# Enova International, Inc. (ENVA) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Enova International, Inc.'s 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1529864/000095017025022244/enva-20241231.htm
Accession: 0000950170-25-022244
Filing date: 2025-02-18
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high

Company profile: /company/ENVA/
All MD&A years: /company/ENVA/mda/
Previous year: /company/ENVA/mda/fy2023/ (FY 2023)
Next year: /company/ENVA/mda/fy2025/ (FY 2025)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

RECENT REGULATORY DEVELOPMENTS

Consumer Financial Protection Bureau (“CFPB”)

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.

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.

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.

State of Washington SSB 6025

In March 2024, the Governor of the State of Washington signed into law a bill that amends the Consumer Loan Act (“CLA”) to add anti-evasion language and a predominant economic interest test for closed-end and open-end loans. In addition, the bill would prohibit engaging in “any activity subject to” the CLA without a license as required by the CLA. The law expands the CLA’s coverage to include

43

any loan made to a “person physically located” in Washington, in addition to the existing coverage of any loan made to a “resident” of Washington, “by a licensee, or persons subject to this chapter”. The current rate cap under the CLA is 25%. The law took effect on June 6, 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.

Minnesota Commerce Omnibus Bill

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.

European Union Pillar Two Directive

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.

RESULTS OF OPERATIONS

Highlights

Our financial results for the year ended December 31, 2024 (“2024”) are summarized below.

•
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”).

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

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

•
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.

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Overview

The following tables reflect our results of operations for the periods indicated, both in dollars and as a percentage of total revenue (dollars in thousands, except per share data):

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,"],["","","2024","","","2023","","","2022"],["Revenue"],["Loans and finance receivables revenue","","$","2,620,296","","","$","2,086,035","","","$","1,712,855"],["Other","","","37,504","","","","31,604","","","","23,230"],["Total Revenue","","","2,657,800","","","","2,117,639","","","","1,736,085"],["Change in Fair Value","","","(1,128,351",")","","","(887,717",")","","","(618,521",")"],["Net Revenue","","","1,529,449","","","","1,229,922","","","","1,117,564"],["Operating Expenses"],["Marketing","","","523,569","","","","414,460","","","","382,573"],["Operations and technology","","","224,391","","","","194,905","","","","173,668"],["General and administrative","","","156,524","","","","160,265","","","","140,464"],["Depreciation and amortization","","","40,207","","","","38,157","","","","36,867"],["Total Operating Expenses","","","944,691","","","","807,787","","","","733,572"],["Income from Operations","","","584,758","","","","422,135","","","","383,992"],["Interest expense, net","","","(290,442",")","","","(194,779",")","","","(115,887",")"],["Foreign currency transaction (loss) gain, net","","","(1,064",")","","","57","","","","(645",")"],["Equity method investment (loss) income","","","(16,460",")","","","116","","","","6,435"],["Other nonoperating expenses","","","(5,691",")","","","(282",")","","","(1,321",")"],["Income before Income Taxes","","","271,101","","","","227,247","","","","272,574"],["Provision for income taxes","","","61,653","","","","52,126","","","","65,150"],["Net income","","","209,448","","","","175,121","","","","207,424"],["Diluted earnings per share","","$","7.43","","","$","5.49","","","$","6.19"],["Revenue"],["Loans and finance receivables revenue","","","98.6","%","","","98.5","%","","","98.7","%"],["Other","","","1.4","","","","1.5","","","","1.3"],["Total Revenue","","","100.0","","","","100.0","","","","100.0"],["Change in Fair Value","","","(42.5",")","","","(41.9",")","","","(35.6",")"],["Net Revenue","","","57.5","","","","58.1","","","","64.4"],["Operating Expenses"],["Marketing","","","19.7","","","","19.6","","","","22.1"],["Operations and technology","","","8.4","","","","9.2","","","","10.0"],["General and administrative","","","5.9","","","","7.6","","","","8.1"],["Depreciation and amortization","","","1.5","","","","1.8","","","","2.1"],["Total Operating Expenses","","","35.5","","","","38.2","","","","42.3"],["Income from Operations","","","22.0","","","","19.9","","","","22.1"],["Interest expense, net","","","(11.0",")","","","(9.2",")","","","(6.7",")"],["Foreign currency transaction (loss) gain, net","","","\u2014","","","","\u2014","","","","\u2014"],["Equity method investment (loss) income","","","(0.6",")","","","\u2014","","","","0.4"],["Other nonoperating expenses","","","(0.2",")","","","\u2014","","","","(0.1",")"],["Income before Income Taxes","","","10.2","","","","10.7","","","","15.7"],["Provision for income taxes","","","2.3","","","","2.5","","","","3.8"],["Net income","","","7.9","%","","","8.3","%","","","11.9","%"]]
[[/GREPCENT_TABLE]]

Valuation of Loans and Finance Receivables

We carry our loans and finance receivables at fair value with changes in fair value recognized directly in earnings. We estimate the fair value of our loans and finance receivables primarily using internally-developed, discounted cash flow analyses to more accurately predict future payments. We adjust contractual cash flows for estimated losses, prepayments and servicing costs over the estimated duration of the underlying assets and discount the future cash flows using a rate of return that we believe a market participant would require. Model results may be adjusted by management if we do not believe the output reflects the fair value of the portfolio, as defined under GAAP. The models are updated at each measurement date to capture any changes in internal factors such as nature, term, volume, payment trends, remaining time to maturity, and portfolio mix, as well as changes in underwriting or observed trends expected to impact future performance. We have validated model performance by comparing past valuations with actual performance noted after each valuation.

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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.

NON-GAAP FINANCIAL MEASURES

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.

We provide non-GAAP financial information for informational purposes and to enhance understanding of our GAAP consolidated financial statements. Readers should consider the information in addition to, but not instead of or superior to, our consolidated financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.

Adjusted Earnings Measures

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.

