243 $
(55 ) $ 3,020 $
(55 ) $ 3,020 $
— $
— $
— $
— $
—
—
$
$
— $
— $
— $
— $
—
—
(1) The gains (losses) on these derivatives substantially offset the (losses) gains on the hedged portion of the foreign intercompany
balances.
14. Related Party Transactions
In October 2017, the Company entered into an agreement for direct mail services with a marketing agency where David Fisher, the
Company’s Chief Executive Officer and Chairman of the Board, also serves as a member of the marketing agency’s Board of
y incurred $11.4 million in expenses related to these services. As of
Directors. During the year ended December 31, 2018, the Compan
December 31, 2018, the Company owed the agency $2.5 million related to services provided. As of and for the years ended December
31, 2017 and 2016, there were no amounts due or expenses incurred related to the agency.
r
An officer of the Company, who resigned effective July 1, 2018, had an ongoing ownership interest in the small business from which
the Company acquired certain assets and assumed certain liabilities in June 2015 (see Note 2 for additional information). Pursuant to
the acquisition, a subsidiary of the Company issued a promissory note to the small business in the amount of $3.0 million (the
“Promissory Note”) and granted the company an opportunity to earn certain contingent purchase consideration (see Note 2 for
additional information), both of which were guaranteed by the Company. The Promissory Note accrued interest at a rate of 4.0% per
annum and matured on June 23, 2018. The Company incurred interest expense related to the Promissory Note of $0.1 million in each
of the years ended December 31, 2018, 2017 and 2016.
The Company believes that the transactions described above have been provided on terms no less favorable to the Company than
could have been negotiated with non-affiliated third parties.
15. Variable Interest Entities
As part of the Company’s overall funding strategy and as part of its efforts to support its liquidity from sources other than its
traditional capital market sources, the Company has established a securitization program through the 2016-1, 2016-2, 2018-1, 2018-2
and 2018-A Securitization Facilities. The Company transfers certain consumer loan receivables to wholly owned, bankruptcy-remote
special purpose subsidiaries (“VIEs”), which issue notes backed by the underlying consumer loan receivables and are serviced by
another wholly-owned subsidiary of the Company. The cash flows from the loans held by the VIEs are used to repay obligations under
the notes.
The Company is required to evaluate the VIEs for consolidation. The Company has the ability to direct the activities of the VIEs that
most significantly impact the economic performance of the entities as th
e servicer of the securitized loan receivables. Additionally, the
Company has the right to returns related to servicing fee revenue from the VIEs and to receive residual payments, which expose it to
potentially significant losses and returns. Accordingly, the Company determined it is the primary beneficiary of the VIEs and is
required to consolidate them. The assets and liabilities related to the VIEs are included in the Company’s consolidated financial
statements and are accounted for as secured borrowings.
ff
109
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. Supplemental Disclosures of Cash Flow Information
The following table sets forth certain cash and non-cash activities for the years ended December 31, 2018, 2017 and 2016 (in
thousands):
Cash paid during the year fr or:
ff
Interest (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Income taxes paid (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
68,350 $
9,581
63,529 $
17,263
59,609
19,213
Non-cash investing and financing activities:
Loans and finance receivables renewed (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
374,563 $
322,648 $
310,425
Year Ended December 31,
2017
2016
2018
17. Operating Segment Information
The Company provides online financial services to non-prime credit consumers and small businesses in the United States, United
Kingdom, and Brazil and has one reportable segment, which is composed of the Company’s domestic and international operations and
corporate services. The Company has aggregated all components of its business into a single operating segment based on the
similarities of the economic characteristics, the nature of the products and services, the nature of the production and distribution
methods, the shared technology platforms, the type of customer and the nature of the regulatory environment.
The following tables present information on the Company’s domestic and international operations as of and for the years ended
December 31, 2018, 2017 and 2016 (in thousands).
