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Stories
Enova Surpasses $1 Billion in SMB Loans in a Single Quarter For First Time
October 23, 2024Enova’s small business loan arm had a huge 3rd quarter.
“Notably, for the first time in our history, we originated over $1 billion in small business loans, up 33% year-over-year and 14% sequentially,” said Enova CEO David Fisher during the company’s earning call. “The main drivers of this growth are consumer spending and confidence from small business owners in this current economy.”
Additionally, he said:
As discussed on our first quarter call, we identified opportunities within our SMB business that we believe would support continued strong growth with improved unit economics. We continue to see the benefits of this strategy in the third quarter as small business originations growth was strong, small business revenue yield continued to move higher sequentially and the small business quarterly net charge-off ratio remained on the low end of our expected range. Expectations for our future credit performance remained stable as the consolidated consumer and small business fair-value premiums were all largely unchanged from last quarter.
Enova Originated $918M in Small Business Loans in Q2
July 29, 2024
Enova remains optimistic about the economy and its borrowers, according to its latest quarterly earnings report.
“Recently, there’s been significant talk from both pundits and our competitors about an uncertain macro environment, but our Q2 performance as well as internal and external data confirmed that both our SMB and consumer customers remain on solid footing as our customers continue to benefit from job growth, low unemployment rates, easing inflation, and rising real wages,” said CEO David Fisher during the earnings call.
SMB loan originations of $918M were down slightly from Q1 but up 29% year-over-year.
“I think competitively, I would say there’s very little has changed,” Fisher said. “There haven’t been new entrants in the space. We haven’t seen any of our competitors get particularly more aggressive. There’s always a little bit of ebb and flows but certainly no trends. As I mentioned in my comments, certainly over the last couple of quarters, we’ve heard some lack of confidence I think from some of the other players in the space and it’s probably holding them back a bit when I think we’re seeing somewhat of the opposite. … And as we talked about, we think our customers are in a really, really good place. Job growth has remained good. Wages continue to rise. Inflation is coming down. Enova is a very beneficial place for both consumers and small businesses.”
Enova Has Big Q1, Sees Strong SMB Market
May 1, 2024Enova 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.”
Enova Has Record Quarter for SMB Lending
January 31, 2024Enova logged its biggest quarter ever for small business loan originations, hitting $930M in Q4.
“Strong demand and solid credit performance enabled us to be more aggressive with our marketing, particularly in our SMB business,” said Enova CEO David Fisher during the earnings call. The company’s net charge-off ratio was also down, dropping from 5.5% in Q3 to 4.8% in Q4.
Enova has consistently considered itself to be in a league of its own on the small business lending front, citing most recently that it continues to benefit from a “strong brand presence” and “low levels of competition.”
“Our results are driven by the strength of our talented team, diversified product offerings and world-class machine learning, analytics and technology,” said Fisher during the call. “A combination of these strengths has enabled us to successfully manage the uncertain macroeconomic environment we faced in 2023, growing originations while managing credit to acceptable levels that generate unit economics above our targets. Our unwavering commitment to this balanced approach to growth has allowed us to take share from our competitors in both our consumer and SMB business while effectively managing risk.”
Enova Discussed Its Q3 Performance, Its View on the Small Business Loan Market
October 24, 2023Enova originated $783M in small business loans in Q3, which is up from $770M in Q1 and $712M in Q2. Overall company profitability was slightly down but mainly because they increased marketing spend later in the quarter in which there was not enough time to also experience the corresponding revenue increase.
Enova also recorded some slightly higher-than-expected chargeoffs that came from their 2nd half 2022 smb loan vintages.
“As you would expect, our underwriting models adjusted based on this data and vintages since January of this year are back in line with our expectations,” said Enova CEO David Fisher on the earnings call. “But since there is a 9 to 12-month emergence period for charge-offs in our small business products, charge-offs from those second half 2022 vintages were at their peak in Q3 of this year.”
