Enova Has Big Q1, Sees Strong SMB Market

Enova originated $960M in small business loans in Q1 2024, setting what is believed to be a new quarterly record. During the earnings call, Enova CEO David Fisher said that confidence in the economy and consumer spending was driving the SMB market forward.

“Our small businesses aren’t concerned about inflation,” Fisher said. “Strong consumer spending and the ability to increase prices are offsetting that. And we are seeing stable performance in that portfolio.”

In fact, the company expects yield on the SMB side of its business to increase in the short term.

“We’ve just shifted more towards kind of the middle to upper end of our APR range for the SMB products,” said Fisher. “And so with those higher APRs from slightly higher defaults – so you’ll see over the next few quarters just slightly elevated compared to historic level default rates in the SMB business and eventually slightly higher net charge-offs as a percentage of ARR. But what will come along with that, is higher yields and higher revenue. And so the ROEs on those products, those originations are looking really, really good.”

Enova also expressed the value it’s gotten out of marketing its products on TV.

“We’ve gotten heavier and heavier in TV,” Fisher said. “That’s been an area of success for us for sure relative to say five to seven years ago, and I think certainly relative to our competitors. And then digital I think has improved for us in ways that we probably wouldn’t have guessed a few years ago. And a lot of that growth I think is kind of taking share away from leads. I think leads has continued to shrink as the share of the total, which was fine, we’d like to control our own destiny.”