Revenue
Domestic (cid:3)(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
International (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
946,515 $
167,559
Total revenue (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 1,114,074 $
709,537 $
134,204
843,741 $
622,991
122,578
745,569
Year Ended December 31,
2017
2016
2018
Income from operations
Domestic(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
International (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Corporate services (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total income from operations (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
294,183 $
1,399
(112,510)
183,072 $
233,065 $
6,147
(104,798)
134,414 $
204,084
19,787
(102,394)
121,477
Depreciation and amortization
Domestic(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
International (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Corporate services (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
s
Total depreciation and amortization (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
7,430 $
1,499
6,261
15,190 $
6,769 $
1,539
6,080
14,388 $
Expenditures for property and equipment
Domestic (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
International (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Corporate services (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total expenditures for property and equipment (cid:17)(cid:17)(cid:17)
t
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
8,177 $
4,328
3,574
16,079 $
6,449 $
4,589
5,490
16,528 $
6,005
2,167
7,392
15,564
6,955
3,158
4,283
14,396
110
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Property and equipment, net
Domestic (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
International (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Corporate services(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total property and equipment, net (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
19,878 $
9,778
19,897
49,553 $
25,732
7,670
15,123
48,525
December 31,
2018
2017
Assets
Domestic (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 1,110,608 $
International (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Corporate services (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
964,697
133,449
61,314
Total assets (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 1,328,185 $ 1,159,460
138,280
79,297
Geographic Information
The following table presents the Company’s revenue by geographic region for the years ended December 31, 2018, 2017 and 2016 (in
thousands):
Revenue
United States (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
United Kingdom (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Other international countries (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
946,515 $
141,453
26,106
Total revenue (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $ 1,114,074 $
709,537 $
114,838
19,366
843,741 $
622,991
103,478
19,100
745,569
Year Ended December 31,
2017
2016
2018
The Company’s long-lived assets, which consist of the Company’s property and equipment, were $49.6 million and $48.5 million at
December 31, 2018 and 2017, respectively. The operations for the Company’s domestic and international businesses are primarily
located within the United States, and the value of any long-lived assets located outside of the United States is immaterial.
18. Fair Value Measurements
Recurring Fair Value Measurements
In accordance with ASC 820, certain of the Company’s assets and liabilities, which are carried at fair value, are classified in
a
following three categories:
one of the
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
During the years ended December 31, 2018 and 2017, there were no transfers of assets or liabilities between Level 1, 2 or 3 in fair
value. It is the Company’s policy to value any transfers between levels of the fair value hierarchy based on end of period values.
The Company’s financial assets (liabilities) that are measured at fair value on a recurring basis as of December 31, 2018 and 2017 are
as follows (in thousands):
December 31,
2018
Fair Value Measurements Using
Level 2
Level 3
Level 1
Financial assets (liabilities)
Nonqualified savings plan assets(1) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Total (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
2,052 $
2,052 $
2,052 $
2,052 $
— $
— $
—
—
111
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Financial assets (liabilities)
December 31,
Fair Value Measurements Using
Level 2
Level 3
Level 1
Forward cud
Nonqualified savings plan assets(1)
rrency exchange contracts
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
(55) $
1,460
1,405
$
—— $
1,460
1,460 $
(55) $
—
(55) $
——
—
——
(1) The non-qualified savings plan assets have an offsetting liability of a greater amount, which is included in “Accounts payable and
accrued expenses” in the Company’sn
consolidated balance sheets.
The Company measures the fair value of its forward currency exchange contracts under Level 2 inputs as defined by ASC 820. For
these forward currency exchange contracts, current market rates are used to determine fair value. The significant inputs used in these
models are derived from observable market rates. The fair value of the nonqualified savings plan assets are measured under a Level 1
input. These assets are publicly traded equity securities for which market prices of identical assets are readily observable.
The Company determined the fair value of the liability for the contingent consideration discussed in Note 2 based on a probability-
weighted discounted cash flow analysis. This analysis reflects the contractual terms of the purchase agreement and utilizes
assumptions with regard to future earnings, probabilities of achieving such future earnings, the timing of expected payments and a
discount rate. Significant increases with respect to assumptions as to future earnings and probabilities of achieving such future
earnings would result in a higher fair value measurement while an increase in the discount rate would result in a lower fair value
measurement. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3
measurement as defined in the fair value hierarchy. Based on future expected earnings, the Company did not expect to pay any
additional contingent consideration and recorded an adjustment to write-off the remaining liability in 2017. As of December 31, 2018,
the Company had not made and was no longer potentially liable for any contingent payments related to this acquisition.
The change in the fair value of the contingent consideration, which is a Level 3 liability measured at fair value on a recurring basis, is
r
summarized in the table below for the year ended December 31, 2017 (in thousands):
Balance at December 31, 2016 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Remeasurement of cf ontingent consideration (see Note 2)
Balance at December 31, 2017 (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)
2,358 $
(2,358)
— $
Contingent
consideration
Total
2,358
(2,358 )
—
Fair Value Measurements Using
Significant Unobservable Inputs
(Level 3)
Fair Value Measurements on a Non-Recurring Basis
The Company measures non-financial assets and liabilities such as property and equipment and intangible assets at fair value on a
nonrecurring basis or when events or circumstances indicate that the carrying amount of the assets may be impaired. At December
r
31,
2018 and 2017, there were no assets or liabilities recorded at fair value on a nonrecurring basis.
