Investor Presentation November 2015
Safe Harbor Statement Cautionary Statement Regarding Risks and Uncertainties That May Affect Future Results This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about the business, financial condition and prospects of Enova. These forward-looking statements give current expectations or forecasts of future events and reflect the views and assumptions of Enova's senior management with respect to the business, financial condition and prospects of Enova as of the date of this release and are not guarantees of future performance. The actual results of Enova could differ materially from those indicated by such forward-looking statements because of various risks and uncertainties applicable to Enova's business, including, without limitation, those risks and uncertainties indicated in Enova's filings with the Securities and Exchange Commission ("SEC"), including our annual report on Form 10-K, quarterly reports on Forms 10-Q and current reports on Forms 8-K. These risks and uncertainties are beyond the ability of Enova to control, and, in many cases, Enova cannot predict all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. When used in this release, the words "believes," "estimates," "plans," "expects," "anticipates" and similar expressions or variations as they relate to Enova or its management are intended to identify forwardlooking statements. Enova cautions you not to put undue reliance on these statements. Enova disclaims any intention or obligation to update or revise any forward-looking statements after the date of this release. Non-GAAP Financial Information In addition to the financial information prepared in conformity with generally accepted accounting principles in the United States ( GAAP ), the Company provides cash flow from operating activities less net consumer loans originated, acquired and repaid and purchases of property and equipment ( free cash flow ) and net income excluding depreciation, amortization, interest, foreign currency transaction gains or losses, taxes, and stock-based compensation expense ( Adjusted EBITDA ), which are not considered measures of financial performance under GAAP. Management uses these non-gaap financial measures for internal managerial purposes and believes that their presentation is meaningful and useful in understanding the activities and business metrics of the Company s operations. Management believes that these non-gaap financial measures reflect an additional way of viewing aspects of the Company s business that, when viewed with the Company s GAAP results, provides a more complete understanding of factors and trends affecting the Company s business. Management provides such non-gaap financial information for informational purposes and to enhance understanding of the Company s GAAP consolidated financial statements. Readers should consider the information in addition to, but not instead of, the Company s 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. A table reconciling such non-gaap financial measures is available in the appendix. 2 November 2015 2015 Enova International, Inc.
Investment Highlights Large Market with Growing Demand for Non-Bank Credit Proprietary Online Model Enables Rapid Expansion at Low Cost Proven Tech and Analytics with 11 Years of Data and Experience Superior Financials with Strong Growth in Revenues and Profits Strong Pipeline of New Growth Initiatives Experienced, Successful Leadership Team 3 November 2015 2015 Enova International, Inc.
Large Online Lending Market Opportunity 68M 1 underserved individuals (Enova has served 2.5M+) $69B unsecured loan volume 2 7M underserved individuals (Enova has served 1.3M+) $9B unsecured loan volume 3 3 4M underserved individuals (Enova has served 68k) $102B estimated potential unsecured personal loan volume 1 2013 FDIC National Survey of Unbanked and Underbanked Households 2 2013 Financially Underserved Market Size Study December 2014, CFSI (Center for Financial Services Innovation) 3 Enova estimates based on data provided by one of our data vendors Sept, 2013. According to Financial Conduct Authority (FCA), in 2013 1.6 million consumers took out 10 million payday loans, with a total value of 2.5 billion ($4.0 billion). The U.K. Parliamentary Commission on Banking Standards estimated that the high-cost credit market, which includes short-term lending, represented over $9 billion in loan volume as of September 2013. However, in its February 2015 final report following its investigation of the U.K. payday lending industry, the Competition & Markets Authority found that revenue for the seven major payday lenders was down 27% year over year for the first nine months of 2014 4 Enova estimates for consumers with an equivalent FICO score below 650 5 Brazil personal loan market size is R$325 billion ($135 billion) according to Brazilian Central Bank as of May 2014. In 2013 China Consumer Credit was RMB 5,414 bi ($884 billion) according to National Statistics Bureau of China and People s Bank of China. Enova estimates that 10% of these markets is non prime credit. 4 November 2015 2015 Enova International, Inc. 4 5
Enova Products for Closing the Credit Gap Credit Ratings Poor Fair Good Excellent U.S. FICO 300 620 660 720 + 40% of U.S. Population FICO score below 675 Single Pay & LOCs Installment Loans Near Prime Loans Small Business Pricing: 189% - 450% APR Amount: $100 - $1,800 Duration: 14 60 days LOCs Open-ended Profile (FICO): Below 550 Pricing: 100% - 299% APR Amount: $1,000 - $10,000 Duration: 3 12 months Profile (FICO): 450 550 Pricing: 35% - 99% APR Amount: $1,000 - $10,000 Duration: 12 60 months Profile (FICO): 500 675 Pricing: RPAs 9.9% - 49% Fee LOCs 40% - 99% APR Amounts: RPAs $5,000 - $200,000 LOCs $5,000 - $35,000 Duration: RPAs est. payback 6 24 mnths LOCs Open-ended Profile (business stats): Avg. 12yrs old & $2MM rev. Avg. 4yrs old & $400k rev. 5 November 2015 2015 Enova International, Inc.
