Enova International Inc

Previous wording

We are a leading technology and analytics company focused on providing online financial services. In 2023, we extended approximately $4.9 billion in credit or financing to borrowers and for the six months ended June 30, 2024, we extended approximately $2.8 billion in credit or financing to borrowers. As of June 30, 2024, 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 49 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 June 30, 2024, we have completed approximately 62.9 million customer transactions and collected more than 65 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 line of credit accounts.

Current wording

We are a leading technology and analytics company focused on providing online financial services. In 2023, we extended approximately $4.9 billion in credit or financing to borrowers and for the nine months ended September 30, 2024, we extended approximately $4.4 billion in credit or financing to borrowers. As of September 30, 2024, 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 49 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 September 30, 2024, we have completed approximately 63.9 million customer transactions and collected more than 65 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 line of credit accounts.

Previous wording

Our flexible and scalable technology platforms allow us to process and complete customers’ transactions quickly and efficiently. In 2023, we processed approximately 3.0 million transactions, and we continue to grow our loan and finance receivable portfolios 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 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.

Current wording

Our flexible and scalable technology platforms allow us to process and complete customers’ transactions quickly and efficiently. In 2023, we processed approximately 3.0 million transactions, and we continue to grow our loan and finance receivable portfolios 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.

Previous wording

Consumer installment loans. Certain subsidiaries (i) directly offer installment loans, (ii) as part of our Bank Programs, as discussed below, 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, to consumers. Certain subsidiaries offer, or arrange through our Bank Programs and CSO program, unsecured consumer installment loan products in 37 states in the United States. Internationally, we also offer or arrange unsecured consumer installment loan products in Brazil. Terms for our consumer installment loan products range between 3 and 60 months with an average contractual term of 39 months. Our loans have regular payments that amortize principal. Loan sizes for these products range between $300 and $10,000. The majority of these loans accrue interest daily at a fixed rate for the life of the loan and have no fees. The average annualized yield for these loans was 79% for the year ended December 31, 2023. Loans may be repaid early at any time with no additional prepayment charges.

Current wording

Consumer installment loans. Certain subsidiaries (i) directly offer installment loans, (ii) as part of our Bank Programs, as discussed below, 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, to consumers. Certain subsidiaries offer, or arrange through our Bank Programs and CSO program, unsecured consumer installment loan products in 37 states in the United States. Internationally, we also offer or arrange unsecured consumer installment loan products in Brazil. Terms for our consumer installment loan products range between 4 and 60 months with an average contractual term of 39 months. Our loans have regular payments that amortize principal. Loan sizes for these products range between $300 and $10,000. The majority of these loans accrue interest daily at a fixed rate for the life of the loan and have no fees. The average annualized yield for these loans was 79% for the year ended December 31, 2023. Loans may be repaid early at any time with no additional prepayment charges.

Previous wording

Money transfer business. Through the acquisition of Pangea, we operate a money transfer platform that allows customers to send money from the United States to Mexico, other Latin American countries and Asia. The customer pays us in U.S. dollars, and we then make local currency available to the intended recipient of the transfer in one of many termination countries. Our revenue model includes a fee per transfer and an exchange rate spread. Our customers can access our proprietary platform via the website, Android app, or iOS (Apple) app.

Current wording

Money transfer business. Under our Pangea brand, we operate a money transfer platform that allows customers to send money from the United States to Mexico, other Latin American countries and Asia. The customer pays us in U.S. dollars, and we then make local currency available to the intended recipient of the transfer in one of many termination countries. Our revenue model includes a fee per transfer and an exchange rate spread. Our customers can access our proprietary platform via the website, Android app, or iOS (Apple) app.

Previous wording

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 initially required that lenders who make short-term loans and longer-term loans with balloon payments reasonably determine consumers’ ability to repay (“ATR”) 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 withdrawal attempts. On July 7, 2020, the CFPB issued a final rule rescinding the 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. The CFPB filed a petition for a writ of certiorari to the Supreme Court. The Supreme Court granted the petition on February 27, 2023. The Supreme Court heard oral arguments on October 3, 2023 and, on May 16, 2024, upheld the constitutionality of the funding structure of the CFPB and remanded the case back to the Fifth Circuit. On June 19, 2024, the Fifth Circuit rendered judgment in favor of the CFPB declaring that the CFPB’s funding structure and the Small Dollar Rule are constitutional, and reinstated its judgment in favor of the CFPB for the Community Financial Services Association of America’s (“CFSA”) alternative arguments. On July 3, 2024, the CFSA filed a petition for rehearing en banc. The Small Dollar Rule will not take effect until 286 days after resolution of the appeal as ordered by the Fifth Circuit when it extended the district court’s stay of the compliance date in 2021. 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.