f
112
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Financial Assets and Liabilities Not Measured at Fair Value
The Company’s financial assets and liabilities as of December 31, 2018 and 2017 that are not measured at fair value in the
consolidated balance sheets are as follows (in thousands):
December 31,
2018
Fair Value Measurements Using
Level 2
Level 3
Level 1
d
h equivalents (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Financial assets:
Cash and cas
it accounts, net (1) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Short-term loans and lind
Installment loans and RPAs, net (1)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Restricted cash (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Investment in unconsolidated id nvestee (2)(3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
f
e of cred
Total (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Financial liabilities:
Liability for estimated losses on consumer loans
guaranteed by the Company (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
t
Revolving line of credit (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Securitization Notes(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
8.50% senior nr otes due 2024(cid:3) (cid:17)4 (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
8.50% senior nr otes due 2025 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
s
Total (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
52,917 $
222,860
637,086
24,342
6,703
943,908 $
52,917 $
—
—
24,342
—
77,259 $
— $
—
—
—
—
— $
—
222,860
670,888
—
6,703
900,451
2,166 $
22,000
227,288
250,000
375,000
876,454 $
$
—
—
—
—
—
— $ 744,537 $
— $
—
225,474
212,500
306,563
2,166
22,000
—
—
—
24,166
December 31,
2017
Fair Value Measurements Using
Level 2
Level 3
Level 1
d
h equivalents (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Financial assets:
Cash and cas
it accounts, net (1)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Short-term loans and lind
Installment loans and RPAs, net (1)
(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Restricted cash (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Investment in unconsolidated id nvestee (2)(3) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
f
e of cred
Total (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Financial liabilities:
68,684 $
192,675
512,030
29,460
6,703
809,552 $
68,684 $
—
—
29,460
—
98,144 $
— $
—
—
—
—
— $
—
192,675
544,799
—
6,703
744,177
Liability for estimated losses on consumer loans
guaranteed by the Company (cid:3) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Promissory note (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Securitization Notes (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
9.75% senior nr otes due 2021 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
8.50% senior nr otes due 2024 (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Total (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
2,258 $
3,000
211,406
342,558
250,000
809,222 $
—
—
—
—
—
—
$
— $
—
215,063
365,700
255,000
$ 835,763 $
2,258
3,287
—
—
—
5,545
(1) Short-term loans, line of credit accounts and installment loans and RPAs are included in “Loans and finance receivables, net” in
the consolidated balance sheets.
(2) Investment in unconsolidated i
(3) See Note 1 for additional information related to the investment in unconsolidated investee.
nvestee is included in “Other assets” in the consolidated balance sheets.
dd
Cash and cash equivalents and restricted cash bear interest at market rates and have maturities of less than 90 days. The carrying
amount of restricted cash and cash equivalents approximates fair value.
Short-term loans, line of credit accounts, installment loans and RPAs are carried in the consolidated balance sheet net of the allowance
with recent default trends to the gross receivable
y
for estimated losses, which is calculated by applying historical loss rates combined
balance. Short-term loans and line of credit accounts have relatively short maturity periods that are generally 12 months or less. The
unobservable inputs used to calculate the fair value of these receivables include historical loss rates, recent default trends and
estimated remaining loan term; therefore, the carrying value approximates the fair value. The fair value of installment loans and RPAs
scounts offered for receivables with
r
is estimated using discounted cash flow analyses, which consider interest rates on loans and di
similar terms to customers with similar credit quality, the timing of expected payments, estimated customer default rates and/or
113
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
valuations of comparable portfolios. Unsecured installment loans typically have terms between two and 60 months. RPAs typically
have estimated delivery terms between six and 18 months.
The Company measures the fair value of its investment in unconsolidated investee using Level 3 inputs. Because the unconsolidated
investee is a private company and financial information is limited, the Company estimates the fair value based on the best available
information at the measurement date. As of December 31, 2018, the Compan
y estimated the fair value of its investment to be
approximately equal to the book value.
f
In connection with its CSO programs, the Company guarantees consumer loan payment obligations to unrelated third-party lenders for
short-term and installment loans the Company arranges for consumers on the third-party lenders’ behalf and is required to purchase
any defaulted loans it has guaranteed. The Company measures the fair value of its liability for third-party lender-owned consumer
loans under Level 3 inputs. The fair value of these liabilities is calculated by applying historical loss rates combined with recent
default trends to the gross consumer loan balance. The unobservable inputs used to calculate the fair value of these loans include
historical loss rates, recent default trends and estimated remaining loan terms; therefore, the carrying value of these liabilities
approximates the fair value.
The Company measures the fair value of its revolving line of credit using Level 3 inputs. The Company considered the fair value of its
other long-term debt and the timing of expected payment(s).
The fair values of the Company’s Securitization Notes and senior notes are estimated based on quoted prices in markets that are not
active, which are deemed Level 2 inputs.