46

The following table provides reconciliations between net income and diluted earnings per share calculated in accordance with GAAP to the Adjusted Earnings Measures (in thousands, except per share data):

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,"],["","","2024","","","2023","","","2022"],["Net income","","$","209,448","","","$","175,121","","","$","207,424"],["Adjustments:"],["Transaction-related costs(a)","","","327","","","","755","","","","\u2014"],["Lease termination and cease use loss(b)","","","\u2014","","","","1,698","","","","\u2014"],["Equity method investment loss (income)(c)","","","16,460","","","","(116",")","","","(6,107",")"],["Other nonoperating expenses(d)","","","5,691","","","","282","","","","1,321"],["Intangible asset amortization","","","8,055","","","","8,385","","","","8,055"],["Stock-based compensation expense","","","31,816","","","","26,738","","","","21,950"],["Foreign currency transaction loss (gain), net","","","1,064","","","","(57",")","","","645"],["Cumulative tax effect of adjustments","","","(14,789",")","","","(9,456",")","","","(5,365",")"],["Regulatory settlement(e)","","","\u2014","","","","15,201","","","","\u2014"],["Adjusted earnings","","$","258,072","","","$","218,551","","","$","227,923"],["Diluted earnings per share","","$","7.43","","","$","5.49","","","$","6.19"],["Adjustments:"],["Transaction-related costs(a)","","","0.01","","","","0.02","","","","\u2014"],["Lease termination and cease use loss(b)","","","\u2014","","","","0.05","","","","\u2014"],["Equity method investment loss (income)(c)","","","0.58","","","","\u2014","","","","(0.18",")"],["Other nonoperating expenses(d)","","","0.20","","","","0.01","","","","0.04"],["Intangible asset amortization","","","0.29","","","","0.26","","","","0.24"],["Stock-based compensation expense","","","1.13","","","","0.84","","","","0.66"],["Foreign currency transaction loss (gain), net","","","0.04","","","","\u2014","","","","0.02"],["Cumulative tax effect of adjustments","","","(0.53",")","","","(0.30",")","","","(0.16",")"],["Regulatory settlement(e)","","","\u2014","","","","0.48","","","","\u2014"],["Adjusted earnings per share","","$","9.15","","","$","6.85","","","$","6.81"]]
[[/GREPCENT_TABLE]]

(a)
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.

(b)
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.

(c)
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).

(d)
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.

(e)
For the year ended December 31, 2023, we reached an agreement with the CFPB, pursuant to which we agreed to pay a civil money penalty of $15.0 million, which is nondeductible for tax purposes.

Adjusted EBITDA

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

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EBITDA is also useful to investors to help assess our estimated enterprise value. The computation of Adjusted EBITDA as presented below may differ from the computation of similarly-titled measures provided by other companies (dollars in thousands):

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,"],["","","2024","","","2023","","","2022"],["Net income","","$","209,448","","","$","175,121","","","$","207,424"],["Depreciation and amortization expenses","","","40,207","","","","38,157","","","","36,867"],["Interest expense, net","","","290,442","","","","194,779","","","","115,887"],["Foreign currency transaction loss (gain), net","","","1,064","","","","(57",")","","","645"],["Provision for income taxes","","","61,653","","","","52,126","","","","65,150"],["Stock-based compensation expense","","","31,816","","","","26,738","","","","21,950"],["Adjustments:"],["Transaction-related costs(a)","","","327","","","","755","","","","\u2014"],["Equity method investment loss (income)(c)","","","16,460","","","","(116",")","","","(6,435",")"],["Regulatory settlement(e)","","","\u2014","","","","15,201","","","","\u2014"],["Other nonoperating expenses(d)","","","5,691","","","","282","","","","1,321"],["Adjusted EBITDA","","$","657,108","","","$","502,986","","","$","442,809"],["Adjusted EBITDA margin calculated as follows:"],["Total Revenue","","$","2,657,800","","","$","2,117,639","","","$","1,736,085"],["Adjusted EBITDA","","$","657,108","","","$","502,986","","","$","442,809"],["Adjusted EBITDA as a percentage of total revenue","","","24.7","%","","","23.8","%","","","25.5","%"]]
[[/GREPCENT_TABLE]]

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

Combined Loans and Finance Receivables

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.

YEAR ENDED 2024 COMPARED TO YEAR ENDED 2023

Revenue and Net Revenue

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.

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.

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The following table sets forth the components of revenue and net revenue, separated by product for 2024 and 2023 (dollars in thousands):

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,"],["","","2024","","","2023","","","$ Change","","","% Change"],["Revenue by product:"],["Consumer loans and finance receivables revenue","","$","1,576,821","","","$","1,295,231","","","$","281,590","","","","21.7","%"],["Small business loans and finance receivables revenue","","","1,043,475","","","","790,804","","","","252,671","","","","32.0"],["Total loan and finance receivable revenue","","","2,620,296","","","","2,086,035","","","","534,261","","","","25.6"],["Other","","","37,504","","","","31,604","","","","5,900","","","","18.7"],["Total revenue","","","2,657,800","","","","2,117,639","","","","540,161","","","","25.5"],["Change in fair value","","","(1,128,351",")","","","(887,717",")","","","(240,634",")","","","27.1"],["Net revenue","","$","1,529,449","","","$","1,229,922","","","$","299,527","","","","24.4","%"],["Revenue by product (% to total):"],["Consumer loans and finance receivables revenue","","","59.3","%","","","61.2","%"],["Small business loans and finance receivables revenue","","","39.3","","","","37.3"],["Total loan and finance receivable revenue","","","98.6","","","","98.5"],["Other","","","1.4","","","","1.5"],["Total revenue","","","100.0","","","","100.0"],["Change in fair value","","","(42.5",")","","","(41.9",")"],["Net revenue","","","57.5","%","","","58.1","%"]]
[[/GREPCENT_TABLE]]

The percentage of revenue from our small business loans and finance receivables increased slightly in 2024 due to increased demand and favorable unit economics.

The following tables summarizes revenue generated from our operations for 2024 and 2023 (dollars in thousands):

[[GREPCENT_TABLE]]
[["","","Years Ended December 31,"],["","","2024","","","2023"],["Loan interest","","$","1,719,631","","","$","1,422,166"],["Statement and draw fees on line of credit accounts","","","774,190","","","","534,845"],["Other","","","163,979","","","","160,628"],["Total revenue","","$","2,657,800","","","$","2,117,639"]]
[[/GREPCENT_TABLE]]

Loan and Finance Receivable Balances

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.