Current wording

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 initially required that lenders who make short-term loans and longer-term loans with balloon payments reasonably determine consumers’ ability to repay (“ATR”) 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 withdrawal attempts. On July 7, 2020, the CFPB issued a final rule rescinding the 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. The CFPB filed a petition for a writ of certiorari to the Supreme Court. The Supreme Court granted the petition on February 27, 2023. The Supreme Court heard oral arguments on October 3, 2023 and, on May 16, 2024, upheld the constitutionality of the funding structure of the CFPB and remanded the case back to the Fifth Circuit. On June 19, 2024, the Fifth Circuit rendered judgment in favor of the CFPB declaring that the CFPB’s funding structure and the Small Dollar Rule are constitutional, and reinstated its judgment in favor of the CFPB for the Community Financial Services Association of America’s (“CFSA”) alternative arguments. On July 3, 2024, the CFSA filed a petition for rehearing en banc. The Small Dollar Rule will likely not take effect until 286 days after resolution of the appeal as ordered by the Fifth Circuit when it extended the district court’s stay of the compliance date in 2021. 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.

Previous wording

On March 30, 2023, the CFPB issued its final rule to implement Section 1071 of the Dodd-Frank Act. Section 1071 amended the Equal Credit Opportunity Act to require financial institutions to collect and report certain data in connection with credit applications made by small businesses, including women- or minority-owned small businesses, and applies to small business loans that we offer. For loans covered by the small business lending rule, a “covered lender” will be required to collect and report on certain information pursuant to an application for credit. Section 1071 requires covered lenders to collect and report information the financial institution generates and information obtained from the applicant, including the applicant’s minority-owned business status, women-owned business status and LGBTQI+-owned status and the applicant’s principal owners’ ethnicity, race and sex, and expressly prohibits a financial institution from discouraging an applicant from responding to requests for applicant-provided data. The implementation date for Section 1071 has been stayed for all covered financial institutions until after the resolution of the Supreme Court’s decision in Community Financial Services Association of America Ltd v. Consumer Financial Protection Bureau.

Current wording

On March 30, 2023, the CFPB issued its final rule to implement Section 1071 of the Dodd-Frank Act. Section 1071 amended the Equal Credit Opportunity Act to require financial institutions to collect and report certain data in connection with credit applications made by small businesses, including women- or minority-owned small businesses, and applies to small business loans that we offer. For loans covered by the small business lending rule, a “covered lender” will be required to collect and report on certain information pursuant to an application for credit. Section 1071 requires covered lenders to collect and report information the financial institution generates and information obtained from the applicant, including the applicant’s minority-owned business status, women-owned business status and LGBTQI+-owned status and the applicant’s principal owners’ ethnicity, race and sex, and expressly prohibits a financial institution from discouraging an applicant from responding to requests for applicant-provided data. The implementation date was previously stayed pending a decision by the Supreme Court in Community Financial Services Association of America, Ltd. v. Consumer Financial Protection Bureau. That stay has now been lifted. The effective date for tier 1 institutions, such as the Company’s small business loan business, to comply with the implementing regulation is currently set as July 18, 2025. By the effective date, the Company’s small business loan business will need to update its application process to appropriately collect, store, and report data required by Section 1071’s implementing regulation.

Previous wording

In May 2023, the Governor of Minnesota signed into law a bill that caps the APR on consumer small loans and consumer short-term loans at a 50% all-in APR and expressly provides for predominant economic interest and totality of the circumstance tests for true lender purposes. The bill defines "consumer small loan" as a consumer-purpose unsecured loan equal to or less than $350 that must be repaid in a single installment. The bill defines a "consumer short-term loan" as a loan to a borrower which has a principal amount, or an advance on a credit limit, of $1,300 or less and requires a minimum payment of more than 25% of the principal balance or credit advance within 60 days. The bill requires the lender to perform an ability to pay analysis if the all-in APR on a consumer small loan or consumer short-term loan exceeds 36%. The bill also codifies 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 rate cap. The law took effect on January 1, 2024 and applies to loans or advances originated on or after that date. We do not expect the changes brought about by this law to have a material impact on our consolidated financial statements.