Focused on Middle and Working Class Borrowers Enova s customers are hardworking, educated homeowners with families and regular income, who have a need for credit due to unforeseen events affecting income or expenses. 6 November 2015 2015 Enova International, Inc.
Online Model has Clear Advantages For Enova No Stores invest in tech and people, not real estate Centralized Analytics sophisticated underwriting in seconds Product Development rapid response to market and regulatory changes Top Talent hiring in desirable urban center For Borrowers Privacy no standing in line and applying in public Convenience apply anytime anywhere and manage account from desktop or mobile Flexibility product choice to draw what s needed and fit payment to budget Speed rapid funding directly into bank account 7 November 2015 2015 Enova International, Inc.
Online Lending is Convenient for Borrowers 1. Apply 2. Underwrite 3. Accept & Fund 4. Service Easy-to-complete identity, employment, income, payroll date, bank account information Multi-stage Screening to verify identity and prevent fraud Decisioning in 3 to 6 seconds analytics system pulls data and determines credit worthiness Advanced Analytics massive parallel processing of 100 algorithms, 1,000 variables, 11 years and 10.5 TB of customer behavior data Accept agreements reviewed and digitally signed online Funding via ACH by next business day in U.S.; within 10 minutes to debit card in U.K. Multi-Channel Service U.S. based in-house service center 24/7 for assistance and payment Proprietary Systems tailored CRM system integrated with analytics engine and marketing channels 8 November 2015 2015 Enova International, Inc.
Multi-Channel Marketing Expertise Online Search Conversion 1 Mobile Phone 48% Tablet 12% Desktop 40% Brand Marketing focus on brand marketing has driven shift in customer acquisition from 67% leads in 2009 to 38% leads in 2014 Mobile responsive websites and mobile applications deliver customer experience across all devices Direct Marketing 32.1% Reduced Reliance on Leads 2009 2014 Direct Marketing Lead Purchasing 66.6% 54.6% Media and Business Data data is combined for optimization engines Marketing Analytics evaluates marketing sources to align customer lifetime value (LTV) and cost per funded account (CPF) Affiliate Marketing 1.3% Affiliate Marketing 6.9% Lead Purchasing 38.5% Campaign Optimization key applications used to manage deployment of marketing campaigns into channels 1 QuickQuid Q2 Q3 2014 9 November 2015 2015 Enova International, Inc.
Long Track Record of Growth Growth in Loan Volume 27.4 M 31.9 M 32.7 M $16.7 B 1.1 M $0.4 B 3.2 M $1.3 B 5.7 M $2.5 B 9.1 M $3.9 B 13.9 M $6.0 B 17.9 M $8.0 B 22.5 M $10.5 B $13.1 B $15.3 B 2006 2007 2008 2009 2010 2011 2012 2013 2014 9M-15 Cumulative Loan Originations $ Cumulative Loan Originations # 11 years+ of revenue and profit growth ~4 M customers served 93% avg. U.S. customer service satisfaction rating 100+ fraud, credit, servicing, & collection models 10 brands in six countries 1 From inception through 3Q2015 $3.0 B 10 November 2015 2015 Enova International, Inc. Cumulative Loans $ 1 $13.4 B $16.7 B
Three Pronged Strategy Drives Growth and Reduces Risk Strategy Drive efficient Execution with Technology and Analytics Diversify Products and Geographies Innovate New opportunities and Internal Functions 11 November 2015 2015 Enova International, Inc.
