MISS ION
Helping hardworking people get access to fast, trustworthy credit.
CUS TOMER S TOR IES
– CARL A, C ASHNETUSA
– FORREST, NETCREDIT
– MAURICE, HEADWAY CAPITAL
– IAR A, SIMPLIC
– K YLE, ONDECK
– CAROLYN, PANGEA
– BARBAR A, THE BUSINESS BACKER
2022 ENOVA ANNUAL REPORT
i
Dear Fellow Shareholders,
2022 was a record-setting year for Enova. Despite a challenging macroeconomic environment,
a range of operating environments and have allowed us to deliver on our commitment to long-
lending, we’ve only scratched the surface in capturing
CUSTOMERS SERVED
ENOVA VA LUE S
175 W. JACKSON BLVD., CHICAGO, IL 60604
ENOVA’ S BUS INE S SE S
Across all sectors and geographies, we’ve seen that
ONLINE-ONLY BUSINESS MODEL
2022 ENOVA ANNUAL REPORT
iii
We also saw continued solid performance in
economic environment. Our Customer First
value means we meet customers where
provide a path forward. Over the course of
continued strong credit performance.
POWERED BY MACHINE LEARNING
ENOVA CUMULATIVE ORIGINATIONS1,2
2
175 W. JACKSON BLVD., CHICAGO, IL 60604
products, with the features and options consumers want
more than those with higher credit scores. With nearly half
of those Americans with lower credit scores facing three or
ACROSS PORTFOLIO
core of what we do, and we saw a steady increase in the
Empowering our customers with a range of loan options
COMBINED RECEIVABLES AND RETURNS1,2
2
2022 ENOVA ANNUAL REPORT
v
GROSS AR DIVERSIFICATION
BY PRODUCT T YPE
REVENUE DIVERSIFICATION
BY PRODUCT T YPE1
FUNDING MIX AND
CAPACIT Y 2
AS OF DECEMBER 31, 2022
YEAR ENDED DECEMBER 31, 2022
AS OF DECEMBER 31, 2022
WITH 18-YEAR HISTORY OF PROFITABLY LENDING THROUGH CREDIT CYCLES WITH PROVEN UNIT ECONOMICS
LOAN PERFORMANCE
CONSUMER PORTFOLIO1,2,3,4
SMALL BUSINESS PORTFOLIO1,5,6
2
2
175 W. JACKSON BLVD., CHICAGO, IL 60604
202 2 FAC T S
2022 REVENUE
diversity and all of the ways it can lead to
challenging assumptions and leveraging
our world-class data and analytics to
makes Enova an awesome place to work.
The success over the course of last year is a
of the team and the strong fundamentals
opportunity ahead of us. We have a proven
OF TOTAL LIQUIDITY1
customers. While the macroeconomic
that we have the right strategy to continue
our success while helping hardworking
people get access to fast, trustworthy credit.
We remain focused on delivering strong
the world’s credit gap.
Thank you for your continued support and investment in Enova.
David Fisher
Enova International, Inc.
2022 ENOVA ANNUAL REPORT
vii
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-35503
Enova International, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation or organization)
175 West Jackson Blvd.
Chicago, Illinois
(Address of principal executive offices)
45-3190813
(I.R.S. Employer
Identification No.)
60604
(Zip Code)
Registrant’s telephone number, including area code:
(312) 568-4200
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, $.00001 par value per share
Trading Symbol(s)
ENVA
Securities Registered Pursuant to Section 12(g) of the Act:
None
Name of Each Exchange on Which Registered
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
Indicate by check if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes
No
No
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter time that the registrant was required to submit
such files). Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company,
or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
Accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm
that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
The aggregate market value of 31,203,162 shares of the registrant’s common stock, par value $0.00001 per share, held by non-affiliates on
No
June 30, 2022 was approximately $899,275,129.
At February 22, 2023 there were 31,551,665 shares of the registrant’s Common Stock, $0.00001 par value per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company’s Proxy Statement for the 2023 Annual Meeting of stockholders are incorporated by reference into Part III of this report.
ENOVA INTERNATIONAL, INC.
YEAR ENDED DECEMBER 31, 2022
INDEX TO FORM 10-K
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Business ...........................................................................................................................................................
Risk Factors .....................................................................................................................................................
Unresolved Staff Comments............................................................................................................................
Properties .........................................................................................................................................................
Legal Proceedings............................................................................................................................................
Mine Safety Disclosures ..................................................................................................................................
PART II
Item 5.
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity
Securities .........................................................................................................................................................
Reserved ..........................................................................................................................................................
Management’s Discussion and Analysis of Financial Condition and Results of Operations .........................
Quantitative and Qualitative Disclosures about Market Risk .........................................................................
Financial Statements and Supplementary Data ...............................................................................................
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .........................
Controls and Procedures ..................................................................................................................................
Other Information ............................................................................................................................................
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections ............................................................
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Directors, Executive Officers and Corporate Governance ..............................................................................
Executive Compensation .................................................................................................................................
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters .......
Certain Relationships and Related Transactions, and Director Independence ................................................
Principal Accountant Fees and Services..........................................................................................................
1
15
38
38
38
38
39
41
42
60
61
102
102
102
102
103
103
103
103
104
PART IV
Item 15.
Item 16.
Exhibits, Financial Statement Schedules.........................................................................................................
Form 10-K Summary.......................................................................................................................................
105
111
SIGNATURES............................................................................................................................................................................
112
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-
looking statements include, but are not limited to, the following:
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
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;
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;
changes in federal or state laws or regulations, or judicial decisions involving licensing or supervision of commercial lenders,
interest rate limitations, the enforceability of choice of law provisions in loan agreements, the validity of bank sponsor
partnerships, the use of brokers or other significant changes;
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
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;
compliance with laws and regulations applicable to our international operations, including anti-corruption laws such as the
Foreign Corrupt Practices Act 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;
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;
the risk that the Company will not successfully integrate acquired companies or that costs associated with the integration are
higher than anticipated;
the risk that the cost savings, synergies, growth and cash flows from acquisitions will not be fully realized or will take longer to
realize than expected;
litigation risk related to acquisitions; 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 impact
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 the
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.
PART I
ITEM 1. BUSINESS
Overview
We are a leading technology and analytics company focused on providing online financial services. In 2022, we extended approximately
$4.5 billion in credit or financing to borrowers. As of December 31, 2022, we offered or arranged loans or draws on lines of credit to
consumers in 37 states in the United States 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, 2022, we have
completed approximately 57.8 million customer transactions and collected approximately 60 terabytes of currently accessible customer
behavior data since launch, 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 installment loans and receivables purchase agreements (“RPAs”) and line of credit accounts.
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 18 years of experience. These
systems employ advanced risk analytics, including machine learning and artificial intelligence, 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 machine learning-enabled analytical models and statistical measures used in making our credit, purchase, marketing
and collection decisions. Approximately 90% of models used in our analytical environment are machine learning-enabled.
Our flexible and scalable technology platforms allow us to process and complete customers’ transactions quickly and efficiently. In
2022, we processed approximately 2.5 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 2014,
we launched our business in Brazil, where we arrange financing for borrowers through a third-party lender. In addition, in 2014, we
introduced a new line of credit product in the United States to serve the needs of small businesses. In 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. In October 2020, we acquired, through a merger, On Deck Capital Inc. (“OnDeck”), a small business lending company offering
lending and funding solutions to small businesses in the U.S., Australia and Canada, to expand our small business offerings. In March
2021, we acquired Pangea Universal Holdings (“Pangea”), which provides mobile international money transfer services to customers in
the U.S with a focus on Latin America and Asia. These new products have allowed us to further diversify our product offerings and
customer base.
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 technological innovations differentiates our capabilities relative to competing platforms as evidenced by
our history of strong growth and stable credit quality.
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 installment loans, line of credit accounts and RPAs to consumers and small businesses. We have one reportable
segment that includes all of our online financial services.
Installment loans. Certain subsidiaries (i) directly offer installment loans, (ii) as part of our Bank Programs, purchase or purchase a
participating interest in, installment loans or (iii) as part of our CSO program, arrange and guarantee installment loans, as discussed
below. Certain subsidiaries offer, or arrange through our Bank Programs and CSO program, unsecured consumer installment loan
products in 37 states in the United States and small business installment loans in 47 states and in Washington D.C. Internationally, we
also offer or arrange unsecured consumer installment loan products in Brazil. Terms for our installment loan products range between
two and 60 months. Loans may be repaid early at any time with no additional prepayment charges.
Line of credit accounts. Certain subsidiaries directly offer, or purchase a participation interest in receivables through our Bank Programs,
new consumer line of credit accounts in 31 states (and continue to service existing line of credit accounts in two additional states) in the
United States and business line of credit accounts in 47 states and in Washington D.C. 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 the 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.
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.
CSO program. We currently operate a credit services organization or credit access business ("CSO") program in Texas. Through our
CSO program, we provide services related to third-party lenders’ installment consumer 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
program 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 program, 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 the loan, which has terms of up to six months, if it goes into default.
As of December 31, 2022 and 2021, the outstanding amount of active and current consumer loans originated by third-party lenders
under the CSO programs was $15.6 million and $13.8 million, respectively, which were guaranteed by us.
Bank programs. Certain subsidiaries operate programs with certain banks to provide marketing services and loan servicing for near-
prime unsecured consumer installment loans and, beginning in January 2021, line of credit accounts. Under the programs, those
subsidiaries receive marketing and servicing fees. The bank has the ability to sell, and the participating subsidiaries have the option, but
not the requirement, to purchase, the loans or a participating interest in receivables the bank originates. We do not guarantee the
performance of the loans and line of credit accounts originated by the bank. As part of the OnDeck business both prior and subsequent
to Enova’s acquisition, OnDeck operates a program with a separate bank to provide marketing services and loan servicing for small
business installment loans and line of credit accounts. Under the OnDeck program, we receive marketing fees while the bank receives
origination fees and certain program fees. The bank has the ability to sell and we have the option, but not the requirement, to purchase
the installment loans the bank originates and, in the case of line of credit accounts, extensions under those line of credit accounts. We
do not guarantee the performance of the loans or line of credit accounts originated by the bank.
Our Markets
We currently provide our services in the following countries:
United States. We began our online business in the United States in May 2004. As of December 31, 2022, we provided services in all
50 states and Washington D.C. We market our financing products under the names CashNetUSA at www.cashnetusa.com, NetCredit at
www.netcredit.com, OnDeck at www.ondeck.com, Headway Capital at www.headwaycapital.com, The Business Backer at
www.businessbacker.com, and Pangea at www.pangeamoneytransfer.com. The United States represented 99.2% of our total revenue in
2022 and 98.1% of our total revenue in 2021.
2
Brazil. In June 2014, we launched our business in Brazil under the name Simplic at www.simplic.com.br, where we arrange unsecured
consumer installment loans for a third-party lender. We plan to continue to invest in and expand our financial services program in Brazil.
Brazil represented 0.7% of total revenue in 2022 and 1.0% of total revenue in 2021.
Key Financial and Operating Metrics
We have achieved significant growth since we began our online business as we have expanded our product offerings organically and
through strategic acquisitions. We measure our business using several financial and operating metrics. Our key metrics include combined
loans and finance receivables outstanding, in addition to other measures described under “Management’s Discussion and Analysis of
Financial Condition and Results of Operations.”
The breakout of the combined loans and finance receivables and revenue of our product offerings is set forth below:
Our Industry
The internet has transformed how consumers and small businesses shop for and acquire products and services. According to a study by
the United Nations, 66% of the world’s population had access to the internet in 2022, a 3% increase from 2021. Cisco’s annual Internet
Report reported that global internet usage is expected to increase at a pace of 6% through 2023. Accompanying the rise in internet usage
is the continued disruption of storefront retail by e-commerce companies like Amazon, as consumers flock to purchase goods and interact
with businesses online. The U.S. Census Bureau Department of Commerce reported e-commerce saw a 10.8% increase in the third
quarter of 2022 compared to 2021. According to the U.S. Census Bureau, e-commerce sales as a percent of total quarterly retail sales in
the United States accounted for 14.8% in the third quarter of 2022. In addition, a number of traditional financial services, such as
banking, bill payment and investing, have become widely available online. An October 2022 report by the American Bankers
Association found that approximately 72% of bank customers in a U.S. sample have used mobile apps or online banking as a means of
accessing banking services in the past 12 months. 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.
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. In its Report on the Economic Well-Being of U.S. Households in 2021 published in May 2022, the Federal Reserve
noted that relatively small, unexpected expenses, such as a car repair or a modest medical bill, can be a hardship for many families and
that, when faced with a hypothetical expense of $400, 32 percent of adults said they could not cover it completely using cash, savings
or a credit card paid off at the end of the month, revealing the need for alternative sources. The onset and continued impacts of the
COVID-19 pandemic have exacerbated financial disruptions for many working-class individuals. According to the same 2022 report
by the Federal Reserve a sizable portion of the population (19%) is unbanked or underbanked. In 2021, the Federal Reserve reported a
1% decrease in the origination of new credit over the past 12 months.
Small businesses are also suffering from lack of access to credit from traditional lenders. Among a sample of small businesses surveyed
for the U.S. Census Bureau April 2022 Small Business Pulse Survey, 66% reported that the pandemic had a negative effect on their
business. According to a 2022 study by the Federal Reserve Banks, 61% of employer firms used personal funds to address their
3
business’s financial challenges. In 2021, 77% of employer firms applied for some type of emergency funding. Online lending and
funding options are emerging as a solution for small businesses that are seeking capital. The Federal Reserve found that 10% of small
businesses surveyed applied for credit from online lenders.
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;
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
disconnect and reconnection fees; and
wish to avoid potential negative credit consequences of missed payments with traditional creditors.
Our Customers
Our non-prime consumer base is comprised largely of individuals living in households that earn an average annual income of $44,000
in the United States. The non-prime lending market is sizable in the United States and Brazil. We estimate there is a $77 billion consumer
lending opportunity market in the United States. In Brazil, we estimate there to be a $43 billion consumer loans market. Small business
lending is also an attractive market opportunity, with an estimated total U.S. small business loan market of $372 billion. Tighter banking
regulations have forced banks to vacate the U.S. market for loans under $1 million. According to a 2021 study by the Federal Reserve
Banks, loans under $250 thousand accounted for 71% of all small business loan applications. Our small business customers have median
annual sales of approximately $577 thousand and average operating history of 10.7 years.
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 60 terabytes of currently accessible consumer behavior data from more than 57 million transactions. 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 18 years of operating history and we continue to invest in our brands, such as
CashNetUSA, NetCredit, OnDeck, Headway Capital, The Business Backer, Simplic and Pangea, 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 machine learning-enabled proprietary models are built on over 18 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. With the acquisition of OnDeck in 2020,
we have added a loan decision process, including the proprietary OnDeck Score®, which provides us with significant visibility
and predictability to assess the creditworthiness of small businesses and allows us to better serve more customers across more
industries.
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 as we
expanded our product offerings. We began offering installment loans in the United States in 2008, then added line of credit
products in 2010 and have experienced significant growth since. Due to the scalability of our platform, we were able to achieve
this growth without significant investment in additional infrastructure, and over the past three years, capital expenditures have
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averaged only 2.6% of revenue per year. We expect our advanced technology and underwriting platform to help continue to drive
significant growth in our business.
Customer First Approach. 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 and web chat. We continuously work to improve
customer satisfaction by evaluating information from website analytics, customer surveys, contact center feedback and focus
groups. Our contact 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 dedication to customer service, the
transparency of our fees and interest charges and our adherence to trade association “best practices.” With the acquisition of
OnDeck, we have added another business with a strong culture for delivering a quality customer experience. OnDeck has a 4.7
Excellent TrustScore on Trustpilot as of January 2023. Trustpilot is an online customer review platform that hosts 120+ million
reviews of businesses worldwide who use it for insights into customer satisfaction. A TrustScore is calculated on a scale from 1
to 5 giving more weight to newer reviews. OnDeck’s score places it at the upper end of customer satisfaction ratings in the non-
bank financial services industry. OnDeck has also consistently achieved an A+ rating from the Better Business Bureau.
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. 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, which have promulgated “best practices” for our industry that we have adopted, and the
Innovative Lending Platform Association, a leading trade organization representing a diverse group of online lending and service
companies serving small businesses. 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 five years, we grew the principal balance of our loans and finance
receivables at a compound annual growth rate of 33.2%, from $870.5 million as of December 31, 2018 to $2,739.2 million as of
December 31, 2022. Over the same period, our revenue grew at a compound annual growth rate of 15.6%, from $972.6 million in
2018 to $1,736.1 million in 2022, our net income from continuing operations grew at a compound annual growth rate of 34.4%,
from $63.6 million in 2018 to $207.4 million in 2022, and our net income from continuing operations as a percent of revenue
increased from 6.5% to 11.9%. Adjusted EBITDA, a non-GAAP measure, grew at a compound annual growth rate of 21.7%, from
$202.0 million to $442.8 million and adjusted EBITDA as a percent of revenue increased from 20.8% in 2018 to 25.5% in 2022.
Top Talent and Teamwork. 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, the University of Chicago and Harvard University. 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, Discover Financial Services, First American Bank, JPMorgan Chase and
Groupon.
Our Growth Strategy
Increase penetration in existing markets through strong brands and direct marketing. While we have some of the most well
known online lending brands in the markets where we currently operate, we believe that we have directly reached only a small
number of the potential customers for our products and services. Our TV and digital advertising have raised awareness for our
brands, improving effectiveness in both direct and indirect channels. In addition to our strong online and direct mail acquisition
activities, our consumer and small business lending businesses both partner with marketplaces and other marketing service
providers to grow our customer base. We believe our competitors – banks as well as smaller and less sophisticated online and
store-based lenders – struggle to adapt to evolving customer preferences and marketing regulatory requirements, giving us the
opportunity to continue to gain significant market share.
Introduce new products and services. We plan to attract new categories of consumers and small businesses not well served by
traditional lenders through the introduction of new products and services. We have introduced new products and customer-friendly
product features to meet customer demand for timely, flexible credit options including installment loans, line of credit accounts,
and small business loans and financing, many of which offer risk-tiered rate structures and some that offer performance-based
rate reduction features. We also offer international money transfer services for people working in the U.S. sending money to
people overseas. All of these leverage our analytics expertise and our flexible and scalable technology platform. One of our first,
industry changing product introductions was offering short-term unsecured installment loans and line of credit accounts to working
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people who previously were limited to two-week loans, bank overdrafts, or pawn loans. Next, starting over ten years ago, our
NetCredit business began offering one of the first longer duration installment loan products reporting to major credit reporting
agencies for near-prime consumers in the U.S. and, in 2019, we launched a line of credit product for that market with a
performance-based rate reduction feature. In 2014, we launched our business in Brazil, where we arrange installment loans with
convenient repayment features for borrowers in partnership with a third-party lender. In October 2020, we acquired OnDeck, a
small business lending company, to expand our small business lending and funding offerings in the U.S., joining it with our line
of credit product from Headway Capital (established in 2014) and our installment loan and short-term financing RPA products
from The Business Backer (acquired in 2016). In 2016, we launched a program for chartered banks where we provide technology,
loan servicing and marketing services to banks to allow them to offer unsecured consumer installment loans and line of credit
accounts; with the acquisition of OnDeck, the program expanded to small business installment loans and line of credit accounts.
In March 2021, we added international money transfer services with the acquisition of Pangea, which provides mobile
international money transfer services to customers in the U.S. We intend to continue to evaluate and offer new products and
services that complement our online specialty financial services in order to meet the growing needs of our consumers and small
businesses.
Online Financing Process
Our consumer and small business financing transactions are conducted almost exclusively online. When a customer is approved for a
new loan or RPA, nearly all customers choose to have funds promptly deposited in their bank account and choose to use a pre-authorized
debit for repayment from their bank account or debit card. Where permitted by law and approved by us, a customer may choose to renew
a short-term consumer loan before payment becomes due by agreeing to pay an additional finance charge. If a loan is renewed or
refinanced, the renewal or refinanced loan is considered a new loan.
We have created a quick and simple process for customers to apply for an online loan or RPA, as shown below:
Technology Platforms
Our proprietary technology platforms are built for scalability and flexibility and are based on proven open source software. The
technology platforms were designed to be powerful enough to handle the large volumes of data required to evaluate consumer and small
business applications and flexible enough to capitalize on changing customer preferences, market trends and regulatory changes. The
scalability and flexibility of our technology platforms allow us to enter new markets and launch new products quickly, typically within
three to six months from conception to launch. With the acquisition of OnDeck, we have enhanced our capabilities to connect and
integrate our small business platforms with a wider network of distribution partners.
We continually employ technological innovations to improve our technology platforms, which perform a variety of integrated and core
functions, including:
Front-end system, which includes external websites, landing pages and mobile sites and applications that customers use when
applying for loans or financing and managing their accounts;
Back-end and customer relationship management (“CRM”) systems, which maintain customer-level data and are used by our
contact center employees to provide real-time information for all inquiries. Our back-end system and CRM systems include,
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among other things, our contact management system, operational and marketing management system, automated phone system,
Interactive Voice Response and contact center performance management system;
Decision engine, which leverages machine learning and artificial intelligence to rapidly evaluate and make credit and financing
decisions throughout the customer relationship; and
Financial system, which manages the external interface for funds transfers and provides daily accounting, reconciliation and
reporting functions.
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 over 40 million credit reports during 2022. This rich dataset has grown significantly over our
more than 18 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 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, fraud, underwriting, customer contact and collections that
leverage artificial intelligence and machine learning-enabled models. 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 nearly 90 data and analytics professionals as of December 31, 2022.
Proprietary Data, Models and Underwriting
Our proprietary models are built on more than 18 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 also acquired OnDeck’s proprietary data and analytics models, which strengthen our ability to serve small businesses. We
continually update our machine learning-enabled 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 may 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
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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. In the small business space, we utilize both FICO and Vantage scores in our
decision models, and our customer base is predominantly in the fair to better range of FICO scores with OnDeck scores generally
between 650 and 780.
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 that leverage artificial
intelligence and machine learning-enabled models to detect fraud trends, identify fraudulent applications and learn from past fraudulent
cases.
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, machine learning-enabled algorithms and artificial
intelligence 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 from fraud.
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:
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.
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.
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 machine learning-enabled analytics-powered approach to marketing has enabled us to increase the percentage
of 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 41% in 2022, and we believe we have also improved customer brand loyalty during the same period.
Customer Service
We believe that our in-house contact 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
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analytics, customer satisfaction surveys, contact center feedback, call monitoring and focus groups. Our contact 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 contact center operations, except in Brazil.
Collections
We operate consumer and small business-specific collection teams that 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 alternatives and make arrangements to repay the
loan or financing. We use a variety of collection strategies to satisfy a delinquent loan or finance receivable, such as settlements and
payment plans, or to adjust the delivery of finance receivables. Employees are continually trained and coached towards improvement
based on quality assurance and work effort audits resulting in continued success in presenting best available payment options to the
customer while limiting complaints and dissatisfaction.
Contact 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 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, including 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.
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,
transparency of fees and interest and customer service. We believe we have a significant competitive advantage as an early mover in
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.
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 and Elevate. 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 Express, Check
Into Cash, Check ‘n Go and One Main Financial. For online small business financing, we believe our main competitors include
traditional banks, legacy merchant cash advance providers, and newer, technology-enabled FinTech lenders.
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 and our “e” logo. OnDeck also has registered trademarks in the United States, Canada
and Australia, including “OnDeck,” “OnDeck Score” and the OnDeck 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
of each year, corresponding to the holiday season, and lowest in the first quarter of each year, corresponding to our customers’ receipt
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of income tax refunds. Demand for our commercial loan products and services in the United States has historically been highest in the
fourth quarter and early first quarter of each year, corresponding generally to holiday and post-holiday season needs, and lowest at the
end of the first quarter and beginning of the second quarter of each year, where we believe that our customers' businesses are generally
slower. Consequently, we experience seasonal fluctuations in our domestic operating results and cash needs.
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.
Operations
Management and Personnel
Executive Officers
Our executive officers, and information about each as of December 31, 2022, are listed below.
NAME
David Fisher.............................................. Chief Executive Officer
Kirk Chartier............................................. Chief Strategy Officer
Steven Cunningham.................................. Chief Financial Officer
Sean Rahilly.............................................. General Counsel & Chief Compliance Officer
POSITION WITH ENOVA
AGE
53
59
53
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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.
David Fisher has served as our Chief Executive Officer since January 29, 2013 when he joined Enova. Mr. Fisher has also served as a
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 GoHealth, Inc. since May 2022 and Fathom Digital Manufacturing Corporation since
December 2021. Mr. Fisher previously served on the Boards of Directors of optionsXpress, CBOE Holdings, Inc., InnerWorkings, Inc.,
GrubHub, Inc. and Just Eat Takeaway.com N.V. 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.
Kirk Chartier currently serves as our Chief Strategy Officer. Mr. Chartier joined Enova in April 2013 as Chief Marketing Officer. Prior
to joining Enova, Mr. Chartier was the Executive Vice President & Chief Marketing Officer of optionsXpress Holdings from January
2010 until Schwab acquired the 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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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 has served on the Board of Directors of AgriBank, a Farm Credit Bank, since January 2022. 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 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 of
Science in Accountancy from DePaul University College of Commerce and a Juris Doctor from DePaul University College of Law.
Human Capital
Our Workforce. Our employees are primarily located in the United States, with a portion of our workforce in Mexico and Brazil. As of
December 31, 2022, we had 1,804 employees, with 1,763 of our employees located in the United States. None of our employees are
currently covered by a collective bargaining agreement or represented by an employee union. 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 a diverse
range of top talent from graduate and undergraduate programs at premier institutions as well as from coding bootcamps such as Code
Platoon. 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, Discover Financial Services, First American Bank, JPMorgan Chase
and Groupon.
Diversity, Equity, & Inclusion. Diversity, equity, and inclusion (“DEI”) are highly valued at Enova. We are committed to fostering a
culture where everyone is treated equitably and fairly, with a sense of belonging, community, and value. We believe that DEI is important
to all aspects of our business, including our goal to attract, develop, and retain talent from underrepresented groups. Our business is
better when we have a team of people from diverse backgrounds, experiences, talents, skills, and perspectives contributing to our success.
To further our commitment, in 2021, we created a new position, Diversity, Equity, & Inclusion Lead, focused exclusively on fostering
and driving our DEI initiatives and values. A key part of this role is partnering with Enova’s DEI Council, DEI groups, and business
teams to ensure that our initiatives have an impactful role in our culture and day-to-day work. We currently have seven DEI groups at
Enova: Apex@Enova (Asian Pacific Experience), B.L.A.C.K.@Enova (Boosting Love Achievement Culture Knowledge),
HOLA@Enova (Hispanic or Latino Alliance), Parents@Enova, Pride@Enova, South Asians@Enova, and Women@Enova.
In The Community. We are dedicated to having a positive impact on our community. We encourage our employees to volunteer in their
communities and on behalf of causes that are important to them through our Enova Gives program. Corporate employees are granted
one paid volunteer day per calendar year to volunteer with or on behalf of a qualified 501(c)(3) non-profit organization of their choice
during work hours. In addition, Enova matches charitable donations from employees to qualifying 501(c)(3) non-profit organizations—
up to $500 per employee each calendar year. Twice per year, two non-profit organizations that receive donations under the matching
program become eligible for an additional one-time donation of $2,000 to $3,000, to be decided by employee vote. At a company level,
Enova invests financially in organizations that are dedicated to strengthening and broadening access to quality education; improving the
lives of children and young adults in need; and providing access to high quality financial literacy programs.
Learning & Development. We offer a combination of required and optional learning and development opportunities to every Enova
employee. Our learning and development program is facilitated and guided primarily by our Talent Development team, Operations
Learning and Development team, company leaders, subject matter experts and our People team. We utilize an enterprise learning
management system (“LMS”) to deliver and manage all online learning. Enova employees can utilize tuition reimbursement or
department training budgets for external learning and development. Required compliance training is administered and tracked through
our LMS, and every Enova employee is assigned required compliance e-Learning modules. We also invest in our talent through a variety
of leadership and mentor programs, as well as other events focused on professional development.
Rewards & Benefits. The primary objectives of our compensation program are to: support Enova’s core values; attract, motivate, and
retain the best talent; encourage and reward high performance and results, while aligning short- and long-term interests with those of
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our stockholders; and reinforce our strategy to grow our business as we continue to innovate. We offer employees competitive and
comprehensive total rewards packages. For U.S.-based employees, this includes competitive base bay; annual bonus consideration; long-
term incentive grants; employer-subsidized health, dental, and vision insurance; an employer match for 401(k) savings; paid and unpaid
time off; group term life and disability insurance; paid volunteer day; paid holidays; paid parental leave; and a summer hours program.
Enova offers additional corporate perks to its U.S. employees, including a discount savings program, tuition reimbursement, last-minute
childcare reimbursement, and meal ordering. Enova also offers a paid four-week sabbatical program for eligible employees. Legal,
financial, and work-life solutions and support are available through our Employee Assistance Program.
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 within
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,
reports by market research firms and other published independent sources. 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
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 activities 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
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renewals and refinancing, as well as restrictions on the use of prepayment penalties, arbitration provisions and certain waivers of 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 service member 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,
we are subject to various state and federal e-signature rules mandating that certain disclosures be made and certain steps be followed 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”), the California
Consumer Privacy Act of 2018 (“CCPA”) and the California Privacy Rights Act of 2020 (“CPRA”), we must disclose to individuals
our privacy policy and practices, including those policies relating to the sharing of individuals’ nonpublic personal information with
third parties. These regulations also require us to ensure that our systems are designed to protect the confidentiality of individuals’
nonpublic personal information. These regulations also dictate certain actions that we must take to notify individuals 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.
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.
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
certain 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.