Current wording

In May 2023, the Governor of Minnesota signed into law a bill that caps the APR on consumer small loans and consumer short-term loans at a 50% all-in APR and expressly provides for predominant economic interest and totality of the circumstance tests for true lender purposes. The bill defines "consumer small loan" as a consumer-purpose unsecured loan equal to or less than $350 that must be repaid in a single installment. The bill defines a "consumer short-term loan" as a loan to a borrower which has a principal amount, or an advance on a credit limit, of $1,300 or less and requires a minimum payment of more than 25% of the principal balance or credit advance within 60 days. The bill requires the lender to perform an ability to pay analysis if the all-in APR on a consumer small loan or consumer short-term loan exceeds 36%. The bill also codifies 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 rate cap. The law took effect on January 1, 2024 and applies to loans or advances originated on or after that date. The changes brought about by this law have not had a material impact on our consolidated financial statements.

Previous wording

Consolidated total revenue increased $129.0 million, or 25.8%, to $628.4 million in the current quarter compared to $499.4 million for the three months ended June 30, 2023, or the prior year quarter.

Current wording

Consolidated total revenue increased $138.5 million, or 25.1%, to $689.9 million in the current quarter compared to $551.4 million for the three months ended September 30, 2023, or the prior year quarter.

Previous wording

Consolidated income from operations increased $33.5 million, or 30.0%, to $145.1 million in the current quarter compared to $111.6 million in the prior year quarter.

Current wording

Consolidated income from operations increased $50.0 million, or 48.2%, to $153.7 million in the current quarter compared to $103.7 million in the prior year quarter.

Previous wording

Consolidated net income was $53.9 million in the current quarter compared to $48.1 million in the prior year quarter. Consolidated diluted income per share was $1.93 in the current quarter compared to $1.50 in the prior year quarter.

Current wording

Consolidated net income was $43.4 million in the current quarter compared to $41.3 million in the prior year quarter. Consolidated diluted income per share was $1.57 in the current quarter compared to $1.29 in the prior year quarter.

Previous wording

During 2023 and continuing into the first half of 2024, views in the marketplace on the economy and its near-term prospects remained mixed with concerns on employment, inflation, and other macroeconomic trends. In certain situations, management concluded that the probability of future charge-offs or prepayments was different than what we had experienced in the past and, therefore, altered those assumptions in our fair value models. We continue to utilize this approach and have adjusted these assumptions where appropriate. We also evaluate the discount rates used in our models on a quarterly basis and adjust when appropriate to be responsive to changes in the market and representative of what a market participant would use. As of June 30, 2024, we deemed the resulting fair value of our loans and finance receivables to be an appropriate market-based exit price that considers current market conditions.

Current wording

During 2023 and continuing through September 30, 2024, views in the marketplace on the economy and its near-term prospects remained mixed with concerns on employment, inflation, and other macroeconomic trends. In certain situations, management concluded that the probability of future charge-offs or prepayments was different than what we had experienced in the past and, therefore, altered those assumptions in our fair value models. We continue to utilize this approach and have adjusted these assumptions where appropriate. We also evaluate the discount rates used in our models on a quarterly basis and adjust when appropriate to be responsive to changes in the market and representative of what a market participant would use. As of September 30, 2024, we deemed the resulting fair value of our loans and finance receivables to be an appropriate market-based exit price that considers current market conditions.

Previous wording

(a) In the first quarter of 2024, we recorded costs totaling $0.3 million ($0.2 million net of related tax) related to a consent solicitation for the Senior Notes due 2025.

Current wording

(a) In the first quarter of 2024, we recorded costs totaling $0.3 million related to a consent solicitation for the Senior Notes due 2025.

Previous wording

Revenue increased $129.0 million, or 25.8%, to $628.4 million for the current quarter as compared to $499.4 million for the prior year quarter. The increase was driven by a 32.2% increase in revenue from our small business portfolio and a 21.6% increase in revenue from our consumer portfolio as higher levels of originations have led to higher loan balances for both portfolios.

Current wording

Revenue increased $138.5 million, or 25.1%, to $689.9 million for the current quarter as compared to $551.4 million for the prior year quarter. The increase was driven by a 38.0% increase in revenue from our small business portfolio and a 18.1% increase in revenue from our consumer portfolio as higher levels of originations have led to higher loan balances for both portfolios.

