Enova International Inc

Previous wording

On November 15, 2023, 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 $15 million. The Consent Order relates to issues, the majority of which were self-disclosed, including payment processing and debiting errors. We remain subject to the restrictions and obligations of the Consent Order, including prohibitions 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.

Current wording

On November 15, 2023, 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 $15 million. The Consent Order relates to issues, the majority of which were self-disclosed, including payment processing and debiting errors. We remain subject to the restrictions and obligations of the Consent Order, including prohibitions from engaging in certain conduct for a period of seven years from the date of the Consent Order. 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.

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 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. The Supreme Court granted the Petition on February 27, 2023 but declined to expedite the proceeding. The Supreme Court heard oral arguments on October 3, 2023. The Supreme Court is expected to rule on the matter in spring of 2024. 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

In October 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 remained in place. In April 2018, an action was filed against the CFPB making a constitutional challenge to the Small Dollar Rule. After appeals to the Fifth Circuit and Supreme Court and a stay of the compliance date, on May 16, 2024, the Supreme Court 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 declared that the CFPB’s funding structure and Small Dollar Rule are constitutional. On July 3, 2024, the CFSA filed a petition for rehearing en banc that was denied by the Court. On November 25, 2024, the Fifth Circuit clarified that the stay of the compliance date of the Small Dollar Rule expires on March 30, 2025. We will make certain changes to our payment processes and customer notifications in our U.S. consumer lending business to meet the compliance date. 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. The Small Dollar Rule may be impacted by recent executive orders and directives, including instructions issued to CFPB staff on February 3, 2025 to suspend the effective dates of final rules.

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. On April 26, 2023, the Texas Bankers Association filed an action challenging the rule. The district court entered judgment in favor of the CFPB on the Administrative Procedure Act challenges and the ruling was appealed to the Fifth Circuit. Oral arguments took place on February 3, 2025. Although the CFPB sought a pause on the appeal, the CFPB no longer opposed an earlier motion for a stay and tolling of the compliance dates. The Fifth Circuit ordered the tolling of the compliance deadlines but only to the trade associations litigating the case. Unless that stay is expanded to non-parties, the effective date for Tier 1 institutions, such as our small business loan business, to comply with implementing the regulation is July 18, 2025. Absent further court action or action by the CFPB, 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. The rule may be impacted by recent executive orders and directives, including instructions issued to CFPB staff on February 3, 2025 to suspend the effective dates of final rules.

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 did not have a material impact on our consolidated financial statements.

Previous wording

On December 15, 2022, the European Union (“EU”) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development (“OECD”) Pillar Two Framework that was supported by over 130 countries worldwide. The EU effective dates are January 1, 2024, and January 1, 2025, for different aspects of the directive. A significant number of other countries are expected to also implement similar legislation. As of December 31, 2023, among the jurisdictions where the Company operates, only the U.K. has enacted legislation adopting the Pillar Two Rules, effective in fiscal 2025. We do not expect the changes brought about this directive to have a material impact on our consolidated financial statements.

Current wording

On December 15, 2022, the European Union (“EU”) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development (“OECD”) Pillar Two Framework that was supported by over 130 countries worldwide. The EU effective dates are January 1, 2024, and January 1, 2025, for different aspects of the directive. A significant number of other countries are expected to also implement similar legislation. As of December 31, 2024, among the jurisdictions where the Company operates, only Brazil has enacted legislation adopting the Pillar Two Rules, specifically a Qualified Domestic Minimum Top-up Tax, effective in fiscal 2025. We do not expect the changes brought about this directive to have a material impact on our consolidated financial statements.

Previous wording

Revenue increased $381.5 million, or 22.0%, to $2,117.6 million in 2023 compared to $1,736.1 million in the year ended December 31, 2022 (“2022”).

Current wording

Revenue increased $540.2 million, or 25.5%, to $2,657.8 million in 2024 compared to $2,117.6 million in the year ended December 31, 2023 (“2023”).