On October 6, 2017, the CFPB issued its final rule entitled “Payday, Vehicle Title, and Certain High-Cost Installment Loans” (the
“Small Dollar Rule”), which covers certain consumer loans that 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 before 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
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
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provide certain notices to consumers before attempting a first payment withdrawal or an unusual withdrawal and after two consecutive
failed withdrawal attempts. On June 7, 2019, the CFPB issued a final rule to set the compliance date for the mandatory underwriting
provisions of the Small Dollar Rule to November 19, 2020. On July 7, 2020, the CFPB issued a final rule rescinding the ability to repay
(“ATR”) provisions of the Small Dollar Rule along with related provisions, such as the establishment of registered information systems
for checking ATR and reporting loan activity. The payment provisions of the Small Dollar Rule remained in place. In April 2018, an
action was filed against the CFPB making a constitutional challenge to the Small Dollar Rule. On October 19, 2022, a three-judge panel
of the Fifth Circuit U.S. Circuit Court of Appeals ruled that the funding structure of the CFPB is unconstitutional and vacated the Small
Dollar Rule. On November 14, 2022, the CFPB filed a Petition for Writ of Certiorari with the U.S. Supreme Court to review the Fifth
Circuit ruling. On January 13, 2023, the Brief in Opposition to the Petition for writ was filed. 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.
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.
On May 24, 2021, we received a Civil Investigative Demand (“CID”) from the CFPB concerning certain loan processing issues. We
cooperated fully with the CFPB and provided all requested data and information in response to the CID. We anticipate being able to
expeditiously complete the investigation as several of the issues were self disclosed and we have provided restitution to customers who
may have been negatively impacted. We received a second CID in April 2022 requesting additional information. We have provided all
requested information in response to the CID.
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.
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 37 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 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 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.
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
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.
In Texas, where we offer our CSO program, we comply with the jurisdiction’s Credit Services Organization Act and related regulations.
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.
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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.
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 altered or ceased making consumer loans in certain states, in compliance with the
new statutes. We regularly monitor proposed legislation or regulations that could affect our business.
Licensing Requirements – Small Business Loans
As part of the OnDeck business both prior and subsequent to Enova’s acquisition, in states and jurisdictions that do not require a license
to make commercial loans, OnDeck, and certain other of our subsidiaries, typically makes commercial installment loans and extends
lines of credit directly to customers pursuant to Utah or Virginia law. There are other states and jurisdictions that require a license or
have other requirements or restrictions applicable to commercial loans, including both installment loans and line of credit accounts, and
may not honor a Utah or Virginia choice of law. In these other states, historically we have originated some installment loans and lines
of credit directly but purchased other installment loans and lines of credit from issuing bank partners, the foregoing depending on the
requirements or restrictions of these other states. Certain line of credit accounts are extended by an issuing bank partner and we may
purchase extensions under those line of credit accounts.
The issuing bank partner establishes its underwriting criteria for the issuing bank partner program in consultation with us. We
recommend commercial loans to the issuing bank partner that meet the bank partner's underwriting criteria, at which point the issuing
bank partner may elect to fund the installment finance loan or extend the line of credit. The issuing bank partner earns origination fees
from the customers who borrow from it and retains the interest paid during the period that the issuing bank partner owns the loan. In
exchange for recommending loans to an issuing bank partner, we earn a marketing referral fee based on the loans recommended to, and
originated by, that issuing bank partner. Historically, OnDeck has been the purchaser of the loans that it referred to issuing bank partners.
Local Regulation—United States
In addition to state and federal laws and regulations, the short-term credit 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 jurisdictions’ 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.
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.
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. The information posted on our website is not incorporated by reference into this Annual Report on Form 10-K.
ITEM 1A. RISK FACTORS
Risk Factors Summary
The summary of risks below provides an overview of the principal risks we are exposed to in the normal course of our business activities:
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.
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 operations
unprofitable or even prohibit our current operations.
The CFPB has examination authority over our U.S. consumer businesses that could have a significant impact on our U.S. business.
We are subject to a Consent Order issued by the CFPB, and any noncompliance could materially adversely affect our business.
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Significant changes in international laws or regulations or a deterioration of the political, regulatory or economic environment of
Brazil, or any other country in which we begin operations, could affect our operations in these countries.
The COVID-19 pandemic negatively impacted our operations and financial results, and any future pandemics may also have a
negative impact on our business, financial position, results of operations, liquidity, and prospects.
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 available
means of processing deposits or payments could materially adversely affect our business.
The failure to comply with debt collection regulations could subject us to fines and other liabilities, which could harm our reputation
and business.
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.
The use of personal data for credit underwriting is highly regulated, which exposes us to compliance risk and increased costs.
Negative public perception of our business could cause demand for our products to significantly decrease.
Control of the Congress and the executive branch of the U.S. government could have a significant impact on financial services
legislation passed in Congress and signed into law.
Current and future litigation or regulatory proceedings could have a material adverse effect on our business, prospects, results of
operations, financial condition and cash flows.
Judicial decisions, CFPB rulemaking or amendments to the Federal Arbitration Act could render the arbitration agreements we use
illegal or unenforceable.
In some circumstances, federal preemption and application of an out-of-state choice of law provision will not, or may not, be
available for the benefit of certain non-bank purchasers of loans to defend against a state law claim of usury.
The failure of third parties who provide products, services or support to us to maintain their products, services or support could
disrupt our operations or result in a loss of revenue.
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
requirements.
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 determination of the fair values of the Company’s loan and finance receivables portfolio involves unobservable inputs that can
be highly subjective and may prove to be materially different than the actual economic outcome.
We are subject to impairment risk.
If the information provided by customers to us is incorrect or fraudulent, we may misjudge a customer’s qualification to receive a
loan and our operating results may be harmed.
We are subject to anticorruption laws including the U.S. Foreign Corrupt Practices Act, anti-money laundering laws and economic
sanctions laws, and our failure to comply therewith, particularly if 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.
Failure of operating controls could produce a significant negative outcome, including customer experience degradation, legal
expenses, increased regulatory cost, significant internal and external fraud losses and vendor risk.
Increased competition from banks, credit card companies, other consumer lenders, and other entities offering similar financial
products and services could adversely affect our business, prospects, results of operations, financial condition and cash flows.
A sustained deterioration in the economy could reduce demand for our products and services and result in reduced earnings.
We may be unable to protect our proprietary technology and analytics or keep up with that of our competitors.
We may be subject to intellectual property disputes, which are costly to defend and could harm our business and operating results.
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.
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.
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.
Growth may place significant demands on our management and our infrastructure and could be costly.
Future acquisitions could disrupt our business and harm our financial condition and operating results.
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The preparation of our financial statements and certain tax positions taken by us require the judgment of management, and we could
be subject to risks associated with these judgments or could be adversely affected by the implementation of new, or changes in the
interpretation of existing, accounting principles, financial reporting requirements or tax rules.
Our U.S. consumer loan and small business financing businesses are seasonal in nature, which causes our revenue and earnings to
fluctuate.
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.
Risk Related to Our Indebtedness
We have incurred significant indebtedness, which could adversely affect our financial condition and prevent us from fulfilling our
obligations under anticipated agreements governing our indebtedness.
The terms of the agreements governing our indebtedness restrict our current and future operations, particularly our ability to respond
to changes or to take certain actions, which could harm our long-term interests.
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.
Changes in our financial condition or a potential disruption in the capital markets could reduce available capital.
Increases in customer default rates could make us and our loans less attractive to lenders under debt facilities and investors in
securitizations which may adversely affect our access to financing and our business.
Risk 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.
The market price of our shares may fluctuate widely.
If securities or industry analysts publish research that is unfavorable about our business, our stock price and trading volume could
decline.
We do not anticipate paying any dividends on our common stock in the foreseeable future.
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.
Risk Factors
Our business and future results may be affected by a number of risks and uncertainties that should be considered carefully in 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 on 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 (collectively,
“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 others, 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 practice 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 FTC, the CFPB, state attorneys general or private
plaintiffs may bring legal actions.
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Additionally, changes in laws or regulations or changes to the application or interpretation of the laws and regulations applicable to
small business lenders could adversely affect the Company’s ability to operate in the manner in which the Company currently conducts
business or make it more difficult or costly for the Company to originate or otherwise acquire additional small business loans, or for the
Company to collect payments on the small business loans. Such changes could subject the Company to additional licensing, registration
and other legal or regulatory requirements in the future or otherwise that could, individually or in the aggregate, adversely affect the
Company’s ability to conduct its business.
We are also subject to various international laws, licensing or authorization requirements in connection with the products or services we
offer in Brazil. 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, products or services that may not be in
compliance with applicable laws, whether as a result of our compliance reviews, regulatory 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 regulatory cure periods have expired, and in other 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.
State, federal and international regulators, as well as the plaintiffs’ bars, subject our industry to intense scrutiny. In addition, our contracts
for certain products and services may be governed by the law applicable in a state other than the state in which 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 state, the contract may be
unenforceable. A judgment that the choice of law provisions in our loan agreements is unenforceable also could result in costly and
time-consuming litigation, penalties, damage to our reputation, trigger repurchase obligations, negatively impact the terms of our future
loans and harm our operating results. Likewise, a judgment that the choice of law provision in other commercial loan agreements is
unenforceable could result in challenges to our choice of law provision and that could result in costly and time-consuming litigation.
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, substantial 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.
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 and 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 operations
unprofitable or even prohibit our current operations.
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 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 may 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 covered dependents.
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 and/or small business 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, 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.
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), or attributable
to matters not specific to our industry.
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.
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 businesses that could have a
significant impact on our U.S. business.
The CFPB, which regulates U.S. consumer financial products and services, has broad 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 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
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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 could 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 finalized a new rule that may affect the consumer lending industry, and this rule could have a material adverse effect on
our U.S. consumer lending business.
On October 6, 2017, the CFPB issued a 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 initially required 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 Small Dollar Rule also introduced 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 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. In April 2018, an action in federal court in Texas was filed against the CFPB making a constitutional challenge
to the Small Dollar Rule. On July 7, 2020, the CFPB issued the final Small Dollar Rule, rescinding the ability to repay ("ATR") and
related provisions, such as the establishment of registered information systems for checking ATR and reporting loan activity. The
payment provisions of the Small Dollar Rule remain in place. On October 19, 2022, a three-judge panel of the Fifth Circuit U.S. Circuit
Court of Appeals ruled in the federal case out of Texas that the funding structure of the CFPB is unconstitutional and vacated the Small
Dollar Rule. On November 14, 2022, the CFPB filed a Petition for Writ of Certiorari with the U.S. Supreme Court to review the Fifth
Circuit ruling. On January 13, 2023, the Brief in Opposition to the Petition for writ was filed. 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.
Our advertising and marketing materials and disclosures have been and continue to be subject to regulatory scrutiny.
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 lending industry as a whole,
our advertising and marketing materials have come under increased scrutiny.
Any inability to continue to advertise and market our business in a manner we consider effective as a result of regulatory review or new
restrictions could have a material adverse effect on our business, prospects, results of operations, financial condition and cash flows.
Significant changes in international laws or regulations or a deterioration of the political, regulatory or economic environment of
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. New legislation or regulations could further restrict the
loan products we offer.
Significant changes in international laws or regulations or a deterioration of the political, regulatory or economic environment of Brazil
could restrict our ability to sustain or expand our operations. Similarly, a significant change in laws, regulations or overall treatment
(including an interpretation or application of such laws and regulations not anticipated 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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We have previously ceased business in certain jurisdictions due to regulatory restrictions and, if we are forced to exit key jurisdictions
in the future due to regulatory restrictions, this 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, 2022, we did not offer or arrange
consumer loans in 13 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.
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 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.
The COVID-19 pandemic negatively impacted our operations and financial results, and any future pandemics may also have a
negative impact on our business, financial position, results of operations, liquidity, and prospects.
The COVID-19 pandemic severely impacted global economic conditions, resulting in substantial volatility in the global financial
markets, increased unemployment, and operational challenges resulting from measures that governments and other authorities imposed
to control its spread, such as travel bans, business and school limitations and closures, quarantines, and shelter-in-place orders. The
extent of the impact of any future pandemic or public health crisis, including due to any significant re-emergence or new variants of
COVID-19, on our business is highly dependent on variables that are difficult to predict, such as the scope and duration of the pandemic
or public health crisis, and the success rate of measures taken by the governments to control its spread and stabilize the economy. We
could experience reduced demand and availability of our products, higher credit losses in our portfolio, impairments of other financial
assets, and other negative impacts to our financial position. We could have issues meeting our financial performance covenants, which
would require waiver/amendment or could result in default on our financing agreements. We are highly reliant on our employees for
our continued operations, and to the extent our employee population is impacted by a pandemic or other public health crisis, or by the
actions by governmental bodies taken in reaction to such events, this could adversely affect our ability to service our customers and to
offer our products. Our access to capital markets could be hampered and could lead to a higher cost of capital.
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 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.
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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.
Effective November 30, 2021, new CFPB rules went into effect that apply to third-party debt collectors covered by the FDCPA, including
our attempts to collect certain debt originated by other lenders such as under our CSO program. The rules (a) clarify the times and places
at which a debt collector may communicate with a consumer; (b) require collectors to provide a channel-specific opt-out mechanism for
debtors in all text messages and emails; (c) provide that a debt collector is presumed to violate the rule if it places a telephone call to a
person more than 7 times within a 7-day period or within 7 days after a telephone conversation with the debtor: (d) include prohibitions
against taking or threatening legal action on time-barred debt outside of proofs of claim filed in bankruptcy proceedings; (e) require debt
collectors to speak to a consumer in person or by phone or send a letter or electronic message and wait a reasonable period of time before
furnishing information to a credit reporting agency; and (f) adopts a set of specifications for the information that should be included in
debt validation notices and when and how the validation notice should be provided to consumers. Creditors and other first-party
collectors are not subject to the final rules, but they will impact Enova’s third-party collectors and debt buyers. Restrictions on our third-
party debt collectors or that apply to our attempts to collect debt originated by other lenders, may have an adverse impact on our U.S.
products and services.
Non-U.S. jurisdictions also regulate 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 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.
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 provide us customer leads at acceptable prices.
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.
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.
In addition, we do business with third parties who are not part of our independent sales organization program, including third parties
who may refer potential small business customers to us or to whom we may refer potential customers for their business. In general, if
we refer an applicant that takes a loan from one of our strategic partners, that strategic partner pays us a commission based on the amount
of the originated loan. The partners determine whether to extend credit to referred applicants using their own credit models and criteria.
Certain states require a license to broker commercial loans or apply other restrictions to loan brokering activities. We believe that our
strategic referral program for small business products would not be considered loan brokering under those state laws and, as such, would
not require us to obtain a license. There is a risk that states could adopt new laws or amend or interpret existing laws to require us to
obtain a broker license, impose penalties for noncompliance, or otherwise prevent us from making further referrals and collecting
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commissions from our referral partners. Challenges to our program could also result in costly and time-consuming litigation, damage to
our reputation and harm our operating results.
To the extent that independent sales organization program partners, other third parties or internal sales representatives mislead loan
applicants or engage or previously engaged in disreputable behavior, our reputation may be harmed and we may face liability.
We rely on third-party independent advisors, including commercial loan brokers, which we call independent sales organization program
partners, or ISOs, for a significant portion of the small business customers to whom we issue loans. As a consequence of their status as
independent contractors who provide services for multiple lenders, we have less control of third-party independent sales activities as
compared to the activities of our internal sales representatives.
Because ISOs earn fees on a commission basis, ISOs may have an incentive to mislead loan applicants, facilitate the submission by loan
applicants of false application data or engage in other disreputable behavior so as to earn additional commissions. We also rely on our
internal sales representatives for customer acquisition in our direct marketing channel, who may also be motivated to engage in
disreputable behavior to increase our customer base because such internal sales representatives are paid on a commission basis. If ISOs
or our internal sales representatives mislead our customers or engage in other disreputable behavior, our customers are less likely to be
satisfied with their experience and we may be subject to costly and time-consuming disputes. Negative publicity relating to ISOs or
internal sales representatives could impair our ability to continue to increase our revenue and our business could otherwise be materially
and negatively impacted.
We significantly enhanced, and regularly update, the nature and scope of the due diligence conducted on both prospective and existing
ISOs. We also implemented certain enhanced contractual provisions and compliance-related measures related to our ISO program. While
these measures were intended to improve certain aspects and reduce the risks of how we work with ISOs and how they work with our
customers, we cannot assure that these measures will work or continue to work as intended, that other compliance-related concerns will
not emerge in the future, that the ISOs will comply with these measures, and that these measures will not negatively impact our business
from this channel or have other unintended or negative impacts on our business beyond the ISO channel.
In addition, we do business with third parties who are not part of our ISO program, including third parties who may refer potential
customers to us. Although such third parties are solely intended to refer to our internal processes we are exposed to the risks of potential
misleading or disreputable behavior from these third parties as well as from our ISOs.
As to our sales force, sales representatives are given sales scripts and receive rigorous training, including in-person training on avoiding
unfair, abusive, and deceptive practices. In addition, internal sales representative calls are recorded and monitored for purposes of
compliance and quality assurance. Despite these controls, we cannot assure that they will work as intended or that all of our internal
sales representatives will comply with our procedures. Failure of our internal sales representatives to do so would expose us to the same,
or worse, consequences than those relating to the ISO channel. We also refer merchants to third-party lenders. It is conceivable that we
are exposed to risk if such third-party lenders engage in wrongful behavior.
We pay commissions to our strategic partners, other third parties and ISOs upfront and generally do not recover them in the event
the related term loan or line of credit is eventually charged off.
We pay commissions to strategic partners and ISOs on the business installment loans and lines of credit we originate through these
channels. We pay these commissions at the time the installment loan is originated or line of credit is opened or drawn on. OnDeck also
paid such commissions on equipment finance loans. We generally do not require that this commission be repaid to us in the event of a
default on an installment loan or line of credit. In certain circumstances we are entitled to recover some or all of the commission paid
for equipment finance originations. While we generally discontinue working with strategic partners and ISOs that refer customers to us
that ultimately have unacceptably high levels of defaults, to the extent that our strategic partners and ISOs are not at risk of forfeiting
their commissions in the event of defaults, they may, to an extent, be indifferent to the riskiness of the potential customers that they refer
to us.
Any violations of our Code of Business Conduct and Ethics, or the failure to detect any such violations, may cause our business,
financial condition or results of operations to be adversely affected.
Our Code of Business Conduct and Ethics prohibits us and our employees from engaging in unethical business practices. In addition,
our ISOs are required to comply with a code of conduct, or the ISO Code, tailored to their brokering services. We refer to our Code of
Business Conduct and Ethics and the ISO Code collectively as the “Code.” However, there can be no assurance that all of our employees,
agents, or contractors will refrain from acting in violation of our Code, or that we will be able to detect any such violations. The
investigation into potential violations of our Code, or even allegations of such violations, could disrupt our operations, involve significant
management distraction, and lead to significant costs and expenses, and such expenses may have a material adverse effect on our
financial results. If we, or our employees, agents or contractors, are found to have engaged in practices that violate our Code, we could
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suffer severe fines, penalties or other consequences that may have a material adverse effect on our business, financial condition or results
of operations. In addition, negative public opinion could result from actual or alleged conduct by us, or our employees, agents or
contractors acting on our behalf, in any number of activities or circumstances in violation of our Code, including employment related
offenses, such as harassment (sexual or otherwise) and discrimination, regulatory compliance and the use and protection of data and
systems, or from actions taken by regulators or others in response to such conduct.
The use of personal data for credit underwriting is highly regulated, which exposes us to compliance risk and increased costs.
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 interpretations by the CFPB or the FTC require us
to materially alter the manner in which we use personal data in our credit underwriting. 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.
In 2018, the State of California enacted the California Consumer Privacy Act of 2018 (“CCPA”), which came into effect on January 1,
2020 and expands the privacy rights of California residents and regulates the sharing of consumer information of California residents.
On November 3, 2020, Californians voted to approve Proposition 24, a ballot measure that creates the California Privacy Rights Act
(“CPRA”). The CPRA amends and expands the rights and obligations under the CCPA. Most of the CPRA’s substantive provisions
took effect on January 1, 2023. The CPRA amends the CCPA and adds new requirements. Therefore, businesses must comply with both
the CCPA and the CPRA. Compliance with the CCPA and the CPRA may increase the cost of conducting business in California, and
we could see increased litigation costs as a result of the enactment of these laws. Several other states, such as Utah, Colorado, Virginia,
Connecticut, Michigan, Ohio, Pennsylvania, and New Jersey, have proposed or passed legislation regarding data privacy and use, which
could create more risks and potential costs.
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 reports 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 may be perceived as controversial. If the negative characterization of these types of loans becomes increasingly 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.
In addition, our ability to attract and retain customers is highly dependent upon the external perceptions of our level of service,
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 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.
Control of the Congress and the executive branch of the U.S. government could have a significant impact on financial services
legislation passed in Congress and signed into law.
In January 2021, the Democratic party took control of the Senate and Joseph Biden was inaugurated as President of the United States.
In January 2023, the Republican party took control of the House of Representatives. The Biden administration has publicly discussed
raising income tax rates, including corporate income taxes. Such legislation would likely lead to an increase in our total tax expense.
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Further, tax rate changes can also lead to discrete tax expense events at the time of enactment. We are unable to predict at this time the
effect of any such new legislation or regulations.
Current and future litigation or regulatory proceedings could have a material adverse effect on our business, prospects, results of
operations, financial condition and cash flows.
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 of loans or financings similar to
those we offer 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 arbitrations 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, including additional class action
litigation.
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.
In some circumstances, federal preemption and application of an out-of-state choice of law provision will not, or may not, be available
for the benefit of certain non-bank purchasers of loans to defend against a state law claim of usury.
Over the past few years there have been several litigation and enforcement actions aimed at issuing banks and their non-bank lending
partners. These actions have primarily challenged the validity of the issuing bank partner model that is used by many non-bank lenders,
including by the Company.
In May 2015, the U.S. Court of Appeals for the Second Circuit held in Madden v. Midland Funding, LLC that federal law did not
preempt a state’s interest rate limitations when applied to a non-bank debt buyer of a consumer credit card loan seeking to collect interest
at the rate originally contracted for by a national bank.
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In June 2020, each of the Office of the Comptroller of the Currency (“OCC”) and the Federal Deposit Insurance Corporation (“FDIC”)
implemented rules to address the valid-when-made doctrine and the uncertainty created by the Madden case. Generally, the rules clarify
that the permissible interest on a loan is determined at the time the loan is made by national banks, Federal savings associations, state
banks and insured branches of foreign banks and such permissible interest rate is not affected by a subsequent sale, assignment or other
transfer to non-bank financial companies or a subsequent change in state law. In July 2020, the attorneys general for California, Illinois
and New York filed a complaint in the U.S. District Court for the Northern District of California challenging the OCC rule on both
substantive and procedural grounds. Additionally, in August 2020, the attorneys general for California, Illinois, Massachusetts,
Minnesota, New Jersey, New York, North Carolina and the District of Columbia filed suit in the U.S. District Court for the Northern
District of California challenging the FDIC rule on similar grounds. In February 2022, the OCC and FDIC prevailed in the litigation
brought by the attorneys general. There have also been numerous litigation and enforcement actions that challenge the status of the
issuing bank partner as the “true lender” of the loan in question. These actions primarily rely on the reasoning set forth in CashCall, Inc.
v. Morrisey. In that case, the court held that the non-bank consumer lending platform, CashCall, and not its bank partner, was the “true
lender” for certain loans made to West Virginia residents. The court relied on a “predominate economic interest” test that sought to
determine which party (as between the issuing bank and the non-bank lending platform) retained the most economic risk in the loan
transaction and should, therefore, be deemed the “true lender” of the loan. The CashCall decision and other similar actions challenge
whether the loans should be subject to the interest rate limitations in the state where the consumer is located rather than in the bank’s
home state because the non-bank lending platform, and not the bank, is the “true lender.” The state law remedies with respect to the
“true lender” actions vary depending on the jurisdiction in which the action is filed.
On October 27, 2020, the OCC issued a final rule, which was effective December 29, 2020, that determines when a national bank or
Federal savings association makes a loan and therefore is the “true lender” in the context of a partnership between a bank and a third
party. The rule provides that a national bank or Federal savings association makes a loan if, as of the date of origination, it (1) is named
as the lender in the loan agreement or (2) it funds the loan. On January 5, 2021, the attorneys general from seven states – New York,
California, Colorado, Massachusetts, Minnesota, New Jersey, and North Carolina – and the District of Columbia filed suit against the
OCC in the U.S. District Court for the Southern District of New York, challenging the rule. On June 30, 2021, President Biden signed
a joint resolution to repeal the OCC’s True Lender Rule pursuant to the Congressional Review Act. If we were deemed by a court to be
the “true lender” of any loans originated by the issuing bank partner, it could impact the enforceability of the loans; it could subject us
to regulatory investigations, penalties and fines; we might have to alter the terms of the loans we broker; it could create challenges for
our capital markets and securitization models; we would have to change the way we do business in such jurisdictions; and we may suffer
an adverse impact on our business.
If our relationship with certain of our issuing bank partners was to end or the legal structure supporting such relationship was to be
successfully challenged, then we may have to comply with additional laws, regulations, and restrictions, and certain states may
require us to obtain a lending or similar license.
In states that do not require a license to make commercial loans, we make certain small business loans directly to customers pursuant to
a specific state’s law. However, some states and jurisdictions require a license to make or solicit certain commercial loans in that state
or jurisdiction and/or may not honor the choice of another state’s law. These states assert either that their own licensing laws and
requirements should generally apply to commercial loans made by nonbanks to residents of their state or apply to commercial loans
made by nonbanks to residents of their state of certain principal amounts or with certain interest rates or other terms. In such states and
jurisdictions and in some other circumstances, certain of our small business loans are originated by an issuing bank partner, which is not
subject to state licensing, and offered to us for sale. With respect to OnDeck loans, a bank currently originates all loans in certain states
as well as some loans to customers in other states and jurisdictions. These bank originated loans are governed by Utah law, the law of
the issuing bank partner’s home state. The remainder of OnDeck loans provide that they are governed by Virginia or Utah law. Loans
originated by our issuing bank partner are generally priced the same as loans originated by us under Virginia or Utah law. While the
other U.S. states where we originate loans currently honor our choice of law, future legal changes could result in any one or more of
those states no longer honoring our choice of law or introducing a new licensing regime applicable to our business. In that case, we
could potentially address the legal change by altering the terms of our loans, curtailing our originations, or placing more loans through
our issuing bank partner.
If we were otherwise not able to work with an issuing bank partner or if we were to seek to make commercial and consumer loans
directly in certain states, we would have to attempt to comply with the laws of these states in other ways, including through obtaining
the appropriate licenses. Compliance with the laws of such states could be costly, and if we are unable to obtain such licenses, our
lending activity could substantially decrease or cease entirely in that state jurisdiction and our revenues, growth and profitability would
be harmed.
If our relationship with an issuing bank partner of commercial and consumer loans were to end or if any other issuing bank partner were
to cease operations, we would either need to find a replacement financial institution with which to enter into a similar arrangement or
we would need to obtain individual federal, state or local lending licenses or otherwise comply with the laws of those jurisdictions in
order to continue to make certain loans in those jurisdictions. Even if we were able to obtain the necessary licenses in those jurisdictions,
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compliance with the laws, rules and regulations of those jurisdictions could be costly and, depending on the terms of the loans, the
interest rates or other loan terms and practices applicable to loans in those jurisdictions might be subject to limits, prohibitions or
restrictions. If we were unable to maintain the necessary relationships, unable to obtain the necessary licenses or unable to otherwise
comply with applicable law, we would be required to discontinue or curtail certain of our lending, or limit the rates of interest charged
on certain loans, in those jurisdictions and would face increased costs and compliance burdens.
In addition, if it were found that our activities under our current arrangements with our issuing bank partners constituted impermissible
lending within any such jurisdiction, we could face penalties and fines within such jurisdictions, and all or a portion of the interest
charged on the loans and/or all or a portion of the principal of the loans could be found to be unenforceable or recoverable by the
borrower and, to the extent it is determined that the loans were not originated in accordance with all applicable laws, we could be
obligated to purchase certain loans that failed to comply with such legal requirements. Further, any finding that we engaged in lending
in states where we are not properly licensed to do so could lead to litigation, harm to our reputation and negatively impact our ability to
originate loans.
The failure of third parties who provide products, services or support to us to maintain their products, services or support could
disrupt our operations or result in a loss of revenue.
A portion of our consumer installment loan revenue depends in part on the willingness and ability of unaffiliated third-party lenders,
through the CSO program, 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 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
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, contact 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 business functions. Any such interruption could have a materially adverse
effect on our business, prospects, results of operations, financial condition and cash flows.
In addition, our systems and those of third parties on whom we rely must comply with applicable legal and regulatory requirements and
be capable of 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.
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 change on 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.
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We are subject to impairment risk.
At December 31, 2022, we had goodwill totaling $279.3 million on our consolidated balance sheet, 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 value of our goodwill to determine whether events and circumstances indicate that impairment in value
may have occurred. A variety of factors could cause the carrying value of goodwill or an intangible asset to become impaired. 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 certain covenants in
our financing documents, which could cause a default under those agreements.
If the information provided by customers to us is incorrect or fraudulent, we may misjudge a customer’s qualification to receive a
loan and our operating results may be harmed.
Our lending decisions are based partly on information provided to us by loan applicants. To the extent that these applicants provide
information to us in a manner that we are unable to verify, our loan decisioning process, including the OnDeck Score®, may not
accurately reflect the associated risk. In addition, data provided by third-party sources is a significant component of our loan decisioning
and this data may contain inaccuracies. Inaccurate analysis of credit data that could result from false loan application information could
harm our reputation, business and operating results.