Previous wording

Net revenue for the current quarter was $370.2 million compared to $299.4 million for the prior year quarter. Our consolidated net revenue margin was 58.9% for the current quarter compared to 59.9% for the prior year quarter. The decrease in consolidated net revenue margin was driven primarily by lower net revenue margin in the consumer portfolio, partially offset by higher net revenue margin in the small business portfolio. Refer to “—Consumer Loans and Finance Receivables” and “—Small Business Loans and Finance Receivables” below for additional discussion of net revenue for the current quarter.

Current wording

Net revenue for the current quarter was $400.3 million compared to $319.6 million for the prior year quarter. Our consolidated net revenue margin was 58.0% for the current quarter compared to 58.0% for the prior year quarter with stability in both the consumer and small business portfolios. Refer to “—Consumer Loans and Finance Receivables” and “—Small Business Loans and Finance Receivables” below for additional discussion of net revenue for the current quarter.

Previous wording

The following table sets forth the components of revenue and net revenue, separated by product for the current quarter and the prior year quarter (in thousands):

Current wording

The following table sets forth the components of revenue and net revenue, disaggregated by product, for the current quarter and the prior year quarter (in thousands):

Previous wording

The fair value of our loan and finance receivable portfolio in our consolidated financial statements was $3,939.2 million and $3,092.4 million as of June 30, 2024 and 2023, respectively. The outstanding principal balance of our loan and finance receivables portfolio was $3,423.7 million and $2,756.9 million as of June 30, 2024 and 2023, respectively. The fair value of the combined loan and finance receivables portfolio includes $17.3 million and $19.1 million with an outstanding principal balance of $12.5 million and $14.2 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 June 30, 2024 and 2023, respectively.

Current wording

The fair value of our loan and finance receivable portfolio in our consolidated financial statements was $4,134.4 million and $3,321.1 million as of September 30, 2024 and 2023, respectively. The outstanding principal balance of our loan and finance receivables portfolio was $3,593.4 million and $2,904.7 million as of September 30, 2024 and 2023, respectively. The fair value of the combined loan and finance receivables portfolio includes $25.4 million and $18.7 million with an outstanding principal balance of $18.3 million and $13.7 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 September 30, 2024 and 2023, respectively.

Previous wording

The consumer portfolio balance was 36.4% of our combined loan and finance receivable portfolio balance at fair value as of June 30, 2024, which decreased slightly compared to 38.2% as of June 30, 2023. Our small business portfolio of loans and finance receivables was 63.6% of our combined loan and finance receivable portfolio at fair value as of June 30, 2024, compared to 61.8% as of June 30, 2023. See “—Non-GAAP Disclosure—Combined Loans and Finance Receivables Measures” above for additional information related to combined loans and finance receivables.

Current wording

The consumer portfolio balance was 37.3% of our combined loan and finance receivable portfolio balance at fair value as of September 30, 2024, which decreased slightly compared to 39.1% as of September 30, 2023. Our small business portfolio of loans and finance receivables was 62.7% of our combined loan and finance receivable portfolio at fair value as of September 30, 2024, compared to 60.9% as of September 30, 2023. See “—Non-GAAP Disclosure—Combined Loans and Finance Receivables Measures” above for additional information related to combined loans and finance receivables.

Previous wording

At June 30, 2024 and 2023, the ratio of fair value as a percentage of principal was 115.1% and 112.2%, respectively, on company owned loans and finance receivables and 115.1% and 112.3%, respectively, on combined loans and finance receivables. These ratios increased compared to the prior year due to improvement in both the consumer and small business portfolios. Refer to “—Consumer Loans and Finance Receivables” and “—Small Business Loans and Finance Receivables” below for additional discussion of fair value ratios for the current quarter.

Current wording

At September 30, 2024 and 2023, the ratio of fair value as a percentage of principal was 115.1% and 114.3%, respectively, on company owned loans and finance receivables and 115.2% and 114.4%, respectively, on combined loans and finance receivables. These ratios slightly increased compared to the prior year due to improvement in both the consumer and small business portfolios. Refer to “—Consumer Loans and Finance Receivables” and “—Small Business Loans and Finance Receivables” below for additional discussion of fair value ratios for the current quarter.

Previous wording

The average amount outstanding per loan and finance receivable decreased slightly in the current quarter compared to the prior year quarter for our overall portfolio due primarily to a mix shift in our consumer portfolio to line of credit accounts, which generally have lower average outstanding balances compared to installment loans.