Previous wording

Net revenue increased $112.3 million, or 10.1%, to $1,229.9 million in 2023 compared to $1,117.6 million in 2022.

Current wording

Net revenue increased $299.5 million, or 24.4%, to $1,529.4 million in 2024 compared to $1,229.9 million in 2023.

Previous wording

Income from operations increased $38.1 million, or 9.9%, to $422.1 million in 2023, compared to $384.0 million in 2022.

Current wording

Income from operations increased $162.7 million, or 38.5%, to $584.8 million in 2024 compared to $422.1 million in 2023.

Previous wording

Net income was $175.1 million in 2023, compared to $207.4 million in 2022. Diluted earnings per share were $5.49 in 2023 compared to $6.19 in 2022.

Current wording

Net income was $209.4 million in 2024 compared to $175.1 million in 2023. Diluted earnings per share were $7.43 in 2024 compared to $5.49 in 2023.

Previous wording

In 2022 and 2023, 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 December 31, 2023, 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

In 2024, 2023 and 2022, 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 December 31, 2024 and 2023, 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

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.

Current wording

In addition to the financial information prepared in conformity with generally accepted accounting principles (“GAAP”), we provide historical non-GAAP financial information. We present non-GAAP financial information because such measures are used by management 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.

Previous wording

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.

Current wording

We provide 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 utilize, and also believe that investors utilize, the Adjusted Earnings Measures to assess operating performance, recognizing 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 Adjusted Earnings Measures are useful to management and investors in comparing our financial results during the periods shown without the effect of certain items that are not indicative of our core operating performance or results of operations.

Previous wording

For the year ended December 31, 2023, we recorded expenses of $0.8 million ($0.6 million net of tax) related to a consent solicitation for our Senior Notes due 2025. For the year ended December 31, 2021, we recorded expenses of $1.4 million ($1.1 million net of tax) related to acquisitions and a divestiture of a subsidiary.

Current wording

For the years ended December 31, 2024 and 2023, we recorded expenses of $0.3 million ($0.2 million net of related tax) and $0.8 million ($0.6 million net of tax), respectively, related to a consent solicitation for our Senior Notes due 2025.

Previous wording

For the years ended December 31, 2023 and 2021, we recorded losses of $1.7 million ($1.3 million net of related tax) to write-off leasehold improvements and $7.5 million ($5.6 million net of tax), including a net write-off of leasehold improvements of $4.2 million), related to the exit of leased office space, respectively.

Current wording

For the year ended December 31, 2023, we recorded losses of $1.7 million ($1.3 million net of related tax) to write off leasehold improvements related to the exit of leased office space.

Previous wording

For the year ended December 31, 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.

Current wording

For the year ended December 31, 2024, we recorded an equity method investment loss of $16.6 million ($13.3 million net of tax) related to the write-down of our investment in Linear. For the year ended December 31, 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 then held an ownership interest, of its operating company, partially offset by a $4.4 million loss (on the sale of OnDeck Canada).

Previous wording

For the years ended December 31, 2023 and 2021, we recorded losses on early extinguishment of debt of $0.3 million ($0.2 million net of tax) and $0.4 million ($0.3 million net of tax), respectively. For the years ended December 31, 2022 and 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.

Current wording

For the years ended December 31, 2024 and 2023, we recorded losses on early extinguishment of debt of $5.7 million ($4.3 million net of tax) and $0.3 million ($0.2 million net of tax), respectively. For the year ended December 31, 2022, we recorded a loss of $1.3 million ($1.0 million net of tax) related to incomplete capital markets transactions.

Previous wording

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, equity method investment income, regulatory settlement, and other nonoperating expenses shown below are useful to investors in order to allow them to compare our 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):

Current wording

We provide Adjusted EBITDA, which is a non-GAAP measure that we define as earnings excluding depreciation, amortization, interest, foreign currency transaction gains or losses, taxes, stock-based compensation expense and certain other items, as appropriate, that are not indicative of our core operating performance. We utilize, and also believe that investors utilize, Adjusted EBITDA to analyze operating performance and evaluate our ability to incur and service debt and our capacity for making capital expenditures. We believe Adjusted EBITDA is useful to management and investors in comparing our financial results during the periods shown without the effect of certain non-cash items and certain items that are not indicative of our core operating performance or results of operations. Adjusted

Previous wording

Refer to footnotes in previous table for explanation of (a), (b), (d), (e) and (f).