The fair value of the Promissory Note was estimated using a discounted cash flow analysis, which is deemed Level 3.
19. Quarterly Financial Data (Unaudited)
The following is a summary of the quarterly results of operations for the years ended December 31
except per share data):
t
, 2018 and 2017 (in thousands,
2018
e
Total Revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
e
Cost of Revenue (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross Profit (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Net Income(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
ings per share (1)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Diluted earn
d
Diluted weighted average common shares
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
$
2017
e
e
Total Revenue (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Cost of Revenue (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Gross Profit (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
$
Net Income (Loss)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
Diluted earnings per share (1)
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17) $
Diluted weighted average common shares
(cid:3)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)(cid:856)
$
)
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
254,298 $
108,553
145,745 $
27,898 $
0.81 $
34,572
192,263 $
81,884
110,379 $
13,852 $
0.41 $
34,036
253,301
121,494
131,807
18,225
0.52
35,371
$ 293,879 $
163,763
$ 130,116 $
15,304 $
$
0.43 $
$
35,665
189,904
79,862
110,042
11,873
0.35
34,125
$ 217,878 $
107,341
$ 110,537 $
(3,368 ) $
$
(0.10 ) $
$
33,670
312,596
177,190
135,406
8,671
0.25
35,103
243,696
127,545
116,151
6,883
0.20
34,172
(1) The sum of quarterly per share amounts may not equal per share amounts for the year due to differences in weighted-average
shares and/or equivalent shares outstanding for each of the periods presented.
20. Subsequent Events
Subsequent events have
q
been reviewed through the date these financial statements were available to be issued.
On February 25, 2019 (the “2019-1 Closing Date”), the Company and several of its subsidiaries entered into a receivables
securitization (the “2019-1 Facility”) with PCAM Credit II, LLC, as lender (the “2019-1 Lender”). The 2019-1 Lender is an affiliate
of Park Cities Asset Management, LLC. The 2019-1 Facility finances Securitization Receivables that have been and will be originated
t
114
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
or acquired under the Company’s NetCredit and CashNetUSA brands by several of the Company’s subsidiaries and that meet
specified eligibility criteria. Under the 2019-1 Facility, eligible Securitization Receivables are sold to a wholly-owned subsi
diary of
the Company (the “2019-1 Debtor”) and serviced by another subsidiary of the Company.
a
The 2019-1 Debtor has issued a delayed draw term note with an initial maximum principal balance of $30.0 million and a revolving
note with an initial maximum principal balance of $20.0 million for an aggregate initial maximum principal balance of $50.0 million,
which is required to be secured by eligible Securitization Receivables. The 2019-1 Facility has an accordion feature that, with the
consent of the 2019-1 Lender, allows for the maximum principal balance of the delayed draw term note to increase to $50.0 milli
on
and the maximum principal balance of the revolving note to increase to $25.0 million, for an aggregate maximum principal balance of
$75.0 million. The 2019-1 Facility is non-recourse to the Company and matures three years after the 2019-1 Closing Date.
m
The 2019-1 Facility is governed by a loan and security agreement, dated as of the 2019-1 Closing Date, between the 2019-1 Lender
and the 2019-1 Debtor. The 2019-1 Facility bears interest at a rate per annum equal to LIBOR (subject to a floor) plus an applicable
margin, which applicable margin is initially 9.75%. In addition, the 2019-1 Debtor is required to pay certain customary upfront closing
fees to the 2019-1 Lender. Interest payments on the 2019-1 Facility will be made monthly. Subject to certain exceptions, the 2019-1
Debtor is not permitted to prepay the delayed draw term note prior to two years after the 2019-1 Closing Date. Following such date,
the 2019-1 Debtor is permitted to voluntarily prepay the 2019-1 Facility without penalty. The revolving note may be paid in whole or
in part at any time after the delayed draw term note has been fully drawn.
t
All amounts due under the 2019-1 Facility are secured by all of the 2019-1 Debtor’s assets, which include the eligible Securitization
Receivables transferred to the 2019-1 Debtor, related rights under the eligible Securitization Receivables, a bank account and
certain
other related collateral. The Company has issued a limited indemnity to the 2019-1 Lender for certain “bad acts,” and the Company
has agreed for the benefit of the 2019-1 Lender to meet certain ongoing financial performance covenants.
u
The 2019-1 Facility documents contain customary provisions for securitizations, including representations and warranties as to the
eligibility of the eligible Securitization Receivables and other matters; indemnification fo
r specified losses not including losses due to
the inability of consumers to repay their loans; covenants regarding special purpose entity matters; and default and termination
provisions which provide for the acceleration of the 2019-1 Facility in circumstances including, but not limited to, failure to make
payments when due, certain insolvency events, breaches of representations, warranties or covenants, failure to maintain the security
interest in the eligible Securitization Receivables, defaults under other material indebtedness of the 2019-1 Debtor and a default by the
Company under its financial performance covenants.