Current wording

The average amount outstanding per loan and finance receivable decreased in the current quarter compared to the prior year quarter for our overall portfolio due primarily to a mix shift in our consumer portfolio to line of credit accounts, which generally have lower average outstanding balances compared to installment loans.

Previous wording

The ending balance, including principal and accrued fees/interest outstanding, of combined consumer loans and finance receivables at June 30, 2024 increased 19.8% to $1,300.7 million compared to $1,085.7 million at June 30, 2023, due primarily to originations outpacing repayments.

Current wording

The ending balance, including principal and accrued fees/interest outstanding, of combined consumer loans and finance receivables at September 30, 2024 increased 17.8% to $1,412.7 million compared to $1,199.3 million at September 30, 2023, due primarily to originations outpacing repayments.

Previous wording

The percentage of loans greater than 30 days delinquent of 6.3% was lower at June 30, 2024, compared to 6.8% at June 30, 2023, due primarily to stronger credit performance in most of our consumer products. Charge-offs (net of recoveries) as a percentage of average combined loan balance was flat at 12.8% for the current quarter, compared to 12.7% for the prior year quarter. 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 of income tax refunds. Lower originations, particularly to new customers, which typically default at a higher percentage than returning customers, generally result in lower delinquencies and charge-offs as the book is more seasoned. Charge-off performance in the current quarter follows this seasonal pattern.

Current wording

The percentage of loans greater than 30 days delinquent of 8.7% was higher at September 30, 2024, compared to 7.8% at September 30, 2023, due primarily to a higher percentage of originations to new customers, which typically default at a higher rate compared to returning customers, and a mix shift to line of credit products, which have higher yields and default rates compared to installment loans. Charge-offs (net of recoveries) as a percentage of average combined loan balance was 14.9% for the current quarter, compared to 15.5% for the prior year quarter, which are both in line with seasonal norms. 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 of income tax refunds. Higher originations, particularly to new customers, which typically default at a higher percentage than returning customers, generally result in higher delinquencies and charge-offs as the book is less seasoned. Charge-off performance in the current quarter follows this seasonal pattern.

Previous wording

Revenue related to our consumer loans and finance receivables was $367.6 million for the current quarter, compared to $302.3 million for the prior year quarter. The increase in revenue was driven primarily by growth in the overall portfolio, particularly our line of credit products. The net revenue margin related to our consumer loans and finance receivables of 55.4% was lower in the current quarter compared to 61.6% for the prior year quarter, but higher compared to the past three sequential quarters.

Current wording

Revenue related to our consumer loans and finance receivables was $410.9 million for the current quarter, compared to $347.9 million for the prior year quarter. The increase in revenue was driven primarily by growth in the overall portfolio, particularly our line of credit products. The net revenue margin related to our consumer loans and finance receivables was 50.4% in the current quarter, which was fairly consistent with the net revenue margin of 49.8% in the prior year quarter.

Previous wording

The ratio of fair value as a percentage of principal on consumer loans and finance receivables was 121.0% at June 30, 2024, compared to 119.0% at June 30, 2023 and 121.9% at March 31, 2024. The increase from the prior year quarter was 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 also 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.

Current wording

The ratio of fair value as a percentage of principal on consumer loans and finance receivables was 120.9% at September 30, 2024, compared to 119.5% at September 30, 2023 and 121.0% at June 30, 2024. The increase from the prior year quarter was 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 also 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.

Previous wording

The ending balance, including principal and accrued fees/interest outstanding, of small business loans and finance receivables at June 30, 2024 increased 27.7% to $2,284.0 million compared to $1,788.8 million at June 30, 2023, due primarily to originations outpacing repayments.

Current wording

The ending balance, including principal and accrued fees/interest outstanding, of small business loans and finance receivables at September 30, 2024 increased 26.8% to $2,351.9 million compared to $1,855.1 million at September 30, 2023, due primarily to originations outpacing repayments.

Previous wording

The percentage of loans greater than 30 days delinquent of 8.1% was slightly lower at June 30, 2024, compared to 8.3% at June 30, 2023. Charge-offs (net of recoveries) as a percentage of average loan balance were flat at 4.8% for the current quarter, compared to 4.7% in the prior year quarter. These metrics evidence stability in credit performance of our small business portfolio.