The following table summarizes loan and finance receivable balances outstanding as of December 31, 2024 and 2023 (in thousands):

[[GREPCENT_TABLE]]
[["","","As of December 31,"],["","","2024","","","2023"],["","","","","","Guaranteed","","","","","","","","","Guaranteed"],["","","Company","","","by the","","","","","","Company","","","by the"],["","","Owned(a)","","","Company(a)","","","Combined(b)","","","Owned(a)","","","Company(a)","","","Combined(b)"],["Consumer loans and finance receivables"],["Principal","","$","1,354,014","","","$","19,859","","","$","1,373,873","","","$","1,138,928","","","$","13,537","","","$","1,152,465"],["Fair value","","","1,639,307","","","","28,414","","","","1,667,721","","","","1,380,784","","","","18,534","","","","1,399,318"],["Fair value as a % of principal","","","121.1","%","","","143.1","%","","","121.4","%","","","121.2","%","","","136.9","%","","","121.4","%"],["Small business loans and finance receivables"],["Principal","","$","2,456,430","","","$","\u2014","","","$","2,456,430","","","$","2,015,807","","","$","\u2014","","","$","2,015,807"],["Fair value","","","2,747,137","","","","\u2014","","","","2,747,137","","","","2,248,383","","","","\u2014","","","","2,248,383"],["Fair value as a % of principal","","","111.8","%","","","\u2014","%","","","111.8","%","","","111.5","%","","","\u2014","%","","","111.5","%"],["Total loans and finance receivables"],["Principal","","$","3,810,444","","","$","19,859","","","$","3,830,303","","","$","3,154,735","","","$","13,537","","","$","3,168,272"],["Fair value","","","4,386,444","","","","28,414","","","","4,414,858","","","","3,629,167","","","","18,534","","","","3,647,701"],["Fair value as a % of principal","","","115.1","%","","","143.1","%","","","115.3","%","","","115.0","%","","","136.9","%","","","115.1","%"]]
[[/GREPCENT_TABLE]]

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(a)
GAAP measure. The loan and finance receivable balances guaranteed by us relate to loans originated by third-party lenders through the CSO program and are not included in our consolidated balance sheets.

(b)
Amounts represent non-GAAP measures.

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.

Average Amount Outstanding per Loan and Finance Receivable

The average amount outstanding per loan and finance receivable is calculated as the total combined loans and finance receivables, gross balance at the end of the period divided by the total number of combined loans and finance receivables outstanding at the end of the period. The following table shows the average amount outstanding per loan and finance receivable by product at December 31, 2024 and 2023:

[[GREPCENT_TABLE]]
[["","","As of December 31,"],["","","2024","","","2023"],["Average amount outstanding per loan and finance receivable (in ones)(a)"],["Consumer loans and finance receivables(b)","","$","1,653","","","$","1,801"],["Small business loans and finance receivables","","","40,354","","","","38,645"],["Total loans(b)","","$","4,102","","","$","4,393"]]
[[/GREPCENT_TABLE]]

(a)
The disclosure regarding the average amount per loan is statistical data that is not included in our consolidated financial statements.

(b)
Includes loans guaranteed by us, which represent loans originated by third-party lenders through the CSO program and are not included in our consolidated balance sheets.

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.

Average Loan and Finance Receivable Origination

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 2024 compared to 2023:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31,"],["","","2024","","","2023"],["Average loan and finance receivable origination amount (in ones)(a)"],["Consumer loans and finance receivables(b)(c)","","$","573","","","$","597"],["Small business loans and finance receivables(c)","","","16,067","","","","16,545"],["Total loans(b)","","$","1,576","","","$","1,627"]]
[[/GREPCENT_TABLE]]

(a)
The disclosure regarding the average loan origination amount is statistical data that is not included in our consolidated financial statements.

(b)
Includes loans guaranteed by us, which represent loans originated by third-party lenders through the CSO program and are not included in our consolidated balance sheets.

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

The average loan and finance receivable origination amount is smaller than the average amount outstanding per loan and finance receivable in the previous section as the former measure includes incremental draws on our line of credit accounts whereas the latter measure includes the entire outstanding receivable on our line of credit accounts.

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.

50

Credit Performance of Loans and Finance Receivables

We monitor the performance of our loans and finance receivables. Internal factors such as portfolio composition (e.g., interest rate, loan term, geography information, customer mix, credit quality) and performance (e.g., delinquency, loss trends, prepayment rates) are reviewed on a regular basis at various levels (e.g., product, vintage). We also weigh the impact of relevant, internal business decisions on portfolio. External factors such as macroeconomic trends, financial market liquidity expectations, competitive landscape and legal/regulatory requirements are also reviewed on a regular basis.

The payment status of a customer, including the degree of any delinquency, is a significant factor in determining estimated charge-offs in the cash flow models that we use to determine fair value. The following table shows payment status on outstanding principal, interest and fees as of the end of each of the last eight quarters (dollars in thousands):

[[GREPCENT_TABLE]]
[["","","2024"],["","","First","","","Second","","","Third","","","Fourth"],["","","Quarter","","","Quarter","","","Quarter","","","Quarter"],["Ending combined loans and finance receivables, including principal and accrued fees/interest outstanding:"],["Company owned","","$","3,438,468","","","$","3,569,726","","","$","3,742,767","","","$","3,966,486"],["Guaranteed by the Company(a)","","","13,046","","","","14,941","","","","21,797","","","","23,826"],["Ending combined loan and finance receivables balance(b)","","$","3,451,514","","","$","3,584,667","","","$","3,764,564","","","$","3,990,312"],[" 30 days delinquent","","","279,659","","","","268,053","","","","293,839","","","","297,832"],[" 30 days delinquency rate","","","8.1","%","","","7.5","%","","","7.8","%","","","7.5","%"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","","2023"],["","","First","","","Second","","","Third","","","Fourth"],["","","Quarter","","","Quarter","","","Quarter","","","Quarter"],["Ending combined loans and finance receivables, including principal and accrued fees/interest outstanding:"],["Company owned","","$","2,785,235","","","$","2,857,557","","","$","3,037,904","","","$","3,297,082"],["Guaranteed by the Company(a)","","","12,841","","","","16,972","","","","16,533","","","","16,351"],["Ending combined loan and finance receivables balance(b)","","$","2,798,076","","","$","2,874,529","","","$","3,054,437","","","$","3,313,433"],[" 30 days delinquent","","","198,011","","","","221,540","","","","242,126","","","","263,524"],[" 30 days delinquency rate","","","7.1","%","","","7.7","%","","","7.9","%","","","8.0","%"]]
[[/GREPCENT_TABLE]]

(a)
Represents loans originated by third-party lenders through the CSO program, which are not included in our consolidated financial statements.

(b)
Non-GAAP measure.

51

Refer to the following sections for discussion of receivable balances and credit metrics at the consumer and small business levels.