In addition, we use identity and fraud checks analyzing data provided by external databases to authenticate each customer’s identity.
From time to time in the past, these checks have failed and there is a risk that these checks could also fail in the future, and fraud, which
may be significant, may occur. We may not be able to recoup funds underlying loans made in connection with inaccurate statements,
omissions of fact or fraud, in which case our revenue, operating results and profitability will be harmed. Fraudulent activity or significant
increases in fraudulent activity could also lead to regulatory intervention, negatively impact our operating results, brand and reputation,
and require us to take steps to reduce fraud risk, which could increase our costs.
We are subject to anticorruption laws including the U.S. Foreign Corrupt Practices Act, anti-money laundering laws and economic
sanctions laws, and our failure to comply therewith, particularly if 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 have policies
and procedures designed to ensure that we, our employees, agents and intermediaries comply with the FCPA and other anticorruption
laws, such policies or procedures may not work effectively all of the time or protect us against liability for actions taken 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.
Other countries in which we operate or have operated, including Brazil, Australia, Canada 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 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 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.
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.
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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 identified as
“Specially Designated Nationals,” such as terrorists and narcotics traffickers. These prohibitions are administered by the 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.
Any continued international expansion could increase the risk of violations of FCPA, anti-money laundering laws, OFAC regulations,
or similar applicable laws and regulations in the future.
Failure of operating controls could produce a significant negative outcome, including customer experience degradation, legal
expenses, increased regulatory cost, significant internal and external fraud losses and vendor risk.
Losses from operational failures can be material. These losses can arise from a wide range of breaches in controls, procedures, processes
and security. Breaches in any of these controls, procedures, processes or security measures could lead to significant legal expense and
even punitive damages. Internal fraud, including the stealing and dissemination of client personally identifiable information, can create
significant client distrust and result in serious legal action against us. Breaches in client onboarding and servicing processes can degrade
customer experience and place current and future revenues at risk. The continued proliferation and technological advances in first and
third-party fraud can result in large losses over a short period of time if undetected. While we seek to enhance and develop our operational
risk strategy and control structure, there can be no assurance that our efforts will be successful and that we will avoid material operational
losses. These potential operational risk loss scenarios are not exhaustive and we could experience a significant loss in any scenario if
our operational risk enhancements do not keep pace with our business, capabilities or our continued organizational growth and
complexity. In addition, operational failures could have a significant effect on our reputation which could cause additional material harm
to our business and prospects.
Increased competition from banks, credit card companies, other consumer lenders, and other entities offering similar financial
products and services could adversely affect our business, prospects, results of operations, financial condition and cash flows.
We have many competitors. Our principal competitors are consumer loan and finance companies, CSOs, online lenders, credit card
companies, auto title lenders and other financial institutions that offer similar financial products and services, including loans on an
unsecured as well as a secured basis. 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 or necessitate a
change in the terms of the loans that we offer, resulting in lower levels of revenue and earnings in these categories.
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 condition and cash flows.
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
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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.
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.
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.
In addition, we use open source software in our technology platform and plan to use open source software in the future. From time to
time, we may face claims from parties claiming ownership of, or demanding release of, the source code, potentially including our
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.
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.
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 systems, it is possible that we
may not be able to anticipate or to implement effective preventive measures against all security breaches, especially because the
techniques used by hackers change frequently or may not be recognized until launched, and because cyber-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.
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 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 have already enacted laws requiring companies to
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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 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.
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 there 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.
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 decline 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.
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
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.
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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, 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.
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 country 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
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.
32
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.
The preparation of our financial statements and certain tax positions taken by us require the judgment of management, and we could
be subject to risks associated with these judgments or could be adversely affected by the implementation of new, or changes in the
interpretation of existing, accounting principles, financial reporting requirements or tax rules.
The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts
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.
We carry our loans and finance receivables at fair value on the consolidated balance sheets. The fair values of our loans and finance
receivables are determined using Level 3 inputs for which changes could significantly impact our fair value measurements. Valuations
are highly dependent upon the reasonableness of our assumptions and the predictability of the relationships that drive the results of our
valuation methodologies. A variety of factors including, but not limited to, estimated customer default rates, the timing of expected
payments, estimated utilization rates on line of credit accounts, estimated costs to service the portfolio, interest rates, observed credit
spreads in the marketplace and valuations of comparable portfolios may ultimately affect the fair values of our loans and finance
receivables. Modifications to our assumptions due to the passage of time and more information becoming available could result in
material changes to our fair value calculations. These changes to fair value could adversely affect our results of operations. These
changes are generally recorded directly to the income statement, which may make our financial statements less comparable to others in
the industry that do not record their loan balances under the fair value option.
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. Our
interpretations of tax laws are subject to review and examination by the various taxing authorities in the jurisdictions where we operate,
and disputes may occur regarding our view on a tax position. These disputes over interpretations with the various taxing authorities may
be settled by audit, administrative appeals or adjudication in the court systems of the tax jurisdictions in which we operate. In addition,
we may revise our estimate of income taxes due to changes in income tax laws, legal interpretations, and business strategies. It is possible
that revisions in our estimate of income taxes may materially affect our results of operations in any reporting period. We regularly
review whether we may be assessed additional income taxes as a result of the resolution of these matters, and we record additional
reserves as appropriate.
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.
33
Our U.S. consumer and small business loan businesses are seasonal in nature, which causes our cash flows to fluctuate over the
year.
Our U.S. consumer and small business 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. Demand for our small business loan products and services in the United States has
historically been highest in the fourth quarter and early first quarter of each year, corresponding generally to holiday and post-holiday
season needs, and lowest at the end of the first quarter and beginning of the second quarter of each year, where we believe that our
customers’ businesses are generally slower. This seasonality requires us to manage our cash flows over the course of the year. If our
originations were to increase and our 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.
Potential union activities could have an adverse effect on our relationship with our workforce.
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.
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.
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.
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.
Our services and operations are vulnerable to damage or interruption from tornadoes, hurricanes, earthquakes, fires, floods, other natural
disasters, power losses, telecommunications failures, terrorist attacks, acts of war, human errors, public health crises 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. Despite any precautions
we may take, system interruptions and delays could occur if there is a natural disaster, if a third-party provider closes a facility we use
without adequate notice for financial or other reasons, or if there are other unanticipated problems at our leased facilities. Because we
rely heavily on our servers, computer and communications systems and the internet to conduct our business and provide high-quality
customer service, disruptions could harm our ability to run our business and cause lengthy delays which could harm our business, results
of operations and financial condition. Acts of terrorism, war, civil unrest, violence or human error could cause disruptions to our business
or the economy as a whole. Our business interruption insurance may not be sufficient to compensate us for losses that may result from
interruptions in our service as a result of system failures or other disruptions. 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.
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.
34
Risks Related to our Indebtedness
We have incurred significant indebtedness, which could adversely affect our financial condition and prevent us from fulfilling our
obligations under anticipated agreements governing our indebtedness.
As of December 31, 2022, we had approximately $2,258.7 million of total debt outstanding. Interest expense on our indebtedness totaled
$118.2 million during the year ended December 31, 2022. 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.
The terms of the agreements governing our indebtedness restrict our current and future operations, particularly our ability to respond
to changes or to take certain actions, which could harm our long-term interests.
The agreements governing our indebtedness contain various restrictive covenants and 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:
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;
restricted in our ability to acquire new businesses; 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 default or
trigger an amortization event under our debt agreements, entitling the lenders to, among other things, terminate future credit availability
(including under our Credit Agreement), increase the interest rate on outstanding debt, and/or accelerate the maturity of outstanding
obligations under our debt agreements. If we were unable to repay the amounts due and payable under such debt agreements that are
secured, the applicable lenders and noteholders could seek remedies, including against the collateral pledged under such facilities. An
acceleration of the debt under certain facilities could also lead to a default under other facilities due to cross-acceleration provisions.
Any such default could materially adversely affect our business, prospects, results of operations, financial condition and cash flows and
35
could impair our ability to continue current operations. In addition, we act as servicer with respect to certain of our securitization
facilities. If we default in our servicing obligations, an early amortization event or default could occur with respect to the applicable
facility and we could be replaced as servicer.
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.
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 prior to maturity 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 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 certain assets and use the proceeds from those
dispositions and may 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.
Changes in our financial condition or a potential disruption in the capital markets could reduce available capital.
If funds are not available from our operations and any excess cash or from our 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 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 to 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.
Increases in customer default rates could make us and our loans less attractive to lenders under debt facilities and investors in
securitizations which may adversely affect our access to financing and our business.
Increases in customer default rates could make us and our loans less attractive to our existing (or prospective) funding sources. If our
existing funding sources do not achieve their desired financial returns or if they suffer losses, they (or prospective funding sources) may
increase the cost of providing future financing or refuse to provide future financing on terms acceptable to us or at all. Certain of our
securitization facilities and asset-backed notes issued by our subsidiaries are non-recourse to Enova and are collateralized by our loans.
If the loans securing such securitization facilities and asset-backed notes fail to perform as expected, the lenders under our securitization
facilities and investors in our asset-backed notes, or future lenders or investors in similar arrangements, may increase the cost of
providing financing or refuse to provide financing on terms acceptable to us or at all. If we were to be unable to arrange new or alternative
methods of financing on favorable terms, we may have to curtail or cease our origination of loans, which could have a material adverse
effect on our business, financial condition, operating results and cash flow.
36
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.
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 or other major catastrophic events;
announcements by us or our competitors of significant acquisitions, strategic partnerships, divestitures, joint ventures, or other
strategic initiatives;
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 could
decline.
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.
37
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 Credit Agreement, 2024 Senior Notes, 2025 Senior Notes and our loan securitization facilities. 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 stockholders will need to sell their shares of common stock.
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.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
We lease our corporate headquarters, which is located in Chicago, Illinois. We maintain additional leased offices in (i) South Jordan,
Utah focusing on consumer and small business application intake and support functions and small business underwriting functions, (ii)
New York, New York and Denver, Colorado for primarily small business operations and (iii) São Paulo, for our Brazilian operations.
We do not own any real property. We believe that our leased facilities are adequate to support our operations and that, as needed, we
will be able to obtain suitable additional facilities on commercially reasonable terms.
ITEM 3. LEGAL PROCEEDINGS
Information concerning legal proceedings is incorporated herein by reference to Note 11, “Commitments and Contingencies,” to the
Consolidated Financial Statements.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
38
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 271 registered stockholders of record of Enova common stock as of February 22, 2023.
Dividends
We do not anticipate paying any dividends on our common stock in the foreseeable future. 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. 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.
39
Performance Graph
The following graph shows a comparison of the cumulative total shareholder return for our common stock to the return for the S&P
SmallCap 600® Index, representing a broad-based equity market index that we are a part of, the S&P SmallCap 600® Financials Index,
representing an industry-based index that we are a part of, from December 31, 2017 through December 31, 2022, and a self-constructed
peer group of companies (the "Old Peer Group") consisting of Envestnet, Inc., Fair Isaac Corporation, Green Dot Corporation, Groupon,
Inc., LendingClub Corporation, Morningstar, Inc. Nelnet, Inc., OneMain Holdings, Inc., Regional Management Corp., SS&C
Technologies Holdings, Inc., and World Acceptance Corp. This data assumes an investment of $100 in each of our common stock and
the three indices on December 31, 2017 and that all dividends were reinvested.
For fiscal year 2022, we moved to using the S&P SmallCap 600® Financials Index instead of the Old Peer Group because we believe
the comparison to the S&P SmallCap 600® Financials Index is a more applicable comparison. Note that historic performance is not
necessarily indicative of future performance.
Unregistered Sales of Equity Securities
We did not sell any unregistered securities during the three years ended December 31, 2022.
40
Issuer Purchases of Equity Securities
The following table provides the information with respect to purchases made by us of shares of our common stock.
Period
October 1 – October 31, 2022 .......................................................................
November 1 – November 30, 2022 ................................................................
December 1 – December 31, 2022.................................................................
Total...........................................................................................................
Total Number
of Shares
Purchased(a)
217,126
152,206
164,681
534,013
$
$
Average
Price Paid
Per Share
31.20
38.37
38.81
35.59
Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plan(b)
209,600
151,101
164,681
525,382
Approximate
Dollar Value
of Shares that
May Yet Be
Purchased
Under the
Plan(b)
(in thousands)
20,395
$
164,598
158,207
158,207
$
(a) Includes shares withheld from employees as tax payments for shares issued under the Company’s stock-based compensation plans
of 7,526 shares and 1,105 shares for the months of October and November, respectively. See Note 13 in the Notes to Consolidated
Financial Statements for additional details on the Company’s stock-based compensation plans.
(b) On November 4, 2021, the Company announced the Board of Directors authorized a new share repurchase program totaling $150.0
million through December 31, 2022 (the "2021 Authorization") which replaced the previous authorization. On February 9, 2022,
the Company announced the Board of Directors authorized a new share repurchase program totaling $100.0 million through June
30, 2023 (the "February 2022 Authorization"). The February 2022 Authorization replaced the 2021 Authorization. The Company
repurchased $132.7 million of common stock under the 2021 Authorization before it was terminated. On November 7, 2022 the
Company announced the Board of Directors authorized an increase to its share repurchase program of up to $150.0 million through
December 31, 2023 (the "November 2022 Authorization"). The November 2022 Authorization will go into effect when the February
2022 Authorization is exhausted. All share repurchases made under these repurchase authorizations have been through open market
transactions.
ITEM 6. RESERVED
41
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
RECENT REGULATORY DEVELOPMENTS
Consumer Financial Protection Bureau (“CFPB”)
On May 24, 2021, we received a Civil Investigative Demand (“CID”) from the CFPB concerning certain loan processing issues. We
cooperated fully with the CFPB and provided all requested data and information in response to the CID. We anticipate being able to
expeditiously complete the investigation as several of the issues were self disclosed and we have provided restitution to customers who
may have been negatively impacted. We received a second CID in April 2022 requesting additional information. We have provided all
requested information in response to the CID.
On October 6, 2017, the CFPB issued its final rule entitled “Payday, Vehicle Title, and Certain High-Cost Installment Loans” (the
“Small Dollar Rule”), which covers certain consumer loans that 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 before 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
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 withdrawal attempts. On June 7, 2019, the CFPB issued a final rule to set the compliance date for the mandatory underwriting
provisions of the Small Dollar Rule to November 19, 2020. On July 7, 2020, the CFPB issued a final rule rescinding the ability to repay
(“ATR”) provisions of the Small Dollar Rule along with related provisions, such as the establishment of registered information systems
for checking ATR and reporting loan activity. The payment provisions of the Small Dollar Rule remain in place. In April 2018, an action
was filed against the CFPB making a constitutional challenge to the Small Dollar Rule. On October 19, 2022, a three-judge panel of the
Fifth Circuit U.S. Circuit Court of Appeals ruled that the funding structure of the CFPB is unconstitutional and vacated the Small Dollar
Rule. On November 14, 2022, the CFPB filed a Petition for Writ of Certiorari with the U.S. Supreme Court to review the Fifth Circuit
ruling. On January 13, 2023, the Brief in Opposition to the Petition for writ was filed. 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.
Illinois SB 1792
On March 23, 2021, the Economic Equity Act (“EEA”) became effective in Illinois. The EEA implements a 36% rate cap on all consumer
lending, with the APR calculated consistent with the Military Lending Act’s Military Annual Percentage Rate. The EEA applies to
consumer loans originated on or after the effective date. In addition, the EEA provides for the application of a predominant economic
interest test for bank service arrangements. Pursuant to the predominant economic interest test, a broker or service with a predominant
economic interest in a loan is considered to be the “true lender” for purposes of applying the EEA and the 36% rate cap.
New Mexico HB 132
On February 15, 2022, the New Mexico Legislature passed HB 132. The bill imposes a 36% rate cap on loans up to $10,000.
Additionally, HB 132 provides for the application of a predominant economic interest test for bank service arrangements whereby a
broker or servicer with a predominant economic interest in a loan is considered to be the “true lender” for purposes of applying the 36%
rate cap. The New Mexico Governor signed the bill into law on March 1, 2022. The law took effect on January 1, 2023.
Brazil General Data Privacy Law
On August 14, 2018, Brazil adopted the General Data Privacy Law (Lei Geral de Proteção de Dados Pessoais or “LGPD”). The key
provisions of LGPD are quite similar to the European Union’s General Data Protection Regulation (“GDPR”) in that it grants certain
rights to data subjects, imposes obligations on companies with regard to the processing of data, and allows authorities to impose
substantial fines on companies that violate the law. LGPD was originally anticipated to go into effect on February 15, 2020; however,
several amendments to LGPD delayed the effective date. LGPD took effect on September 18, 2020, and enforcement of the penalties
and sanctions for non-compliance began August 1, 2021. Compliance with LGPD may increase the cost of conducting business in Brazil,
and we could see regulatory compliance costs and enforcement activity now that the law is in effect.
42
RESULTS OF OPERATIONS
Highlights
Our financial results for the year ended December 31, 2022 (“2022”) are summarized below.
Revenue increased $528.2 million, or 43.7%, to $1,736.1 million in 2022 compared to $1,207.9 million in the year ended
December 31, 2021 (“2021”).
Net revenue increased $93.3 million, or 9.1%, to $1,117.6 million in 2022 compared to $1,024.3 million in 2021.
Income from Operations decreased $29.1 million, or 7.0%, to $384.0 million in 2022, compared to $413.1 million in 2021.
Net income was $207.4 million in 2022, compared to $256.3 million in 2021. Diluted earnings per share were $6.19 in 2022
compared to $6.79 in 2021.
43
Overview
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):
Revenue
Loans and finance receivables revenue.............................................................. $
Other .............................................................................................................
Total Revenue ...................................................................................................
Change in Fair Value.........................................................................................
Net Revenue ......................................................................................................
Operating Expenses
Marketing.......................................................................................................
Operations and technology...............................................................................
General and administrative...............................................................................
Depreciation and amortization..........................................................................
Total Operating Expenses..................................................................................
Income from Operations....................................................................................
Interest expense, net ........................................................................................
Foreign currency transaction (loss) gain, net ......................................................
Gain on bargain purchase.................................................................................
Equity method investment income ....................................................................
Other nonoperating expenses............................................................................
Income before Income Taxes .............................................................................
Provision for income taxes ...............................................................................
Net income from continuing operations before noncontrolling interest...............
Less: Net income attributable to noncontrolling interest......................................
Net income from continuing operations .............................................................
Net loss from discontinued operations...............................................................
Net income attributable to Enova International, Inc. .........................................
Diluted earnings per share – continuing operations............................................. $
Diluted loss per share – discontinued operations ................................................
Diluted earnings per share................................................................................. $
Revenue
Loans and finance receivables revenue..............................................................
Other .............................................................................................................
Total Revenue ...................................................................................................
Change in Fair Value.........................................................................................
Net Revenue ......................................................................................................
Operating Expenses
Marketing.......................................................................................................
Operations and technology...............................................................................
General and administrative...............................................................................
Depreciation and amortization..........................................................................
Total Operating Expenses..................................................................................
Income from Operations....................................................................................
Interest expense, net ........................................................................................
Foreign currency transaction (loss) gain, net ......................................................
Gain on bargain purchase.................................................................................
Equity method investment income ....................................................................
Other nonoperating expenses............................................................................
Income before Income Taxes .............................................................................
Provision for income taxes ...............................................................................
Net income from continuing operations before noncontrolling interest...............
Less: Net income attributable to noncontrolling interest ....................................
Net income from continuing operations .............................................................
Net loss from discontinued operations...............................................................
Net income attributable to Enova International, Inc. .........................................
2022
Year Ended December 31,
2021
2020
$
1,712,855
23,230
1,736,085
(618,521)
1,117,564
$
1,192,043
15,889
1,207,932
(183,672)
1,024,260
1,076,204
7,506
1,083,710
(399,517)
684,193
382,573
173,668
140,464
36,867
733,572
383,992
(115,887)
(645)
—
6,435
(1,321)
272,574
65,150
207,424
—
207,424
—
207,424
6.19
—
6.19
$
$
98.7%
1.3
100.0
(35.6)
64.4
22.1
10.0
8.1
2.1
42.3
22.1
(6.7)
—
—
0.4
(0.1)
15.7
3.8
11.9
—
11.9
—
11.9%
271,160
147,700
156,962
35,375
611,197
413,063
(76,509)
(382)
—
2,953
(1,970)
337,155
80,087
257,068
773
256,295
—
256,295
6.79
—
6.79
$
$
98.7%
1.3
100.0
(15.2)
84.8
22.5
12.2
13.0
2.9
50.6
34.2
(6.3)
—
—
0.2
(0.2)
27.9
6.6
21.3
0.1
21.2
—
21.2%
69,780
96,284
140,600
19,732
326,396
357,797
(86,691)
514
163,999
628
(827)
435,420
57,191
378,229
85
378,144
(300)
377,844
11.71
(0.01)
11.70
99.3%
0.7
100.0
(36.9)
63.1
6.4
8.9
13.0
1.8
30.1
33.0
(8.0)
0.1
15.1
0.1
(0.1)
40.2
5.3
34.9
—
34.9
—
34.9%
44
Valuation of Loans and Finance Receivables
The COVID-19 pandemic severely impacted global economic conditions, resulting in substantial volatility in the financial markets,
increased unemployment, and operational challenges resulting from measures that governments imposed to control its spread. We
actively worked with our customers to understand their financial situations, waived late fees, offered a variety of repayment options to
increase flexibility and reduced or deferred payments for impacted customers. We took measures to adjust our underwriting procedures,
which reduced exposure to more heavily impacted consumers and businesses. Certain of these measures eased since the height of the
pandemic, with improvement of economic conditions and our outlook.
From a loan valuation perspective, at the onset of the COVID-19 pandemic in the first quarter of 2020, we deemed it appropriate to
increase the discount rates used in our internally-developed valuation models, thereby lowering loan fair values, to capture the increase
in potential volatility in expected cash flows due to the unprecedented nature of the pandemic and governmental response. These rates
remained consistent for the remainder of 2020. Over the course of 2021, we noted a tightening of credit spreads in observable pricing
in the market; as such, we reduced the discount rates used in our valuations. As of December 31, 2021, our discount rates had generally
returned to the levels utilized immediately prior to the pandemic. Over the course of 2022, we increased our discount rates based
primarily on movements in the market. We believe the adjustments to our discount rates to be responsive to changes in the market and
representative of what a market participant would use.
After seeing increases in delinquency and charge-offs early in the pandemic, we experienced significant improvements to these metrics
over the remainder of 2020 and into 2021. The U.S. government provided multiple rounds of stimulus assistance to taxpayers and
businesses. Positive COVID-19 test counts as well as the severity of related symptoms have generally decreased across 2021 and 2022,
although there have been spikes as different variants escalate and abate. In 2022, views in the marketplace on the economy and its near-
term prospects remain mixed with concerns on employment, inflation, and other macroeconomic trends. In certain situations,
management concluded that the probability of future charge-offs was higher than what we had experienced in the past and, therefore,
increased anticipated charge-offs in our fair value models. We continue to utilize this approach and have adjusted charge-off expectations
where appropriate. As of December 31, 2022, we deemed the resulting fair value to be an appropriate market-based exit price that
considers current market conditions.
NON-GAAP FINANCIAL 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 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 per 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 complete
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 accordance
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.
45
The following table provides reconciliations between net income and diluted earnings per share calculated in accordance with GAAP to
the Adjusted Earnings Measures (in thousands, except per share data):
Net income from continuing operations................................................ $
Adjustments:
Gain on bargain purchase ..................................................................
Transaction-related costs(a)................................................................
Lease termination and cease use loss(b) .............................................
Equity method investment income(c) .................................................
Other nonoperating expenses(d) .........................................................
Intangible asset amortization.............................................................
Stock-based compensation expense ..................................................
Foreign currency transaction loss (gain), net(e) .................................
Cumulative tax effect of adjustments................................................
Discrete tax adjustments(f) .................................................................
Adjusted earnings.................................................................................. $
Diluted earnings per share from continuing operations ........................ $
Adjustments:
Gain on bargain purchase ..................................................................
Transaction-related costs(a)................................................................
Lease termination and cease use loss(b) .............................................
Equity method investment income(c) .................................................
Other nonoperating expenses(d) .........................................................
Intangible asset amortization.............................................................
Stock-based compensation expense ..................................................
Foreign currency transaction loss (gain), net(e) .................................
Cumulative tax effect of adjustments................................................
Discrete tax adjustments(f) .................................................................
Adjusted earnings per share .................................................................. $
2022
207,424
Year Ended December 31,
2021
256,295
$
$
—
—
—
(6,107)
1,321
8,055
21,950
645
(5,365)
—
227,923
6.19
—
—
—
(0.18)
0.04
0.24
0.66
0.02
(0.16)
—
6.81
$
$
$
—
1,424
7,535
—
1,970
6,862
21,179
372
(9,855)
—
285,782
6.79
—
0.04
0.20
—
0.05
0.18
0.56
0.01
(0.26)
—
7.57
$
$
$
2020
378,144
(163,999)
20,023
—
—
827
1,777
18,041
(499)
(8,038)
(11,604)
234,672
11.71
(5.08)
0.62
—
—
0.03
0.05
0.56
(0.02)
(0.25)
(0.36)
7.26
(a) For the years ended December 31, 2021 and 2020, we recorded expenses of $1.4 million ($1.1 million net of tax) and $20.0 million
($19.5 million net of tax), respectively, related to acquisitions and a divestiture of a subsidiary.
(b) For the year ended December 31, 2021, we recorded losses of $7.5 million ($5.6 million net of tax), including a net write-off of
leasehold improvements of $4.2 million).
(c) For the year ended 2022, we recorded equity method investment income of $6.3 million ($3.6 million net of tax) that was comprised
primarily of an $11.0 million gain generated on the sale by Linear, in which we hold an ownership interest, of its operating company,
partially offset by a $4.4 million loss on the sale of OnDeck Canada.
(d) For the years ended December 31, 2022 and December 31, 2021, we recorded a loss of $1.3 million ($1.0 million net of tax) and
$0.8 million ($0.6 million net of tax), respectively, related to incomplete capital markets transactions. For the year ended
December 31, 2021, we recorded a loss of $0.8 million ($0.6 million net of tax) related to the partial divestiture of a subsidiary.
For the years ended December 31, 2021 and 2020, we recorded losses on early extinguishment of debt of $0.4 million ($0.3 million
net of tax) and $0.8 million ($0.6 million net of tax), respectively.
(e) Excludes amounts attributable to noncontrolling interests.
(f) For the year ended December 31, 2020, we recorded income tax benefits of $11.6 million resulting from the remeasurement of our
liability for certain previously unrecognized tax benefits.
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 transaction-related costs, lease termination and cease use (gain) loss, gain on bargain purchase, equity
method investment income, and other nonoperating expenses shown below are useful to investors in order to allow them to compare our
46
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):
Net income from continuing operations............................................. $
Depreciation and amortization expenses(e).....................................
Interest expense, net(e) ....................................................................
Foreign currency transaction loss (gain), net(e) ..............................
Provision for income taxes.............................................................
Stock-based compensation expense ...............................................
Adjustments:
2022
207,424
36,867
115,887
645
65,150
21,950
$
Year Ended December 31,
2021
256,295
35,362
75,929
372
80,087
21,179
$
Transaction-related costs(a).............................................................
Lease termination and cease use loss(b)..........................................
Gain on bargain purchase...............................................................
Equity method investment income.................................................
Other nonoperating expenses(d) ......................................................
Adjusted EBITDA.............................................................................. $
—
—
—
(6,435)
1,321
442,809
2020
378,144
19,726
86,507
(499)
57,191
18,041
20,023
—
(163,999)
(628)
827
415,333
1,083,710
415,333
1,424
3,336
—
(2,953)
1,970
473,001
1,207,932
473,001
$
$
$
$
$
$
1,736,085
442,809
25.5%
39.2%
38.3%
Adjusted EBITDA margin calculated as follows:
Total Revenue ................................................................................ $
Adjusted EBITDA.......................................................................... $
Adjusted EBITDA as a percentage of total revenue ......................
Refer to footnotes in previous table for explanation of (a), (b), (d) and (e).
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 2022 COMPARED TO YEAR ENDED 2021
Revenue and Net Revenue
Revenue increased $528.2 million, or 43.7%, to $1,736.1 million for 2022 as compared to $1,207.9 million for 2021. The change in
revenue was driven primarily by a 71.9% increase in revenue from our small business portfolio and a 30.6% increase in revenue from
our consumer portfolio as higher levels of originations in 2021 and 2022 led to higher loan balances for both portfolios.
Our net revenue was $1,117.6 million for 2022 compared to $1,024.3 million for 2021. Our net revenue as a percentage of revenue (“net
revenue margin”) was 64.4% in 2022 compared to 84.8% in 2021. The net revenue margin in the prior year was elevated due primarily
to lower delinquency rates and lower than expected charge-offs as a result of portfolio seasoning and lower originations. As originations
increased across the second half of 2021 and through 2022, the delinquency rates and charge-offs increased, resulting in net revenue
margin for 2022 being within a more normal range.
47
The following table sets forth the components of revenue and net revenue, separated by product for 2022 and 2021 (dollars in thousands):
Year Ended December 31,
2021
2022
$ Change
% Change
Revenue by product:
Consumer loans and finance receivables revenue........................ $ 1,065,033
647,822
Small business loans and finance receivables revenue ................
1,712,855
Total loan and finance receivable revenue.......................................
23,230
Other ............................................................................................
1,736,085
Total revenue....................................................................................
Change in fair value .........................................................................
(618,521)
Net revenue ...................................................................................... $ 1,117,564
$
815,251
376,792
1,192,043
15,889
1,207,932
(183,672)
$ 1,024,260
$
$
249,782
271,030
520,812
7,341
528,153
(434,849)
93,304
30.6%
71.9
43.7
46.2
43.7
236.8
9.1%
Revenue by product (% to total):
Consumer loans and finance receivables revenue........................