a
tt
115
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management has
evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934) as of December 31, 2018 (the “Evaluation Date”). Based upon that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and
procedures are effective and provide reasonable assurance (i) that information required to be disclosed in reports that we file
or submit
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and
forms; and (ii) that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated
and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions
regarding required disclosures.
mm
t
ff
Limitations on the Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and
procedures or internal control over financial reporting will prevent or detect all possible misstatements due to error and fraud. Our
disclosure controls and procedures and internal control over financial reporting are, however, designed to provide reasonable
assurance of achieving their objectives.
Report of Management on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined
in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with
generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
We conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in “Internal
Control — Integrated Framework” (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based
on our evaluation under the framework in “Internal Control — Integrated Framework” (2013), management, with the participation of
our Chief Executive Officer and Chief Financial Officer, concluded that our internal control over financial reporting was effective as
of December 31, 2018. The effectiveness of our internal control over financial reporting as of December 31, 2018 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in this F
orm
10-K.
uu
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under
lly
the Exchange Act) during the quarter ended December 31, 2018 that have materially affected, or are reasonably likely to materia
affect, our internal control over financial reporting.
ff
ff
ITEM 9B. OTHER INFORMATION
None.
116
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The Company plans to file its Proxy Statement for the 2019 Annual Meeting of Stockholders, or the Proxy Statement, within 120 days
after December 31, 2018. Information required by this Item 10 relating to our directors and nominees is included under the captions
“Proposal 1: Proposal to Elect Directors—Directors to be Elected by our Stockholders” and “Stockholder Proposals and
Communications with our Board—Director Nominations” of our Proxy Statement and is incorporated herein by reference.
The information required by this Item 10 regarding our Audit Committee is included under the caption “Structure and Functioning of
the Board—Board Committees—Audit Committee” and is incorporated herein by reference.
Information concerning executive officers is contained in this report under “Item 1. Business—Operations—Management and
Personnel—Executive Officers.”
Information required by this Item 10 regarding compliance with Section 16(a) of the Exchange Act of 1934 is included under the
caption “Section 16(a) Beneficial Ownership Reporting Compliance” in our Proxy Statement and is incorporated herein by reference.
The Company has adopted a Code of Business Conduct and Ethics that applies to all of its directors, officers (including all of
its
executive officers) and employees. This Code of Business Conduct and Ethics is publicly available on the Company’s website at
www.enova.com in the Investor Relations section under “Corporate Governance—Code of Conduct.” Amendments to the Code of
Business Conduct and Ethics and any grant of a waiver from a provision of the Code of Business Conduct and Ethics requiring
disclosure under applicable SEC rules will be disclosed on the Company’s website.
t
ITEM 11. EXECUTIVE COMPENSATION
Information contained under the caption “Executive Compensation”, “Director Compensation”, “Compensation Committee Interlocks
and Insider Participation” and “Executive Compensation—Management Development and Compensation Committee Report” in the
Proxy Statement is incorporated into this report by reference in response to this Item 11.
t
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
Information contained under the caption “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement
is incorporated into this report by reference in response to this Item 12.
Securities Authorized for Issuance Under Equity Compensation Plans
The table below sets forth information, as of December 31, 2018, with respect to shares of common stock of the Company that may be
issued under the Company’s existing equity compensation plans.
Plan Category
Number of securities to be
issued upon exercise of
outstanding options, warrants
and rights
(a)
Weighted average exercise
price of outstanding options,
warrants and rights
(b)
Number of securities
remaining available for future
issuance under equity
compensation plans (excluding
securities reflected in column
(a))
(c)
Equity compensation plans
approved by security holders (cid:17)(cid:17)(cid:3)(cid:17)
(cid:17)(cid:17)
Equity compensation plans not
approved by security holders
(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
(cid:17)(cid:17)
Total (cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)
3,372,259
$
—
3,372,259
$
10.94
—
10.94
6,438,286
—
6,438,286
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information contained under the captions “Certain Relationships and Related Transactions”, “Structure and Functioning of the
Board—Board Committees” and “Structure and Functioning of the Board—Director Independence” in the Proxy Statement is
incorporated into this report by reference in response to this Item 13.
117
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information contained under the caption “Audit and Non-Audit Fees” in the Proxy Statement is incorporated into this report by
reference in response to this Item 14.