Consumer Loans and Finance Receivables

The following table includes financial information for our consumer loans and finance receivables. Delinquency metrics include principal, interest and fees, and only amounts that are past due (dollars in thousands):

[[GREPCENT_TABLE]]
[["","","2024"],["","","First","","","Second","","","Third","","","Fourth"],["","","Quarter","","","Quarter","","","Quarter","","","Quarter"],["Consumer loans and finance receivables:"],["Consumer combined loan and finance receivable principal balance:"],["Company owned","","$","1,106,364","","","$","1,176,727","","","$","1,266,030","","","$","1,354,014"],["Guaranteed by the Company(a)","","","10,780","","","","12,487","","","","18,292","","","","19,859"],["Total combined loan and finance receivable principal balance(b)","","$","1,117,144","","","$","1,189,214","","","$","1,284,322","","","$","1,373,873"],["Consumer combined loan and finance receivable fair value balance:"],["Company owned","","$","1,347,165","","","$","1,421,814","","","$","1,526,834","","","$","1,639,307"],["Guaranteed by the Company(a)","","","14,773","","","","17,284","","","","25,446","","","","28,414"],["Ending combined loan and finance receivable fair value balance(b)","","$","1,361,938","","","$","1,439,098","","","$","1,552,280","","","$","1,667,721"],["Fair value as a % of principal(b)(c)","","","121.9","%","","","121.0","%","","","120.9","%","","","121.4","%"],["Consumer combined loan and finance receivable balance, including principal and accrued fees/interest outstanding:"],["Company owned","","$","1,208,551","","","$","1,285,755","","","$","1,390,882","","","$","1,482,970"],["Guaranteed by the Company(a)","","","13,046","","","","14,941","","","","21,797","","","","23,826"],["Ending combined loan and finance receivable balance(b)","","$","1,221,597","","","$","1,300,696","","","$","1,412,679","","","$","1,506,796"],["Average consumer combined loan and finance receivable balance, including principal and accrued fees/interest outstanding:"],["Company owned(d)","","$","1,242,677","","","$","1,244,846","","","$","1,344,872","","","$","1,429,349"],["Guaranteed by the Company(a)(d)","","","14,956","","","","13,730","","","","18,999","","","","22,060"],["Average combined loan and finance receivable balance(b)(d)","","$","1,257,633","","","$","1,258,576","","","$","1,363,871","","","$","1,451,409"],["Installment loans as percentage of average combined loan and finance receivable balance","","","40.4","%","","","39.0","%","","","36.9","%","","","35.9","%"],["Line of credit accounts as percentage of average combined loan and finance receivable balance","","","59.6","%","","","61.0","%","","","63.1","%","","","64.1","%"],["Revenue","","$","364,731","","","$","367,558","","","$","410,884","","","$","433,648"],["Change in fair value","","","(182,979",")","","","(164,011",")","","","(203,647",")","","","(212,947",")"],["Net revenue","","","181,752","","","","203,547","","","","207,237","","","","220,701"],["Net revenue margin","","","49.8","%","","","55.4","%","","","50.4","%","","","50.9","%"],["Combined loan and finance receivable originations and purchases","","","417,432","","","","490,640","","","","569,091","","","","601,734"],["Delinquencies:"],[" 30 days delinquent","","$","84,137","","","$","82,169","","","$","123,369","","","$","123,442"],[" 30 days delinquent as a % of combined loan and finance receivable balance(b)(c)","","","6.9","%","","","6.3","%","","","8.7","%","","","8.2","%"],["Charge-offs:"],["Charge-offs (net of recoveries)","","$","187,419","","","$","161,171","","","$","203,588","","","$","233,139"],["Charge-offs (net of recoveries) as a % of average combined loan and finance receivable balance(b)(d)","","","14.9","%","","","12.8","%","","","14.9","%","","","16.1","%"]]
[[/GREPCENT_TABLE]]

52

[[GREPCENT_TABLE]]
[["","","2023"],["","","First","","","Second","","","Third","","","Fourth"],["","","Quarter","","","Quarter","","","Quarter","","","Quarter"],["Consumer loans and finance receivables:"],["Consumer combined loan and finance receivable principal balance:"],["Company owned","","$","908,087","","","$","983,388","","","$","1,078,228","","","$","1,138,928"],["Guaranteed by the Company(a)","","","10,549","","","","14,199","","","","13,684","","","","13,537"],["Total combined loan and finance receivable principal balance(b)","","$","918,636","","","$","997,587","","","$","1,091,912","","","$","1,152,465"],["Consumer combined loan and finance receivable fair value balance:"],["Company owned","","$","1,062,867","","","$","1,168,044","","","$","1,286,330","","","$","1,380,784"],["Guaranteed by the Company(a)","","","13,901","","","","19,115","","","","18,661","","","","18,534"],["Ending combined loan and finance receivable fair value balance(b)","","$","1,076,768","","","$","1,187,159","","","$","1,304,991","","","$","1,399,318"],["Fair value as a % of principal(b)(c)","","","117.2","%","","","119.0","%","","","119.5","%","","","121.4","%"],["Consumer combined loan and finance receivable balance, including principal and accrued fees/interest outstanding:"],["Company owned","","$","978,730","","","$","1,068,742","","","$","1,182,769","","","$","1,246,675"],["Guaranteed by the Company(a)","","","12,841","","","","16,972","","","","16,533","","","","16,351"],["Ending combined loan and finance receivable balance(b)","","$","991,571","","","$","1,085,714","","","$","1,199,302","","","$","1,263,026"],["Average consumer combined loan and finance receivable balance, including principal and accrued fees/interest outstanding:"],["Company owned(d)","","$","1,015,849","","","$","1,017,061","","","$","1,133,499","","","$","1,218,622"],["Guaranteed by the Company(a)(d)","","","14,206","","","","14,627","","","","17,681","","","","16,341"],["Average combined loan and finance receivable balance(b)(d)","","$","1,030,055","","","$","1,031,688","","","$","1,151,180","","","$","1,234,963"],["Installment loans as percentage of average combined loan and finance receivable balance","","","58.9","%","","","53.5","%","","","46.4","%","","","42.3","%"],["Line of credit accounts as percentage of average combined loan and finance receivable balance","","","41.1","%","","","46.5","%","","","53.6","%","","","57.7","%"],["Revenue","","$","281,011","","","$","302,264","","","$","347,898","","","$","364,058"],["Change in fair value","","","(114,651",")","","","(115,946",")","","","(174,766",")","","","(183,169",")"],["Net revenue","","","166,360","","","","186,318","","","","173,132","","","","180,889"],["Net revenue margin","","","59.2","%","","","61.6","%","","","49.8","%","","","49.7","%"],["Combined loan and finance receivable originations and purchases","","","291,203","","","","401,468","","","","478,501","","","","497,978"],["Delinquencies:"],[" 30 days delinquent","","$","72,092","","","$","73,829","","","$","93,542","","","$","90,596"],[" 30 days delinquent as a % of combined loan and finance receivable balance(b)(c)","","","7.3","%","","","6.8","%","","","7.8","%","","","7.2","%"],["Charge-offs:"],["Charge-offs (net of recoveries)","","$","156,272","","","$","131,198","","","$","178,902","","","$","213,813"],["Charge-offs (net of recoveries) as a % of average combined loan and finance receivable balance(b)(d)","","","15.2","%","","","12.7","%","","","15.5","%","","","17.3","%"]]
[[/GREPCENT_TABLE]]