Small business loans and finance receivables revenue ................
Total loan and finance receivable revenue.......................................
Other ............................................................................................
Total revenue....................................................................................
Change in fair value .........................................................................
Net revenue ......................................................................................
61.4%
37.3
98.7
1.3
100.0
(35.6)
64.4%
67.5%
31.2
98.7
1.3
100.0
(15.2)
84.8%
The percentage of revenue from our small business loans and finance receivables increased in 2022 as we placed more emphasis on this
portion of our overall portfolio based on strength in demand, credit metrics and outlook.
Loan and Finance Receivable Balances
The fair value of our loan and finance receivable portfolio in our consolidated financial statements at December 31, 2022 and 2021 was
$3,018.5 million and $1,964.7 million, respectively, with an outstanding principal balance of $2,739.2 million and $1,878.4 million,
respectively. The fair value of the combined loan and finance receivables portfolio includes $16.3 million with an outstanding principal
balance of $12.9 million and $18.8 million with an outstanding principal balance of $11.8 million of consumer loan balances that are
guaranteed by us but not owned by us, which are not included in our consolidated financial statements as of December 31, 2022 and
2021, respectively. See “—Non-GAAP Financial Measures—Combined Loans and Finance Receivables” above for additional
information related to combined loans and finance receivables.
The following table summarizes loan and finance receivable balances outstanding as of December 31, 2022 and 2021 (in thousands):
Company
Owned(a)
2022
Guaranteed
by the
Company(a)
As of December 31,
Combined(b)
Company
Owned(a)
2021
Guaranteed
by the
Company(a)
Combined(b)
Consumer loans and finance receivables
Principal ............................................ $
Fair value ...........................................
Fair value as a % of principal ..................
Small business loans and finance
receivables
Principal ............................................ $
Fair value ...........................................
Fair value as a % of principal ..................
Total loans and finance receivables
Principal ............................................ $
Fair value ...........................................
Fair value as a % of principal ..................
$
$
$
965,753
1,083,062
112.1%
1,773,411
1,935,466
109.1%
2,739,164
3,018,528
110.2%
$
12,937
16,257
125.7%
978,690
1,099,319
112.3%
— $
—
—%
$
12,937
16,257
125.7%
1,773,411
1,935,466
109.1%
2,752,101
3,034,785
110.3%
$
$
$
$
$
$
867,751
890,144
102.6%
1,010,675
1,074,546
106.3%
1,878,426
1,964,690
104.6%
$
11,789
18,813
159.6%
879,540
908,957
103.3%
— $
—
—%
$
11,789
18,813
159.6%
1,010,675
1,074,546
106.3%
1,890,215
1,983,503
104.9%
(a) GAAP measure. The loan and finance receivable balances guaranteed by us relate to loans originated by third-party lenders
through the CSO programs and are not included in our consolidated balance sheets.
(b) Amounts represent non-GAAP measures.
At December 31, 2022, the ratio of fair value as a percentage of principal was 110.2% on company owned loans and finance receivables
and 110.3% on combined loans and finance receivables compared to 104.6% on company owned loans and finance receivables and
104.9% on combined loans and finance receivables at December 31, 2021. These ratios increased during the year due primarily to a mix
48
shift towards line of credit products, which generally have a higher fair value as a percentage of principal compared to installment loans,
as well as an improvement in credit outlook on certain products, partially offset by higher delinquency rates on certain products.
Average Amount Outstanding per Loan and Finance Receivable
The average amount outstanding per loan and finance receivable is calculated as the total combined loans and finance receivables, gross
balance at the end of the period divided by the total number of combined loans and finance receivables outstanding at the end of the
period. The following table shows the average amount outstanding per loan and finance receivable by product at December 31, 2022
and 2021:
Average amount outstanding per loan and finance receivable
(in ones)(a)
Consumer loans and finance receivables(b).......................................... $
Small business loans and finance receivables .....................................
Total loans(b) ........................................................................................ $
2,089
39,021
5,172
$
$
1,953
38,125
3,849
As of December 31,
2022
2021
(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.
The average amount outstanding per loan increased to $5,172 as of December 31, 2022 compared to $3,849 from prior year, mainly due
to an increase in the mix of loans and finance receivables held by small businesses in our portfolio, which are larger on average than our
consumer portfolio.
Average Loan and Finance Receivable Origination
The average loan and finance receivable origination amount is calculated as the total amount of combined loans and finance receivables
originated, renewed and purchased for the period divided by the total number of combined loans and finance receivables originated,
renewed and purchased for the period. The following table shows the average loan and finance receivable origination amount by product
for 2022 compared to 2021:
Average loan and finance receivable origination amount (in ones)(a)
Consumer loans and finance receivables(b)(c) ........................................ $
Small business loans and finance receivables(c)....................................
Total loans(b) ......................................................................................... $
665
17,193
1,823
$
$
648
15,703
1,419
Year Ended
December 31,
2022
2021
(a) The disclosure regarding the average loan origination amount 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.
(c) For line of credit accounts the average represents the average amount of each incremental draw.
The average loan origination amount increased to $1,823 from $1,419 during 2022 compared to 2021, due primarily to an increase in
the mix of higher dollar amount loans and finance receivables to small businesses and, to a lesser extent, the gradual easing of restrictions
on loan amounts as risks from the COVID-19 pandemic abated.
Credit Performance of Loans and Finance Receivables
We monitor the performance of our loans and finance receivables. Internal factors such as portfolio composition (e.g., interest rate, loan
term, geography information, customer mix, credit quality) and performance (e.g., delinquency, loss trends, prepayment rates) are
reviewed on a regular basis at various levels (e.g., product, vintage). We also weigh the impact of relevant, internal business decisions
on portfolio. External factors such as macroeconomic trends, financial market liquidity expectations, competitive landscape and
legal/regulatory requirements are also reviewed on a regular basis.
49
The payment status of a customer, including the degree of any delinquency, is a significant factor in determining estimated charge-offs
in the cash flow models that we use to determine fair value. The following table shows payment status on outstanding principal, interest
and fees as of the end of each of the last eight quarters (dollars in thousands):
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
2022
Ending combined loans and finance receivables, including
principal and accrued fees/interest outstanding:
Company owned ............................................................................. $ 2,169,140
Guaranteed by the Company(a)........................................................
11,858
Ending combined loan and finance receivables balance(b) ........ $ 2,180,998
> 30 days delinquent .......................................................................
113,798
> 30 days delinquency rate .............................................................
5.2%
$ 2,377,514
13,997
$ 2,391,511
121,459
$ 2,630,537
14,330
$ 2,644,867
147,688
$ 2,837,799
15,644
$ 2,853,443
190,119
5.1%
2021
5.6%
6.7%
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Ending combined loans and finance receivables, including
principal and accrued fees/interest outstanding:
Company owned ............................................................................ $
Guaranteed by the Company(a).......................................................
Ending combined loan and finance receivables balance(b) ....... $
> 30 days delinquent ......................................................................
> 30 days delinquency rate ............................................................
1,265,987
6,792
1,272,779
96,228
$
$
1,416,533
9,655
1,426,188
81,883
$
$
1,650,771
13,239
1,664,010
90,782
$
$
1,944,263
13,750
1,958,013
103,213
7.6%
5.7%
5.5%
5.3%
(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.
50
Refer to the following sections for discussion of receivable balances and credit metrics at the consumer and small business levels.
Consumer Loans and Finance Receivables
The following table includes financial information for our consumer loans and finance receivables. Delinquency metrics include
principal, interest and fees, and only amounts that are past due (dollars in thousands):
Consumer loans and finance receivables:
Consumer combined loan and finance receivable principal
balance:
Company owned ............................................................................. $
Guaranteed by the Company(a)........................................................
Total combined loan and finance receivable principal
balance(b) ........................................................................................ $
Consumer combined loan and finance receivable fair value
balance:
Company owned ............................................................................. $
Guaranteed by the Company(a)........................................................
Ending combined loan and finance receivable fair value
balance(b) ........................................................................................ $
Fair value as a % of principal(b)(c)....................................................
Consumer combined loan and finance receivable balance,
including principal and accrued fees/interest outstanding:
Company owned ............................................................................. $
Guaranteed by the Company(a)........................................................
Ending combined loan and finance receivable balance(b).......... $
Average consumer combined loan and finance receivable
balance, including principal and accrued fees/interest
outstanding:
Company owned(d) .......................................................................... $
Guaranteed by the Company(a)(d).....................................................
Average combined loan and finance receivable balance(b)(d)..... $
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
2022
888,657
10,027
898,684
934,351
14,433
$
$
$
936,601
11,873
948,474
$
$
972,320
11,843
984,163
$
$
965,753
12,937
978,690
989,128
17,860
$ 1,056,205
16,144
$ 1,083,062
16,257
948,784
$ 1,006,988
$ 1,072,349
$ 1,099,319
105.6%
106.2%
109.0%
112.3%
951,560
11,858
963,418
$ 1,004,847
13,997
$ 1,018,844
$ 1,039,792
14,330
$ 1,054,122
$ 1,040,517
15,644
$ 1,056,161
953,108
12,960
966,068
$
$
$
966,816
12,591
979,407
$ 1,027,100
14,421
$ 1,041,521
$ 1,038,389
15,050
$ 1,053,439
$
253,043
(133,078)
119,965
47.4%
$
277,096
(135,646)
141,450
51.0%
286,347
(145,276)
141,071
49.3%
Revenue........................................................................................... $
Change in fair value ........................................................................
Net revenue .....................................................................................
Net revenue margin.........................................................................
248,547
(116,767)
131,780
53.0%
Delinquencies:
> 30 days delinquent ....................................................................... $
> 30 days delinquent as a % of combined loan and finance
receivable balance(b)(c) .....................................................................
Charge-offs:
Charge-offs (net of recoveries) ....................................................... $
Charge-offs (net of recoveries) as a % of average combined loan
and finance receivable balance(b)(d) .................................................
70,480
$
72,300
$
77,258
$
86,884
7.3%
7.1%
7.3%
8.2%
137,224
$
134,524
$
167,762
$
171,421
14.2%
13.7%
16.1%
16.3%
51
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
2021
Consumer loans and finance receivables:
Consumer combined loan and finance receivable principal
balance:
Company owned.............................................................................. $
Guaranteed by the Company(a) ........................................................
Total combined loan and finance receivable principal
balance(b)......................................................................................... $
Consumer combined loan and finance receivable fair value
balance:
Company owned.............................................................................. $
Guaranteed by the Company(a) ........................................................
Ending combined loan and finance receivable fair value
balance(b)......................................................................................... $
Fair value as a % of principal(b)(c)....................................................
Consumer combined loan and finance receivable balance,
including principal and accrued fees/interest outstanding:
Company owned.............................................................................. $
Guaranteed by the Company(a) ........................................................
Ending combined loan and finance receivable balance(b).......... $
Average consumer combined loan and finance receivable
balance, including principal and accrued fees/interest
outstanding:
Company owned(d)........................................................................... $
Guaranteed by the Company(a)(d) .....................................................
Average combined loan and finance receivable balance(b)(d) ..... $
523,170
5,691
528,861
581,398
7,246
588,644
111.3%
564,934
6,792
571,726
598,900
8,670
607,570
Revenue........................................................................................... $
Change in fair value ........................................................................
Net revenue .....................................................................................
Net revenue margin .........................................................................
181,737
(26,073)
155,664
85.7%
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
585,087
8,284
593,371
623,975
10,824
634,799
107.0%
630,203
9,655
639,858
580,704
7,585
588,289
174,512
(49,708)
124,804
71.5%
$
$
$
$
$
$
$
$
$
709,781
11,354
721,135
723,553
16,921
740,474
102.7%
768,964
13,239
782,203
702,818
11,366
714,184
215,432
(97,061)
118,371
54.9%
867,751
11,790
879,541
890,144
18,813
908,957
103.3%
927,673
13,750
941,423
836,147
13,212
849,359
243,570
(104,715)
138,855
57.0%
Delinquencies:
> 30 days delinquent ....................................................................... $
> 30 days delinquent as a % of combined loan and finance
receivable balance(b)(c) .....................................................................
Charge-offs:
Charge-offs (net of recoveries) ....................................................... $
Charge-offs (net of recoveries) as a % of average combined loan
and finance receivable balance(b)(d)..................................................
24,589
$
26,201
$
45,804
$
59,312
4.3%
4.1%
5.9%
6.3%
36,408
$
27,050
$
57,836
$
112,582
6.0%
4.6%
8.1%
13.3%
(a) Represents loans originated by third-party lenders through the CSO programs that we have not yet purchased, which are not
included in our consolidated balance sheets.
(b) Non-GAAP measure.
(c) Determined using period-end balances.
(d) The average combined loan and finance receivable balance is the average of the month-end balances during the period.
The combined ending loan balance, including principal and accrued fees/interest outstanding, of consumer loans and finance receivables
at December 31, 2022 increased 12.2% to $1,056.2 million compared to $941.4 million at December 31, 2021, due primarily to the
acceleration in originations beginning approximately mid-2021, following the strategic reduction in originations at the onset of the
COVID-19 pandemic in early 2020 to mitigate risks associated with the pandemic.
The percentage of loans greater than 30 days delinquent increased to 8.2% at December 31, 2022, compared to 6.3% at December 31,
2021. The increase was driven primarily by a mix shift towards line of credit products, which generally have higher interest rates and
fees due to the higher risk of default.
52
Charge-offs (net of recoveries) as a percentage of average combined loan balance increased to 16.3% for the three months ended
December 31, 2022 (the “2022 fourth quarter”), compared to 13.3% for the three months ended December 31, 2021 (the “2021 fourth
quarter”), driven primarily by growth in originations on line of credit products, particularly to new customers, which typically default
at a higher percentage than returning customers.
The ratio of fair value as a percentage of principal on consumer loans and finance receivables increased to 112.3% at December 31,
2022, compared to 103.3% at December 31, 2021, due primarily to a mix shift towards line of credit products, which generally have a
higher fair value as a percentage of principal compared to installment loans.
Refer to “Results of Operations—Valuation of Loans and Finance Receivables” in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” for additional discussion on loan valuation, including the discount rate assumption.
Small Business Loans and Finance Receivables
The following table includes financial information for our small business loans and finance receivables. Delinquency metrics include
principal, interest and fees, and only amounts that are past due (dollars in thousands):
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
2022
Small business loans and finance receivables:
Total loan and finance receivable principal balance....................... $ 1,210,389
Ending loan and finance receivable fair value balance...................
1,297,533
Fair value as a % of principal(a).......................................................
107.2%
$ 1,364,055
1,471,723
$ 1,580,289
1,708,918
$ 1,773,411
1,935,466
107.9%
108.1%
109.1%
Ending loan and finance receivable balance, including principal
and accrued fees/interest outstanding ............................................. $ 1,217,580
$ 1,372,667
$ 1,590,745
$ 1,797,282
Average loan and finance receivable balance(b) .............................. $ 1,122,609
$ 1,288,384
$ 1,488,029
$ 1,684,617
Revenue........................................................................................... $
Change in fair value ........................................................................
Net revenue .....................................................................................
Net revenue margin.........................................................................
$
132,594
1,138
133,732
100.9%
$
149,909
(8,764)
141,145
94.2%
$
172,721
(24,662)
148,059
85.7%
192,598
(49,099)
143,499
74.5%
Delinquencies:
> 30 days delinquent ....................................................................... $
> 30 days delinquent as a % of loan balance(a) ...............................
43,318
$
49,159
$
70,430
$
103,235
3.6%
3.6%
4.4%
5.7%
Charge-offs:
Charge-offs (net of recoveries) ....................................................... $
Charge-offs (net of recoveries) as a % of average loan and
finance receivable balance(b) ...........................................................
20,860
$
27,867
$
43,778
$
69,110
1.9%
2.2%
2.9%
4.1%
53
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
2021
Small business loans and finance receivables:
Total loan and finance receivable principal balance ....................... $
Ending loan and finance receivable fair value balance ...................
Fair value as a % of principal(a).......................................................
696,678
649,313
93.2%
Ending loan and finance receivable balance, including principal
and accrued fees/interest outstanding.............................................. $
701,053
Average loan and finance receivable balance(b) .............................. $
700,348
Revenue........................................................................................... $
Change in fair value ........................................................................
Net revenue .....................................................................................
Net revenue margin .........................................................................
75,560
4,995
80,555
106.6%
$
$
$
$
$
$
$
$
781,793
784,728
100.4%
786,330
739,378
85,561
45,078
130,639
876,668
911,729
$ 1,010,675
1,074,546
104.0%
106.3%
881,807
$ 1,016,590
$
$
837,606
100,610
24,515
125,125
956,110
115,063
22,804
137,867
152.7%
124.4%
119.8%
Delinquencies:
> 30 days delinquent ....................................................................... $
> 30 days delinquent as a % of loan balance(a)................................
71,639
$
55,682
$
44,978
$
43,901
10.2%
7.1%
5.1%
4.3%
Charge-offs:
Charge-offs (net of recoveries) ....................................................... $
Charge-offs (net of recoveries) as a % of average loan and
finance receivable balance(b) ...........................................................
18,042
$
5,102
$
7,060
$
7,677
2.6%
0.7%
0.8%
0.8%
(a) Determined using period-end balances.
(b) The average loan and finance receivable balance is the average of the month-end balances during the period.
The combined ending loan balance, including principal and accrued fees/interest outstanding, of small business loans and finance
receivables at December 31, 2022 increased 76.8% to $1,797.3 million compared to $1,016.6 million at December 31, 2021, due
primarily to strong originations in the year.
The percentage of loans and finance receivables greater than 30 days delinquent increased to 5.7% at December 31, 2022, compared to
4.3% at December 31, 2021. Charge-offs (net of recoveries) as a percentage of average loan balance increased to 4.1% for the 2022
fourth quarter, compared to 0.8% in the 2021 fourth quarter. The credit performance of our small business portfolio was stronger in
2021 when compared to the pre-COVID-19 period as the portfolio was more seasoned due to reductions in originations in response to
the pandemic. Delinquency and charge-offs have risen across 2022 to more normal levels due to the acceleration in originations and
macroeconomic pressures on our customers and their businesses.
The ratio of fair value as a percentage of principal on small business loans and finance receivables increased to 109.1% at December 31,
2022, compared to 106.3% at December 31, 2021, due primarily to the strong credit performance of our line of credit products.
Refer to “Results of Operations—Valuation of Loans and Finance Receivables” in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” for additional discussion on loan valuation, including the discount rate assumption.
Total Expenses
Total operating expenses increased $122.4 million, or 20.0%, to $733.6 million in 2022, compared to $611.2 million in 2021.
Marketing expense increased $111.4 million, or 41.1%, to $382.5 million in 2022 compared to $271.1 million in 2021, due primarily to
our efforts to capture increasing market demand for loan products in the current year. The prior year, particularly the first half, was
abnormally low due to our strategic actions to mitigate risks associated with the COVID-19 pandemic. Certain marketing costs, such as
commissions paid to third-party lead providers, are variable and increase as originations increase.
Operations and technology expense increased $26.0 million, or 17.6%, to $173.7 million in 2022 from $147.7 million in 2021, due
primarily to higher variable costs, particularly personnel and underwriting, due to the increase in originations and the size of the loan
portfolio. As a percentage of revenue, operations and technology expense decreased to 10.0% in 2022 from 12.2% in 2021, as increased
originations and revenues outpaced fixed costs.
54
General and administrative expense decreased $16.5 million, or 10.5%, to $140.5 million in 2022 compared to $157.0 million in 2021,
due primarily to synergies achieved following the October 2020 acquisition of OnDeck. As a percentage of revenue, general and
administrative expense decreased to 8.1% in 2022 from 13.0% in 2021, as increased originations and revenues outpaced fixed costs.
Depreciation and amortization expense increased $1.5 million, or 4.2%, to $36.9 million in 2022 compared to $35.4 million in 2021
driven primarily by additional internally-developed software placed into service and fixed assets and intangible assets acquired with
Pangea.
Nonoperating Items
Interest expense, net increased $39.4 million, or 51.5%, to $115.9 million in 2022 compared to $76.5 million in 2021, due primarily to
an increase in the average amount of debt outstanding to $1,856.1 million during 2022 from $1,036.2 million during 2021, partially
offset by a decrease in the weighted average interest rate on our outstanding debt to 6.35% in 2022 from 7.34% in 2021. See “—Liquidity
and Capital Resources—Current Debt Facilities” below for further information.
Provision for Income Taxes
The effective tax rate from continuing operations of 23.9% in 2022 was consistent with the 23.8% rate in 2021. The 2022 rate was
primarily driven by an increase in state tax rates, which was offset by excess tax benefits from stock-based compensation.
As of December 31, 2022, the balance of unrecognized tax benefits was $87.7 million which is included in “Accounts payable and
accrued expenses” on the consolidated balance sheet, $11.6 million of which, if recognized, would favorably affect the effective tax rate
in the period of recognition. We had $44.1 million of unrecognized tax benefits as of December 31, 2021. We believe that we have
adequately accounted for any material tax uncertainties in our existing reserves for all open tax years.
Our U.S. tax returns are subject to examination by federal and state taxing authorities. The statute of limitations related to our
consolidated Federal income tax returns is closed for all tax years up to and including 2018. However, the 2014 tax year is still open to
the extent of the net operating loss which we carried back from the 2019 tax return. The years open to examination by state, local and
foreign government authorities vary by jurisdiction, but the statute of limitation is generally 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.
LIQUIDITY AND CAPITAL RESOURCES
Capital Funding Strategy
We seek to maintain a stable and flexible balance sheet to ensure that liquidity and funding are available to meet our business obligations.
As of December 31, 2022, we had cash, cash equivalents, and restricted cash of $178.4 million, of which $78.2 million was restricted,
compared to $225.9 million, of which $60.4 million was restricted, as of December 31, 2021. During the three months ended March 31,
2022, we increased the borrowing capacity on four of our loan securitization facilities without having to increase any of the respective
borrowing rates. In June 2022, we entered into a new $420.0 million loan securitization facility and increased the aggregate principal
on our existing secured revolving credit agreement while extending its term. In October 2022, we entered into a new $125 million loan
securitization facility. In November 2022, we amended two securitization facilities which resulted in a net increase to our funding
capacity of $26.0 million and expanded the eligibility requirements to include more of our loans. As of December 31, 2022, we had
funding capacity of $533.1 million. Based on numerous stressed-case modeling scenarios, we believe we have sufficient liquidity to run
our operations for the foreseeable future. Further, we have no recourse debt obligations due until September 2024. As part of our capital
and liquidity management, we may from time to time acquire our outstanding debt securities, including through redemptions, tender
offers, open market purchases, negotiated transactions or otherwise, in accordance with applicable securities laws and in compliance
with the indentures governing our outstanding debt securities, upon such terms and at such prices as we may determine.
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 fund our seasonal working capital growth,
which is driven by demand for our loan and financing products. 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 existing indebtedness. 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 existing indebtedness.
55
On June 30, 2017, we entered into a secured revolving credit agreement (as amended, the “Credit Agreement”). On June 23, 2022, we
entered into an amendment and restatement of our Credit Agreement that, among other things, increased the borrowing capacity to
$440.0 million, with a $20.0 million letter of credit sublimit and $10.0 million swingline loan sublimit. The Credit Agreement bears
interest, at our option, at the base rate plus 0.75% or the Secured Overnight Financing Rate plus 3.50%. In addition to customary fees
for a credit facility of this size and type, the Credit Agreement provides for payment of a commitment fee calculated with respect to the
unused portion of the commitment, and ranges from 0.15% per annum to 0.50% per annum depending on usage. The Credit Agreement
contains certain prepayment penalties if it is terminated on or before the first and second anniversary dates, subject to certain exceptions.
The Credit Agreement matures on June 30, 2026. As of February 22, 2023, our available borrowings under the Credit Agreement were
$130.3 million. Since 2016, we have entered into several loan securitization facilities and offered asset-backed notes to fund our growth,
primarily in our near-prime consumer installment loan and small business loan businesses. As of February 22, 2023, we had funding
capacity of $363.8 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 and small business loan securitization facilities.
As of December 31, 2022, 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 sale of assets,
increased borrowings under the Credit Agreement, or any refinancing or replacement thereof, and reductions in capital spending which
could be expected to generate additional liquidity.
Capital
Our Total stockholders' equity increased by $93.0 million to $1,186.1 million at December 31, 2022 from $1,093.1 million at December
31, 2021. The increase of stockholders' equity was driven primarily by net income for the year ended December 31, 2022, partially offset
by $143.1 million in repurchases of our common stock. Our book value per share outstanding increased to $37.99 at December 31, 2022
from $32.01 at December 31, 2021, which was primarily driven by net income and share repurchases in 2022 .
On February 9, 2022, we announced the Board of Directors authorized a new share repurchase program totaling $100.0 million through
June 30, 2023 (the "February 2022 Authorization"). On November 7, 2022, we announced the Board of Directors authorized an increase
to our share repurchase program of up to $150.0 million through December 31, 2023 (the "November 2022 Authorization"). The
November 2022 Authorization will go into effect when the February 2022 Authorization is exhausted. Repurchases under our repurchase
programs will be made in accordance with applicable securities laws from time to time in the open market, through privately negotiated
transactions or otherwise. The share repurchase program does not obligate us to purchase any shares of our common stock. The
authorization for the share repurchase programs may be terminated, increased or decreased by the Board of Directors in its discretion at
any time. During 2022, we paid $137.6 million to repurchase common stock under the share repurchase programs.
Cash
At December 31, 2022, we had $100.2 million of available unrestricted cash to fund our future operations compared to approximately
$165.5 million at December 31, 2021.
Our cash and cash equivalents at December 31, 2022 were held primarily for working capital purposes and were used to fund a portion
of our lending activities. From time to time, we use excess cash and cash equivalents to fund our lending activities. We do not enter into
investments for trading or speculative purposes. Our policy is to invest cash in excess of our immediate working capital requirements in
short-term investments, deposit accounts or other arrangements designed to preserve the principal balance and maintain adequate
liquidity. Our excess cash may be invested primarily in overnight sweep accounts, money market instruments or similar arrangements
that provide competitive returns consistent with our polices and market conditions.
Our restricted cash primarily consists of funds held in accounts as reserves on certain debt facilities and as collateral for issuing bank
partner transactions. We have no ability to draw on such funds as long as they remain restricted under the applicable arrangements but
have the ability to use these funds to finance loan originations, subject to meeting borrowing base requirements. Our policy is to invest
restricted cash held in debt facility related accounts, to the extent permitted by such debt facility, in investments designed to preserve
the principal balance and provide liquidity. Accordingly, such cash is invested primarily in money market instruments that offer daily
purchase and redemption and provide competitive returns consistent with our policies and market conditions.
56
Current Debt Facilities
The following table summarizes our debt facilities as of December 31, 2022.
Funding Debt:
Maturity date
Weighted average
interest rate(a)
Borrowing
capacity
Principal
outstanding
2018-1 Securitization Facility.................................... March 2027 (b)
(c)
2018-2 Securitization Facility....................................
NCR 2022 Securitization Facility.............................. October 2026 (d)
ODR 2021-1 Securitization Facility .......................... November 2024 (e)
(f)
ODR 2022-1 Securitization Facility ..........................
RAOD Securitization Facility.................................... November 2025 (g)
(h)
ODAST III Securitization Notes................................
Total funding debt..........................................................
Corporate Debt:
June 2025
May 2027
July 2025
8.50% Senior Notes Due 2024................................... September 2024
8.50% Senior Notes Due 2025................................... September 2025
Revolving line of credit .............................................
Total corporate debt .......................................................
June 2026
7.95%
8.34%
9.07%
7.22%
7.27%
6.93%
2.07%
6.33%
8.50%
8.50%
7.50%
8.17%
200,000
225,000
125,000
233,333
420,000
230,263
300,000
1,733,596
$
$
250,000
375,000
440,000 (i)
$
1,065,000
$
192,717
179,654
43,958
197,167
187,000
230,263
300,000
1,330,759
250,000
375,000
309,000
934,000
(a) The weighted average interest rate is determined based on the rates and principal balances on December 31, 2022. It does not
include the impact of the amortization of deferred loan origination costs or debt discounts.
(b) The period during which new borrowings may be made under this facility expires in March 2025.
(c) The period during which new borrowings may be made under this facility expires in July 2023.
(d) The period during which new borrowings may be made under this facility expires in October 2024.
(e) The period during which new borrowings may be made under this facility expires in November 2023.
(f) The period during which new borrowings may be made under this facility expires in June 2024.
(g) The period during which new borrowings may be made under this facility expires in November 2024.
(h) The period during which new borrowings may be made under this facility expires in April 2024.
(i) We had outstanding letters of credit under the Revolving line of credit of $0.8 million as of December 31, 2022.
Our ability to fully utilize the available capacity of our debt facilities may also be impacted by provisions that limit concentration risk
and eligibility.
Cash Flows
Our cash flows and other key indicators of liquidity are summarized as follows (dollars in thousands):
Cash flows provided by (used in) operating activities
Cash flows from operating activities - continuing operations .......... $
Cash flows from operating activities - discontinued operations .......
Cash flows provided by operating activities .........................................
Cash flows (used in) provided by investing activities
Loans and finance receivables ..........................................................
Acquisitions, net of cash acquired ....................................................
Purchases of property and equipment ...............................................
Disposal of a subsidiary ....................................................................
Other investing activities ..................................................................
Total cash flows (used in) provided by investing activities..................
Cash flows provided by (used in) financing activities .......................... $
Total debt to Adjusted EBITDA (a) ........................................................