118
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements are filed in Item 8 of Part II of this report:
Financial Statements:
Report of Independent Registered Public Accounting Firm ..........................................................................................................
m
78
Consolidated Balance Sheets – December 31, 2018 and 2017....................................................................................................... 79
Consolidated Statements of Income – Years Ended December 31, 2018, 2017 and 2016 ............................................................. 81
Consolidated Statements of Comprehensive Income – Years Ended December 31, 2018, 2017 and 2016 ................................... 82
Consolidated Statements of Stockholders’ Equity – Years Ended December 31, 2018, 2017 and 2016 ....................................... 83
Consolidated Statements of Cash Flows – Years Ended December 31, 2018, 2017 and 2016 ...................................................... 84
Notes to Consolidated Financial Statements .................................................................................................................................. 85
119
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
Exhibit No.
2.1
Exhibit Description
Separation and Distribution Agreement between Cash
America International, Inc. and Enova International, Inc.
Form
8-K
File No.
001-35503
Exhibit
2.1
Filing Date
11/19/2014
Filed
Herewith
Enova International, Inc. Amended and Restated Certificate
of Incorporation
8-K
001-35503
3.2
11/17/2017
Enova International, Inc. Amended and Restated Bylaws
8-K
001-35503
Specimen common stock certificate
10-12B 001-35503
3.1
4.1
4.3
11/17/2017
10/2/2014
7/31/2014
10-12B
001-35503
Indenture, dated May 30, 2014, between Enova
International, Inc., the U.S. subsidiaries of Enova
International, Inc., as guarantors, and U.S. Bank National
Association, as trustee
First Supplemental Indenture, dated as of October 1, 2014,
between Enova International, Inc., NC Financial Solutions of
Louisiana, LLC, NC Financial Solutions of Montana, LLC,
and NC Financial Solutions of Rhode Island, LLC, each, as
subsidiary guarantor, and U.S. Bank National Association,
as trustee
Second Supplemental Indenture, dated February 13, 2015,
between Enova International, Inc., the U.S. subsidiaries of
Enova International, Inc., as guarantors, and U.S. Bank
National Association, as trustee
Third Supplemental Indenture, dated November 10, 2015,
between Enova International, Inc., the U.S. subsidiaries of
Enova International, Inc., as guarantors, and U.S. Bank
National Association, as trustee
Fourth Supplemental Indenture, dated as of September 1,
2017, by and among Enova International, Inc., CNU of
Iowa, LLC, Computershare Trust Company, N.A. and
Computer Trust Company of Canada, as trustee
Trustee Agreement, dated October 20, 2016, by and among
Enova International, Inc., U.S. Bank National Association,
Computershare Trust Company, N.A., and Computershare
Trust Company of Canada
Indenture, dated as of September 1, 2017, by and among
Enova International, Inc., each of the guarantors party
thereto and Computershare Trust Company, N.A., as trustee
and the Form of 8.500% Senior Note due 2024 (included as
Exhibit A).
Amended and Restated Indenture, dated October 20, 2017,
between EFR 2016-1, LLC and Bankers Trust Company, as
indenture trustee and securities intermediary(3)
First Amendment, dated October 20, 2017, between EFR
2016-1, LLC and Bankers Trust Company, as indenture
trustee and securities intermediary(3)
Indenture, dated as of September 19, 2018, by and among
Enova International, Inc., each of the guarantors party
thereto and Computershare Trust Company, N.A., as trustee
and the Form of 8.500% Senior Note due 2025
120
10-12B
001-35503
4.4
10/2/2014
10-Q
001-35503
10.1
5/8/2015
10-K
001-35503
4.6
3/7/2016
8-K
001-35503
4.2
9/8/2017
10-K
001-35503
4.7
2/24/2017
8-K
001-35503
4.1
9/8/2017
10-K
001-35503
4.9
2/26/2018
10-K
001-35503
4.10
2/26/2018
10-Q
001-35503
4.1
10/31/2018
Exhibit No.
10.1
Exhibit Description
Tax Matters Agreement between Cash America
International, Inc. and Enova International, Inc.
Form
8-K
File No.