(a)
Represents loans originated by third-party lenders through the CSO program that we have not yet purchased, which are not included in our consolidated balance sheets.

(b)
Non-GAAP measure.

(c)
Determined using period-end balances.

(d)
The average combined loan and finance receivable balance is the average of the month-end balances during the period.

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.

53

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.

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.

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.

Small Business Loans and Finance Receivables

The following table includes financial information for our small business loans and finance receivables. Delinquency metrics include principal, interest and fees, and only amounts that are past due (dollars in thousands):

[[GREPCENT_TABLE]]
[["","","2024"],["","","First","","","Second","","","Third","","","Fourth"],["","","Quarter","","","Quarter","","","Quarter","","","Quarter"],["Small business loans and finance receivables:"],["Total loan and finance receivable principal balance","","$","2,192,066","","","$","2,246,925","","","$","2,327,336","","","$","2,456,430"],["Ending loan and finance receivable fair value balance","","","2,448,045","","","","2,517,345","","","","2,607,606","","","","2,747,137"],["Fair value as a % of principal(a)","","","111.7","%","","","112.0","%","","","112.0","%","","","111.8","%"],["Ending loan and finance receivable balance, including principal and accrued fees/interest outstanding","","$","2,229,917","","","$","2,283,971","","","$","2,351,885","","","$","2,483,516"],["Average loan and finance receivable balance(b)","","$","2,133,422","","","$","2,240,893","","","$","2,313,142","","","$","2,412,795"],["Installment loans as percentage of average combined loan and finance receivable balance","","","54.0","%","","","52.6","%","","","51.2","%","","","50.3","%"],["Line of credit accounts as percentage of average combined loan and finance receivable balance","","","46.0","%","","","47.4","%","","","48.8","%","","","49.7","%"],["Revenue","","$","236,477","","","$","251,782","","","$","269,454","","","$","285,762"],["Change in fair value","","","(79,127",")","","","(91,969",")","","","(83,390",")","","","(101,144",")"],["Net revenue","","","157,350","","","","159,813","","","","186,064","","","","184,618"],["Net revenue margin","","","66.5","%","","","63.5","%","","","69.1","%","","","64.6","%"],["Combined loan and finance receivable originations and purchases","","","959,935","","","","918,014","","","","1,044,829","","","","1,113,185"],["Delinquencies:"],[" 30 days delinquent","","$","195,522","","","$","185,884","","","$","170,470","","","$","174,390"],[" 30 days delinquent as a % of loan balance(a)","","","8.8","%","","","8.1","%","","","7.2","%","","","7.0","%"],["Charge-offs:"],["Charge-offs (net of recoveries)","","$","99,279","","","$","107,215","","","$","105,737","","","$","109,044"],["Charge-offs (net of recoveries) as a % of average loan and finance receivable balance(b)","","","4.7","%","","","4.8","%","","","4.6","%","","","4.5","%"]]
[[/GREPCENT_TABLE]]

54

[[GREPCENT_TABLE]]
[["","","2023"],["","","First","","","Second","","","Third","","","Fourth"],["","","Quarter","","","Quarter","","","Quarter","","","Quarter"],["Small business loans and finance receivables:"],["Total loan and finance receivable principal balance","","$","1,791,973","","","$","1,773,554","","","$","1,826,458","","","$","2,015,807"],["Ending loan and finance receivable fair value balance","","","1,940,499","","","","1,924,401","","","","2,034,732","","","","2,248,383"],["Fair value as a % of principal(a)","","","108.3","%","","","108.5","%","","","111.4","%","","","111.5","%"],["Ending loan and finance receivable balance, including principal and accrued fees/interest outstanding","","$","1,806,505","","","$","1,788,815","","","$","1,855,135","","","$","2,050,407"],["Average loan and finance receivable balance(b)","","$","1,809,800","","","$","1,800,700","","","$","1,813,995","","","$","1,922,857"],["Installment loans as percentage of average combined loan and finance receivable balance","","","62.3","%","","","59.1","%","","","57.2","%","","","55.3","%"],["Line of credit accounts as percentage of average combined loan and finance receivable balance","","","37.7","%","","","40.9","%","","","42.8","%","","","44.7","%"],["Revenue","","$","194,456","","","$","190,459","","","$","195,226","","","$","210,663"],["Change in fair value","","","(80,404",")","","","(82,180",")","","","(54,992",")","","","(73,243",")"],["Net revenue","","","114,052","","","","108,279","","","","140,234","","","","137,420"],["Net revenue margin","","","58.7","%","","","56.9","%","","","71.8","%","","","65.2","%"],["Combined loan and finance receivable originations and purchases","","","770,164","","","","711,659","","","","782,685","","","","927,807"],["Delinquencies:"],[" 30 days delinquent","","$","125,919","","","$","147,711","","","$","148,584","","","$","172,928"],[" 30 days delinquent as a % of loan balance(a)","","","7.0","%","","","8.3","%","","","8.0","%","","","8.4","%"],["Charge-offs:"],["Charge-offs (net of recoveries)","","$","76,215","","","$","83,772","","","$","99,001","","","$","91,623"],["Charge-offs (net of recoveries) as a % of average loan and finance receivable balance(b)","","","4.2","%","","","4.7","%","","","5.5","%","","","4.8","%"]]
[[/GREPCENT_TABLE]]

(a)
Determined using period-end balances.