2022
Year Ended December 31,
2021
2020
$
893,998
—
893,998
$
471,868
—
471,868
741,171
(300)
740,871
(1,631,354)
—
(43,629)
8,713
—
(1,666,270)
724,866
5.1x
$
(923,494)
(29,153)
(29,674)
1,928
25
(980,368)
365,149
2.9x
$
2,986
109,920
(29,491)
—
168
83,583
(535,974)
2.3x
(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.”
57
Cash Flows from Operating Activities
Net cash provided by operating activities increased $422.1 million, or 89.5%, to $894.0 million for 2022 from $471.9 million for 2021.
The increase was driven primarily by additional interest and fee income from growth in the loan portfolio, particularly since mid-2021.
Net cash provided by operating activities for 2021 was abnormally low due to the strategic reduction in originations implemented at the
onset of the COVID-19 pandemic.
We believe cash flows from operations and available cash balances and borrowings under our securitization facilities and Credit
Agreement, which may include increased borrowings under our Credit Agreement, any refinancing or replacement thereof, and
additional securitization of consumer and small business loans, will be sufficient to fund our future operating liquidity needs, including
to fund our working capital growth.
Cash Flows from Investing Activities
Net cash flows used in investing activities increased $685.9 million, or 70.0%, for 2022 compared to 2021, due primarily to a $707.9
million increase in net cash used in loans and finance receivables, due to a 46.0% increase in loans and finance receivables originated
or purchased and a 31.0% increase in loans and finance receivables repaid.
Cash Flows from Financing Activities
Net cash provided by financing activities in 2022 was $724.9 million compared to $365.1 million used in financing activities in 2021.
Cash flows provided by financing activities for 2022 primarily reflects net borrowings of $109.0 million under the Credit Agreement
and $762.2 million under our securitization facilities, partially offset by $143.1 million of cash used in treasury shares purchased,
primarily under the share repurchase programs discussed above under “Capital”. Cash flows used in financing activities for 2021
primarily reflects $200 million of net borrowing under our Credit Agreement, $272.6 million of net borrowing under our securitization
facilities, partially offset by $116.7 million of cash used in treasury shares purchased, primarily under the share repurchase programs.
CRITICAL ACCOUNTING ESTIMATES
Loans and Finance Receivables
Beginning January 1, 2020, we have elected the fair value option for our loans and finance receivables. We estimate the fair value of
our loans and finance receivables primarily using discounted cash flow analyses at an individual loan level to more accurately predict
future payments. We adjust contractual cash flows for estimated losses, prepayments and servicing costs over the estimated duration of
the underlying assets and discount the future cash flows using a rate of return that we believe a market participant would require. Model
results may be adjusted by management if we do not believe the output reflects the fair value of the portfolio, as defined under U.S.
GAAP. The models are updated at each measurement date to capture any changes in internal factors such as nature, term, volume,
payment trends, remaining time to maturity, and portfolio mix, as well as changes in underwriting or observed trends expected to impact
future performance. We have validated model performance by comparing past valuations with actual performance noted after each
valuation.
The following describes the primary inputs to the discounted cash flow analyses that require significant judgment:
Net losses – Net losses are estimates of the principal payments that will not be repaid over the life of our portfolio, net of the
expected principal recoveries on charged-off receivables. We have developed proprietary underwriting systems based on data
we have collected since the Company’s inception. 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 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. Leveraging the data at the core of our business, we utilize our models to estimate lifetime
credit losses for loans and finance receivables. Inputs to the models include contractual cash flows, customer application
information, historical and current performance, and behavioral information. Management may also incorporate discretionary
adjustments based on our expectations of future credit performance.
Prepayments – Prepayments are estimates of the amount of principal payments that will occur earlier than contractually required
during the life of a loan and finance receivable. Prepayments accelerate the timing of principal repayment and reduce interest
payments. Prepayment rates in our discounted cash flow models are developed using historical results as the basis. Model
inputs are similar to those utilized to estimate net losses and may also incorporate discretionary adjustments based on our
expectations of future performance.
Utilization – Utilization is the rate that a line of credit is utilized in proportion to the borrowing limit. Utilization rates in our
discounted cash flow model for the OnDeck line of credit product are developed using historical results as the basis and are
58
used to estimate future draws on the line. Model inputs are similar to those utilized to estimate net losses and may also
incorporate discretionary adjustments based on our expectations of future activity.
Servicing costs – Servicing costs applied to the expected cash flows of our portfolio reflect our estimate of the amount investors
would incur to service the underlying assets for the remainder of their lives. Servicing costs are derived from our internal
analysis of our cost structure considering the characteristics of our receivables and have been benchmarked against observable
information on comparable assets in the marketplace.
Discount rates – Determined at a product level, the discount rates utilized in our cash flow analyses reflect our estimates of the
rates of return that investors would require when investing in financial instruments with similar risk and return characteristics.
Management continuously monitors factors that may impact the fair values of its products. Internal factors such as portfolio composition
(for example, interest rate, loan term, geography information, customer mix, credit quality) and performance (e.g., delinquency, loss
trends, prepayment rates) are reviewed on a regular basis at various levels, including product and vintage. The Company also weighs
the impact of relevant, internal business decisions on estimated fair value. External factors such as macroeconomic trends, financial
market liquidity expectations, competitive landscape and legal or regulatory requirements are also reviewed on a regular basis.
Management also reviews the results of its fair value model output compared to prior periods for unusual trends, potential model over-
or under-reaction, outlier results and other distorting factors. Based on these analyses, management may deem it appropriate to adjust
model output to derive management’s best estimate of fair value.
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
potential impairment annually 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 have historically performed our annual goodwill impairment test as of June 30 each year. During the year ended December 31, 2021,
we voluntarily changed our annual impairment assessment date from June 30 to October 1 to better align with our budgeting process
and year end as well as to include nearly a full year of results after our October 2020 acquisition of OnDeck, which was a material
change to our financial position and results of operations. We believe the change in goodwill impairment testing date does not represent
a material change to our method of applying an accounting principle in light of our internal controls and requirements to assess goodwill
impairment upon certain triggering events.
We first assess qualitative factors to determine whether it is necessary to perform the 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 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. See Note 5, Goodwill and Other Intangible Assets, to the Consolidated Financial Statements.
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
more likely than not, we must establish a valuation allowance. An expense or benefit is included within the tax provision in the
consolidated statement of income for any increase or decrease in the valuation allowance for a given period.
We report our loans and finance receivables in the Company’s tax returns at fair market value, as determined for U.S. federal income
tax purposes, which differs from how we report them in the consolidated financial statements due in part to statutory tax and judicial
principles that may lead to different interpretations of expected credit losses and discount rate assumptions. Changes in the fair market
value of our loans and finance receivables as determined for tax purposes may have a significant impact on the timing and amount of
how income taxes are recognized in the consolidated financial statements. The estimates of fair market value are dependent on multiple
assumptions, including expected credit losses and discount rates.
59
We perform an evaluation of the recoverability of our deferred tax assets on a quarterly basis. We establish a valuation allowance if it
is more-likely-than-not (greater than 50 percent) that all or some portion of the deferred tax asset will not be realized. We analyze several
factors, including the nature and frequency of operating losses, our 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.
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 the technical
merits. We record interest and penalties related to tax matters as income tax expense in the consolidated statement of income.
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 Supplementary
Data” in this report for a discussion of recently issued accounting pronouncements that may be significant to Enova.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is a broad term related to economic losses due to adverse changes in the fair value of a financial instrument. While market
risk may embody several elements, including liquidity and basis risk, the SEC’s market risk rules focus on pricing risk, which relates to
changes in the level of prices due to changes in interest rates, foreign currency exchange rates, commodity prices, equity prices, and
other market changes that affect market risk-sensitive instruments.
We carry our loans and finance receivables at fair value with changes in fair value recognized directly in earnings. The valuation of our
loan portfolio may be impacted by macroeconomic and other factors that may positively or negatively impact the repayment capacity
of our customers or the discounted value of expected future cash flows from our loan portfolio.
Changes to market interest rates can impact the fair value of our loans and finance receivables. The fair value of our loans and receivables
are estimated using a discounted cash flow methodology, where the discount rate represents an estimate of the required rate of return by
market participants. Required returns may increase or decrease depending upon the level of market interest rates and additional risk
premiums required to generate acceptable returns on specific assets. An increase of 100 basis points to the discount rates used in our
valuations would decrease the balance of loans and finance receivables at fair value by approximately 0.7% at December 31, 2022 and
2021. A decrease of 100 basis points to the discount rates used in our valuations would increase the balance of Loans and finance
receivables at fair value by approximately 0.7% at December 31, 2022 and 2021.
Expectations of future credit losses are a significant input to the valuation of our loans and finance receivables. A variety of
macroeconomic and other factors can impact the expected repayment capacity of our customers and our expectation of future credit
losses, both positively and negatively. Increasing our estimates for future credit losses used in our valuations to 110% of current
expectations would decrease the balance of loans and finance receivables at fair value by approximately 3.2% and 4.1% at December
31, 2022 and 2021, respectively. Conversely, credit losses may decrease as the economy strengthens or with increased government
assistance. Decreasing our estimates for future credit losses used in our valuations to 90% of current expectations would increase the
balance of loans and finance receivables at fair value by approximately 3.3% and 4.0% at December 31, 2022 and 2021, respectively.
The expected rate of future customer prepayments can also impact the fair value of our loans and finance receivables. Prepayment speeds
can vary with economic activity, competition and other factors that may increase or decrease the liquidity available to our customers to
prepay obligations. Increasing our estimates for future prepayments used in our valuations to 110% of current expectations would
decrease the balance of Loans and finance receivables at fair value by 0.9% and 1.2% at December 31, 2022 and 2021, respectively.
Conversely, prepayment speeds may decrease as the economy weakens or inflation increases. Decreasing our estimates for future
prepayments used in our valuations to 90% of current expectations would increase the balance of Loans and finance receivables at fair
value by 0.8% and 1.2% at December 31, 2022 and 2021, respectively.
60
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (Deloitte & Touche LLP; PCAOB ID No. 34)
(PricewaterhouseCoopers LLP; PCAOB ID No. 238) ................................................................................................................
Consolidated Balance Sheets – December 31, 2022 and 2021 ....................................................................................................
Consolidated Statements of Income – Years Ended December 31, 2022, 2021 and 2020..........................................................
Consolidated Statements of Comprehensive Income – Years Ended December 31, 2022, 2021 and 2020 ...............................
Consolidated Statements of Stockholders’ Equity – Years Ended December 31, 2022, 2021 and 2020 ...................................
Consolidated Statements of Cash Flows – Years Ended December 31, 2022, 2021 and 2020 ..................................................
Notes to Consolidated Financial Statements................................................................................................................................
62
65
67
68
69
70
71
61
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors 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 subsidiaries (the "Company") as of
December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash
flows, for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial
statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 2022, based on criteria
established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company
as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended
December 31, 2022 and 2021, 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,
2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
Basis for Opinions
The Company’s management is responsible for these 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 the accompanying Report
of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements
and an opinion 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 and regulations of the Securities
and Exchange Commission and the PCAOB.
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 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.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining,
on a test basis, evidence regarding the amounts and disclosures in the 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
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.
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 (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) 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.
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.
62
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material
to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of
critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or
disclosures to which it relates.
Loans and finance receivables at fair value – Refer to Notes 1 and 18 to the consolidated financial statements
Critical Audit Matter Description
The estimation of the fair value of loans and finance receivables portfolio uses discounted cash flow models that have been internally
developed. The models use inputs that are unobservable and inherently judgmental and reflect management’s best estimates of the
assumptions a market participant would use to calculate fair value. The valuation inputs for the projections of future cash flows
include estimated losses, prepayment rates, utilization rates, servicing costs and discount rates.
We identified loans and finance receivables at fair value as a critical audit matter because of the subjective process in determining
significant inputs and judgments used to estimate the fair value. Given management’s use of unobservable inputs to estimate the fair
value of the loans and finance receivables, performing audit procedures to evaluate these inputs requires a high degree of auditor
judgment and an increased extent of effort, including the need to involve our internal fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to loans and finance receivables at fair value included the following, among others:
We tested the effectiveness of internal controls related to the determination of loans and finance receivables at fair value,
including those controls related to the significant inputs used to estimate the fair value.
We tested the underlying data, including historical loan data and other assumptions, that served as the basis for the
valuation.
We assessed the consistency by which management has applied significant unobservable valuation assumptions.
With the assistance of our internal fair value specialists, we developed a range of independent estimates of fair value and
compared our estimates to the recorded valuation.
/s/ Deloitte & Touche LLP
Chicago, IL
February 24, 2023
We have served as the Company's auditor since 2021.
63
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Enova International, Inc.
Opinion on the Financial Statements
We have audited the consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows of Enova
International, Inc. and its subsidiaries (the “Company”) for the year ended December 31, 2020, including the related notes
(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present
fairly, in all material respects, the results of operations and cash flows of the Company for the year ended December 31, 2020 in
conformity with accounting principles generally accepted in the United States of America.
Change in Accounting Principle
As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for loans and
finance receivables in 2020.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company’s consolidated financial statements based on our audit. 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 and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free
of material misstatement, whether due to error or fraud.
Our audit 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 audit 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. We believe that our audit provides a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Chicago, Illinois
February 26, 2021
We served as the Company’s auditor from 2011 to 2021.
64
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
Assets
Cash and cash equivalents(1).......................................................................................... $
Restricted cash(1)............................................................................................................
Loans and finance receivables at fair value(1) ...............................................................
Income taxes receivable ................................................................................................
Other receivables and prepaid expenses(1).....................................................................
Property and equipment, net..........................................................................................
Operating lease right-of-use asset .................................................................................
Goodwill........................................................................................................................
Intangible assets, net .....................................................................................................
Other assets(1) ................................................................................................................
Total assets ............................................................................................................ $
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses(1).................................................................... $
Operating lease liability ................................................................................................
Deferred tax liabilities, net ............................................................................................
Long-term debt(1)...........................................................................................................
Total liabilities...........................................................................................................
Commitments and contingencies (Note 11)
Stockholders' equity:
Common stock, $0.00001 par value, 250,000,000 shares authorized, 44,326,999
and 43,423,572 shares issued and 31,220,928 and 34,144,012 outstanding as of
December 31, 2022 and 2021, respectively ..............................................................
Preferred stock, $0.00001 par value, 25,000,000 shares authorized, no shares
issued and outstanding ..............................................................................................
Additional paid in capital ..........................................................................................
Retained earnings ......................................................................................................
Accumulated other comprehensive loss....................................................................
Treasury stock, at cost (13,106,071 and 9,279,560 shares as of
December 31, 2022 and 2021, respectively) .............................................................
Total stockholders' equity .........................................................................................
Total liabilities and stockholders' equity............................................................... $
December 31,
2022
2021
$
$
$
100,165
78,235
3,018,528
43,741
66,267
93,228
19,347
279,275
27,390
54,713
3,780,889
198,320
33,595
104,169
2,258,660
2,594,744
165,477
60,406
1,964,690
51,104
52,274
78,402
23,101
279,275
35,444
51,310
2,761,483
156,102
40,987
86,943
1,384,399
1,668,431
—
—
—
251,878
1,313,185
(5,990)
(372,928)
1,186,145
3,780,889
$
—
225,689
1,105,761
(8,540)
(229,858)
1,093,052
2,761,483
(1) Includes amounts in consolidated variable interest entities (“VIEs”) presented separately in the table below.
65
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.
Assets of consolidated VIEs, included in total assets above
Cash and cash equivalents.................................................................................................. $
Restricted cash....................................................................................................................
Loans and finance receivables at fair value........................................................................
Other receivables and prepaid expenses.............................................................................
Other assets.........................................................................................................................
Total assets of consolidated VIEs .................................................................................. $
Liabilities of consolidated VIEs, included in total liabilities above
Accounts payable and accrued expenses............................................................................ $
Long-term debt ...................................................................................................................
Total liabilities of consolidated VIEs............................................................................. $
December 31,
2022
2021
420
65,546
1,699,698
17,413
5,597
1,788,674
7,528
1,329,009
1,336,537
$
$
$
$
420
45,706
745,246
6,378
2,082
799,832
2,061
565,770
567,831
See Notes to Consolidated Financial Statements
66
2020
1,083,710
(399,517)
684,193
69,780
96,284
140,600
19,732
326,396
357,797
(86,691)
514
163,999
628
(827)
435,420
57,191
378,229
85
378,144
(300)
377,844
11.86
(0.01)
11.85
11.71
(0.01)
11.70
31,897
32,302
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Revenue............................................................................................................. $
Change in Fair Value.......................................................................................
Net Revenue......................................................................................................
Operating Expenses
Marketing.......................................................................................................
Operations and technology ............................................................................
General and administrative ............................................................................
Depreciation and amortization.......................................................................
Total Operating Expenses ...............................................................................
Income from Operations .................................................................................
Interest expense, net.......................................................................................
Foreign currency transaction (loss) gain, net.................................................
Gain on bargain purchase ..............................................................................
Equity method investment income ................................................................
Other nonoperating expenses.........................................................................
Income before Income Taxes ..........................................................................
Provision for income taxes ............................................................................
Net income from continuing operations before noncontrolling interest.....
Less: Net income attributable to noncontrolling interest...............................
Net income from continuing operations.........................................................
Net loss from discontinued operations...........................................................
Net income attributable to Enova International, Inc. .................................. $
Earnings (Loss) Per Share attributable to Enova International, Inc.:
Earnings (loss) per common share – basic:
Continuing operations.................................................................................... $
Discontinued operations ................................................................................
Earnings (loss) per common share – basic......................................................... $
Earnings (loss) per common share – diluted:
Continuing operations.................................................................................... $
Discontinued operations ................................................................................
Earnings (loss) per common share – diluted...................................................... $
Weighted average common shares outstanding:
2022
1,736,085
(618,521)
1,117,564
Year Ended December 31,
2021
1,207,932
(183,672)
1,024,260
$
$
382,573
173,668
140,464
36,867
733,572
383,992
(115,887)
(645)
—
6,435
(1,321)
272,574
65,150
207,424
—
207,424
—
207,424
6.42
—
6.42
6.19
—
6.19
$
$
$
$
$
271,160
147,700
156,962
35,375
611,197
413,063
(76,509)
(382)
—
2,953
(1,970)
337,155
80,087
257,068
773
256,295
—
256,295
7.05
—
7.05
6.79
—
6.79
$
$
$
$
$
Basic...............................................................................................................
Diluted ...........................................................................................................
32,290
33,483
36,351
37,736
See Notes to Consolidated Financial Statements
67
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Net income including noncontrolling interest ................................................... $
Other comprehensive (loss) gain, net of tax:
Foreign currency translation (loss) gain(1) .....................................................
Ownership change in noncontrolling interest ................................................
Unrealized gain on investments, net of tax....................................................
OnDeck Australia deconsolidation ................................................................
Total other comprehensive (loss) gain, net of tax..............................................
Comprehensive Income ...................................................................................
Net income attributable to noncontrolling interest ........................................
Foreign currency translation loss (gain) attributable to noncontrolling
interests ..........................................................................................................
Ownership change in noncontrolling interest ................................................
Comprehensive loss (income) attributable to the noncontrolling interest .........
Comprehensive income attributable to Enova International, Inc............... $
2022
Year Ended December 31,
2021
2020
207,424
$
257,068
$
377,929
789
—
1,761
—
2,550
209,974
—
—
—
—
209,974
$
(1,478)
(270)
—
106
(1,642)
255,426
(773)
126
802
155
255,581
$
(3,832)
—
—
—
(3,832)
374,097
(85)
(80)
—
(165)
373,932
(1) Net of tax benefit (provision) of $(209), $513 and $1,830 for the years ended December 31, 2022, 2021 and 2020, respectively.
See Notes to Consolidated Financial Statements
68
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P
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Cash Flows from Operating Activities
Net income before noncontrolling interest ........................................................... $
Less: Net loss from discontinued operations ........................................................
Net income from continuing operations...............................................................
$
207,424
—
207,424
$
257,068
—
257,068
377,929
300
378,229
2022
Year Ended December 31,
2021
2020
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization........................................................................
Amortization of deferred loan costs and debt discount ......................................
Change in fair value ......................................................................................
Stock-based compensation expense.................................................................
Gain on bargain purchase...............................................................................
Loss on sale of subsidiary ..............................................................................
Incomplete transaction costs...........................................................................
Loss on early extinguishment of debt ..............................................................
Operating leases, net .....................................................................................
Lease termination and cease-use costs.............................................................
Deferred income taxes, net.............................................................................
Changes in operating assets and liabilities:
Finance and service charges on loans and finance receivables ...........................
Other receivables, prepaid expenses and other assets ........................................
Accounts payable and accrued expenses..........................................................
Current income taxes receivable/payable.........................................................
Cash flows from operating activities - continuing operations.............................
Cash flows from operating activities - discontinued operations..........................
Net cash provided by operating activities.................................................
Cash Flows from Investing Activities
Loans and finance receivables originated or acquired ...........................................
Loans and finance receivables repaid ..................................................................
Acquisitions, net of cash acquired.......................................................................
Capitalization of software development costs and purchases of fixed assets............
Sale of subsidiary..............................................................................................
Other investing activities ...................................................................................
Net cash (used in) provided by investing activities....................................
Cash Flows from Financing Activities
Borrowings under revolving line of credit ...........................................................
Repayments under revolving line of credit...........................................................
Borrowings under securitization facilities............................................................
Repayments under securitization facilities ...........................................................
Debt issuance costs paid ....................................................................................
Debt prepayment penalty paid ............................................................................
Proceeds from exercise of stock options ..............................................................
Treasury shares purchased .................................................................................
Net cash provided by (used in) financing activities ...................................
Effect of exchange rates on cash.........................................................................
Net (decrease) increase in cash, cash equivalents and restricted cash................
Cash, cash equivalents and restricted cash at beginning of year ...........................
Cash, cash equivalents and restricted cash at end of year..................................... $
36,867
5,698
612,154
21,950
—
4,388
710
—
(3,637)
—
17,034
(32,317)
(24,335)
(2,843)
50,905
893,998
—
893,998
(4,103,939)
2,472,585
—
(43,629)
8,713
—
(1,666,270)
139,000
(30,000)
827,657
(65,487)
(7,473)
—
4,239
(143,070)
724,866
(77)
(47,483)
225,883
178,400
$
35,375
6,224
180,165
21,179
—
842
—
378
(3,549)
(6,311)
39,306
(20,802)
(7,222)
17,843
(48,628)
471,868
—
471,868
(2,810,560)
1,887,066
(29,153)
(29,674)
1,928
25
(980,368)
302,000
(102,000)
547,268
(274,688)
(6,231)
—
15,457
(116,657)
365,149
34
(143,317)
369,200
225,883
$
19,732
12,699
399,517
18,041
(163,999)
—
—
827
(2,014)
—
3,240
68,848
(5,601)
(18,088)
29,740
741,171
(300)
740,871
(1,033,041)
1,036,027
109,920
(29,491)
—
168
83,583
100,250
(224,750)
152,983
(507,023)
(388)
(827)
189
(56,408)
(535,974)
(244)
288,236
80,964
369,200
See Notes to Consolidated Financial Statements
70
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 loan and finance receivable products that are primarily unsecured. The business is operated primarily
through the internet to provide convenient, fully-automated financial solutions to its customers. As of December 31, 2022, the Company
offered or arranged loans to consumers under the names “CashNetUSA” and “NetCredit” in 37 states in the United States 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 “OnDeck,” “Headway Capital” and “The Business Backer.”
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 includes installment
loans and line of credit accounts. The Company provides financing to small businesses through either installment loans, a receivables
purchase agreement product (“RPAs”) or a line of credit account. 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.
Installment loans are loans written by the Company, 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 or by a bank partner.
Installment loans includes longer-term loans that require the outstanding principal balance to be paid down in multiple installments.
Line of credit accounts include draws made through the Company’s line of credit products.
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, at
which point, the loan is purchased by the Company. Prior to any potential purchase, CSO loans are not included in the Company’s
consolidated balance sheets.
The Company operates programs with certain banks to provide marketing services and loan servicing for near-prime unsecured
consumer installment loans and, beginning in January 2021, line of credit accounts. Under the programs, the Company receives
marketing and servicing fees while the bank receives an origination fee. The bank has the ability to sell and the Company has the option,
but not the requirement, to purchase the loans the bank originates and, in the case of line of credit accounts, a participation interest in
those accounts. The Company does not guarantee the performance of the loans and line of credit accounts originated by the bank. As
part of the OnDeck business both prior and subsequent to Enova’s acquisition, OnDeck operates a program with a separate bank to
provide marketing services and loan servicing for small business installment loans and line of credit accounts. Under the OnDeck
program, the Company receives marketing fees while the bank receives origination fees and certain program fees. The bank has the
ability to sell and the Company has the option, but not the requirement, to purchase the installment loans that the bank originates and,
in the case of line of credit accounts, extensions under those line of credit accounts. The Company does not guarantee the performance
of the loans originated by the bank.
Through the acquisition of Pangea, which is described in more detail in Note 2 to the consolidated financial statements, the Company
now operates a money transfer platform that allows customers to send money from the United States to Mexico, other Latin American
countries and Asia. Revenue is generated through fees per transfer and an exchange rate spread.
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
year amounts have been reclassified to conform to current year presentation.
71
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 significant to
the VIE.
With the acquisition of OnDeck, the Company owned a 55% controlling interest in On Deck Capital Australia PTY LTD (“OnDeck
Australia”). The remaining interests were owned by an unrelated third party. Prior to December 2021, we consolidated the financial
position and results of operations of this entity under the voting interest model. The noncontrolling interest, which is presented as a
separate component of consolidated equity, represented the minority owners' proportionate share of the equity of the entity and was
adjusted for the minority owners' share of the earnings, losses, investments and distributions. Refer to "Investments in Unconsolidated
Investees" later in this note for discussion of the partial divestiture in December 2021 that triggered the deconsolidation of OnDeck
Australia.
On October 25, 2019, the Company’s U.K. businesses were placed into administration, which resulted in treatment of the businesses as
discontinued operations for all periods presented. Throughout these consolidated financial statements, unless otherwise noted, current
and prior year financial information is presented as if the U.K. businesses were excluded from continuing operations as required. For
further information about the placement of the segment into administration, refer to “Discontinued Operations” below.
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 the dates of
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, fair value of 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 Australia and Brazil are the Australian
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.
In December 2021, the Company sold a portion of its interest in OnDeck Australia and, as a result, deconsolidated it from the Company's
consolidated financial statements. In conjunction with the deconsolidation, the AOCI balances related to OnDeck Australia were
reversed out and included in the calculation of loss on divestiture. Refer to "Investments in Unconsolidated Investees" section later in
this note for additional discussion of the divestiture.
Discontinued Operations
Beginning in 2007, the Company provided services in the United Kingdom under various brands, including QuickQuid, Pounds to
Pocket and On Stride. Due in part to the level of claim and legal settlement costs incurred in conducting our U.K. business and
unsuccessful discussions with U.K regulators, on October 24, 2019, the Company announced its intent to exit the U.K. market. On
October 25, 2019, Grant Thornton LLP, a licensed U.K. insolvency practitioner, was appointed as administrators (“Administrators”) to
take control of management of the U.K. businesses. The effect of the U.K. businesses’ entry into administration was to place their
management, affairs, business and property under the direct control of the Administrators. Accordingly, the Company deconsolidated
its U.K. businesses as of October 25, 2019 and is presenting them as discontinued operations for all periods presented in these
consolidated financial statements. The Company recorded a one-time after-tax charge of $74.5 million, including one-time cash charges
of $52.2 million, as a result of placing the U.K. businesses into administration. During the year ended December 31, 2020, the Company
recorded an impairment charge of $0.4 million ($0.3 million net of taxes) to write down a receivable on certain expenses incurred by
the Company prior to administration that were deemed non-reimbursable by the Administrators.
The Company entered into a service agreement with the Administrators under which the Company provides certain administrative,
technical and other services in exchange for compensation by the Administrators. The agreement expired July 8, 2022 and was not
72
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
extended beyond that date. During the years ended December 31, 2022, 2021 and 2020, the Company recorded $0.5 million, $2.8 million
and $5.0 million, respectively, in revenue related to these services. As of December 31, 2022, the Company did not have any outstanding
receivable or payable balances with the Administrators. As of December 31, 2021, the Administrators owed the Company $0.5 million,
related to services provided.
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):
Cash and cash equivalents..................................................................... $
Restricted cash ......................................................................................
Total cash, cash equivalents and restricted cash ................................... $
2022
100,165
78,235
178,400
December 31,
2021
165,477
60,406
225,883
$
$
$
$
2020
297,273
71,927
369,200
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. Interest is generally
recognized on an effective yield basis over the contractual term of the loan on installment loans, the estimated outstanding period of the
draw on line of credit accounts, or the projected delivery term on RPAs. CSO fees are recognized over the term of the loan. Late and
nonsufficient funds fees are recognized when assessed to the customer.
Prior to the adoption of the fair value option effective January 1, 2020, origination fees as well as certain direct costs associated with
originating loans were deferred and amortized into or against revenue on an effective yield basis over the term of the loan or the projected
delivery term of the finance receivable. Subsequent to the election of the fair value option, these fees and costs are no longer eligible for
deferral. As such, origination fees on installment loans, purchase fees on RPAs, and draw fees on line of credit accounts are recognized
when assessed to the customer.
Loans and Finance Receivables
The Company utilizes the fair value option on its entire loan and finance receivable portfolio. As such, loans and finance receivables
are carried at fair value in the consolidated balance sheet with changes in fair value recorded in the consolidated income statement. To
derive the fair value, the Company generally utilizes discounted cash flow analyses that factor in estimated losses, prepayments,
utilization rates and servicing costs over the estimated duration of the underlying assets. Loss, prepayment, utilization and servicing cost
assumptions are determined using historical loss data and include appropriate consideration of recent trends and anticipated future
performance. Future cash flows are discounted using a rate of return that the Company believes a market participant would require.
