Enova expects Q4 2025 adjusted EPS growth of 20%–25% amid accelerating consumer origination

Earnings Call Insights: Enova International (ENVA) Q3 2025

MANAGEMENT VIEW

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David Fisher, President, CEO & Chairman, highlighted "another great quarter, highlighted by solid loan growth and strong credit metrics across our portfolios, driven by our nimble online-only business model and well-diversified portfolio." Fisher reminded participants about the upcoming leadership transition: "Steve Cunningham, our CFO, will take over as CEO on January 1, at which time I will transition to the Executive Chairman role. I've committed to remain as Exec Chair for at least 2 years. Scott Cornelius, our Treasurer, will succeed Steve as CFO."

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Fisher indicated third quarter originations increased 22% year-over-year and 9% sequentially to almost $2 billion, resulting in a 20% year-over-year increase in combined loan and finance receivables to $4.5 billion. Small business products represented 66% of the total portfolio and consumer 34%. Fisher also stated, "Revenue increased 16% year-over-year and 5% sequentially to $803 million in the third quarter. SMB revenue increased an impressive 29% year-over-year and 7% sequentially to a record $348 million, and our consumer revenue increased 8% year-over-year and 4% sequentially to $443 million."

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Fisher addressed prior credit tightening, stating, "As expected, following the adjustment to this one product, credit performance has quickly returned to normal. In fact, credit in that product now exceeds our expectations with some of the lowest early default metrics we have witnessed. As a result, we've begun rapidly reaccelerating its growth."

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Steven Cunningham, Chief Financial Officer & Director, said, "We're pleased to deliver another solid quarter of top and bottom line results that were in line or better than our expectations, with strong growth in originations, receivables and revenue, along with solid credit, operating efficiency and balance sheet flexibility."

OUTLOOK

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Cunningham stated, "For the fourth quarter of 2025, we expect total company revenue to be 10% to 15% higher than the fourth quarter of 2024 as a result of strong SMB growth and a reacceleration of growth in our consumer portfolios."

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He provided further guidance: "We expect the total company net revenue margin for the fourth quarter of 2025 to be in the range of 55% to 60%." Additional expectations for Q4 include marketing expenses around 20% of revenue, O&T costs between 8% to 8.5% of revenue, and G&A costs between 5% and 5.5% of revenue.

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"These expectations should lead to adjusted EPS for the fourth quarter of 2025 that is 20% to 25% higher than the fourth quarter of 2024."

FINANCIAL RESULTS

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The company reported total revenue of $803 million for Q3 2025, a 16% increase year-over-year. Combined loan and finance receivables reached $4.5 billion, up 20% year-over-year. Small business originations grew 31% year-over-year to $1.4 billion; consumer originations grew 4% year-over-year to $590 million.

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The consolidated net charge-off ratio for the quarter was 8.5%, compared to 8.1% last quarter and 8.4% in Q3 of last year. Adjusted EPS increased 37% year-over-year to $3.36 per diluted share, delivering an annualized third quarter return on equity of 28%.

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Cost of funds declined to 8.6%, 15 basis points lower sequentially and nearly 100 basis points lower than the third quarter of 2024.

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During the third quarter, Enova acquired 339,000 shares at a cost of $38 million and started Q4 with share repurchase capacity of approximately $80 million.

Q&A

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David Scharf, Citizens JMP Securities, LLC: Question about capital actions and whether Enova would seek additional covenant relief to return more capital or consider a dividend. Fisher responded, "I think everything is on the table. Certainly, both of those over time as well as other ways of utilizing excess cash. We have plenty of excess capital, other ways of using excess capital to maybe further diversify the businesses and increase our valuation."

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William Ryan, Seaport Research Partners: Asked about the marketing spend being efficient and possibly more profitable than modeled. Fisher explained, "The model continues to get more profitable, and I'll give a lot of credit to our marketing and business teams who are continuing to get more efficient on the marketing and acquisition and conversion side."

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Ryan also asked about mix shifts in consumer originations. Fisher confirmed, "That was the product. And yes, that is where we're expecting the most acceleration going into Q4."

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Vincent Caintic, BTIG, LLC: Asked about areas of potential credit deterioration. Fisher stated, "There's no significant pockets at all. Our subprime business has some of the best credit metrics we've seen in a long, long time."

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Kyle Joseph, Stephens Inc.: Inquired about the competitive dynamics between small business and consumer. Fisher said, "We don't purposely push growth in one versus the other. It's all based on our unit economics framework."

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Moshe Orenbuch, TD Cowen: Questioned whether accelerating consumer growth in Q4 would reduce small business origination. Fisher said, "Completely incremental. As you know, we have plenty of excess capital. So we have plenty of capital to invest in both in Q4."

SENTIMENT ANALYSIS

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Analysts' tone was positive, frequently congratulating management and expressing confidence in the leadership transition, but also pressing for details on capital allocation, growth outlook, and competitive dynamics. Questions focused on operational efficiency and sustainability of growth trends.

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Management maintained a confident and slightly optimistic tone, with Fisher stating, "I've never been more excited about Enova's future," and Cunningham noting, "We remain confident in our ability to generate meaningful financial results for the remainder of 2025 and beyond."

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Compared to the previous quarter, the sentiment remained positive, with analysts maintaining a tone of cautious optimism and management reiterating confidence.

QUARTER-OVER-QUARTER COMPARISON

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Guidance for Q4 2025 projects revenue to be 10% to 15% higher than Q4 2024, while previous Q2 guidance for Q3 expected revenue to be more than 15% higher year-over-year, indicating a slightly more nuanced outlook.

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Consumer origination growth is expected to reaccelerate in Q4 following credit model tightening and subsequent normalization in Q3, a shift from last quarter’s cautious stance.

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Credit metrics remained stable; net charge-off ratio rose slightly to 8.5% from 8.1% last quarter.

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Management’s tone of confidence and focus on operational discipline and efficiency was consistent with the previous quarter.

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Analyst focus shifted from leadership transition and credit model adjustments to efficiency, capital allocation, and the sustainability of recent strong credit performance.

RISKS AND CONCERNS

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Management acknowledged "some noise in the macro environment" but remains confident in their ability to "withstand changes in the macro environment as our technology and analytics continue to be more sophisticated and our balance sheet is stronger than ever."

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Fisher described ongoing vigilance: "We adjust credit hundreds of times a quarter. So there's always something here or something there, but there's no significant pockets at all."

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Analysts probed the sustainability of credit quality and efficiency gains, as well as the flexibility to increase capital returns or dividends.

FINAL TAKEAWAY

Enova’s management highlighted another quarter of strong origination growth, stable credit, and efficient operations, with a clear expectation for accelerating consumer growth and continued small business momentum in Q4. The company projects 20% to 25% adjusted EPS growth year-over-year for the fourth quarter, supported by a diversified portfolio, robust liquidity, and disciplined expense management. Management emphasized confidence in both their strategic direction and the resilience of their operating model, while also noting substantial capacity to return capital to shareholders.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/enva/earnings/transcripts]

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