Execute: Real-Time Analytics & Technology Marketing Algorithmic media buying models Fraud & Underwriting > 1,000+ variables for underwriting > 100+ algorithms running > 10.5 TB in managed datasets $7 M est. 2014 EBITDA from model improvements Servicing & Retention 300 M+ unique customer interactions Credit Data Customer Interaction Info Social Data Banking Data Public Records Device Info Colossus Analytics Engine Pattern recognition Machine Learning Predictive models 500K transactions / hours New Customers Risk Based Ability to Repay Credit Decisions Customized Customer Interactions Collections 15 optimization models running 12 November 2015 2015 Enova International, Inc.
Loan Loss Provision as a % of Average Loan Balance Average Loan Balance Outstanding ($M) Execute: Data Analytics that Improves Loan Performance 500 450 400 350 300 250 200 150 100 35% 30% 25% 20% Enova Loan Balance Outstanding Average Consumer Loan Balance Enova Loan Loss Provision % Proprietary powerfully assesses identity, risk and credit worthiness based on 11 years of lending history and millions of loans Robust up to ten different scorecards and 30+ variables across multiple products and geographies Flexible 50+ person analytics group continuously refines the underwriting system hundreds of times per year Predictive more predictive than FICO scores, uses variety of sources and data types, rapidly adjusting as more data is collected 15% 10% Loan Loss Provision % Net Charge-off % 13 November 2015 2015 Enova International, Inc.
Execute: Customer Service that Drives Recommendation 100% 98% 96% 94% 92% 90% 88% 86% 84% 82% 80% Jul '14 U.S. Customer Satisfaction Ratings Q3 14 Q3 15 Aug '14 Sep '14 Oct '14 Nov '14 Would recommend to friend Would use Brand again Dec '14 Jan '15 Feb '15 Mar '15 Apr '15 May '15 Jun '15 Jul '15 Aug '15 Satisfied with service received Sep '15 Cust Service Rep was knowledgeable U.S. based In-House Contact Centers 24/7 multi-channel availability via phone, chat, text, or email supported by state-of-the-art CRM and telephony technology Analytics Drive Results customer interactions - time of day, contact frequency, contact method and script - optimized for efficiency and effectiveness Best Practices Sustain Performance onboarding, soft skills training and continuous education with scorecards, call monitoring and calibration, wait time, first call resolution High Service Levels average wait times < 10 seconds 94% < 30 seconds, during 2013 14 November 2015 2015 Enova International, Inc.
Geography Diversify: History of New Products and New Markets Product and Market Launches Results Brand Year Founded Geography 1 Products 2004 32 States Short-Term Loans Installment Loans Lines of Credit Revenue by Product & Geography 09 Revenue International 16% 3Q 15 Revenue 2007 All U.K. Short-Term Loans U.S. 84% U.S. 81% 2009 All Australia Installment Loans International 19% 2009 4 Provinces Short-Term Loans Installment 2% 2010 All U.K. Installment Loans Product 2 Short-Term 98% Short-term 33% Line of credit 27% Installment 40% 2012 13 States Installment Loans 1 As of November 2015 2 Product revenues are net of discontinued products 15 November 2015 2015 Enova International, Inc.
Innovate: Consistent Growth for Near Prime Offering 185% Average Loan Amount and Average APR $3,913 $1,301 67% Avg. Loan Size Avg. APR ($ in Millions) Cumulative Loan Originations $348,000,000 $283 $141 $188 $230 $10 $15 $31 $47 $61 $91 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 16 November 2015 2015 Enova International, Inc.
($ in Millions) ($ in Millions) Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Innovate: Strong Track Record with Full Pipeline Small Business Initiatives Brazil Initiative 50.0% Initial Default Rate Unsecured line of credit Unsecured purchase of sales receivables Unsecured installment loans 24.7% 21.0% Accounts Receivable $26 $33 $38 Cumulative Originations 2.1 2.7 3.2 $17 0.6 0.7 0.8 0.9 1.1 1.4 Installment Jun-15 Jul-15 Aug-15 Sep-15 Loan 118% CAGR Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 1 2 3 Product continues to perform; obtained National License Phase I Approval Product shift to higher average loan amount and lower APR continues Entering final stages of product development with marketing partner for pilot launch 1 Simple Credit is Enova s Chinese Installment Loan product 2 OnStride is Enova s U.K. Near Prime Installment Loan Product 3 CreditMe is Enova s U.S. Thin File Line of Credit Product 17 November 2015 2015 Enova International, Inc.
