Enova Sees ‘Stable’ Nonprime Consumer Credit, Small Business Trends

Enova International’s fourth quarter growth — with double-digit gains in loan originations and revenues — showed strength across small business demand and lending to consumers.

The FinTech uses machine learning and digital channels to extend its loans, including to subprime and near-prime borrowers.

CEO David Fisher said on the conference call that, in addition, credit metrics tied to Enova’s consumer lending operations were stable.

By the numbers, fourth quarter loan originations were up 20% year over year, and up 6% from the third quarter to $1.7 billion. Loan and finance receivables surged 21% to what the company has noted was a record $4 billion.

Small and mid-sized business (SMB) products represented 62% of the total portfolio and consumer-related offerings were 38%.

Revenues were 25% higher to $730 million, as measured year over year. Drilling down a bit, SMB-related revenues were 36% higher than a year ago, said the CEO, and added 6% sequentially to $286 million. Consumer related revenues gained 19% year over year to $434 million.

Credit Trends

“Credit quality remains good across the portfolio due to the stability and strength we’ve seen in the performance of our customers,” Fisher said. The net charge-offs ratios improved in both the consumer and business segments.

“Demand and credit in our consumer business continues to be driven by jobs and wage growth. Our target customers are those who traditional lenders view as too risky and too difficult to underwrite, leading them to be underserved by mainstream financial institutions,” he told analysts.

Charge-offs for the consumer loans and receivables, combined, stood at 16.1% in the fourth quarter, down from 17.3% in the year ago quarter. With the SMB operations, the same ratio was 4.5% in the fourth quarter, lower than the 4.8% seen in the 2023 period.

Due in part to SMB optimism, smaller firms are seeking capital and are bypassing traditional banks to do so.

“Based on internal and external data, both our consumer and small business customers are on solid footing as they continue to benefit from job growth, low unemployment rates, easing inflation, and rising real wages,” Fisher said.

CFO Steven Cunningham said on the call that for the first quarter of 2025, “We expect total company revenue to be flat to slightly higher sequentially resulting in year over year revenue growth of around 20%.” Shares were up 1% in after-hours trading on Tuesday (Feb. 4). He added on the call that the consolidated net charge-off ratio for the fourth quarter declined 0.8% year over year to 8.9%.

“Expectations for our future credit performance remain stable,” Cunningham told analysts.

Full year originations should see 15% growth vs. 2024, the CFO said.

During the question-and-answer session with analysts, and in reference to the consumer portfolio, Fisher said “As you kind of play that forward through 2025, I would not expect kind of major changes in the performance of the portfolio. … Our consumer book is very short term in nature.” The company, he added “feels really good” about the “continued health of the non-prime consumer.”