Current wording

The percentage of loans greater than 30 days delinquent of 7.2% was lower at September 30, 2024, compared to 8.0% at September 30, 2023. Charge-offs (net of recoveries) as a percentage of average loan balance were lower at 4.6% for the current quarter, compared to 5.5% in the prior year quarter. These metrics evidence the improvement in credit performance of our small business portfolio.

Previous wording

Revenue related to our small business loans and finance receivables was $251.8 million for the current quarter, compared to $190.5 million for the prior year quarter. The increase in revenue was driven primarily by growth in the overall portfolio. The net revenue margin related to our small business loans and finance receivables was 63.5% for the current quarter, compared to 56.9% for the prior year quarter, due to improved performance of more recent vintages.

Current wording

Revenue related to our small business loans and finance receivables was $269.5 million for the current quarter, compared to $195.2 million for the prior year quarter. The increase in revenue was driven primarily by growth in the overall portfolio. The net revenue margin related to our small business loans and finance receivables was 69.1% for the current quarter, which is fairly consistent with the net revenue margin of 71.8% in the prior year quarter.

Previous wording

The ratio of fair value as a percentage of principal on small business loans and finance receivables was 112.0% at June 30, 2024, compared to 108.5% at June 30, 2023 and 111.7% at March 31, 2024. The increase from June 30, 2023 was due primarily to recent vintages, which have exhibited improved performance, being a higher percentage of the portfolio.

Current wording

The ratio of fair value as a percentage of principal on small business loans and finance receivables was 112.0% at September 30, 2024, compared to 111.4% at September 30, 2023 and 112.0% at June 30, 2024. The increase from September 30, 2023 was due primarily to improved credit performance and slightly higher average yields.

Previous wording

Marketing expense increased to $120.8 million in the current quarter compared to $96.0 million in the prior year quarter due primarily to growth in the overall business with higher commissionable originations in our small business portfolio and higher online advertising costs intended to capture increasing market demand for both our consumer and small business loan products.

Current wording

Marketing expense increased to $141.1 million in the current quarter compared to $116.5 million in the prior year quarter due primarily to growth in the overall business with higher commissionable originations in our small business portfolio and higher online advertising costs intended to capture increasing market demand for both our consumer and small business loan products.

Previous wording

Operations and technology expense increased to $54.9 million in the current quarter compared to $47.0 million in the prior year quarter, due primarily to higher variable costs, particularly personnel costs, underwriting, and other selling expenses, due to the increase in originations and the size of the loan portfolio. As a percentage of revenue, operations and technology expense decreased to 8.7% in the current year quarter from 9.4% in the prior year quarter, as increased originations and revenues outpaced fixed costs.

Current wording

Operations and technology expense increased to $56.6 million in the current quarter compared to $51.7 million in the prior year quarter, due primarily to higher variable costs, particularly personnel costs and, to a lesser extent, bank charges, collection and other selling expenses, due to the increase in originations and the size of the loan portfolio. As a percentage of revenue, operations and technology expense decreased to 8.2% in the current year quarter from 9.4% in the prior year quarter, as increased originations and revenues outpaced fixed costs.

Previous wording

General and administrative expense increased to $39.7 million in the current quarter compared to $36.2 million in the prior year quarter, due largely to higher personnel costs, partially offset by lower legal and consulting costs. As a percentage of revenue, general and administrative expense decreased to 6.3% in the current year quarter from 7.3% in the prior year quarter, as increased originations and revenues outpaced fixed costs.

Current wording

General and administrative expense increased to $38.9 million in the current quarter compared to $37.7 million in the prior year quarter, due largely to higher personnel costs, partially offset by lower legal, consulting and occupancy costs. As a percentage of revenue, general and administrative expense decreased to 5.6% in the current year quarter from 6.9% in the prior year quarter, as increased originations and revenues outpaced fixed costs.

Previous wording

Interest expense, net increased $25.4 million, or 55.7%, to $71.0 million in the current quarter compared to $45.6 million in the prior year quarter. The increase was due primarily to an increase in the average amount of debt outstanding, which increased $813.2 million to $3,081.6 million during the current quarter from $2,268.4 million during the prior year quarter, and an increase in the weighted average interest rate on our outstanding debt to 9.33% during the current quarter from 8.16% during the prior year quarter resulting primarily from year-over-year increases in benchmark rates.