Proactive, Global Compliance Capabilities Compliance Infrastructure Licensed where required; reduces regulatory risk and is a barrier to entry Central team led by professional bank compliance officer reporting to Board of Directors Regulatory framework built into technology platform and the business model Rapidly update products and business rules for changes in regulatory requirements and laws Regulatory Environment National and 50 States 1 Primary Federal regulator, CFPB issued outline in April 2015, final rules likely 2017 State regulations generally stable, subject to political process of state legislatures State and Federal focus on unlicensed lenders potential longterm positive impact 1 As of September 30, 2015 National Primary National regulator, FCA (as of 4/1/14) issued new rules under the Consumer Credit Sourcebook in early 2014 Total Cost of Credit cap effective 1/2/15 FCA expects just 3 or 4 lenders will continue providing high-cost, shortterm credit National and Provincial Australia National regulator Brazil National regulator Canada Provincial regulators China National and Provincial regulators 18 November 2015 2015 Enova International, Inc.
Enova s Assessment of CFPB Rule-Making Consumer Financial Protection Bureau (CFPB) working on rules for high-cost, short-term lending Dodd-Frank charged CFPB with supervising PayDay lenders In April 2013, CFPB announced its intention to propose rules Current estimated timeline Mar - Apr 15 Dec 15 - Jan 16 Jun - Jul 16 Jan 17 Outline of Proposals Published and Panel Started Small Biz Review Panel & Report (60 days) Proposed Rules Comment Period (60 90 days) Final Rules Implement Period (6 12 months) Effective Date Enova is well-positioned to manage rule changes Advanced analytics leverage diverse data sources in addition to traditional affordability criteria to issue compliant loans at scale Technology platform enables speedy adjustments to product design and operational processes 19
U.K. Regulatory Landscape U.K. Regulatory changes have had a strong impact on the industry Regulatory environment and market conditions seem to have stabilized to a new normal Jan- 14 Apr- 15 Leading Active Lenders 1 0 10 20 30 40 50 New regulations from Financial Conduct Authority (FCA) Enova made operational changes in 2014 to meet rules set by the FCA Products fully compliant by January 2, 2015 deadline with: - Enhanced affordability analysis in underwriting - Bank debit attempt limits - Loan extension and fee caps - Price caps (max 0.8% of principal per day, with total interest and fees < than total principal lent) FCA Full Authorization Application CashEuroNetUK submitted application for QuickQuid & PoundsToPocket Feb. 2015 - Positive initial feedback very comprehensive - Approval not assured OnStride application submitted August 2015 Decisions expected 6-12 months from respective application dates 1 Jan 14 numbers from House of Commons Payday Loans report, Dec 17 2013, Apr 15 numbers are Enova estimate from that report in addition to market survey data 20 November 2015 2015 Enova International, Inc.
Financial Highlights Consistent history of strong growth in revenue and Adjusted EBITDA 1 U.S. revenue increased 6.4% to $366.1 million in 9M15 Adjusted EBITDA margin of 26.7% in 9M15 Generated $71 million of operating cash flow in Q3 15 Solid balance sheet with total liquidity of $92 million, including $34 million in cash and $58 million in revolver 1 See Reconciliation of Non-GAAP Financial Measures on page 27. 21 November 2015 2015 Enova International, Inc.
($Millions) ($Millions) History of Revenue and Profit Growth Total Revenue & EPS Adjusted EBITDA & Margin $1,000 900 800 700 600 500 400 300 200 100 0 $765 $810 $661 $672 $480 $378 2010 2011 2012 2013 2014 LTM 3Q15 250 225 200 175 150 125 100 75 50 25 0 $236 $182 $162 $131 $88 $63 2010 2011 2012 2013 2014 LTM 3Q15 EPS $0.75 $1.12 $1.78 $2.36 $3.38 $1.88 Margin 16.7% 18.3% 19.9% 21.2% 29.1% 27.1% Note: Margins are calculated as a percentage of gross revenue. 22 November 2015 2015 Enova International, Inc.
($Millions) Scalable Business Model Provides Operating Leverage $900 $800 $700 $600 Loans Outstanding Revenue O&T and G&A Expenses Enova Key Metrics 1 2 5 Yr % increase 218% $500 $400 251% $300 $200 175% $100 $0 2009 2010 2011 2012 2013 2014 1 Gross loan balances outstanding include loan arrangements extended by unrelated third parties. 2 Operations and technology, and general and administrative expenses. 23 November 2015 2015 Enova International, Inc.