Current wording

Refer to footnotes in previous table for explanation of (a), (c), (d) and (e).

Previous wording

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.

Current wording

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 management and 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.

Previous wording

Revenue increased $381.5 million, or 22.0%, to $2,117.6 million for 2023 as compared to $1,736.1 million for 2022. The change in revenue was driven primarily by a 21.6% increase in revenue from our consumer portfolio and a 22.1% increase in revenue from our small business portfolio as higher levels of originations have led to higher loan balances for both portfolios.

Current wording

Revenue increased $540.2 million, or 25.5%, to $2,657.8 million for 2024 as compared to $2,117.6 million for 2023. The change in revenue was driven primarily by a 21.7% increase in revenue from our consumer portfolio and a 32.0% increase in revenue from our small business portfolio as higher levels of originations have led to higher loan balances for both portfolios.

Previous wording

Our net revenue was $1,229.9 million for 2023 compared to $1,117.6 million for 2022. Our net revenue as a percentage of revenue (“net revenue margin”) was 58.1% in 2023 compared to 64.4% in 2022. The decrease in net revenue margin was driven primarily by normalization in our small business portfolio, which had an atypically high net revenue margin in the prior year due to lower delinquency rates and lower than expected charge-offs as a result of portfolio seasoning and lower originations, partially offset by improvement in our consumer portfolio in the current year.

Current wording

Our net revenue was $1,529.4 million for 2024 compared to $1,229.9 million for 2023. Our net revenue as a percentage of revenue (“net revenue margin”) was 57.5% in 2024 compared to 58.1% in 2023. 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 fair value of our loan and finance receivable portfolio in our consolidated financial statements at December 31, 2023 and 2022 was $3,629.2 million and $3,018.5 million, respectively, with an outstanding principal balance of $3,154.7 million and $2,739.2 million, respectively. The fair value of the combined loan and finance receivables portfolio includes $18.5 million (with an outstanding principal balance of $13.5 million) and $16.3 million (with an outstanding principal balance of $12.9 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, 2023 and 2022, respectively. See “—Non-GAAP Financial Measures—Combined Loans and Finance Receivables” above for additional information related to combined loans and finance receivables.

Current wording

The fair value of our loan and finance receivable portfolio in our consolidated financial statements at December 31, 2024 and 2023 was $4,386.4 million and $3,629.2 million, respectively, with an outstanding principal balance of $3,810.4 million and $3,154.7 million, respectively. The fair value of the combined loan and finance receivables portfolio includes $28.4 million (with an outstanding principal balance of $19.9 million) and $18.5 million (with an outstanding principal balance of $13.5 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, 2024 and 2023, respectively. See “—Non-GAAP Financial Measures—Combined Loans and Finance Receivables” above for additional information related to combined loans and finance receivables.

Previous wording

At December 31, 2023, the ratio of fair value as a percentage of principal was 115.0% on company owned loans and finance receivables and 115.1% on combined loans and finance receivables compared to 110.2% on company owned loans and finance receivables and 110.3% on combined loans and finance receivables at December 31, 2022. These ratios increased during the year 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, as well as an improvement in credit outlook on certain products, partially offset by higher delinquency rates on other products.

Current wording

At December 31, 2024, the ratio of fair value as a percentage of principal was 115.1% on company owned loans and finance receivables and 115.3% on combined loans and finance receivables compared to 115.0% on company owned loans and finance receivables and 115.1% on combined loans and finance receivables at December 31, 2023. These ratios were consistent year-over-year due to consistency in credit performance in both the consumer and small business portfolios.