Accrued and unpaid interest and fees are included in “Loans and finance receivables” in the consolidated balance sheets.
Prior to January 1, 2020, the Company carried its loans and finance receivables at amortized cost, less an allowance for estimated losses
and unamortized net deferred origination costs. In determining the allowance, the Company applied a documented systematic
methodology generally at a product level. The factors the Company considered to assess the adequacy of the allowance included past
due performance, historical behavior of monthly vintages, underwriting changes, delinquency status, payment history and recency
factors.
73
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. Excluding OnDeck loans and finance
receivables, when a customer does not make a scheduled payment as of the due date, that payment is considered delinquent, and the
remainder of the receivable balance is considered current. If the customer does not make two consecutive payments, the entire account
or loan is classified as delinquent and placed on a non-accrual status. For the OnDeck portfolio, a loan is considered to be delinquent
when the daily or weekly payments are one day past due. Loans are placed in nonaccrual status and the accrual of interest income is
stopped on loans that are delinquent and non-paying. Loans are returned to accrual status if they are brought to non-delinquent status or
have performed in accordance with the contractual terms for a reasonable period of time and, in the Company’s judgment, will continue
to make periodic principal and interest payments as scheduled. The Company allows for normal payment processing time before
considering a loan delinquent but does not provide for any additional grace period.
Where permitted by law and as long as a loan is not considered delinquent, a customer may choose to renew or extend the due date on
certain installment loans. In order to renew or extend a single-pay 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 single-pay 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 offers certain forbearance options on its loan products with features such as payment deferrals without the incurrence of
additional finance charges or late fees. If a loan is deemed to be current and the customer makes a deferral or payment modification, the
loan is still deemed to be current until the next scheduled payment is missed.
The Company generally charges off loans and finance receivables between 60 and 65 days delinquent. If a loan or finance receivable is
deemed uncollectible prior to this, it is charged off at that point. For the OnDeck portfolio, the Company generally charges off a loan
when it is probable that that it will be unable to collect all of the remaining principal payments, which is generally after 90 days of
delinquency and 30 days of non-activity. 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. Recoveries on loans and finance receivables that were
previously charged off are generally recognized when collected or sold.
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
and maintenance activities are expensed as incurred. Depreciation expense is generally provided on a straight-line basis, using the
following estimated useful lives:
Computer hardware and software ...................................................................
Furniture, fixtures and equipment...................................................................
Leasehold improvements (1) ............................................................................
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 three
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
74
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
for potential impairment annually as of October 1 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.
The Company first assesses qualitative factors to determine whether it is necessary to perform the 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 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 undiscounted
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.
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.
Investments in Unconsolidated Investees
In December 2021, the Company sold a portion of its interest in OnDeck Australia, recognizing a loss of $0.8 million that has been
included in "Other nonoperating expense." Prior to this, the Company had consolidated the financial position and results of operations
of OnDeck Australia under the voting interest model. Subsequent to the transaction, the Company owns a 20% equity interest in OnDeck
Australia and no longer has control over the entity; as such, the Company has deconsolidated OnDeck Australia from its financial
statements and now records its interest under the equity method of accounting. As of December 31, 2022 and 2021, the carrying value
of the Company’s investment in OnDeck Australia was $1.1 million and $1.8 million, respectively, which the Company has included in
“Other assets” on the consolidated balance sheets.
On February 24, 2021, the Company contributed the platform-as-service business assumed in the OnDeck acquisition to Linear Financial
Technologies Holding LLC (“Linear”) in exchange for ownership units in that entity. The Company records its interest in Linear under
the equity method of accounting. In 2022, the Company recognized a gain of $11.0 million related to the sale by Linear of its operating
company. As of December 31, 2022 and 2021, the carrying value of the Company’s investment in Linear was $18.3 million and $5.6
million, respectively, which the Company has included in “Other assets” on the consolidated balance sheets.
With the acquisition of OnDeck, as discussed in Note 2, the Company obtained a 58.5% equity interest in On Deck Capital Canada
Holdings, Inc. (“OnDeck Canada”). Despite holding a majority of the equity interest, the Company did not have a controlling financial
interest as it did not hold a majority of the voting interest. As such, the Company utilized the equity method to account for its investment
in OnDeck Canada in the Company’s consolidated financial statements. In the second quarter of 2022, the Company sold its remaining
interest in OnDeck Canada, which resulted in a net loss of $4.4 million. As of December 31, 2021, the carrying value of the investment
was $13.7 million, which the Company has included in “Other assets” on the consolidated balance sheets.
Equity method income has been included in “Equity method investment income” in the consolidated income statements.
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, 2022 and 2021, the carrying value of the investment was $6.9 million, which the Company has included in “Other
75
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
assets” on the consolidated balance sheets. As of December 31, 2022, 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.
All marketing expenses are expensed as incurred.
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 contact 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 consolidated
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 consolidated statement of cash flows, they are classified in operating activities in the same manner as
other cash flows related to income taxes.
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.
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 10 for further discussion.
Earnings Per Share
Basic earnings per share is computed by dividing net income attributable to Enova International, Inc. 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 other 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.
76
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, 2022, 2021 and 2020 (in thousands, except per share amounts):
Numerator:
Net income from continuing operations............................................ $
Net loss from discontinued operations..............................................
Net Income .................................................................................... $
Denominator:
Total weighted average basic shares .................................................
Shares applicable to stock-based compensation ...............................
Total weighted average diluted shares ..........................................
Earnings per common share – basic:
Continuing operations ....................................................................... $
Discontinued operations....................................................................
Earnings per common share – basic.............................................. $
Earnings per common share – diluted:
Continuing operations ....................................................................... $
Discontinued operations....................................................................
Earnings per common share – diluted........................................... $
2022
Year Ended December 31,
2021
2020
207,424
—
207,424
32,290
1,193
33,483
6.42
—
6.42
6.19
—
6.19
$
$
$
$
$
$
256,295
—
256,295
36,351
1,385
37,736
7.05
—
7.05
6.79
—
6.79
$
$
$
$
$
$
378,144
(300)
377,844
31,897
405
32,302
11.86
(0.01)
11.85
11.71
(0.01)
11.70
For the years ended December 31, 2022, 2021 and 2020, 530,471, 142,758 and 2,052,307 shares of common stock underlying stock
options, respectively, were excluded from the calculation of diluted net earnings per share because their effect would have been
antidilutive. For the years ended December 31, 2022 and 2021, there were no shares and for the year ended December 31, 2020, there
were 627,804 shares of common stock underlying restricted stock units that were excluded from the calculation of diluted net earnings
per share because their effect would have been antidilutive.
2. Acquisitions
Pangea
On March 19, 2021, the Company completed the purchase of Pangea Universal Holdings, Inc. (“PUH”), a Chicago-based payments
platform offering mobile international money transfer services. In accordance with the terms of the transaction, PUH was merged into
Pangea Transfer Company, LLC (“Pangea”) with the separate corporate existence of PUH thereupon ceasing and Pangea continuing as
the surviving, wholly-owned subsidiary of the Company. Pangea serves the international money transfer market with a focus on Latin
America and Asia. Customers have the option to transfer funds directly into bank accounts or have cash picked up from partners in
minutes. The total consideration of $32.9 million consisted of $30.0 million in cash and $2.9 million in loan forgiveness. The Company
performed a valuation analysis of identifiable assets acquired and liabilities assumed and allocated the aggregate purchase consideration
based on the fair values of those identifiable assets and liabilities. The allocation of the purchase consideration included $19.8 million
and $11.3 million of intangible assets and goodwill, respectively, with all other assets acquired and liabilities assumed being nominal.
The operating results of Pangea, which were not material, have been included in the Company’s consolidated financial statements from
the date of acquisition. Its revenues and cost of revenues are included in “Revenues” and “Change in Fair Value,” respectively, in the
Consolidated Statements of Income.
OnDeck
On July 28, 2020, the Company and OnDeck entered into an Agreement and Plan of Merger (the “Merger Agreement”) among the
Company, OnDeck and Energy Merger Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), pursuant to which,
subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub would merge with and into OnDeck, with OnDeck
surviving as an indirect wholly owned subsidiary of the Company. On October 13, 2020 (the “Acquisition Date”), the Company and
OnDeck completed the transaction following the approval of OnDeck’s stockholders and the satisfaction of all other closing conditions.
The acquisition increases the scale and portfolio diversification of the Company. OnDeck offers a range of term loans and lines of credit
customized for the needs of small business owners.
77
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Under the terms of the Merger Agreement, each holder of OnDeck common stock received $0.12 per share in cash and a fixed exchange
ratio of 0.092 shares of the Company’s common stock for each OnDeck share they owned as of the Acquisition Date. As a result, the
Company issued 5.6 million shares of common stock to OnDeck stockholders. Based on the closing share price of the Company as of
October 12, 2020 of $18.74, the value of Company common stock and cash provided in exchange for OnDeck common stock was $111.5
million. In addition to the exchange of common stock, the consideration transferred also included the cancellation or replacement of
certain equity awards of OnDeck employees in effect prior to the transaction valued at approximately $4.2 million.
The Company was considered to be the accounting acquirer and as such, the closing date purchase consideration was allocated to the
fair value of OnDeck assets and liabilities. The fair value estimate for loans and finance receivables was determined using discounted
cash flow analyses that factor in estimated losses, prepayments, utilization rates and servicing costs over the estimated duration of the
underlying assets. Loss, prepayment, utilization and servicing cost assumptions were determined using historical loss data and included
appropriate consideration of recent trends and anticipated future performance. Future cash flows were discounted using a rate of return
that a market participant would require. Going forward, the Company elected to utilize the fair value option for OnDeck’s loans and
finance receivables, which is consistent with the Company’s accounting on its legacy portfolio of loans and finance receivables.
Operating lease right-of-use assets and operating lease liabilities reflect remeasurements based on the estimated present value of future
lease payments, adjusted for favorable or unfavorable lease terms. The above- and below-market lease adjustments take into account
current market leasing rates.
Intangible assets acquired consisted of developed technology and trade name of $19.1 million and $6.5 million, respectively. The fair
value estimates for intangible assets were determined based on the assumptions that market participants would use in pricing an asset,
based on the most advantageous market for the asset (i.e., its highest and best use). A relief from royalty method and a cost approach
method, which included assumptions on projected cash flows, royalty rate, and discount rate, were utilized to determine the fair value
of the developed technology intangible asset, which is being amortized on a straight-line basis over 5 years. A relief from royalty method,
which included assumptions on projected cash flows, royalty rate, and discount rate, was utilized to determine the fair value of the trade
name intangible asset, which is being amortized on a straight-line basis over 7 years.
Deferred taxes were determined based on the excess tax basis over the book basis of the fair value adjustments attributable to the net
assets acquired. The incremental deferred tax assets and liabilities were calculated based on the statutory rates where fair value
adjustments were estimated. The estimated tax rate used of 23.81% did not reflect Enova’s expected effective tax rate at the time of
acquisition, as that rate included other tax charges and benefits and does not take into account any historical or possible future tax events
that may impact the combined company following the Acquisition Date. Prior to the merger, OnDeck had a valuation allowance against
the federal and state deferred tax assets. As a result of the merger, the Company released most of the U.S. valuation allowance as the
Company had sufficient U.S. income in 2018 and 2019 combined, and projected income going forward. The Company still has a
valuation allowance on the federal NOL for the Section 382 ownership change limiting the recoverability of the losses before expiration.
The fair value estimates for debt facilities were based on quoted market prices for each instrument, if available, or for similar instruments
if not available, and adjusted for features specific to the instrument based on the assumptions that market participants would use in
pricing the debt.
78
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The allocation of the purchase consideration was as follows (in thousands):
Purchase price
Fair value of Company common stock issued to OnDeck shareholders(1)..... $
Cash paid for outstanding OnDeck common stock(2).....................................
Fair value of OnDeck equity awards assumed by the Company(3) ................
Cash paid for OnDeck equity awards(4)..........................................................
Total purchase consideration...................................................................... $
Allocation
Cash and cash equivalents.............................................................................. $
Restricted cash ...............................................................................................
Loans and finance receivables at fair value (unpaid principal balance of
$623,826) .......................................................................................................
Other receivables and prepaid expenses ........................................................
Deferred tax assets, net ..................................................................................
Property and equipment .................................................................................
Operating lease right-of-use assets.................................................................
Intangible assets .............................................................................................
Other assets ....................................................................................................
Total assets .............................................................................................
Accounts payable and accrued expenses........................................................
Operating lease liabilities ...............................................................................
Long-term debt...............................................................................................
Bargain purchase gain(5) .................................................................................
Accumulated other comprehensive loss.........................................................
Noncontrolling interest...................................................................................
Total liabilities and equity......................................................................
Total purchase consideration.......................................................................... $
104,313
7,204
1,647
2,571
115,735
55,100
68,192
528,567
9,501
29,738
13,527
21,026
25,600
16,497
767,748
30,528
34,726
421,576
163,999
(137)
1,321
652,013
115,735
(1)
(2)
(3)
(4)
(5)
Represents the fair value of Company common stock issued to OnDeck stockholders pursuant to the Merger Agreement. The fair
value is based on 60,035,223 shares of OnDeck common stock outstanding as of October 12, 2020, an exchange ratio of 0.092
shares of Company common stock per share of OnDeck common stock and the closing price per share of Company common stock
on October 12, 2020, of $18.74, as shares were transferred to OnDeck stockholders prior to the opening of markets on October
13, 2020.
Represents the cash consideration paid of $0.12 per outstanding share of OnDeck common stock based on 60,035,223 shares
outstanding as of October 12, 2020, as shares were transferred to OnDeck stockholders prior to the opening of markets on October
13, 2020.
Equity-based awards held by OnDeck employees prior to the acquisition date have been replaced with Company equity-based
awards. The portion of the equity-based awards that relates to services performed by the employee prior to the acquisition date
is included within consideration transferred, and includes restricted stock units and performance-based restricted stock units.
Represents the cash consideration for the settlement and cancellation of 2,148,193 OnDeck stock options held by employees and
non-employee directors of OnDeck.
As a result of the acquisition date fair value of the identifiable net assets acquired exceeding the sum of the value of consideration
transferred, the Company recognized a bargain purchase gain of $164.0 million, which is included in “Gain on bargain purchase”
in the consolidated statements of income. Uncertainty around the degree and duration of impact that the COVID-19 pandemic
will have on OnDeck’s operations and financial results, along with the uncertainty surrounding its future non-compliance in its
debt facilities, ability to renegotiate some of its existing facilities or repay outstanding indebtedness, and maintain sufficient
liquidity are what likely led to a bargain purchase scenario.
During 2020, revenue from OnDeck since the Acquisition Date was $55.9 million. During 2020, the net earnings from OnDeck
attributable to Enova International, Inc. since the Acquisition Date, excluding transaction-related costs of $12.4 million, were $15.4
million. The Company recognized transaction-related costs of $20.0 million in General and administrative expenses for the year ended
December 31, 2020. These expenses include severance and retention costs, investment banking, legal, accounting, and related third-
party costs associated with the transaction, including preparation for regulatory filings and stockholder approvals.
79
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following supplemental unaudited pro forma financial information reflects the consolidated results of operations of the Company
as if the acquisition had occurred on January 1, 2019 (in thousands):
Revenue............................................................................................................................ $
Net income from continuing operations attributable to the Company.............................
Unaudited pro forma
results for the
Year Ended
December 31,
2020
1,373,299
121,475
For purposes of conforming accounting policies, the preceding unaudited pro forma financial information assumes adoption of the fair
value option for OnDeck’s loans and finance receivables as of January 1, 2020. In conjunction with this election, the Company’s loans
and finance receivables are carried at fair value with changes in fair value recognized directly in earnings and origination fees and costs
are no longer eligible for deferral. Other significant nonrecurring pro forma adjustments include:
The removal of the bargain purchase gain of $164.0 million recorded upon close of the acquisition.
The removal of nonrecurring acquisition costs directly attributable to the acquisition of $17.7 million.
The net adjustment to depreciation and amortization expense as a result of the identified intangible assets acquired.
The amortization of the fair value adjustment to long-term debt using the effective interest method, offset by the elimination
of the amortization expense for debt issuance costs previously deferred by OnDeck.
The adjustment to the tax provision, assuming a combined company, including the tax impact of the aforementioned pro
forma adjustments.
The supplemental unaudited pro forma financial information is provided for illustrative purposes only and does not purport to represent
what the actual consolidated results of operations would have been had the acquisition actually occurred on January 1, 2019, nor does
it purport to project the future consolidated results of operations.
3. Loans and Finance Receivables
Revenue generated from the Company’s loans and finance receivables for the years ended December 31, 2022, 2021 and 2020 was as
follows (in thousands):
Consumer loans and finance receivables revenue................................. $
Small business loans and finance receivables revenue .........................
Total loans and finance receivables revenue.........................................
Other......................................................................................................
Total Revenue ....................................................................................... $
2022
1,065,033
647,822
1,712,855
23,230
1,736,085
$
Year Ended December 31,
2021
815,251
376,792
1,192,043
15,889
1,207,932
$
$
$
2020
962,119
114,085
1,076,204
7,506
1,083,710
Loans and Finance Receivables at Fair Value
The components of Company-owned loans and finance receivables at December 31, 2022 and 2021 were as follows (in thousands):
Principal balance - accrual .................................................................... $
Principal balance - non-accrual .............................................................
Total principal balance ......................................................................
As of December 31, 2022
Small
Business
1,656,312
117,099
1,773,411
$
$
Consumer
857,682
108,071
965,753
Loans and finance receivables at fair value - accrual............................
Loans and finance receivables at fair value - non-accrual ....................
Loans and finance receivables at fair value ......................................
Difference between principal balance and fair value ............................ $
1,073,100
9,962
1,083,062
117,309
$
1,878,253
57,213
1,935,466
162,055
$
80
Total
2,513,994
225,170
2,739,164
2,951,353
67,175
3,018,528
279,364
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Principal balance - accrual .................................................................... $
Principal balance - non-accrual(1) ..........................................................
Total principal balance ......................................................................
Loans and finance receivables at fair value - accrual............................
Loans and finance receivables at fair value - non-accrual(1) .................
Loans and finance receivables at fair value ...................................... $
Difference between principal balance and fair value ............................ $
As of December 31, 2021
Small
Business
Consumer
799,678
68,073
867,751
885,238
4,906
890,144
22,393
$
$
$
967,950
42,725
1,010,675
1,051,400
23,146
1,074,546
63,871
$
$
$
Total
1,767,628
110,798
1,878,426
1,936,638
28,052
1,964,690
86,264
As of December 31, 2022 and 2021, the aggregate fair value of loans and finance receivables that are 90 days or more past due was $8.2
million, of which $8.0 million was in non-accrual status, and $6.4 million, of which $6.3 million was in non-accrual status, respectively.
The aggregate unpaid principal balance for loans and finance receivables that are 90 days or more past due was $17.9 million and $12.4
million, respectively.
Changes in the fair value of Company-owned loans and finance receivables during the years ended December 31, 2022 and 2021 were
as follows (dollars in thousands):
Balance at beginning of period.............................................................. $
Originations or acquisitions ..............................................................
Interest and fees(1)..............................................................................
Repayments .......................................................................................
Charge-offs, net(2)..............................................................................
Net change in fair value(2) .................................................................
Effect of foreign currency translation ...............................................
Balance at end of period........................................................................ $
Consumer
$
$
Year Ended December 31, 2022
Small
Business
1,074,546
2,970,278
647,822
(2,675,793)
(161,615)
80,228
—
1,935,466
890,144
1,454,450
1,065,033
(1,796,320)
(610,931)
80,164
522
1,083,062
$
$
Total
1,964,690
4,424,728
1,712,855
(4,472,113)
(772,546)
160,392
522
3,018,528
Year Ended December 31, 2021
Small
Business
Consumer
Balance at beginning of period............................................................... $
Originations or acquisitions................................................................
Interest and fees(1)...............................................................................
Repayments ........................................................................................
Charge-offs, net(2)...............................................................................
Net change in fair value(2) ..................................................................
Effect of foreign currency translation ................................................
Balance at end of period......................................................................... $
625,219
1,266,324
815,251
(1,538,710)
(233,876)
(43,679)
(385)
890,144
$
$
616,287
1,764,343
376,792
(1,777,224)
(37,881)
135,271
(3,042)
1,074,546
$
$
(1) Included in “Revenue” in the consolidated statements of income.
(2) Included in “Change in Fair Value” in the consolidated statements of income.
Total
1,241,506
3,030,667
1,192,043
(3,315,934)
(271,757)
91,592
(3,427)
1,964,690
In connection with its CSO programs, the Company guarantees consumer loan payment obligations to unrelated third-party lenders for
consumer loans and is required to purchase any defaulted loans it has guaranteed. As of December 31, 2022 and 2021, the amount of
consumer loans guaranteed by the Company had an estimated fair value of $16.3 million and $18.8 million, respectively, and an
outstanding principal balance of $12.9 million and $11.8 million, respectively. As of December 31, 2022 and 2021 the amount of
consumer loans, including principal, fees and interest, guaranteed by the Company were $15.6 million and $13.8 million, respectively.
These loans are not included in the consolidated balance sheets as the Company does not own the loans prior to default.
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. The Company capitalized internal software development costs of $29.3 million, $26.7 million and $26.7 million during
2022, 2021 and 2020, respectively.
81
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Major classifications of property and equipment at December 31, 2022 and 2021 were as follows (in thousands):
Computer software................................................................................ $
Furniture, fixtures and equipment.........................................................
Leasehold improvements ......................................................................
Total ...................................................................................................... $
Computer software................................................................................ $
Furniture, fixtures and equipment.........................................................
Leasehold improvements ......................................................................
Total ...................................................................................................... $
As of December 31, 2022
Accumulated
Depreciation
$
$
(79,770) $
(18,875)
(17,704)
(116,349) $
Cost
151,310
33,764
24,503
209,577
As of December 31, 2021
Accumulated
Depreciation
$
$
(70,904) $
(17,641)
(16,098)
(104,643) $
Cost
134,916
22,953
25,176
183,045
Net
71,540
14,889
6,799
93,228
Net
64,012
5,312
9,078
78,402
The Company recognized depreciation expense of $28.8 million, $28.5 million and $18.0 million during 2022, 2021 and 2020,
respectively.
5. Goodwill and Other Intangible Assets
Changes in the carrying value of goodwill for the years ended December 31, 2022 and 2021 were as follows (in thousands):
Balance as of January 1, 2021 ........................................................................ $
Acquisitions................................................................................................
Balance as of December 31, 2021 .................................................................. $
Balance as of December 31, 2022 .................................................................. $
267,974
11,301
279,275
279,275
The Company completed its annual assessment of goodwill as of October 1, 2022 based on qualitative factors and determined that a
quantitative analysis was required. Management used the income approach to complete its annual goodwill assessment and determined
that the fair value of its goodwill exceeded carrying value; as such, no impairment existed at that date.
Acquired intangible assets that are subject to amortization as of December 31, 2022 and 2021, were as follows (in thousands):
Developed technology(1) ....................................................................... $
Trade names and trademarks(1) .............................................................
Licenses ................................................................................................
Customer relationships .........................................................................
Lead provider and broker relationships ................................................
Total ...................................................................................................... $
As of December 31, 2022
Accumulated
Amortization
Cost
25,980
11,213
3,100
1,900
1,700
43,893
$
$
(10,443) $
(3,827)
(1,033)
(633)
(567)
(16,503) $
As of December 31, 2021
Accumulated
Amortization
Cost
Developed technology(1) ....................................................................... $
Trade names and trademarks(1) .............................................................
Licenses ................................................................................................
Customer relationships .........................................................................
Lead provider and broker relationships ................................................
Total...................................................................................................... $
25,980
11,212
3,100
1,900
1,700
43,892
$
$
(5,247) $
(2,308)
(413)
(253)
(227)
(8,448) $
Net
15,537
7,386
2,067
1,267
1,133
27,390
Net
20,733
8,904
2,687
1,647
1,473
35,444
(1)
Includes acquired intangible assets related to the Company’s acquisition of OnDeck. See Note 2 for additional information.
82
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Developed technology is amortized over five years on a straight-line basis. Customer, lead provider and broker relationships are
generally amortized over three to five years based on the pattern of economic benefits provided. Trade names and trademarks are
generally amortized over three to 20 years on a straight-line basis. Licenses are generally amortized over five years on a straight-line
basis.
Amortization expense for acquired intangible assets was $8.1 million, $6.9 million and $1.8 million for the years ended December 31,
2022, 2021 and 2020, respectively.
Estimated future amortization expense for the years ended December 31, is as follows (in thousands):
Year
2023................................................................................................................ $
2024................................................................................................................
2025................................................................................................................
2026................................................................................................................
2027................................................................................................................
Amount
8,055
8,055
7,291
2,359
806
6. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses at December 31, 2022 and 2021 were as follows (in thousands):
As of December 31,
2022
2021
Unrecognized tax benefits......................................................................... $
Trade accounts payable.............................................................................
Accrued payroll and fringe benefits..........................................................
Accrued interest payable...........................................................................
Accrual for consumer loan payments rejected for non-sufficient funds...
Liability for consumer loans funded by third-party lender .......................
Other accrued liabilities ............................................................................
Total .......................................................................................................... $
87,679
30,778
32,137
22,978
11,294
10,988
2,466
198,320
$
$
44,137
37,177
35,106
17,811
9,495
7,950
4,426
156,102
7. Marketing Expenses
Marketing expenses for the years ended December 31, 2022, 2021 and 2020 were as follows (in thousands):
Advertising............................................................................................ $
Customer procurement expense including lead purchase costs ............
Total ...................................................................................................... $
2022
134,127
248,446
382,573
Year Ended December 31,
2021
112,681
158,479
271,160
$
$
$
$
2020
37,069
32,711
69,780
8. Leases
The Company has operating leases primarily for its corporate headquarters, other offices located in the U.S. and certain equipment. The
Company’s leases have remaining lease terms of less than one year to six years. Certain leases include options to extend the leases for
up to five years, while others include options to terminate the leases within one year. The Company’s lease agreements do not contain
any material residual value guarantees or material restrictive covenants.
The Company determines if an arrangement is an operating lease at inception. Leases with an initial term of 12 months or less are not
recorded on the consolidated balance sheet. All other operating leases are recorded on the consolidated balance sheet with right-of-use
assets representing the right to use the underlying asset for the lease term and lease liabilities representing the obligation to make lease
payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present
value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be
exercised. The right-of-use assets represent the lease liability, plus any lease payments made at or before the commencement date, less
any lease incentives received. If a lease does not provide an implicit rate, the Company uses its incremental secured borrowing rate,
adjusted for the maturity date, based on information available at the commencement date in determining the present value of lease
83
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
payments. Lease agreements with lease and non-lease components are accounted for as a single lease component. The Company’s
operating lease expense is recognized on a straight-line basis over the lease term and is recorded in general and administrative expense.
In December 2021, the Company entered into the Partial Termination and Surrender Agreement and Sixth Lease Modification
Agreement (the "Termination Agreement") to terminate its leases for a portion of its New York City office. As a result of the Termination
Agreement, the Company incurred a one-time termination cost of $9.2 million and gave up its right of use to three of four floors. In
return, the lessor gave up its right to future lease payments related to those floors. The terms for the lease for the remaining floor
remained unchanged.
Lease expenses for the years ended December 31, 2022 and 2021 were as follows (in thousands):
Operating lease cost .............................................................................. $
Operating lease impairment/termination charge ...................................
Variable lease cost.................................................................................
Short-term lease cost .............................................................................
Sublease income....................................................................................
Total lease cost ...................................................................................... $
7,652
(72)
723
383
(226)
8,460
$
$
11,217
3,336
1,176
577
(407)
15,899
$
$
7,181
—
701
120
(345)
7,657
2022
Year Ended December 31,
2021
2020
Future minimum lease payments as of December 31, 2022 are as follows (in thousands):
Year
2023................................................................................................................ $
2024................................................................................................................
2025................................................................................................................
2026................................................................................................................
2027................................................................................................................
Thereafter .......................................................................................................
Total lease payments ...................................................................................... $
Less: interest...................................................................................................
Present value of lease liabilities ..................................................................... $
Amount
9,506
9,126
9,256
8,510
5,354
421
42,173
8,578
33,595
The weighted average remaining lease term and discount rate as of December 31, 2022 and 2021 were as follows:
Weighted average remaining lease term (years)
Operating leases ..................................................................................
4.5
Weighted average discount rate
Operating leases ..................................................................................
10.12%
5.9
9.92%
December 31,
2022
2021
Supplemental cash flow disclosures related to leases for the years ended December 31, 2022 and 2021 were as follows (in thousands):
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases........................................................ $
10,692
$
15,141
Right-of-use assets obtained in exchange for lease obligations
Operating leases...................................................................................................
—
360
Year Ended December 31,
2021
2022
84
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Long-term Debt
The Company’s long-term debt instruments and balances outstanding as of December 31, 2022 and 2021 were as follows (in thousands):
Funding Debt:
Maturity date
Weighted
average
interest rate(1)
Borrowing
capacity
Outstanding
December 31,
2022
2021
2018-1 Securitization Facility .......................
March 2027
2018-2 Securitization Facility .......................
July 2025
2018-A Securitization Notes .........................
May 2026
2019-A Securitization Notes .........................
June 2026
NCR 2022 Securitization Facility ..................
October 2026
ODR 2021-1 Securitization Facility............... November 2024
ODR 2022-1 Securitization Facility...............
RAOD Securitization Facility ....................... November 2025
ODAST III Securitization Notes....................
Total funding debt ...................................
June 2025
May 2027
Corporate Debt:
8.50% Senior Notes Due 2024 ......................
8.50% Senior Notes Due 2025 ......................
Revolving line of credit ................................
Total corporate debt .................................
Less: Long-term debt issuance costs ..............