Current wording

Interest expense, net increased $28.2 million, or 58.0%, to $76.9 million in the current quarter compared to $48.7 million in the prior year quarter. The increase was due primarily to an increase in the average amount of debt outstanding, which increased $869.4 million to $3,226.6 million during the current quarter from $2,357.2 million during the prior year quarter, and an increase in the weighted average interest rate on our outstanding debt to 9.57% during the current quarter from 8.28% during the prior year quarter resulting primarily from year-over-year increases in benchmark rates.

Previous wording

Net income increased $5.8 million, or 12.0%, to $53.9 million during the current quarter compared to $48.1 million during the prior year quarter. The increase was due primarily to an increase in income from operations due primarily to increased net revenue and lower operating expenses as a percentage of revenue, partially offset by higher interest expense as a result of an increase in the average amount of debt outstanding and an increase in the weighted average interest rate on our outstanding debt.

Current wording

Net income increased $2.1 million, or 5.2%, to $43.4 million during the current quarter compared to $41.3 million during the prior year quarter. The increase was due primarily to an increase in income from operations due to higher net revenue and lower operating expenses as a percentage of revenue, partially offset by higher interest expense, which was the result of an increase in the average amount of debt outstanding and an increase in the weighted average interest rate on our outstanding debt, and the write-down of our investment in Linear.

Previous wording

Revenue increased $255.6 million, or 26.0%, to $1,238.3 million for the six-month period ended June 30, 2024, or current six-month period, as compared to $982.7 million for the six-month period ended June 30, 2023, or prior year six-month period. The increase was driven by a 26.8% increase in revenue from our small business portfolio and a 25.5% increase in revenue from our consumer portfolio as higher levels of originations have led to higher loan balances for both portfolios.

Current wording

Revenue increased $394.1 million, or 25.7%, to $1,928.2 million for the nine-month period ended September 30, 2024, or current nine-month period, as compared to $1,534.1 million for the nine-month period ended September 30, 2023, or prior year nine-month period. The increase was driven by a 30.6% increase in revenue from our small business portfolio and a 22.8% increase in revenue from our consumer portfolio as higher levels of originations have led to higher loan balances for both portfolios.

Previous wording

Net revenue for the current six-month period was $716.0 million compared to $585.3 million for the prior year six-month period. Our consolidated net revenue margin was 57.8% for the current six-month period compared to 59.6% for the prior year six-month period.

Current wording

Net revenue for the current nine-month period was $1,116.4 million compared to $904.9 million for the prior year nine-month period. Our consolidated net revenue margin was 57.9% for the current nine-month period compared to 59.0% for the prior year nine-month period. The decrease in net revenue margin was driven primarily by lower net revenue margin in the consumer portfolio, partially offset by higher net revenue margin in the small business portfolio.

Previous wording

The following table sets forth the components of revenue and net revenue, separated by product for the current six-month period and the prior year six-month period (in thousands):

Current wording

The following table sets forth the components of revenue and net revenue, separated by product for the current nine-month period and the prior year nine-month period (in thousands):

Previous wording

Revenue generated from the Company’s operations for the current six-month period and the prior year six-month period was as follows (in thousands):

Current wording

Revenue generated from the Company’s operations for the current nine-month period and the prior year nine-month period was as follows (in thousands):

Previous wording

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 the current six-month period compared to the prior year six-month period:

Current wording

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 the current nine-month period compared to the prior year nine-month period:

Previous wording

(c) For line of credit accounts, the average represents the average amount of each incremental draw.

Current wording

(c) Represents the average amount of each incremental draw on line of credit accounts.

Previous wording

The average loan and finance receivable origination amount decreased to $1,590 from $1,722 during the current six-month period compared to the prior year six-month period, due primarily to a mix shift to line of credit accounts, which generally have lower average draw amounts compared to installment loan originations.

Current wording

The average loan and finance receivable origination amount decreased to $1,583 from $1,636 during the current nine-month period compared to the prior year nine-month period, due primarily to a mix shift to line of credit accounts, which generally have lower average draw amounts compared to installment loan originations.

Previous wording

Marketing expense increased to $231.3 million in the current six-month period compared to $175.7 million in the prior year six-month period. The increase was due primarily to growth in the overall business with higher online advertising costs intended to capture increasing market demand for both our consumer and small business loan products and higher commissionable originations in our small business portfolio.

Current wording

Marketing expense increased to $372.4 million in the current nine-month period compared to $292.2 million in the prior year nine-month period. The increase was due primarily to growth in the overall business with higher online advertising costs intended to capture increasing market demand for both our consumer and small business loan products and higher commissionable originations in our small business portfolio.