001-35503
Exhibit
10.1
Filing Date
11/19/2014
Filed
Herewith
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
Enova International, Inc. 2014 Long-Term Incentive Plan*
10-Q
001-35503
10.1
11/14/2014
Enova International, Inc. First Amended and Restated 2014
Long-Term Incentive Plan*
DEF 14A 001-35503 Appendix A 4/7/2016
Enova International, Inc. Senior Executive Bonus Plan*
DEF 14A 001-35503 Appendix B 4/7/2016
Enova International, Inc. Supplemental Executive
Retirement Plan, as amended and restated effective
September 13, 2017*
10-Q
001-35503
10.1
11/1/2017
Enova International, Inc. Nonqualified Savings Plan*
10-12B 001-35503
10.6
7/31/2014
Form of Enova International, Inc. Severance Pay Plan for
Executives*
Form of Enova International, Inc. Senior Executive Bonus
Plan*
Summary of 2014 Terms and Conditions of the Enova
International, Inc. Short-Term Incentive Plan*
10-12B
001-35503
10.12
10/2/2014
10-12B
001-35503
10.13
10/2/2014
10-12B
001-35503
10.14
10/2/2014
Form of Executive Change-in-Control Severance and
Restrictive Covenant Agreement (Chief Executive Officer)*
8-K
001-35503
10.1
9/15/2017
Form of Executive Change-in-Control Severance and
Restrictive Covenant Agreement (Executive Officers other
than the CEO)*
Form of Enova International, Inc. 2014 Long-Term
Incentive Plan Award Agreement for Special Grant of
Restricted Stock Units for Directors*
Form of Enova International, Inc. 2014 Long-Term
Incentive Plan Award Agreement for Grant of Restricted
Stock Units (for Officers)*
Form of Enova International, Inc. 2014 Long-Term
Incentive Plan Award Agreement for Special Grant of
Nonqualified Stock Option with a Limited Stock
Appreciation Right (for Officers)*
Form of Enova International, Inc. 2014 Long-Term
Incentive Plan Award Agreement for Grant of Restricted
Stock Units*
Form of Enova International, Inc. First Amended and
Restated 2014 Long-Term Incentive Plan Award Agreement
for Grant of Restricted Stock Units*
Form of Enova International, Inc. 2014 Long-Term
Incentive Plan Award Agreement for Special Grant of
Nonqualified Stock Option with a Limited Stock
Appreciation Right*
Form of Enova International, Inc. Second Amended and
Restated 2014 Long-Term Incentive Plan Award Agreement
for Grant of Restricted Stock Units*
121
8-K
001-35503
10.2
9/15/2017
10-12B
001-35503
10.17
10/17/2014
10-12B
001-35503
10.18
10/17/2014
10-12B
001-35503
10.19
10/17/2014
10-Q
001-35503
10.2
8/11/2015
10-Q
001-35503
10.2
8/4/2016
10-Q
001-35503
10.3
8/11/2015
X
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
Exhibit No.
10.19
Exhibit Description
Offer letter dated May 19, 2016 between Enova Financial
Holdings, LLC and Steven Cunningham*
Director Appointment Agreement, dated March 30, 2016, by
and among the Company, SAF Capital Management LLC
and certain of its affiliates
Loan and Security Agreement, dated December 1, 2016, by
and between Redpoint Capital Asset Funding, LLC and EFR
2016-2, LLC
Sale Agreement, dated December 1, 2016, by and between
Enova International, Inc. and EFR 2016-2, LLC
Form
10-Q
File No.
001-35503
Exhibit
10.1
Filing Date
8/4/2016
Filed
Herewith
8-K
001-35503
10.1
3/31/2016
10-K
001-35503
10.37
2/24/2017
10-K
001-35503
10.38
2/24/2017
Lease Agreement, dated July 25, 2014, between 175 Jackson
L.L.C. and Enova International, Inc.
10-12B
001-35503
10.11
10/22/2014
Second Amendment to Lease Agreement, dated September
13, 2017, between 175 Jackson L.L.C. and Enova
International, Inc.
Credit Agreement among Enova International, Inc., as a
Borrower and the Parent, certain restricted subsidiaries of
the Parent from time to time party hereto, as Borrowers,
certain restricted subsidiaries of the Parent from time to time
party hereto, as Guarantors, the lenders party hereto, and
TBK Bank, SSB, as Administrative Agent and Collateral
Agent Dated as of June 30, 2017(3)
First Amendment to Credit Agreement among Enova
International, Inc., as a Borrower and the Parent, certain
restricted subsidiaries of the Parent from time to time party
hereto, as Borrowers, certain restricted subsidiaries of the
Parent from time to time party hereto, as Guarantors, the
lenders party hereto, and TBK Bank, SSB, as Administrative
Agent and Collateral Agent dated as of April 13, 2018
Second Amendment to Credit Agreement among Enova
International, Inc., as a Borrower and the Parent, certain
restricted subsidiaries of the Parent from time to time party
hereto, as Borrowers, certain restricted subsidiaries of the
Parent from time to time party hereto, as Guarantors, the
lenders party hereto, and TBK Bank, SSB, as Administrative
Agent and Collateral Agent dated as of October 5, 2018
Purchase Agreement by and among Enova International,
Inc., the Guarantors party thereto and Jefferies LLC, as
Representative of the Initial Purchasers listed therein, dated
August 18, 2017
Amended and Restated Note Purchase Agreement, dated
October 20 2017, by and among NetCredit Loan Services,
LLC, EFR 2016-1, LLC, Jefferies Funding LLC, WN
2016-1, LLC, Fortress Credit CO LLC, FSLF ENV LLC and
other noteholders from time to time party thereto(3)
10-Q
001-35503
10.2
11/1/2017
10-Q
001-35503
10.1
8/2/2017
10-Q
001-35503
10.1
8/01/2018
8-K
001-35503
10.1
8/24/2017
X
10-K
001-35503
10.26
2/26/2018
10.30
Amended and Restated Receivables Purchase Agreement,
dated October 20, 2017, between Enova Finance 5, LLC and
the Company(3)
10-K
001-35503
10.27
2/26/2018
10.31
Loan and Security Agreement, dated July 23, 2018, by and
between Pacific Western Bank and EFR 2018-1, LLC
10-Q
001-35503
10.1
10/31/2018
122
Exhibit No.