(b)
The average loan and finance receivable balance is the average of the month-end balances during the period.

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.

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.

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.

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.

Total Expenses

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

55

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.

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.

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.

Depreciation and amortization expense increased $2.1 million, or 5.4%, to $40.2 million in 2024 compared to $38.1 million in 2023 driven primarily by general growth in the business.

Nonoperating Items

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.

Equity method investment loss was $16.5 million in 2024 compared to $0.1 million of income in 2023 due to the write-down of our investment in Linear as discussed in Note 1 to the consolidated financial statements.

Provision for Income Taxes

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.

LIQUIDITY AND CAPITAL RESOURCES

Capital Funding Strategy

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.

Historically, we have generated significant cash flow through normal operating activities for funding both long-term and short-term needs. Our near-term liquidity is managed to ensure that adequate resources are available to fund our seasonal working capital growth, which is driven by demand for our loan and financing products. On December 6, 2023, we issued and sold $400.0 million in aggregate principal amount of 11.25% Senior Notes due 2028 (the “2028 Senior Notes”) and used the net proceeds, in part, to retire existing indebtedness, including the remaining principal amount outstanding under our 8.50% senior notes due 2024 (the “2024 Senior Notes”). On August 12, 2024, we issued and sold $500.0 million in aggregate principal amount of 9.125% senior notes due 2029 (the “2029 Senior Notes”) and used the net proceeds, in part, to retire existing indebtedness, including the remaining principal amount outstanding under our 8.50% senior notes due 2025 (the “2025 Senior Notes”).

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On June 23, 2022, we entered into an amendment and restatement of our existing secured revolving credit agreement (as amended, the “Credit Agreement”) that, among other changes, increased the borrowing capacity to $440.0 million, with a $20.0 million letter of credit sublimit and $10.0 million swingline loan sublimit. On October 19, 2023, we amended the Credit Agreement to, among other changes, increase the total commitment amount from $440.0 million to $515.0 million. On September 11, 2024, we further amended the Credit Agreement to, among other changes, increase the total commitment amount from $515.0 million to $665.0 million. The Credit Agreement bears interest, at our option, at the base rate plus 0.75% or the Secured Overnight Financing Rate plus 3.50%. In addition to customary fees for a credit facility of this size and type, the Credit Agreement provides for payment of a commitment fee calculated with respect to the unused portion of the commitment, and ranges from 0.15% per annum to 0.50% per annum depending on usage. The Credit Agreement contains certain prepayment penalties if it is terminated on or before the first and second anniversary dates, subject to certain exceptions. The Credit Agreement matures on June 30, 2026. As of February 13, 2025, our available borrowings under the Credit Agreement were $126.6 million. Since 2016, we have entered into several loan securitization facilities and offered asset-backed notes to fund our growth, primarily in our near-prime consumer loan and small business loan businesses. As of February 13, 2025, we had funding capacity of $603.6 million. We expect that our operating needs, including satisfying our obligations under our debt agreements and funding our working capital growth, will be satisfied by a combination of cash flows from operations, borrowings under the Credit Agreement, or any refinancing, replacement thereof or increase in borrowings thereunder, and securitization or sale of loans and finance receivables under our consumer and small business loan securitization facilities.

As of December 31, 2024, we were in compliance with all financial ratios, covenants and other requirements set forth in our debt agreements. Unexpected changes in our financial condition or other unforeseen factors may result in our inability to obtain third-party financing or could increase our borrowing costs in the future. To the extent we experience short-term or long-term funding disruptions, we have the ability to adjust our volume of lending and financing to consumers and small businesses that would reduce cash outflow requirements while increasing cash inflows through repayments. Additional alternatives may include the securitization or sale of assets, increased borrowings under the Credit Agreement, or any refinancing or replacement thereof, and reductions in capital spending which could be expected to generate additional liquidity.

Capital

Our Total stockholders' equity decreased by $43.3 million to $1,196.9 million at December 31, 2024 from $1,240.2 million at December 31, 2023. The decrease of stockholders' equity was driven primarily by repurchases of our outstanding common stock, which is discussed in more detail below, partially offset by net income for the year ended December 31, 2024 and, to a lesser extent, stock-based compensation expense. Our book value per share outstanding increased to $46.38 at December 31, 2024 from $42.63 at December 31, 2023.

On February 9, 2022, we announced the Board of Directors authorized a new share repurchase program totaling $100.0 million through June 30, 2023 (the “February 2022 Authorization”). On November 7, 2022, we announced the Board of Directors authorized an increase to our share repurchase program of up to $150.0 million through December 31, 2023 (the “November 2022 Authorization”). The November 2022 Authorization went into effect in March 2023 upon exhaustion of the February 2022 Authorization. On October 24, 2023, we announced the Board of Directors authorized a new share repurchase program totaling $300.0 million through December 31, 2024 (the “October 2023 Authorization”), which replaced the November 2022 Authorization. The Company had repurchased $91.5 million of common stock under the November 2022 Authorization before it was terminated. On August 12, 2024, we announced the Board of Directors authorized a new share repurchase program totaling $300.0 million through December 31, 2025 (the “August 2024 Authorization”), which replaced the October 2023 Authorization. The Company had repurchased $255.9 million of common stock under the October 2023 Authorization before it was terminated. Repurchases under our repurchase programs are made in accordance with applicable securities laws from time to time in the open market, through privately negotiated transactions or otherwise. The share repurchase programs do not obligate us to purchase any shares of our common stock. The August 2024 Authorization may be terminated, increased or decreased by the Board of Directors in its discretion at any time. During 2024, we paid $274.5 million to repurchase common stock under the share repurchase programs.

Cash

At December 31, 2024, we had $73.9 million of available unrestricted cash to fund our future operations compared to approximately $54.4 million at December 31, 2023.

Our cash and cash equivalents at December 31, 2024 were held primarily for working capital purposes and were used to fund a portion of our lending activities. From time to time, we use excess cash and cash equivalents to fund our lending activities. We do not enter into investments for trading or speculative purposes. Our policy is to invest cash in excess of our immediate working capital requirements in short-term investments, deposit accounts or other arrangements designed to preserve the principal balance and maintain adequate liquidity. Our excess cash may be invested primarily in overnight sweep accounts, money market instruments or similar arrangements that provide competitive returns consistent with our polices and market conditions.