Less: Debt discounts ....................................
Total long-term debt ................................
September 2024
September 2025
June 2026
(2)
(3)
(4)
(5)
(6)
(7)
(8)
7.95%
8.34%
—
—
9.07%
7.22%
7.27%
6.93%
2.07%
6.33%
8.50%
8.50%
7.50%
8.17%
$
$
$
$
200,000
225,000
—
—
125,000
233,333
420,000
230,263
300,000
1,733,596
250,000
375,000
440,000 (9)
1,065,000
$
$
$
$
$
$
192,717
179,654
—
—
43,958
197,167
187,000
230,263
300,000
1,330,759
250,000
375,000
309,000
934,000
(5,112)
(987)
2,258,660
$
$
$
$
$
$
72,706
75,000
628
19,255
—
—
—
101,000
300,000
568,589
250,000
375,000
200,000
825,000
(7,608)
(1,582)
1,384,399
(1) The weighted average interest rate is determined based on the rates and principal balances on December 31, 2022. It does not
include the impact of the amortization of deferred loan origination costs or debt discounts.
(2) The period during which new borrowings may be made under this facility expires in March 2025.
(3) The period during which new borrowings may be made under this facility expires in July 2023.
(4) The period during which new borrowings may be made under this facility expires in October 2024.
(5) The period during which new borrowings may be made under this facility expires in November 2023.
(6) The period during which new borrowings may be made under this facility expires in June 2024.
(7) The period during which new borrowings may be made under this facility expires in November 2024.
(8) The period during which new borrowings may be made under this facility expires in April 2024.
(9) The Company had outstanding letters of credit under the Revolving line of credit of $0.8 million as of December 31, 2022 and 2021.
Weighted-average interest rates on long-term debt were 6.35% and 7.34% for the year ended December 31, 2022 and 2021, respectively.
As of December 31, 2022 and 2021, the Company was in compliance with all covenants and other requirements set forth in the prevailing
long-term debt agreements.
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.
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 Senior 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.
85
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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.
The Company used a portion of the net proceeds of the 2025 Senior Notes offering to retire existing indebtedness, to pay the related
accrued interest, premiums, fees and expenses associated therewith. The remaining amount was used for general corporate purposes.
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 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.
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 indenture
that governs the Company’s 2024 Senior Notes (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 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 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.
The Company used the net proceeds of the 2024 Senior Notes offering to retire a portion of its existing indebtedness, to pay the related
accrued interest, premiums, fees and expenses associated therewith and for general corporate purposes.
Loan Securitization Facilities
NCR 2022 Securitization Facility
On October 21, 2022, the Company and several of its subsidiaries entered into a receivables funding agreement (the “NCR 2022
Securitization Facility”) with Jefferies Funding LLC, as the initial note purchaser and administrative agent (the “NCR 2022
Administrative Agent”). The NCR 2022 Securitization Facility collateralizes certain 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 note payable. Under the NCR 2022 Securitization Facility, receivables are sold to a wholly-owned subsidiary of the Company (the
“NCR 2022 Debtor”) and serviced by another subsidiary of the Company.
The NCR 2022 Debtor will issue notes with an initial maximum principal balance of $125.0 million, which are required to be secured
by 1.25 times the drawn amount in eligible receivables. The notes have a revolving period through October 21, 2024 and a final maturity
date of October 21, 2026. The NCR 2022 Securitization Facility is non-recourse to the Company. As of December 31, 2022, the total
outstanding amount of the NCR 2022 Securitization Facility was $44.0 million.
The NCR 2022 Securitization Facility is governed by a note issuance and purchase agreement, dated as of October 21, 2022, among the
NCR 2022 Administrative Agent, the NCR 2022 Debtor, Citibank, N.A., as collateral agent and paying agent, and the other note
purchasers from time to time party thereto. The NCR 2022 Securitization Facility bears interest at a rate per annum equal to the Secured
Overnight Financing Rate (“SOFR”) (subject to a floor) plus 4.75%. Interest payments on the NCR 2022 Securitization Facility are
made monthly. The NCR 2022 Debtor is permitted to prepay the NCR 2022 Securitization Facility, subject to certain fees and conditions.
In the event of prepayment for the purposes of securitizations, no fees shall apply. Amounts due under the NCR 2022 Securitization
86
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Facility are secured by all of the NCR 2022 Debtor’s assets, which include the receivables transferred to the NCR 2022 Debtor, related
rights under the receivables, a bank account and certain other related collateral.
The NCR 2022 Facility documents contain customary provisions for securitizations, including: representations and warranties as to the
eligibility of the 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 NCR 2022 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 of the NCR 2022 Debtor.
ODR 2022-1 Securitization Facility
On June 30, 2022 (the “ODR 2022-1 Closing Date”), the Company and several of its subsidiaries entered into a receivables securitization
(the “ODR 2022-1 Securitization Facility”) with lenders party thereto from time to time, BMO Capital Markets Corp. as administrative
agent and collateral agent and Deutsche Bank Trust Company Americas, as paying agent. The ODR 2022-1 Securitization Facility
finances securitization receivables that have been and will be originated or acquired under the Company’s OnDeck brand by a wholly-
owned subsidiary and that meet specified eligibility criteria. Under the ODR 2022-1 Securitization Facility, eligible securitization
receivables are sold to a wholly-owned subsidiary of the Company (the “ODR 2022-1 Debtor”) and serviced by another subsidiary of
the Company.
The ODR 2022-1 Securitization Facility has Class A and Class B revolving commitments of $350.0 million and $70.0 million,
respectively, which are required to be secured by eligible securitization receivables. The ODR 2022-1 Securitization Facility is non-
recourse to the Company and matures three years after the ODR 2022-1 Closing Date. As of December 31, 2022, the total outstanding
amount of the ODR 2022-1 Securitization Facility was $187.0 million.
The ODR 2022-1 Securitization Facility is governed by a credit agreement, dated as of the ODR 2022-1 Closing Date, among the ODR
2022-1 Debtor, the administrative and collateral agent, the lenders, and the paying agent. The revolving Class A revolving loans shall
accrue interest at a rate per annum equal to the CP rate plus 1.75% with an advance rate of 75%. The Class B revolving loans shall
accrue interest at a rate per annum equal to SOFR plus 7.50% with an advance rate of 90%. Interest payments on the ODR 2022-1
Securitization Facility will be made monthly.
All amounts due under the ODR 2022-1 Securitization Facility are secured by all of the ODR 2022-1 Debtor’s assets, which include the
eligible securitization receivables transferred to the ODR 2022-1 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 lenders for certain “bad acts,” and
the Company has agreed for the benefit of the lenders to meet certain ongoing financial performance covenants.
The ODR 2022-1 Securitization Facility documents contain customary provisions for securitizations, including representations and
warranties as to the eligibility of the eligible securitization receivables and other matters; indemnification for specified losses not
including losses due to the inability of customers to repay their loans or lines of credit; covenants regarding special purpose entity
matters; and default and termination provisions which provide for the acceleration of the ODR 2022-1 Securitization 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, and defaults under other
material indebtedness of the ODR 2022-1 Debtor.
ODR 2021-1 Securitization Facility
On November 17, 2021 (the “ODR 2021-1 Closing Date”), the Company and several of its subsidiaries entered into a receivables
securitization (the “ODR 2021-1 Securitization Facility”) with the lenders party thereto from time to time, JPMorgan Chase Bank, N.A.,
as administrative agent and collateral agent, and Deutsche Bank Trust Company Americas, as paying agent. The ODR 2021-1
Securitization Facility finances securitization receivables that have been and will be originated or acquired under the Company’s
OnDeck brand by several of the Company’s subsidiaries and that meet specified eligibility criteria. Under the ODR 2021-1 Securitization
Facility, eligible securitization receivables are sold to a wholly-owned subsidiary of the Company (the “ODR 2021-1 Debtor”) and
serviced by another subsidiary of the Company.
The ODR 2021-1 Debtor has issued revolving loan notes that are required to be secured by eligible securitization receivables. On March
29, 2022, the ODR 2021-1 Securitization Facility was amended to, among other changes, increase the commitment amount of the
revolving loans from $150.0 million to $200.0 million. On November 18, 2022 the ODR 2021-1 Securitization Facility was further
87
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
amended to include a Class B revolving note with a maximum loan balance of $33.3 million, increasing the total commitment amount
from $200.0 million to $233.3 million. The ODR 2021-1 Securitization Facility is non-recourse to the Company and matures three years
after the ODR 2021-1 Closing Date. As of December 31, 2022 and 2021, there was $197.2 million and no outstanding amount under
the ODR 2021-1 Securitization Facility, respectively.
The ODR 2021-1 Securitization Facility is governed by a credit agreement, dated as of the ODR 2021-1 Closing Date, and amended on
March 29, 2022 and November 18, 2022, among the ODR 2021-1 Debtor, the administrative and collateral agent, the lenders, and the
paying agent. The ODR 2021-1 Securitization Facility Class A note bears interest at a rate per annum equal to a benchmark rate (currently
the lender’s asset-backed commercial paper rate) plus an applicable margin of 1.85%. The ODR 2021-1 Securitization Facility Class B
note bears interest at a rate per annum equal to a benchmark rate (currently SOFR) plus an applicable margin of 8.00%. Interest payments
on the ODR 2021-1 Securitization Facility will be made monthly.
All amounts due under the ODR 2021-1 Securitization Facility are secured by all of the ODR 2021-1 Debtor’s assets, which include the
eligible securitization receivables transferred to the ODR 2021-1 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 lenders for certain “bad acts,” and
the Company has agreed for the benefit of the lenders to meet certain ongoing financial performance covenants.
The ODR 2021-1 Securitization Facility documents contain customary provisions for securitizations, including representations and
warranties as to the eligibility of the eligible securitization receivables and other matters; indemnification for specified losses not
including losses due to the inability of customers to repay their loans or lines of credit; covenants regarding special purpose entity
matters; and default and termination provisions which provide for the acceleration of the ODR 2021-1 Securitization 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, and defaults under other
material indebtedness of the ODR 2021-1 Debtor.
ODAST III Securitization Notes
On May 5, 2021, OnDeck Asset Securitization Trust III LLC (“ODAST III”), a wholly-owned subsidiary of the Company, issued $300
million initial principal amount of fixed-rate, asset-backed notes (the “ODAST III Securitization Notes”) in a securitization transaction
(the “ODAST III Transaction” and such series, the “ODAST III Series”). The ODAST III Securitization Notes are the first series of
notes ever issued by ODAST III. On May 5, 2021, the proceeds of the ODAST III Transaction were used to purchase small business
loans from On Deck Capital, Inc. (“ODC”) and ODK Capital, LLC (“ODK”), each of which is a wholly-owned subsidiary of the
Company, that will be pledged as collateral for the ODAST III Securitization Notes. The Company used substantially all the proceeds
from ODAST III to purchase such small business loans from certain of its subsidiaries and for other general corporate purposes. As of
December 31, 2022 and 2021, the carrying amount of the ODAST III Securitization Notes was $298.2 million, including an unamortized
discount of $1.0 million and unamortized issuance costs of $0.8 million and $297.2 million, including an unamortized discount of $1.6
million and unamortized issuance costs of $1.2 million, respectively.
The ODAST III Securitization Notes were issued in four classes with a weighted average fixed interest coupon of 2.07% per annum.
The revolving period during which a certain portion of collections received on the portfolio of loans held by ODAST III may be used to
continue to purchase loans from ODC and ODK ends in April 2024. The ODAST III Securitization Notes have a final maturity in May
2027 with optional prepayment beginning in May 2023. The ODAST III Securitization Notes are, and future series of notes, if any,
issued under the Base Indenture will be, secured by and payable from such series pro rata allocation of collections received on a revolving
pool of small business loans transferred from time to time from the Company to ODAST III. At the time of issuance of the ODAST III
Securitization Notes, the portfolio of loans held by ODAST III and pledged to secure the ODAST III Securitization Notes was
approximately $316 million.
2019-A Securitization Notes
On October 17, 2019 (the “2019-A Closing Date”), the Company issued $138,888,000 Class A Asset Backed Notes (the “2019-A Class
A Notes”), $44,445,000 Class B Asset Backed Notes (the “2019-A Class B Notes”), and $16,667,000 Class C Asset Backed Notes (the
“2019-A Class C Notes” and, collectively with the 2019-A Class A Notes and the 2019-A Class B Notes, the “2019-A Securitization
Notes”), through an indirect subsidiary. The 2019-A Class A Notes bear interest at 3.96%, the 2019-A Class B Notes bear interest at
6.17%, and the 2019-A Class C Notes bear interest at 7.62%. The 2019-A Securitization Notes are backed by a pool of unsecured
consumer installment loans (“Securitization Receivables”) and represent obligations of the issuer only. The 2019-A Securitization Notes
are not guaranteed by the Company. Under the 2019-A Notes, Securitization Receivables are sold to a wholly-owned subsidiary of the
Company and serviced by another subsidiary of the Company. The 2019-A Securitization Notes were paid in full and terminated during
2022. As of December 31, 2021, the total outstanding amount of the 2019-A Securitization Notes was $19.3 million.
88
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2018-A Securitization Notes
On October 31, 2018 (the “2018-A Closing Date”), the Company issued $95,000,000 Class A Asset Backed Notes (the “2018-A Class
A Notes”) and $30,400,000 Class B Asset Backed Notes (the “2018-A Class B Notes” and, collectively with the Class A Notes, the
“2018-A Securitization 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 Securitization Notes are backed by a pool of Securitization Receivables and represent obligations of the
issuer only. The 2018-A Securitization Notes are not guaranteed by the Company. Under the 2018-A Securitization Notes, Securitization
Receivables are sold to a wholly-owned subsidiary of the Company and serviced by another subsidiary of the Company. The 2018-A
Securitization Notes were paid in full and terminated during 2022. As of December 31, 2021, the total outstanding amount of the 2018-A
Securitization Notes was $0.6 million.
2018-2 Securitization Facility
On October 23, 2018, the Company and several of its subsidiaries entered into a receivables funding agreement (the “2018-2
Securitization Facility”) with Credit Suisse AG, New York Branch, as agent (the “2018-2 Agent”). The 2018-2 Securitization 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 Securitization
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.
The 2018-2 Debtor has issued a revolving note with an initial maximum principal balance of $150.0 million, which was required to be
secured by 1.25 times the drawn amount in eligible Securitization Receivables. On July 23, 2021, the 2018-2 Securitization Facility was
amended to increase the advance rate to 90% and to reopen and extend the revolving period for two years to July 23, 2023. The
amendment also made certain changes in the scope of eligibility criteria for acceptable collateral. On March 14, 2022 the 2018-2
Securitization facility was amended to, among other changes, increase the commitment amount from $150.0 million to $225.0 million.
As of December 31, 2022 and 2021, the outstanding amount of the 2018-2 Securitization Facility was $179.7 million and $75.0 million,
respectively.
The 2018-2 Securitization Facility is governed by a loan and security agreement, dated as of October 23, 2018, and amended on July
23, 2021 and March 14, 2022, among the 2018-2 Agent, the 2018-2 Debtor and certain other lenders and agent parties thereto. The
2018-2 Securitization Facility Class A Notes bear interest at a rate per annum equal to SOFR plus an applicable margin, which rate per
annum is 3.63% and the Class B Notes bear interest at a rate per annum equal to SOFR plus 8.00%. In addition, the 2018-2 Debtor paid
certain customary upfront closing fees to the 2018-2 Agent. Interest payments on the 2018-2 Securitization Facility will be made
monthly. The 2018-2 Debtor shall be permitted to prepay the 2018-2 Securitization Facility, subject to certain fees and conditions. Any
remaining amounts outstanding will be payable no later than July 23, 2025, the final maturity date.
All amounts due under the 2018-2 Securitization 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 Securitization 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 Securitization 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 Securitization Facility
On July 23, 2018, the Company and several of its subsidiaries entered into a receivables funding agreement (the “2018-1 Securitization
Facility”) with Pacific Western Bank, as lender (the “2018-1 Lender”). The 2018-1 Securitization 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 Securitization 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.
The 2018-1 Debtor has issued a revolving note with an initial maximum principal balance of $150.0 million, which was required to be
secured by 1.25 times the drawn amount in eligible Securitization Receivables. On September 15, 2021, the 2018-1 Securitization
89
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Facility was amended to increase the advance rate 90% and to reopen and extend the revolving period to September 15, 2024 and the
final maturity date to September 15, 2026. The amendment also increased the eligibility criteria around acceptable collateral and
increased flexibility around certain financial covenants. On March 24, 2022, the 2018-1 Securitization Facility was amended to, among
other changes, increase the commitment amount of the revolving loans from $150.0 million to $200.0 million and extend the maturity
date from September 15, 2026 to March 24, 2027. The 2018-1 Securitization Facility is non-recourse to the Company. As of December
31, 2022 and 2021, the outstanding amount of the 2018-1 Securitization Facility was $192.7 million and $72.7 million, respectively.
The 2018-1 Securitization Facility is governed by a loan and security agreement, dated as of July 23, 2018, and amended on September
15, 2021 and March 24, 2022, between the 2018-1 Lender and the 2018-1 Debtor. The 2018-1 Securitization Facility bears interest at a
rate per annum equal to SOFR plus an applicable margin, which rate per annum is 4.25%. In addition, the 2018-1 Debtor paid certain
customary upfront closing fees to the 2018-1 Lender. Interest payments on the 2018-1 Securitization Facility will be made monthly. The
2018-1 Debtor shall be permitted to prepay the 2018-1 Securitization 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
March 24, 2027, the final maturity date.
All amounts due under the 2018-1 Securitization 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 indebtedness of the 2018-1 Debtor.
RAOD Securitization Facility
Assumed in the OnDeck acquisition, the loan securitization facility (“RAOD Securitization Facility”) for Receivable Assets of OnDeck,
LLC (“RAOD”), a wholly-owned indirect subsidiary of the Company, collateralizes certain eligible installment loans originated or
purchased by OnDeck or certain other subsidiaries. The RAOD Securitization Facility was amended on December 24, 2020, which,
amongst other changes, extended the revolving period from December 2020 to December 2022, extended the maturity date from
September 2021 to December 2023, revised the advance rate to 76% and changed the borrowing rate from LIBOR plus 1.65% to LIBOR
plus 2.5%. On July 16, 2021, the RAOD Securitization Facility was further amended to increase the total commitment from $100.0
million to $177.6 million by increasing the Class A note commitment to $150.0 million and adding a Class B note with a commitment
of $27.6 million. The borrowing rate on the Class A note was lowered from LIBOR plus 2.5% to LIBOR plus 1.75% and the borrowing
rate on the Class B note was LIBOR plus 6.5% and the advance rate for the Class A notes remained 76% and the Class B notes advance
rate was 90%. The scope of acceptable collateral was also expanded to include line of credit products from OnDeck in addition to
installment loans. On March 18, 2022, the RAOD Securitization Facility was amended to, among other changes, increase the Class A
commitment amount to $200.0 million and the Class B commitment to $36.8 million. On November 18, 2022, the RAOD Securitization
Facility was amended to extend the revolving period to November 2024, extend the maturity date to November 2025, change the Class
A borrowing rate from LIBOR plus 1.75% to SOFR plus 1.90% and the Class B borrowing rate from LIBOR plus 6.5% to SOFR plus
8.00%, and decrease the Class B commitment from $36.8 million to $30.3 million and the Class B advance rate from 90% to 87.5%.
The Class A commitment amount and advance rate remained the same at $200.0 million and 76%, respectively. As of December 31,
2022 and 2021, the carrying amount of the RAOD Securitization Facility was $230.3 million and $101.0 million, respectively.
Revolving Credit Facility
On June 23, 2022, the Company and certain of its subsidiaries entered into an amended and restated secured revolving credit agreement
with Bank of Montreal, as administrative agent and collateral agent, the lenders from time to time party thereto, and BMO Capital
Markets, Axos Bank, and Synovus Bank, as the joint lead arrangers and joint lead bookrunners (the “Credit Agreement”). The Credit
Agreement amended and restated the existing credit agreement, dated as of June 30, 2017, by and among the Company, certain of its
subsidiaries, the lenders from time to time party thereto, and TBK Bank, SSB, as administrative agent, in its entirety. The Credit
Agreement provides for a secured, asset-backed revolving credit facility in an aggregate principal amount of up to $440.0 million, with
a $20.0 million letter of credit sublimit and a $10.0 million swingline loan sublimit. The proceeds of the loans under the Credit
Agreement may be used for working capital and other general business purposes. The Company had outstanding borrowings as of
December 31, 2022 and 2021, of $309.0 million and $200.0 million, respectively, under the Credit Agreement.
90
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The loans bear interest, at the Company’s option, at the base rate plus 0.75% or the SOFR rate plus 3.50%. In addition to customary fees
for a credit facility of this size and type, the Credit Agreement provides for payment of a commitment fee calculated with respect to the
unused portion of the commitment, and ranges from 0.15% per annum to 0.50% per annum depending on usage. The Credit Agreement
contains certain prepayment penalties if it is terminated on or before the first and second anniversary dates, subject to certain exceptions.
The loans mature on June 30, 2026. The Company had outstanding letters of credit under the Credit Agreement of $0.8 million as of
December 31, 2022 and 2021.
The Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the Company
and its subsidiaries’ ability to, among other things, incur indebtedness, grant liens, merge or consolidate, dispose of assets, make
investments, enter into certain transactions with affiliates, make restricted payments, and enter into restrictive agreements, in each case
subject to customary exceptions for a credit facility of this size and type. The Credit Agreement also includes financial maintenance
covenants, which require the Company to maintain compliance with a minimum fixed charge coverage ratio and a maximum
consolidated leverage ratio, each determined in accordance with the terms of the Credit Agreement. The Credit Agreement also contains
environmental, social, and governance provisions allowing amendment of the Credit Agreement to reflect subsequently agreed upon
key performance indicators with respect to sustainability targets, achievement of which would result in adjustments to the commitment
fee and applicable margins.
As of December 31, 2022, required principal payments under the terms of the long-term debt for each of the five years after December
31, 2022 are as follows (in thousands):
Year
2023 ................................................................................................................ $
2024 ................................................................................................................
2025 ................................................................................................................
2026 ................................................................................................................
2027 ................................................................................................................
Thereafter .......................................................................................................
Securitization(1)...............................................................................................
Total................................................................................................................ $
Amount
—
250,000
375,000
309,000
—
—
1,330,759
2,264,759
(1) The ODR 2021-1 Securitization Facility matures in November 2024, the ODR 2022-1 Securitization Facility matures in June 2025,
the 2018-2 Securitization Facility matures in July 2025, the RAOD Securitization Facility matures in November 2025, the NCR
2022 Securitization Facility matures in October 2026, the 2018-1 Securitization Facility matures in March 2027 and the ODAST
III Securitization Notes mature in May 2027.
91
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. Income Taxes
The components of the Company’s deferred tax assets and liabilities as of December 31, 2022 and 2021 were as follows (in thousands):
Deferred tax assets:
Compensation and benefits ................................................................... $
Translation adjustments ........................................................................
Lease liability........................................................................................
Foreign net operating loss carryforward ...............................................
U.S. net operating loss carryforward ....................................................
Capitalized intangible costs ..................................................................
Other .....................................................................................................
Total deferred tax assets....................................................................
Deferred tax liabilities:
Amortizable intangible assets ...............................................................
Loans and finance receivables, net .......................................................
Property and equipment ........................................................................
Operating lease right-of-use asset .........................................................
Other .....................................................................................................
Total deferred tax liabilities ..............................................................
Net deferred tax liabilities before valuation allowance ................
Valuation allowance..................................................................................
Net deferred tax liabilities......................................................................... $
As of December 31,
2022
2021
$
4,922
2,889
7,891
4,627
9,032
12,124
5,373
46,858
64,552
48,812
19,718
4,543
2,314
139,939
(93,081)
(11,088)
(104,169) $
9,362
2,657
9,705
4,054
7,029
—
7,663
40,470
66,664
27,839
16,095
5,470
2,777
118,845
(78,375)
(8,568)
(86,943)
As a result of the Tax Cuts and Jobs Act of 2017, certain research and experimental expenditures that could previously be deducted
immediately under Internal Revenue Code Section 174 are, beginning with amounts paid or incurred in tax years starting after December
31, 2021, required to be capitalized and amortized ratably over a 5 year period for research performed in the United States or 15 years
for research conducted outside the United States. As of December 31, 2022, the Company had a deferred tax asset of $12.1 million
related to this provision, which is included in capitalized intangible costs in the preceding table.
The components of the provision for income taxes and the income to which it relates for the years ended December 31, 2022, 2021 and
2020 are shown below (in thousands):
Income before income taxes:
Domestic............................................................................................ $
International ......................................................................................
Income before income taxes.................................................................. $
Current provision:
Federal............................................................................................... $
State and local ...................................................................................
Total current provision .......................................................................... $
Deferred provision:
Federal............................................................................................... $
State and local ...................................................................................
Total deferred provision ........................................................................ $
Total provision for income taxes........................................................... $
2022
Year Ended December 31,
2021
2020
272,863
(289)
272,574
41,942
6,218
48,160
15,566
1,424
16,990
65,150
$
$
$
$
$
$
$
335,809
1,346
337,155
32,610
8,194
40,804
35,982
3,301
39,283
80,087
$
$
$
$
$
$
$
435,420
—
435,420
39,066
6,399
45,465
8,467
3,259
11,726
57,191
92
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 years ended December 31, 2022, 2021 and 2020,
for the following reasons (dollars in thousands):
2022
Year Ended December 31,
2021
2020
Tax provision computed at the federal statutory income tax rate ...... $
State and local income taxes, net of federal tax benefits....................
Bargain purchase gain ........................................................................
Release of uncertain tax position........................................................
Other...................................................................................................
Total provision ............................................................................... $
57,240
8,752
—
(460)
(382)
65,150
$
$
70,802
9,687
—
(659)
257
80,087
$
$
91,438
8,422
(34,440)
(11,604)
3,375
57,191
Effective tax rate ................................................................................
23.9%
23.8%
13.1%
The Company has gross federal net operating loss carryforwards of $11.9 million as of December 31, 2022, mainly attributable to the
Company’s 2020 acquisitions. The Company has recorded a valuation allowance related to the federal net operating loss carryforwards
as they are not more likely than not to be utilized as the losses will be limited to the Section 382 ownership changes. The Company has
established a tax-effected valuation allowance of $0.7 million as of December 31, 2022, against the net operating losses that will expire
prior to their utilization. Following the acquisition of OnDeck, the Company is subject to a Section 382 limitation associated with the
built-in losses and other attributes of the acquired OnDeck assets. The reversal of certain deferred tax assets acquired by Enova associated
with OnDeck assets may be determined to be recognized built-in losses as defined in Section 382. As such, the losses may be limited to
the annual Section 382 limitation of approximately $1.0 million per year.
The Company has gross state net operating loss carryforwards of $341.6 million, $59.7 million and $35.2 million as of December 31,
2022, 2021 and 2020, respectively, that, if unused, will expire between calendar years 2023 and 2042. As of December 31, 2022, the
gross state net operating loss carryforwards include losses incurred in states that quantify net operating losses before the application of
apportionment factors. The Company did not previously have net operating loss carryforwards in these states, and their inclusion inflates
the total amount of state net operating loss carryforwards when compared to a population of states that quantify net operating losses
after the application of apportionment factors. The Company has recorded a valuation allowance of $4.7 million as of December 31,
2022, related to Louisiana state net operating loss carryforward deferred tax assets as they are not more likely than not to be utilized
based on the calculation of income tax in the state of Louisiana. The state excludes interest income from its tax base and the Company
does not anticipate generating a sufficient amount of non-interest income to enable the utilization of net operating losses.
The Company has gross foreign net operating loss carryforwards from Brazilian operations of $22.0 million, $19.3 million and $19.5
million as of December 31, 2022, 2021 and 2020, 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 Brazilian net operating
loss carryforwards, as they are not more likely than not to be utilized. As of December 31, 2022, we currently have insignificant
accumulated earnings in foreign jurisdictions. We intend to indefinitely reinvest these earnings and expect future U.S. cash generation
to be sufficient to meet future U.S. cash needs.
The following table summarizes the valuation allowance activity for the years ended December 31, 2022, 2021 and 2020 (in thousands):
Balance at beginning of period.............................................................. $
Additions ...........................................................................................
Deductions.........................................................................................
Balance at end of period........................................................................ $
8,568
2,683
(163)
11,088
$
$
12,169
2,674
(6,275)
8,568
$
$
5,377
6,792
—
12,169
2022
Year Ended December 31,
2021
2020
93
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A reconciliation of the activity related to unrecognized tax benefits follows for the years ended December 31, 2022, 2021 and 2020 (in
thousands):
Balance at beginning of period.............................................................. $
Additions based on tax positions related to the current year.............
Reductions based on tax positions related to the current year ..........
Additions for tax positions of prior years..........................................
Reductions for tax positions of prior years .......................................
Additions for opening tax positions of acquired entity .....................
Reductions due to settlements with the taxing authorities ................
Balance at end of period........................................................................ $
2022
Year Ended December 31,
2021
2020
42,024
42,487
—
276
(200)
—
(754)
83,833
$
$
39,037
5,514
—
2,242
(2,926)
—
(1,843)
42,024
$
$
53,613
—
(4,114)
2,033
(7,351)
6,460
(11,604)
39,037
Included in the balances of unrecognized tax benefits at December 31, 2022, 2021 and 2020 are potential benefits of $11.6 million,
$10.5 million and $10.6 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, 2022, 2021 and 2020 was $76.1 million,
$33.6 million and $28.4 million, respectively. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits
in income tax expense. The liability for unrecognized tax benefits as of December 31, 2022 and 2021 includes $3.7 million and $3.5
million, respectively, for accrued interest and penalties related to unrecognized tax benefits. Within the tabular rollforward, the additions
and reductions based on tax positions related to the current year, primarily relate to a temporary uncertainty that is expected to reverse
in the immediately following tax period. The table includes the net increase or decrease associated with this position.