Previous wording

The average amount outstanding per loan decreased to $4,393 as of December 31, 2023 compared to $5,172 from prior year, mainly due 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 decreased to $4,102 as of December 31, 2024 compared to $4,393 from prior year, mainly due 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 average loan origination amount decreased to $1,627 from $1,823 during 2023 compared to 2022, due primarily to a mix shift to line of credit accounts, which generally have lower draw amounts compared to installment loan originations.

Current wording

The average loan origination amount decreased to $1,576 from $1,627 during 2024 compared to 2023, due primarily to a mix shift to line of credit accounts, which generally have lower draw amounts compared to installment loan originations.

Previous wording

The combined ending loan balance, including principal and accrued fees/interest outstanding, of consumer loans and finance receivables at December 31, 2023 increased 19.6% to $1,263.0 million compared to $1,056.2 million at December 31, 2022, due primarily to originations outpacing repayments.

Current wording

The combined ending loan balance, including principal and accrued fees/interest outstanding, of consumer loans and finance receivables at December 31, 2024 increased 19.3% to $1,506.8 million compared to $1,263.0 million at December 31, 2023, due primarily to originations outpacing repayments.

Previous wording

The percentage of loans greater than 30 days delinquent decreased to 7.2% at December 31, 2023, compared to 8.2% at December 31, 2022, driven primarily by improved credit performance. Charge-offs (net of recoveries) as a percentage of average combined loan balance increased to 17.3% for the three months ended December 31, 2023 (the “2023 fourth quarter”), compared to 16.3% for the three months ended December 31, 2022 (the “2022 fourth quarter”), driven primarily by growth in originations on line of credit products, which generally have higher yields and credit risk compared to our installment products. 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.

Current wording

The percentage of loans greater than 30 days delinquent increased to 8.2% at December 31, 2024, compared to 7.2% at December 31, 2023, driven primarily by 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 decreased to 16.1% for the three months ended December 31, 2024 (the “2024 fourth quarter”), compared to 17.3% for the three months ended December 31, 2023 (the “2023 fourth quarter”), driven primarily by improved credit performance in most of our products in the consumer loan portfolio. The trend in charge-offs (net of recoveries) as a percentage of average combined loan balance across the four quarters of 2024 was 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. 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.

Previous wording

Revenue related to our consumer loans and finance receivables was $364.1 million for the 2023 fourth quarter, compared to $286.3 million for the 2022 fourth quarter. The increase in revenue was driven primarily by growth in the overall portfolio. The net revenue margin related to our consumer loans and finance receivables was 49.7% for the 2023 fourth quarter, which is fairly stable compared to 49.3% for the 2022 fourth quarter.

Current wording

Revenue related to our consumer loans and finance receivables was $433.6 million for the 2024 fourth quarter, compared to $364.1 million for the 2023 fourth quarter. The increase in revenue was driven primarily by growth in the overall portfolio. The net revenue margin related to our consumer loans and finance receivables was 50.9% for the 2024 fourth quarter, which was fairly consistent with the net revenue margin of 49.7% in the 2023 fourth quarter.

Previous wording

The ratio of fair value as a percentage of principal on consumer loans and finance receivables increased to 121.4% at December 31, 2023, compared to 112.3% at December 31, 2022, 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, as well as improvement in credit performance of the portfolio. 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.

Current wording

The ratio of fair value as a percentage of principal on consumer loans and finance receivables was flat at 121.4% at December 31, 2024 and 2023. 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.

Previous wording

The combined ending loan balance, including principal and accrued fees/interest outstanding, of small business loans and finance receivables at December 31, 2023 increased 14.1% to $2,050.4 million compared to $1,797.3 million at December 31, 2022, due primarily to originations outpacing repayments.

Current wording

The combined ending loan balance, including principal and accrued fees/interest outstanding, of small business loans and finance receivables at December 31, 2024 increased 21.1% to $2,483.5 million compared to $2,050.4 million at December 31, 2023, due primarily to originations outpacing repayments.