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Our restricted cash typically consists of funds held in accounts as reserves on certain debt facilities and as collateral for issuing bank partner transactions. We have no ability to draw on such funds as long as they remain restricted under the applicable arrangements but have the ability to use these funds to finance loan originations, subject to meeting borrowing base requirements. Our policy is to invest restricted cash held in debt facility related accounts, to the extent permitted by such debt facility, in investments designed to preserve the principal balance and provide liquidity. Accordingly, such cash is invested primarily in money market instruments that offer daily purchase and redemption and provide competitive returns consistent with our policies and market conditions. As of December 31, 2023, restricted cash also included $173.6 million in escrow related to the redemption of our 2024 Senior Notes on January 3, 2024.

Current Debt Facilities

The following table summarizes our debt facilities as of December 31, 2024.

[[GREPCENT_TABLE]]
[["","","Revolving period end date","","Maturity date","","Weighted average interest rate(a)","","Borrowing capacity","","","Principal outstanding"],["Funding Debt:"],["2018-1 Securitization Facility","","March 2025","","March 2026","","8.94%","","","200,000","","","","32,200"],["NCR 2022 Securitization Facility","","October 2026","","October 2028","","8.62%","","","200,000","","","","119,039"],["NCLOCR 2024 Securitization Facility","","February 2027","","February 2028","","9.87%","","","150,000","","","","99,000"],["ODR 2021-1 Securitization Facility","","November 2025","","November 2026","","8.09%","","","233,333","","","","233,333"],["ODR 2022-1 Securitization Facility","","June 2026","","June 2027","","8.23%","","","420,000","","","","188,342"],["RAOD Securitization Facility","","November 2026","","November 2027","","7.30%","","","236,842","","","","192,000"],["HWCR 2023 Securitization Facility","","September 2026","","September 2027","","8.80%","","","487,595","","","","331,214"],["2023-A Securitization Notes","","\u2014","","December 2027","","7.78%","","","32,116","","","","32,116"],["2024-A Securitization Notes","","\u2014","","October 2030","","7.75%","","","123,546","","","","123,546"],["ODAS IV 2023-1 Securitization Notes","","July 2026","","August 2030","","7.66%","","","227,051","","","","227,051"],["ODAS IV 2024-1 Securitization Notes","","May 2027","","June 2031","","6.84%","","","399,574","","","","399,574"],["ODAS IV 2024-2 Securitization Notes","","September 2027","","October 2031","","5.78%","","","261,353","","","","261,353"],["Total funding debt","","","","","","7.70%","","$","2,971,410","","","$","2,238,768"],["Corporate Debt:"],["9.125% Senior Notes Due 2029","","\u2014","","August 2029","","9.13%","","","500,000","","","","500,000"],["11.25% Senior Notes Due 2028","","\u2014","","December 2028","","11.25%","","","400,000","","","","400,000"],["Revolving line of credit","","June 2026","","June 2026","","7.93%","","","665,000","","(b)","","453,000"],["Total corporate debt","","","","","","9.35%","","$","1,565,000","","","$","1,353,000"]]
[[/GREPCENT_TABLE]]

(a)
The weighted average interest rate is determined based on the rates and principal balances on December 31, 2024. It does not include the impact of the amortization of deferred loan origination costs or debt discounts.

(b)
We had outstanding letters of credit under the Revolving line of credit of $0.7 million as of December 31, 2024.

Our ability to fully utilize the available capacity of our debt facilities may also be impacted by provisions that limit concentration risk and eligibility.

Cash Flows

Our cash flows and other key indicators of liquidity are summarized as follows (dollars in thousands):

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,"],["","","2024","","","2023","","","2022"],["Cash flows provided by operating activities","","$","1,538,576","","","$","1,166,869","","","$","893,998"],["Cash flows used in investing activities"],["Loans and finance receivables","","","(1,867,773",")","","","(1,449,417",")","","","(1,631,354",")"],["Purchases of property and equipment","","","(43,422",")","","","(45,241",")","","","(43,629",")"],["Disposal of a subsidiary","","","\u2014","","","","\u2014","","","","8,713"],["Total cash flows used in investing activities","","","(1,911,195",")","","","(1,494,658",")","","","(1,666,270",")"],["Cash flows provided by financing activities","","$","318,882","","","$","526,541","","","$","724,866"],["Total debt to Adjusted EBITDA (a)","","","5.4","x","","","5.9","x","","","5.1","x"]]
[[/GREPCENT_TABLE]]

(a)
Total debt to Adjusted EBITDA, a non-GAAP measure, is calculated using Adjusted EBITDA for the twelve months ended for the respective period indicated. See “—Non-GAAP Financial Measures—Adjusted EBITDA.”

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Cash Flows from Operating Activities

Net cash provided by operating activities increased $371.7 million, or 31.9%, to $1,538.6 million for 2024 from $1,166.9 million for 2023. The increase was driven primarily by additional interest and fee income from growth in the loan portfolio.

We believe cash flows from operations and available cash balances and borrowings under our securitization facilities and Credit Agreement, which may include increased borrowings under our Credit Agreement, any refinancing or replacement thereof, and additional securitization of consumer and small business loans, will be sufficient to fund our future operating liquidity needs, including to fund our working capital growth.

Cash Flows from Investing Activities

Net cash flows used in investing activities increased $416.5 million, or 27.9%, in 2024 compared to 2023, due primarily to loan originations outpacing repayments by a wider margin in the current year compared to the prior year.

Cash Flows from Financing Activities

Net cash provided by financing activities in 2024 was $318.9 million compared to $526.5 million in 2023. Cash flows provided by financing activities for 2024 primarily consisted of net borrowings of $571.4 million under our securitization facilities and $97.0 million under the Credit Agreement, partially offset by $289.3 million in treasury shares purchases, primarily under our share repurchase programs, and $44.4 million in net repayments of senior notes. Cash flows provided by financing activities for 2023 primarily consisted of net borrowings of $396.2 million related to the issuance of the 2028 Senior Notes, $334.4 million under our securitization facilities, and $47.0 million under the Credit Agreement, partially offset by $153.2 million in treasury shares purchases, primarily under our share repurchase programs, and $81.1 million used to pay down our 2024 Senior Notes.