Exhibit Description
Form
File No.
Exhibit
Filing Date
Filed
Herewith
10.32
10.33
Receivables Purchase Agreement, dated July 23, 2018 by
and between EFR 2018-1, LLC, as purchaser, and NetCredit
Funding, LLC, as seller
Purchase Agreement by and among Enova International,
Inc., the Guarantors party thereto and Credit Suisse
Securities (USA) LLC, as Representative of the Initial
Purchasers listed therein, dated September 14, 2018
10.34
Loan and Security Agreement, dated October 23, 2018, by
and between Credit Suisse AG and EFR 2018-2, LLC
21.1
23.1
31.1
31.2
32.1
32.2
Subsidiaries of Enova International, Inc.
Consent of PricewaterhouseCoopers LLP
Certification of Chief Executive Officer
Certification of Chief Financial Officer
Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
101.INS XBRL Instance Document(1)
101.SCH XBRL Taxonomy Extension Schema Document(1)
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
Document(1)
101.LAB XBRL Taxonomy Label Linkbase Document(1)
101.DEF XBRL Taxonomy Extension Definition Linkbase
Document(1)
101.PRE XBRL Taxonomy Extension Presentation Linkbase
Document(1)
10-Q
001-35503
10.2
10/31/2018
10-Q
001-35503
10.3
10/31/2018
X
X
X
X
X
X
X
X(2)
X(2)
X(2)
X(2)
X(2)
X(2)
* Indicates management contract or compensatory plan, contract or arrangement.
(1)Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language):
(i) Consolidated Balance Sheets at December 31, 2018 and December 31, 2017; (ii) Consolidated Statements of Income for the
years ended December 31, 2018, December 31, 2017 and December 31, 2016; (iii) Consolidated Statements of Comprehensive
Income for the years ended December 31, 2018, December 31, 2017 and December 31, 2016; (iv) Consolidated Statements of
Equity at December 31, 2018, December 31, 2017 and December 31, 2016; (v) Consolidated Statements of Cash Flows for the
years ended December 31, 2018, December 31, 2017 and December 31, 2016; and (vi) Notes to Consolidated Financial Statements.
(2)Submitted electronically herewith.
(3)Portions of this document have been omitted pursuant to a confidential treatment request approved by the SEC.
ITEM 16. FORM 10-K SUMMARY
None.
123
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: February 27, 2019
ENOVA INTERNATIONAL, INC.
By: /s/ DAVID FISHER
David Fisher
Chief Executive Officer
Pursuant to the requirements of the Securities and Exchange Act of 1934, the report has been signed by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
f
Signature
/s/ DAVID FISHER
David Fisher
Title
Chairman of the Board of Directors,
Chief Executive Officer and Director
(Principal Executive Officer)
Date
February 27, 2019
/s/ STEVEN CUNNINGHAM
Steven Cunningham
Chief Financial Officer
(Principal Financial and Accounting Officer)
February 27, 2019
/s/ ELLEN CARNAHAN
Ellen Carnahan
/s/ DANIEL R. FEEHAN
Daniel R. Feehan
/s/ WILLIAM M. GOODYEAR
William M. Goodyear
/s/ JAMES A. GRAY
James A. Gray
/s/ GREGG A. KAPLAN
Gregg A. Kaplan
/s/ MARK MCGOWAN
Mark McGowan
/s/ MARK A. TEBBE
Mark A. Tebbe
Director
Director
Director
Director
Director
Director
Director
February 27, 2019
February 27, 2019
February 27, 2019
February 27, 2019
February 27, 2019
February 27, 2019
February 27, 2019
124
Enova International, Inc.
175 W. Jackson Blvd., Suite 1000
Chicago, IL 60604