Previous wording

The percentage of loans and finance receivables greater than 30 days delinquent increased to 8.4% at December 31, 2023, compared to 5.7% at December 31, 2022. Charge-offs (net of recoveries) as a percentage of average loan balance increased to 4.8% for the 2023 fourth quarter, compared to 4.1% in the 2022 fourth quarter. The credit performance of our small business portfolio was stronger in 2022 as the portfolio was more seasoned due to reductions in originations in response to the pandemic. Delinquency and charge-offs have since increased to more normal levels due to the acceleration in originations and macroeconomic pressures on our customers and their businesses.

Current wording

The percentage of loans and finance receivables greater than 30 days delinquent decreased to 7.0% at December 31, 2024, compared to 8.4% at December 31, 2023. Charge-offs (net of recoveries) as a percentage of average loan balance decreased to 4.5% for the 2024 fourth quarter, compared to 4.8% in the 2023 fourth 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 $210.7 million for the 2023 fourth quarter, compared to $192.6 million for the 2022 fourth 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 65.2% for the 2023 fourth quarter, compared to 74.5% for the 2022 fourth quarter. The net revenue margin in the prior year was elevated due to lower delinquency rates and lower than expected charge-offs as a result of portfolio seasoning and lower originations. The net revenue margin in the 2023 fourth quarter was in a more normalized range as credit performance has returned to more normalized levels. The net revenue margins in the third and fourth quarters are higher than the prior two sequential quarters due to improved performance of more recent vintages.

Current wording

Revenue related to our small business loans and finance receivables was $285.8 million for the 2024 fourth quarter, compared to $210.7 million for the 2023 fourth 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 64.6% for the 2024 fourth quarter, which was fairly consistent with the net revenue margin of 65.2% in the 2023 fourth quarter.

Previous wording

The ratio of fair value as a percentage of principal on small business loans and finance receivables increased to 111.5% at December 31, 2023, compared to 109.1% at December 31, 2022, due primarily to recent vintages, which have exhibited improved performance, being a higher percentage of the portfolio. 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.

Current wording

The ratio of fair value as a percentage of principal on small business loans and finance receivables increased slightly to 111.8% at December 31, 2024, compared to 111.5% at December 31, 2023. 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.

Previous wording

Total operating expenses increased $74.2 million, or 10.1%, to $807.8 million in 2023, compared to $733.6 million in 2022.

Current wording

Total operating expenses increased $136.9 million, or 16.9%, to $944.7 million in 2024, compared to $807.8 million in 2023.

Previous wording

Marketing expense increased $32.0 million, or 8.3%, to $414.5 million in 2023 compared to $382.5 million in 2022, due primarily to growth in the overall business as well as higher online advertising costs intended to capture increasing market demand for both our consumer and small business loan products, partially offset by lower commissionable originations in our small business portfolio and lower direct mail spend.

Current wording

Marketing expense increased $109.1 million, or 26.3%, to $523.6 million in 2024 compared to $414.5 million in 2023, 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 $21.2 million, or 12.2%, to $194.9 million in 2023 from $173.7 million in 2022, due primarily to higher variable costs, particularly personnel, collection and underwriting costs, due to the increase in originations and the size of the loan portfolio. As a percentage of revenue, operations and technology expense decreased to 9.2% in 2023 from 10.0% in 2022, as increased originations and revenues outpaced fixed costs.

Current wording

Operations and technology expense increased $29.5 million, or 15.1%, to $224.4 million in 2024 from $194.9 million in 2023, due primarily to higher variable costs, particularly personnel costs and, to a lesser extent, underwriting, 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 8.4% in 2024 from 9.2% in 2023, as increased originations and revenues outpaced fixed costs.

Previous wording

General and administrative expense increased $19.8 million, or 14.1%, to $160.3 million in 2023 compared to $140.5 million in 2022, due primarily to the CFPB settlement of $15.0 million in the 2023 fourth quarter and, to a lesser extent, higher personnel costs, partially offset by lower occupancy costs due to real estate rationalization efforts. As a percentage of revenue, general and administrative expense decreased to 7.6% in 2023 from 8.1% in 2022. Excluding the CFPB settlement charge, general and administrative expense as a percentage of revenue decreased to 6.9% in 2023 from 8.1% in 2022, as increased originations and revenues outpaced fixed costs.