CRITICAL ACCOUNTING ESTIMATES

Loans and Finance Receivables

We have elected the fair value option for our loans and finance receivables. We estimate the fair value of our loans and finance receivables primarily using discounted cash flow analyses at an individual loan level to more accurately predict future payments. We adjust contractual cash flows for estimated losses, prepayments and servicing costs over the estimated duration of the underlying assets and discount the future cash flows using a rate of return that we believe a market participant would require. Model results may be adjusted by management if we do not believe the output reflects the fair value of the portfolio, as defined under U.S. GAAP. The models are updated at each measurement date to capture any changes in internal factors such as nature, term, volume, payment trends, remaining time to maturity, and portfolio mix, as well as changes in underwriting or observed trends expected to impact future performance. We have validated model performance by comparing past valuations with actual performance noted after each valuation.

The following describes the primary inputs to the discounted cash flow analyses that require significant judgment:

•
Net losses – Net losses are estimates of the principal payments that will not be repaid over the life of our portfolio, net of the expected principal recoveries on charged-off receivables. We have developed proprietary underwriting systems based on data we have collected since the Company’s inception. These systems employ advanced risk analytics to decide whether to approve financing transactions, to structure the amount and terms of the financings we offer pursuant to jurisdiction-specific regulations, and to provide customers with funds quickly and efficiently. Our systems closely monitor collection and portfolio performance data that we use to continually refine the analytical models and statistical measures used in making our credit, purchase, marketing, and collection decisions. Leveraging the data at the core of our business, we utilize our models to estimate lifetime credit losses for loans and finance receivables. Inputs to the models include contractual cash flows, customer application information, historical and current performance, and behavioral information. Management may also incorporate discretionary adjustments based on our expectations of future credit performance.

•
Prepayments – Prepayments are estimates of the amount of principal payments that will occur earlier than contractually required during the life of a loan and finance receivable. Prepayments accelerate the timing of principal repayment and reduce interest payments. Prepayment rates in our discounted cash flow models are developed using historical results as the basis. Model inputs are similar to those utilized to estimate net losses and may also incorporate discretionary adjustments based on our expectations of future performance.

•
Servicing costs – Servicing costs applied to the expected cash flows of our portfolio reflect our estimate of the amount investors would incur to service the underlying assets for the remainder of their lives. Servicing costs are derived from our internal analysis of our cost structure considering the characteristics of our receivables and have been benchmarked against observable information on comparable assets in the marketplace.

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•
Discount rates – Determined at a product level, the discount rates utilized in our cash flow analyses reflect our estimates of the rates of return that investors would require when investing in financial instruments with similar risk and return characteristics.

Management continuously monitors factors that may impact the fair values of our products. Internal factors such as portfolio composition (for example, interest rate, loan term, geography information, customer mix, credit quality) and performance (e.g., delinquency, loss trends, prepayment rates) are reviewed on a regular basis at various levels, including product and vintage. The Company also weighs the impact of relevant, internal business decisions on estimated fair value. External factors such as macroeconomic trends, financial market liquidity expectations, competitive landscape and legal or regulatory requirements are also reviewed on a regular basis. Management also reviews the results of our fair value model output compared to prior periods for unusual trends, potential model over- or under-reaction, outlier results and other distorting factors. Based on these analyses, management may deem it appropriate to adjust model output to derive management’s best estimate of fair value.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. In accordance with Accounting Standards Codification (“ASC”) 350, Goodwill, we test goodwill for potential impairment annually on October 1 and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value below its carrying amount.

We first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. In assessing the qualitative factors, we consider relevant events and circumstances including but not limited to macroeconomic conditions, industry and market environment, our overall financial performance, cash flow from operating activities, market capitalization and stock price. If we determine that the quantitative impairment test is required, we use the income approach to complete our annual goodwill assessment. The income approach uses future cash flows and estimated terminal values that are discounted using a market participant perspective to determine the fair value, which is then compared to the carrying value to determine if there is impairment. The income approach includes assumptions about revenue growth rates, operating margins and terminal growth rates discounted by an estimated weighted-average cost of capital derived from other publicly-traded companies that are similar from an operational and economic standpoint. See Note 4, Goodwill and Other Intangible Assets, to the Consolidated Financial Statements.

Income Taxes

We account for income taxes under ASC 740, Income Taxes. As part of the process of preparing our consolidated financial statements, we are required to estimate income taxes in each of the jurisdictions in which we operate. This process involves estimating the actual current tax expense together with assessing temporary differences in recognition of income for tax and accounting purposes. These differences result in deferred tax assets and liabilities and are included within the consolidated balance sheets. We must then assess the likelihood that the deferred tax assets will be recovered from future taxable income and, to the extent we believe that recovery is not more likely than not, we must establish a valuation allowance. An expense or benefit is included within the tax provision in the consolidated statement of income for any increase or decrease in the valuation allowance for a given period.

We report our loans and finance receivables in the Company’s tax returns at fair market value, as determined for U.S. federal income tax purposes, which differs from how we report them in the consolidated financial statements due in part to statutory tax and judicial principles that may lead to different interpretations of expected credit losses and discount rate assumptions. Changes in the fair market value of our loans and finance receivables as determined for tax purposes may have a significant impact on the timing and amount of how income taxes are recognized in the consolidated financial statements. The estimates of fair market value are dependent on multiple assumptions, including expected credit losses and discount rates.

We perform an evaluation of the recoverability of our deferred tax assets on a quarterly basis. We establish a valuation allowance if it is more-likely-than-not (greater than 50 percent) that all or some portion of the deferred tax asset will not be realized. We analyze several factors, including the nature and frequency of operating losses, our carryforward period for any losses, the reversal of future taxable temporary differences, the expected occurrence of future income or loss and the feasibility of available tax planning strategies to protect against the loss of deferred tax assets.

We account for uncertainty in income taxes in accordance with ASC 740, which requires that a more-likely-than-not threshold be met before the benefit of a tax position may be recognized in the consolidated financial statements and prescribes how such benefit should be measured. We must evaluate tax positions taken on our tax returns for all periods that are open to examination by taxing authorities and make a judgment as to whether and to what extent such positions are more likely than not to be sustained based on the technical merits. We record interest and penalties related to tax matters as income tax expense in the consolidated statement of income.

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Our judgment is required in determining the provision for income taxes, the deferred tax assets and liabilities and any valuation allowance recorded against deferred tax assets. Our judgment is also required in evaluating whether tax benefits meet the more-likely-than-not threshold for recognition under ASC 740.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Refer to Note 1 in the Notes to the Consolidated Financial Statements in Part II, Item 8 “Financial Statements and Supplementary Data” in this report for a discussion of recently issued accounting pronouncements that may be significant to Enova.