The Company believes it is reasonably possible that, within the next twelve months, unrecognized domestic tax benefits will change by
a significant amount up to and including the full amount of the reserve. The Company’s principal uncertainties are related to the timing
of recognition of income and losses related to its loan and finance receivable portfolio. In 2020, the Company successfully closed 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 any future 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 the tax positions will
be resolved in the next twelve months.
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 2018. However, the 2014 tax year
is still open to the extent of the net operating loss that was carried back from the 2019 tax return. The years open to examination by
state, local and foreign government authorities vary by jurisdiction, but the statute of limitation is generally 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.
11. Commitments and Contingencies
Guarantees of Consumer Loans
In connection with its CSO programs, the Company guarantees consumer loan payment obligations to unrelated third-party lenders for
consumer loans and is required to purchase any defaulted loans it has guaranteed. As of December 31, 2022 and 2021, the amount of
consumer loans guaranteed by the Company had an estimated fair value of $16.3 million and $18.8 million, respectively, and an
outstanding principal balance of $12.9 million and $11.8 million, respectively. As of December 31, 2022 and 2021, the amount of
consumer loans, including principal, fees and interest, guaranteed by the Company were $15.6 million and $13.8 million, respectively.
These loans are not included in the consolidated balance sheets as the Company does not own the loans prior to default.
Litigation
On April 23, 2018, the Commonwealth of Virginia, through Attorney General Mark R. Herring, filed a lawsuit in the Circuit Court for
the County of Fairfax, Virginia against NC Financial Solutions of Utah, LLC (“NC Utah”), a subsidiary of the Company. The lawsuit
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
94
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 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 parties. 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.
12. Employee Benefit Plans
The Company sponsors the Enova International, Inc. 401(k) Savings Plan (the “Enova 401(k) Plan”), which is open to all U.S. employees
of the Company and its subsidiaries, excluding, until January 1, 2022, OnDeck. For OnDeck employees, prior to being transitioned to
the Enova 401(k) plan effective January 1, 2022, the Company sponsored the OnDeck 401(k) Plan which covered substantially all
employees of OnDeck. The Company also offers the Enova International, Inc. Nonqualified Savings Plan (the “NQSP”) for certain
members of Company management. For the Enova 401(k) Plan, new employees are automatically enrolled in this plan unless they elect
not to participate. 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 Enova 401(k) Plan. The Company’s matching contributions fully vest after a participant’s second year of
service with the Company. For the OnDeck 401(k) Plan, new OnDeck employees were automatically enrolled in this plan unless they
elected not to participate. The Company made matching contributions of 50% of up to the first 6% of pay that each employee contributed
to the OnDeck 401(k) Plan. The Company’s matching contributions fully vested after one year of service with the Company. The
Company recorded compensation expense for combined contributions to these three plans of $2.7 million, $3.6 million and $3.3 million
for the years ended December 31, 2022, 2021 and 2020, respectively.
The Company also 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 $0.8 million, $0.7 million
and $0.6 million for SERP contributions for the years ended December 31, 2022, 2021 and 2020, respectively.
The NQSP and the SERP are non-qualified, unfunded, deferred compensation plans for which the Company holds securities in rabbi
trusts to pay benefits. 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):
Other receivables and prepaid expenses ................................................... $
Accounts payable and accrued expenses .................................................. $
5,884
6,639
$
$
5,561
6,238
As of December 31,
2022
2021
13. Stock-Based Compensation
Under the Enova International, Inc. 2014 Third Amended and Restated Long-Term Incentive Plan (the “Enova LTIP”), the Company is
authorized to issue 14,500,000 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, 2022, there were 3,315,663 shares
available for future grants under the Enova LTIP.
In connection with the acquisition of OnDeck on October 13, 2020, the Board of Directors authorized the issuance of 419,291 shares of
Common Stock with respect to certain RSUs (including certain performance-based RSUs) outstanding under the On Deck Capital, Inc.
95
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2014 Equity Incentive Plan that were assumed by Enova. The Board of Directors also authorized the issuance of 67,757 shares of
Common Stock under certain inducement RSUs being granted in connection with the acquisition of OnDeck.
During the year ended December 31, 2022, the Company received 129,254 shares of its common stock valued at approximately $5.5
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, 2022, 2021 and 2020, 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
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 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 based on the Company’s closing stock price on the day 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 2022, 2021 and 2020:
Outstanding at beginning of year ......................................
Units granted..................................................................
Shares issued..................................................................
Units forfeited ................................................................
Outstanding at end of year ...............................................
Year Ended December 31,
2022
Year Ended December 31,
2021
Year Ended December 31,
2020
Weighted
Average Fair
Value at
Date of
Grant
$
$
25.80
43.15
24.87
32.74
32.06
Weighted
Average Fair
Value at
Date of
Grant
$
$
19.98
29.81
18.87
24.07
25.80
Units
1,750,093
1,055,746
(793,006)
(267,352)
1,745,481
Units
1,745,481
593,916
(640,337)
(158,481)
1,540,579
Weighted
Average Fair
Value at Date
of Grant
$
$
21.09
18.89
19.61
20.56
19.98
Units
1,117,766
1,294,509
(588,924)
(73,258)
1,750,093
Compensation expense related to these RSUs totaling $17.8 million ($13.4 million net of related taxes), $17.9 million ($13.5 million
net of related taxes) and $13.7 million ($10.3 million net of related taxes) was recognized for the years ended December 31, 2022, 2021
and 2020, respectively. Total unrecognized compensation cost related to these RSUs at December 31, 2022 was $34.3 million, which
will be recognized over a weighted average period of approximately 2.5 years. The outstanding RSUs had an aggregate intrinsic value
of $59.1 million at December 31, 2022.
Stock Options
During the years ended December 31, 2022, 2021 and 2020, 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 generally 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 periods. For the year ended
December 31, 2022, the Company estimated the fair value of the stock option grants using the Black-Scholes option-pricing model
based on the following weighted average assumptions: risk-free interest rate of 3.0%, expected term (life) of options of 4.5 years,
expected volatility of 59.1% and no expected dividends.
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. The Company 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
96
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
grant date based on its historical forfeiture rate and revises the estimate, if necessary, in subsequent periods if actual forfeitures differ
from those estimates.
The following table summarizes the Company’s stock option activity during 2022, 2021 and 2020:
Outstanding at beginning of year ......................................
Options granted ..............................................................
Options exercised ...........................................................
Options forfeited.............................................................
Outstanding at end of year ...............................................
Exercisable options at end of year ....................................
Year Ended December 31,
2022
Year Ended December 31,
2021
Year Ended December 31,
2020
Weighted
Average
Exercise
Price
20.65
37.00
15.80
30.46
23.80
19.72
Units
2,104,013
378,725
(263,090)
(16,961)
2,202,687
1,471,971
$
$
Weighted
Average
Exercise
Price
20.18
33.90
22.27
—
20.65
18.32
Units
2,621,956
175,839
(693,782)
—
2,104,013
1,402,261
$
$
Weighted
Average
Exercise Price
19.35
$
22.81
11.40
16.79
20.18
18.95
$
Units
2,084,297
576,223
(16,625)
(21,939)
2,621,956
1,641,133
The weighted average fair value of options granted in 2022 was $18.66. Compensation expense related to stock options totaling $4.1
million ($3.1 million net of related taxes), $3.2 million ($2.4 million net of related taxes) and $4.3 million ($3.2 million net of related
taxes) was recognized for the years ended December 31, 2022, 2021 and 2020, respectively. Total unrecognized compensation cost
related to stock options at December 31, 2022 was $7.7 million, which will be recognized over a period of approximately 2.4 years. At
December 31, 2022, the intrinsic value of stock options outstanding was $32.6 million, and the intrinsic value of stock options
exercisable was $27.5 million, respectively.
14. Related Party Transactions
With the acquisition of OnDeck, as discussed in Notes 1 and 2 in the Notes to Consolidated Financial Statements, the Company recorded
its interest in OnDeck Canada under the equity method of accounting; as such, OnDeck Canada was deemed a related party. In the
second quarter of 2022, the Company sold its remaining interest in OnDeck Canada. As of December 31, 2021, the Company had a due
from affiliate balance of $1.2 million related to OnDeck Canada that was primarily the result of labor and software charges from people
and technology assets at the OnDeck parent company.
On February 24, 2021, the Company contributed the platform-as-service business assumed in the OnDeck acquisition to Linear in
exchange for ownership units in that entity. The Company records its interest in Linear under the equity method of accounting. As of
December 31, 2022, the Company had no outstanding affiliate balance with Linear. As of December 31, 2021, the Company had a due
from affiliate balance of $2.9 million from Linear that was primarily comprised of reimbursable expenses paid by the Company on
behalf of Linear and fees for services provided.
As discussed in Note 1 in the Notes to Consolidated Financial Statements, in December 2021, the Company divested a portion of its
interest in OnDeck Australia and began recording its remaining interest utilizing the equity method of accounting. As of December 31,
2022 and 2021, there was a due from affiliate balance of $0.2 million and no outstanding balance between the Company and OnDeck
Australia, respectively.
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 its various securitization facilities. The Company
transfers certain loan receivables to wholly owned, bankruptcy-remote special purpose subsidiaries (“VIEs”), which issue notes backed
by the underlying loan receivables and are serviced by other wholly-owned subsidiaries 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 the 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
97
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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.
16. Supplemental Disclosures of Cash Flow Information
The following table sets forth certain cash and non-cash activities for the years ended December 31, 2022, 2021 and 2020 (in thousands):
2022
Year Ended December 31,
2021
2020
Cash paid during the year for:
Interest............................................................................................... $
Income taxes (recovered) paid ..........................................................
108,006
(2,354)
Non-cash investing and financing activities:
Loans and finance receivables renewed ............................................ $
Fair value of acquired assets .............................................................
Liabilities assumed in acquisitions....................................................
Issuance of common stock related to the acquisition of OnDeck .....
320,789
—
—
—
$
$
$
$
71,103
89,270
220,106
—
—
—
74,901
27,479
95,080
772,376
487,458
(105,960)
17. Operating Segment Information
During the three years ended December 31, 2022, the Company primarily provided online financial services to non-prime credit
consumers and small businesses in the United States, Australia and Brazil. The Company 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 table presents the Company’s revenue by geographic region for the years ended December 31, 2022, 2021 and 2020 (in
thousands):
Revenue
United States ................................................................................. $
Other international countries.........................................................
Total revenue ................................................................................... $
1,722,927
13,158
1,736,085
$
$
1,184,599
23,333
1,207,932
$
$
1,071,694
12,016
1,083,710
2022
Year Ended December 31,
2021
2020
The Company’s long-lived assets, which consist of the Company’s property and equipment, were $93.2 million and $78.4 million at
December 31, 2022 and 2021, 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
The Company uses a hierarchical framework that prioritizes and ranks the market observability of inputs used in its fair value
measurements. Market price observability is affected by a number of factors, including the type of asset or liability and the characteristics
specific to the asset or liability being measured. Assets and liabilities with readily available, active, quoted market prices or for which
fair value can be measured from actively quoted prices generally are deemed to have a higher degree of market price observability and
a lesser degree of judgment used in measuring fair value. The Company classifies the inputs used to measure fair value into one of three
levels as follows:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or
similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose
significant value drivers are observable.
Level 3: Unobservable inputs for the asset or liability measured.
98
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s
market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to
measure an asset or liability may fall into different levels of the fair value hierarchy. In those cases, the fair value measurement is
categorized in its entirety in the same level of the fair value hierarchy as the lowest level of input that is significant to the entire
measurement. Such determination requires significant management judgment.
During the years ended December 31, 2022 and 2021, there were no transfers of assets or liabilities between Level 1, 2 or 3. 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 that are measured at fair value on a recurring basis as of December 31, 2022 and 2021 are as follows
(in thousands):
Financial assets
Consumer loans and finance receivables(1) .................................... $
Small business loans and finance receivables(1).............................
Non-qualified savings plan assets(2) ...............................................
Investment in trading security(3).....................................................
Total........................................................................................... $
1,083,062
1,935,466
5,884
17,406
3,041,818
December 31,
2022
Financial assets
Consumer loans and finance receivables(1) .................................... $
Small business loans and finance receivables(1) .............................
Non-qualified savings plan assets(2) ...............................................
Investment in trading security(3) .....................................................
890,144
1,074,546
5,561
16,062
Total........................................................................................... $ 1,986,313
December 31,
2021
$
$
$
$
Fair Value Measurements Using
Level 2
Level 3
Level 1
— $
—
5,884
17,406
23,290
$
— $
—
—
—
— $
1,083,062
1,935,466
—
—
3,018,528
Fair Value Measurements Using
Level 2
Level 3
Level 1
— $
—
5,561
16,062
21,623
$
— $
890,144
—
1,074,546
—
—
—
—
— $ 1,964,690
(1) Consumer loans and finance receivables and small business loans and finance receivables include $528.8 million and $1,170.9
million as of December 31, 2022, respectively, and $274.5 million and $470.8 million as of December 31, 2021, respectively in
assets of consolidated VIEs.
(2) The non-qualified savings plan assets are included in “Other receivables and prepaid expenses” in the Company’s consolidated
balance sheets and have an offsetting liability of equal amount, which is included in “Accounts payable and accrued expenses” in
the Company’s consolidated balance sheets.
(3) Investment in trading security is included in “Other assets” in the Company’s consolidated balance sheets.
The Company primarily estimates the fair value of its loan and finance receivables portfolio using discounted cash flow models that
have been internally developed. The models use inputs, such as estimated losses, prepayments, utilization rates, servicing costs and
discount rates, that are unobservable but reflect the Company’s best estimates of the assumptions a market participant would use to
calculate fair value. Certain unobservable inputs may, in isolation, have either a directionally consistent or opposite impact on the fair
value of the financial instrument for a given change in that input. An increase to the net loss rate, prepayment rate, servicing cost, or
discount rate would decrease the fair value of the Company’s loans and finance receivables. When multiple inputs are used within the
valuation techniques for loans, a change in one input in a certain direction may be offset by an opposite change from another input.
The fair value of the nonqualified savings plan assets was deemed Level 1 as they are publicly traded equity securities for which market
prices of identical assets are readily observable.
The fair value of the investment in trading security was deemed Level 1 as it is a publicly traded fund with active market pricing that is
readily available.
The Company had no liabilities measured at fair value on a recurring basis as of December 31, 2022 or 2021.
99
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 31,
2022 and 2021, there were no assets or liabilities recorded at fair value on a nonrecurring basis.
Financial Assets and Liabilities Not Measured at Fair Value
The Company’s financial assets and liabilities as of December 31, 2022 and 2021 that are not measured at fair value in the consolidated
balance sheets are as follows (in thousands):
December 31,
2022
Financial assets:
Cash and cash equivalents .............................................................. $
Restricted cash(1).............................................................................
Investment in unconsolidated investee (2) .......................................
Total ........................................................................................... $
100,165
78,235
6,918
185,318
Financial liabilities:
Revolving line of credit .................................................................. $
Securitization facilities ...................................................................
8.50% senior notes due 2024..........................................................
8.50% senior notes due 2025..........................................................
Total ........................................................................................... $
309,000
1,329,772
250,000
375,000
2,263,772
December 31,
2021
Financial assets:
Cash and cash equivalents .............................................................. $
Restricted cash(1).............................................................................
Investment in unconsolidated investee (2) .......................................
Total ........................................................................................... $
165,477
60,406
6,918
232,801
Financial liabilities:
Revolving line of credit .................................................................. $
Securitization facilities ...................................................................
8.50% senior notes due 2024..........................................................
8.50% senior notes due 2025..........................................................
Total ........................................................................................... $
200,000
567,007
250,000
375,000
1,392,007
$
$
$
$
$
$
$
$
Fair Value Measurements Using
Level 2
Level 1
Level 3
100,165
78,235
—
178,400
$
$
— $
—
—
—
— $
— $
—
—
— $
— $
1,304,702
237,185
346,523
1,888,410
$
—
—
6,918
6,918
309,000
—
—
—
309,000
Fair Value Measurements Using
Level 2
Level 1
Level 3
165,477
60,406
—
225,883
$
$
— $
—
—
—
— $
— $
—
—
— $
— $
567,903
254,693
386,348
1,208,944
$
—
—
6,918
6,918
200,000
—
—
—
200,000
(1) Restricted cash includes $65.5 million and $45.7 million in assets of consolidated VIEs as of December 31, 2022 and 2021,
respectively.
(2) Investment in unconsolidated investee is included in “Other assets” in the consolidated balance sheets.
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.
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.
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 facilities and senior notes are estimated based on quoted prices in markets that are not
active, which are deemed Level 2 inputs.
100
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. Subsequent Events
Subsequent events have been reviewed through the date these financial statements were issued.
On February 22, 2023, the Company priced an offering by an indirect subsidiary, NetCredit Combined Receivables 2023, LLC (the
“Issuer”), subject to market and other customary conditions, of $170.0 million in aggregate principal notes (the “2023-A Notes”), with
an anticipated closing date of on or about March 3, 2023 (the “2023-A Closing Date”). The 2023-A Notes will be sold at a discount of
the principal amount to yield 9.00% to expected maturity (equivalent to 3.975% spread above interpolated U.S. Treasuries) and will be
backed by a pool of Securitization Receivables. The 2023-A Notes will represent obligations of the Issuer only and will not be guaranteed
by the Company. Under the 2023-A Notes, approximately $200.0 million of Securitization Receivables will be sold to a wholly-owned
subsidiary of the Company and serviced by another subsidiary of the Company. The net proceeds of the offering of the 2023-A Notes
on the 2023-A Closing Date will be used to acquire the Securitization Receivables from certain subsidiaries of the Company, fund a
reserve account and pay fees and expenses incurred in connection with the transaction. The 2023-A Notes will be 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 2023-A Notes 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 Securities Act and applicable state securities or blue sky laws and foreign securities laws.
101
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, 2022 (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.
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, 2022.
The effectiveness of our internal control over financial reporting as of December 31, 2022 has been audited by Deloitte & Touche LLP,
an independent registered public accounting firm, as stated in their report which appears in this Form 10-K.
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
the Exchange Act) during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
102
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The Company plans to file with the SEC a definitive proxy statement, pursuant to SEC Regulation 14A in connection with its 2023
Annual Meeting of Stockholders, or the Proxy Statement, within 120 days after December 31, 2022. 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.
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.
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, 2022, with respect to shares of common stock of the Company that may be
issued under the Company’s existing equity compensation plans.
Plan Category
Equity compensation plans
approved by security holders.....
Equity compensation plans not
approved by security holders.....
Total...........................................
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)
3,743,266
$
—
3,743,266
$
14.01
—
14.01
3,315,663
—
3,315,663
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.
103
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.
104
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 (Deloitte & Touche LLP; PCAOB ID No. 34)
(PricewaterhouseCoopers LLP; PCAOB ID No. 238) ................................................................................................................
Consolidated Balance Sheets – December 31, 2022 and 2021 ....................................................................................................
Consolidated Statements of Income – Years Ended December 31, 2022, 2021 and 2020..........................................................
Consolidated Statements of Comprehensive Income – Years Ended December 31, 2022, 2021 and 2020................................
Consolidated Statements of Stockholders’ Equity – Years Ended December 31, 2022, 2021 and 2020 ....................................
Consolidated Statements of Cash Flows – Years Ended December 31, 2022, 2021 and 2020 ...................................................
Notes to Consolidated Financial Statements................................................................................................................................
62
65
67
68
69
70
71
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
8-K
001-35503
2.1
12/28/2020
Agreement and Plan of Merger dated as of July
28, 2020, among Enova International, Inc.,
Energy Merger Sub, Inc. and On Deck Capital,
Inc.
Enova International, Inc. Amended and
Restated Certificate of Incorporation
Enova International, Inc. Amended and
Restated Bylaws
8-K
001-35503
8-K
001-35503
Specimen common stock certificate
10-12B
001-35503
Description of the Registrant’s Securities
10-K
001-35503
8-K
001-35503
3.2
3.1
4.1
4.2
4.1
11/17/2017
11/17/2017
10/2/2014
2/27/2020
9/8/2017
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).
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
Base Indenture, dated as of May 5, 2021, by
and among OnDeck Asset Securitization Trust
III LLC as Issuer and Deutsche Bank Trust
Company Americas, as Indenture Trustee of
Asset Backed Notes (Issuable in Series of
Notes)
105
10-Q
001-35503
4.1
10/31/2018
10-Q
001-35503
4.1
8/2/2021
2.2
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
10.1
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
Series 2021-1 Indenture Supplement dated as of
May 5, 2021 to Base Indenture dated as of May
5, 2021, by and among OnDeck Asset
Securitization Trust III LLC as Issuer and
Deutsche Bank Trust Company Americas, as
Indenture Trustee of up to $500,000,000 of
Asset Backed Notes
Tax Matters Agreement between Cash America
International, Inc. and Enova International, Inc.
Enova International, Inc. 2014 Long-Term
Incentive Plan*
Enova International, Inc. First Amended and
Restated 2014 Long-Term Incentive Plan*
Enova International, Inc. Senior Executive
Bonus Plan*
Enova International, Inc. Amended and
Restated Senior Executive Bonus Plan*
Enova International, Inc. Supplemental
Executive Retirement Plan, as amended and
restated effective September 13, 2017*
Enova International, Inc. Nonqualified Savings
Plan*
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*
Enova International, Inc. Amended and
Restated Annual Short Term Incentive Plan*
Form of Executive Change-in-Control
Severance and Restrictive Covenant Agreement
(Chief Executive Officer)*
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)*
10-Q
001-35503
4.2
8/2/2021
8-K
001-35503
10.1
11/19/2014
10-Q
001-35503
10.1
11/14/2014
DEF 14A 001-35503 Appendix A
4/7/2016
DEF 14A 001-35503 Appendix B
4/7/2016
10-Q
001-35503
10.1
7/31/2019
10-Q
001-35503
10.1
11/1/2017
10-12B
001-35503
10.6
7/31/2014
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
10-Q
001-35503
10.2
7/31/2019
10-K
001-35503
10.12
2/28/2022
10-K
001-35503
10.13
2/28/2022
10-12B
001-35503
10.17
10/17/2014
10-12B
001-35503
10.18
10/17/2014
106
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
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
Form of Enova International, Inc. Second
Amended and Restated 2014 Long-Term
Incentive Plan Award Agreement for Special
Grant of Nonqualified Stock Option with a
Limited Stock Appreciation Right
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
Lease Agreement, dated July 25, 2014, between
175 Jackson L.L.C. and Enova International,
Inc.
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
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
10-Q
001-35503
10.1
7/29/2020
10-Q
001-35503
10.2
7/29/2020
10-Q
001-35503
10.1
8/4/2016
8-K
001-35503
10.1
3/31/2016
10-12B
001-35503
10.11
10/22/2014
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
107
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
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
Loan and Security Agreement, dated July 23,
2018, by and between Pacific Western Bank
and EFR 2018-1, LLC
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
Loan and Security Agreement, dated October
23, 2018, by and between Credit Suisse AG and
EFR 2018-2, LLC
Third 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 July 1, 2019
Amendment No. 5 to Fourth Amended and
Restated Credit Agreement, dated as of
December 24, 2020, among Receivable Assets
of OnDeck, LLC, as Borrower, the Lenders
party thereto and Truist Bank, as Administrative
Agent (Portions of this exhibit have been
omitted pursuant to Item 601(b)(10) of
Regulation S-K.)
Fifth Amendment, Consent and Joinder to
Credit Agreement and Amendment to Security
Agreement by and among Enova International,
Inc., the other borrowers and guarantors party
thereto, the lenders party hereto, and TBK
Bank, SSB, as Administrative Agent and
Collateral Agent, dated as of May 10, 2021
108
10-K
001-35503
10.27
2/27/2019
10-Q
001-35503
10.1
10/31/2018
10-Q
001-35503
10.2
10/31/2018
10-Q
001-35503
10.3
10/31/2018
10-K
001-35503
10.34
2/27/2019
10-Q
001-35503
10.3
7/31/2019
10-K
001-35503
10.36
2/26/2021
10-Q
001-35503
10.1
8/2/2021
10.36
10.37
10.38
10.39
10.40
10.41
10.42
10.43
10.44
10.45
Amendment No. 6 to Fourth Amended and
Restated Credit Agreement, dated as of July 16,
2021, among Receivable Assets of OnDeck,
LLC, as Borrower, the Lenders party thereto
and Truist Bank, as Administrative Agent
Amendment to Loan and Security Agreement,
dated July 23, 2021, by and between Credit
Suisse AG and EFR 2018 2, LLC
Amendment to Loan and Security Agreement,
dated September 15, 2021, by and between
Pacific Western Bank and EFR 2018 1, LLC
Credit agreement dated as of November 17,
2021 among OnDeck Receivables 2021, LLC,
various lenders, and JPMorgan Chase Bank,
N.A., as Administrative Agent and Collateral
Agent and Deutsche Bank Trust Company
Americas, as Paying Agent
Second Amendment to Loan and Security
Agreement, dated March 14, 2022, by and
between Credit Suisse AG and EFR 2018-2,
LLC
Amendment No. 7 to Fourth Amended and
Restated Credit Agreement, dated as of March
18, 2022, among Receivable Assets of OnDeck,
LLC, as Borrower, the Lenders party thereto
and Truist Bank, as Administrative Agent
Second Amendment to Loan and Security
Agreement, dated March 24, 2022, by and
between Pacific Western Bank and EFR 2018-
1, LLC
First Amendment to Credit Agreement, dated
March 29, 2022 among OnDeck Receivables
2021, LLC, various lenders, and JPMorgan
Chase Bank, N.A., as Administrative Agent and
Collateral Agent and Deutsche Bank Trust
Company Americas, as Paying Agent
Amended and Restated 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 Bank
of Montreal, as Administrative Agent and
Collateral Agent dated as of June 23, 2022
Credit Agreement dated June 30, 2022 among
OnDeck Receivables 2022, LLC, various
lenders, and BMO Capital Markets Corp., as
Administrative Agent and Collateral Agent, and
Deutsche Bank Trust Company Americas, as
Paying Agent
10-Q
001-35503
10.1
10/29/2021
10-Q
001-35503
10.2
10/29/2021
10-Q
001-35503
10.3
10/29/2021
10.-K
001-35503
10.39
2/28/2022
10-Q
001-35503
10.1
5/3/2022
10-Q
001-35503
10.2
5/3/2022
10-Q
001-35503
10.3
5/3/2022
10-Q
001-35503
10.4
5/3/2022
10-Q
001-35503
10.1
7/29/2022
10-Q
001-35503
10.2
7/29/2022
109
10.46
10.47
10.48
16.1
21.1
23.1
23.2
31.1
31.2
32.1
32.2
101.INS
101.SCH
101.CAL
101.LAB
Note Issuance and Purchase Agreement among
NetCredit Receivables 2022, LLC as Issuer,
Citibank, N.A. as Collateral Agent and Paying
Agent, Jefferies Funding LLC as Initial Note
Purchaser, each of note purchasers from time to
time party hereto, and Jefferies Funding LLC,
as Administrative Agent dated as of October 21,
2022
Third Amendment to Credit Agreement, dated
November 18, 2022, among OnDeck
Receivables 2021, LLC, various lenders, and
JPMorgan Chase Bank, N.A., as Administrative
Agent and Collateral Agent and Deutsche Bank
Trust Company Americas, as Paying Agent
Amendment No. 8 to Fourth Amended and
Restated Credit Agreement, dated as of
November 18, 2022, among Receivable Assets
of OnDeck, LLC, as Borrower, the Lenders
party thereto and Truist Bank, as Administrative
Agent
Letter of PricewaterhouseCoopers LLP to the
SEC dated May 3, 2021
Subsidiaries of Enova International, Inc.
Consent of Deloitte & Touche LLP
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
Inline XBRL Instance Document - the instance
document does not appear in the Interactive
Data File because its XBRL tags are embedded
within the Inline XBRL document.(1)
Inline XBRL Taxonomy Extension Schema
Document(1)
Inline XBRL Taxonomy Extension Calculation
Linkbase Document(1)
Inline XBRL Taxonomy Label Linkbase
Document(1)
10-Q
001-35503
16.1
5/3/2021
X
X
X
X
X
X
X
X
X
X
X(2)
X(2)
X(2)
X(2)
110
101.DEF
101.PRE
104
Inline XBRL Taxonomy Extension Definition
Linkbase Document(1)
Inline XBRL Taxonomy Extension Presentation
Linkbase Document(1)
Cover Page Interactive Data File (formatted as
Inline XBRL and contained in Exhibit 101)
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, 2022 and December 31, 2021; (ii) Consolidated Statements of Income for the years
ended December 31, 2022, December 31, 2021 and December 31, 2020; (iii) Consolidated Statements of Comprehensive Income
for the years ended December 31, 2022, December 31, 2021 and December 31, 2020; (iv) Consolidated Statements of
Stockholders’ Equity at December 31, 2022, December 31, 2021 and December 31, 2020; (v) Consolidated Statements of Cash
Flows for the years ended December 31, 2022, December 31, 2021 and December 31, 2020; 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.
111
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 24, 2023
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.
Signature
/s/ DAVID FISHER
David Fisher
Title
Chairman of the Board of Directors,
Chief Executive Officer and Director
(Principal Executive Officer)
/s/ STEVEN CUNNINGHAM
Steven Cunningham
Chief Financial Officer
(Principal Financial Officer)
/s/ JAMES J. LEE
James J. Lee
/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/ LINDA JOHNSON RICE
Linda Johnson Rice
/s/ MARK A. TEBBE
Mark A. Tebbe
Chief Accounting Officer
(Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
Director
112
Date
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023