Given the current interest rate environment, the call drew out some insightful information about the small business loan market. Bullet points below:
- “…while prime and super prime borrowers are facing higher interest expense due to the increase in the Fed funds rate, we have not raised our pricing.” – Fisher
- “I think the competitive environment is still pretty benign, like we’ve been talking about for a while. Nothing new on the small business side. I think we’ve seen, as we talked about, competitors struggle with liquidity, also a couple move more towards the prime space in SMB.” – Fisher
- “On the small business side, still a lot coming through the wholesale channel through ISOs, but we continue to grow our direct channel. It’s a very fast-growing channel for us” – Fisher
- “So if the consumer falls on their face, small businesses are in big trouble. We saw that during COVID, but if the consumer is still spending and doing well, the small businesses tend to be a big beneficiary of that incremental spend.” – Fisher
- “While there’s a lot of uncertainty in the economy today, both internal and external data lead us to believe that both our consumer and small business customers are navigating it well.” – Fisher
- “Inflation continues to moderate, while the labor market and wage growth continue to be very strong.” – Fisher
- “To be clear, Enova overall is in great shape, and we’re feeling good about Q4 and next year.” – Fisher
Enova Originated $712M in Small Business Loans in Q2
July 27, 2023Enova originated $712M in small business loans in Q2, according to the latest earnings report, up slightly YoY and down slightly QoQ.
Overall, the company says it has been taking a cautious approach even as it continues to grow. There is plenty of demand while the competitive environment remains fairly weak in their opinion.
“During the quarter, we closed our first ever facility secured exclusively by small business lines of credit,” Enova CEO Steve Cunningham said. “The two-year $287 million secured warehouse was priced at SOFR plus 420 basis points. Additionally, last week, we reentered the term securitization market with our first OnDeck deal since 2021. The rated three-year fixed rate $227 million term transaction priced with the blended coupon of 7.7%, demonstrating our confidence in the continued strength of our business relative to our current valuation.”
Enova Originated $770M in Small Business Loans in Q1
April 27, 2023Enova originated $770M in small business loans in Q1, according to the latest earnings report. The company posted an overall impressive net income of $51M to boot.
“We delivered another quarter of solid top- and bottom-line results, with our balanced approach to growth enabling us to successfully navigate the current macroeconomic backdrop,” said David Fisher, Enova’s CEO, in an official statement.
SMB credit products now makeup 65% of Enova’s portfolio, up from 56% last year.
“Given our strong brand presence, minimal competition and diverse portfolio, we continue to see a long runway ahead to drive meaningful volume,” Fisher said.
Although the company’s eye is still on growth they are being intentionally conservative given the macroeconomic conditions.
“…with the good credit metrics and entering a more seasonably attractive time of year, that gives us incentive to accelerate originations a bit, which I also mentioned on the call,” said Fisher. “And those could push up the metrics a bit because, it’s important to remember, there’s 2 ways of accelerating originations. You can open up your credit model and bring in more lower credit quality customers or you can spend more per customer and attract more higher credit quality customers. And we vary those tactics based on what we’re seeing in our data each and every day. And we’re twisting those dials each and every day to adjust marketing spend and adjust where our credit metrics are.”
Enova’s Current Small Business Lending Strategy
February 10, 2023“We are being very conservative with our small business lending right now. There’s a tremendous amount of demand,” said David Fisher, CEO of Enova, on the company’s most recently quarterly earnings call. “I think both demand from businesses who need money coming out of COVID still but also from a lack of competition and a reduction of competition. So there’s a tremendous amount of demand. We’re filling a very small portion of it as we are trying to remain very, very conservative with respect to our originations, so we can manage through any turmoil in the economy.”
Fisher said that for its small business lending right now, the focus is really on diversification, that being “diversification across states, across industries, across product types and across kind of the credit spectrum.”
“…as we’ve just seen over the last 6 to 12 months, there are some industries that are doing well for a couple of quarters and some that are doing worse and then that rotates,” he said. “And having that strong diversification has allowed us to manage through that variability over the last couple of years without too much difficulty.”
Despite the company’s conservative strategy right now, Enova still managed to originate $826M in small business loans in Q4 2022, an increase from the $807M in the previous quarter.
Given all of Enova’s consistent success, especially in the current environment, one analyst asked if there was a play for the company to increase its marketshare.
“So we’re not being super aggressive with taking share right now because we don’t want to be too aggressive with our lending,” Fisher replied. “But we continue to build out products and expand the types of opportunities we can offer to small businesses and we’ll continue to do that over time so that as we do get aggressive hopefully in the next — more aggressive over the next 6 to 12 months, we can take our industry-leading position, combine that with the new products that we can offer customers and we’ll be even in a more dominant position. So we’re gaining share kind of just by the fact that competitors are pulling back even more due to credit concerns or lack of capital and we’re fine with that. But we’re not trying to maximize our market share right now because we do want to make sure that we’re being smart about credit. But continuing to build in the background so that when we do get more aggressive, we’re really well positioned.”
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