Current wording

General and administrative expense decreased $3.8 million, or 2.3%, to $156.5 million in 2024 compared to $160.3 million in 2023, due primarily to the CFPB settlement of $15.0 million in the 2023 fourth quarter, partially offset by higher personnel costs in 2024. As a percentage of revenue, general and administrative expense decreased to 5.9% in 2024 from 7.6%, or 6.9% after excluding the impact of the CFPB settlement charge, as increased originations and revenues outpaced fixed costs.

Previous wording

Interest expense, net increased $78.9 million, or 68.1%, to $194.8 million in 2023 compared to $115.9 million in 2022, due primarily to an increase in the average amount of debt outstanding to $2,382.7 million during 2023 from $1,856.1 million during 2022, and an increase in the weighted average interest rate on our outstanding debt to 8.28% in 2023 from 6.35% in 2022. See “—Liquidity and Capital Resources—Current Debt Facilities” below for further information.

Current wording

Interest expense, net increased $95.6 million, or 49.1%, to $290.4 million in 2024 compared to $194.8 million in 2023, due primarily to an increase in the average amount of debt outstanding to $3,148.9 million during 2024 from $2,382.7 million during 2023, and an increase in the weighted average interest rate on our outstanding debt to 9.31% in 2024 from 8.28% in 2023. See “—Liquidity and Capital Resources—Current Debt Facilities” below for further information.

Previous wording

The effective tax rate from continuing operations of 22.9% in 2023 was lower compared to the effective tax rate of 23.9% in 2022. The decrease was primarily driven by excess tax benefits from stock-based compensation, the remeasurement of unrecognized tax benefits due to the statute of limitations closure of the 2019 tax year, and lower state rates, partially offset by the nondeductible regulatory settlement charge.

Current wording

The effective tax rate from continuing operations of 22.7% in 2024 was slightly lower compared to the effective tax rate of 22.9% in 2023. The decrease was primarily driven by a reduction of interest expense due to the remeasurement of unrecognized tax benefits and the 2023 nondeductible regulatory settlement charge that was recorded in the prior year quarter, partially offset by an increase in nondeductible compensation expenses related to executive officers.

Previous wording

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, 2023, we had cash, cash equivalents, and restricted cash of $377.4 million, of which $323.1 million was restricted, compared to $178.4 million, of which $78.2 million was restricted, as of December 31, 2022. During the current year we issued $170.0 million of asset-backed notes to fund our growth in our near-prime consumer loan business, entered into a new $287.2 million small business loan securitization facility and issued $227.1 million of asset-backed notes to fund our growth in our small business loan business. As of December 31, 2023, we had funding capacity of $658.9 million. Based on numerous stressed-case modeling scenarios, we believe we have sufficient liquidity to run our operations for the foreseeable future. Further, with the repayment of our 8.50% Senior Notes due 2024 (the “2024 Senior Notes”) on January 3, 2024, we have no recourse debt obligations due until September 2025. 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.

Current wording

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, 2024, we had cash, cash equivalents, and restricted cash of $322.7 million, of which $248.8 million was restricted, compared to $377.4 million, of which $323.1 million was restricted, as of December 31, 2023. During the year ended December 31, 2024, we issued $217.2 million of asset-backed notes and entered into a $150.0 million consumer loan securitization facility to fund growth in our near-prime consumer loan portfolio. We also issued $660.9 million of asset-backed notes to fund growth in our small business loan portfolio. During the year, we also amended our revolving credit agreement, a small business loan securitization facility and a consumer loan securitization facility, increasing our borrowing capacity by $150.0 million, $200.4 million and $75.0 million, respectively. As of December 31, 2024, we had funding capacity of $944.0 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 June 2026. 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.