Appendix 24 November 2015 2015 Enova International, Inc. 24
Consolidated Income Statement 12 Mos Ended 12 Mos Ended 12 Mos Ended 12 Mos Ended 12 Mos Ended 9 Mos Ended in thousands December 31, December 31, December 31, December 31, December 31, September 30, 2010 2011 2012 2013 2014 2015 Revenue $ 378,317 $ 480,340 $ 660,928 $ 765,323 $ 809,837 $ 477,183 Cost of Revenue 164,957 201,687 288,474 315,052 266,787 145,720 Gross Profit 213,360 278,653 372,454 450,271 543,050 331,463 Expenses Marketing 59,197 73,329 108,810 135,336 127,862 84,431 Operations and technology 40,983 52,371 63,505 70,776 73,573 54,156 General and Administrative 50,252 65,401 72,690 84,420 107,875 75,282 Depreciation and amortization 8,559 11,263 13,272 17,143 18,732 14,198 Total Expenses 158,991 202,364 258,277 307,675 328,042 228,067 Income from Operations 54,369 76,289 114,177 142,596 215,008 103,396 Interest expense, net (15,209) (17,420) (20,996) (19,788) (38,474) (39,501) Foreign currency transaction (loss) gain (156) (487) (342) (1,176) (35) (1,187) Income before Income Taxes 39,004 58,382 92,839 121,632 176,499 62,708 Provision for income taxes 14,183 21,350 33,967 43,594 64,828 22,897 Net Income $ 24,821 $ 37,032 $ 58,872 $ 78,038 $ 111,671 $ 39,811 25 November 2015 2015 Enova International, Inc.
Consolidated Balance Sheets in thousands December 31, December 31, December 31, December 31, December 31, September 30, 2010 2011 2012 2013 2014 2015 Assets Cash $ 17,653 $ 34,411 $ 37,548 $ 47,480 $ 75,106 $ 34,310 Loans and finance receivables, net 89,193 162,985 228,390 303,467 323,611 380,805 PP&E, net 31,588 36,716 41,759 39,405 33,985 48,814 Goodwill and Intangible assets, net 256,832 256,014 256,043 255,914 255,901 275,266 Other assets 23,805 39,614 49,128 45,886 71,594 80,959 Total Assets $ 419,071 $ 529,740 $ 612,868 $ 692,152 $ 760,197 $ 820,154 Liabilities and Stockholder s Equity Debt $ 270,839 $ 410,964 $ 427,889 $ 424,133 $ 494,181 $ 494,690 Other liabilities 68,655 76,927 87,563 94,971 112,032 126,188 Total Liabilities 339,494 487,891 515,452 519,104 606,213 620,878 Total Stockholder s Equity 79,577 41,849 97,416 173,048 153,984 199,276 Total Liabilities and Stockholder s Equity $ 419,071 $ 529,740 $ 612,868 $ 692,152 $ 760,197 $ 820,154 26 November 2015 2015 Enova International, Inc.
Reconciliation of Non-GAAP Financial Measures Adjusted EBITDA to Net Income Fiscal Year Ended December 31, 3Q 2015 ($ millions) 2010 2011 2012 2013 2014 LTM Net income $ 24.8 $ 37.0 $ 58.9 $ 78.0 $ 111.7 $ 62.3 Lease termination and relocation costs (1) - - - - 1.4 3.3 Regulatory penalty (2) - - - 2.5 - - Withdrawn IPO (3) - - 3.9 - - - Interest expense, net 15.2 17.4 21.0 19.8 38.5 52.8 Provision for income taxes 14.2 21.4 33.9 43.6 64.8 37.1 Depreciation and amortization 8.6 11.3 13.3 17.1 18.7 19.2 Foreign currency transaction (gain) loss 0.1 0.5 0.3 1.2-0.7 Stock-based compensation expense 0.1 0.1 0.2 0.3 0.7 6.9 Adjusted EBITDA $ 63.0 $ 87.7 $ 131.5 $ 162.5 $ 235.8 $ 182.2 (1) Represents facility cease-use charges on our prior headquarters. (2) Represents the amount paid in connection with a civil money penalty assessed by the Consumer Financial Protection Bureau, which is nondeductible for tax purposes. (3) Represents costs related to our withdrawn Registration Statement in July 2012 in connection with efforts in pursuit of an initial public offering. Free Cash Flow ($ millions) LTM 3Q 2015 Cash flow from operating activities 278 Cash flow from investing activities: Consumer loans (281) Purchases of property and equipment (32) Free cash flow $ (35) 27 November 2015 2015 Enova International, Inc.