enva-10q_20210331.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-35503

Enova International, Inc.

(Exact name of registrant as specified in its charter)

Delaware		45-3190813
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification No.)

175 West Jackson Blvd. Chicago, Illinois		60604
(Address of principal executive offices)		(Zip Code)

(312) 568-4200

(Registrant’s telephone number, including area code)

NONE

(Former name, former address and former fiscal year, if changed since last report)

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $.00001 par value per share	ENVA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

36,751,592 of the Registrant’s common shares, $.00001 par value, were outstanding as of April 29, 2021.

CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You should not place undue reliance on these statements. These forward-looking statements give current expectations or forecasts of future events and reflect the views and assumptions of senior management with respect to the business, financial condition, operations and prospects of Enova International, Inc. and its subsidiaries (collectively, the “Company”). When used in this report, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecast,” “project” and similar expressions or variations as they relate to the Company or its management are intended to identify forward-looking statements. Forward-looking statements address matters that involve risks and uncertainties that are beyond the ability of the Company to control and, in some cases, predict. Accordingly, there are or will be important factors that could cause the Company’s actual results to differ materially from those indicated in these statements. Key factors that could cause the Company’s actual financial results, performance or condition to differ from the expectations expressed or implied in such forward-looking statements include, but are not limited to, the following:

•

the effect of the COVID-19 pandemic on our operations;

•

the effect of laws and regulations targeting our industry that directly or indirectly regulate or prohibit our operations or render them unprofitable or impractical;

•

the effect of and compliance with domestic and international consumer credit, tax and other laws and government rules and regulations applicable to our business, including changes in such laws, rules and regulations, or changes in the interpretation or enforcement thereof, and the regulatory and examination authority of the Consumer Financial Protection Bureau with respect to providers of consumer financial products and services in the United States;

•

the effect of and compliance with enforcement actions, orders and agreements issued by applicable regulators, such as the January 2019 Consent Order issued by the Consumer Financial Protection Bureau;

•

changes in federal or state laws or regulations, or judicial decisions involving licensing or supervision of commercial lenders, interest rate limitations, the enforceability of choice of law provisions in loan agreements, the validity of bank sponsor partnerships, the use of brokers or other significant changes;

•

our ability to process or collect loans and finance receivables through the Automated Clearing House system;

•

the deterioration of the political, regulatory or economic environment in countries where we operate or in the future may operate;

•

the actions of third parties who provide, acquire or offer products and services to, from or for us;

•

public and regulatory perception of the consumer loan business, small business financing and our business practices;

•

the effect of any current or future litigation proceedings and any judicial decisions or rulemaking that affects us, our products or the legality or enforceability of our arbitration agreements;

•

changes in demand for our services, changes in competition and the continued acceptance of the online channel by our customers;

•

changes in our ability to satisfy our debt obligations or to refinance existing debt obligations or obtain new capital to finance growth;

•

a prolonged interruption in the operations of our facilities, systems and business functions, including our information technology and other business systems;

•

compliance with laws and regulations applicable to our international operations, including anti-corruption laws such as the Foreign Corrupt Practices Act and international anti-money laundering, trade and economic sanctions laws;

•

our ability to attract and retain qualified officers;

•

cyber-attacks or security breaches;

•

acts of God, war or terrorism, pandemics and other events;

•

the ability to successfully integrate newly acquired businesses into our operations;

•

interest rate and foreign currency exchange rate fluctuations;

•

changes in the capital markets, including the debt and equity markets;

•

the effect of any of the above changes on our business or the markets in which we operate;

•

the risk that the Company will not successfully integrate acquired companies or that costs associated with integration are higher than anticipated;

•

the risk that the cost savings, synergies, growth and cash flows from acquisitions will not be fully realized or will take longer to realize than expected;

•

litigation risk related to the transaction; and

•

other risks and uncertainties described herein.

The foregoing list of factors is not exhaustive and new factors may emerge or changes to these factors may occur that would impact the Company’s business and cause actual results to differ materially from those expressed in any of our forward-looking statements. Additional information regarding these and other factors may be contained in the Company’s filings with the Securities and Exchange Commission (the “SEC”). Readers of this report are encouraged to review all of the Risk Factors contained in the Company’s filings with the SEC to obtain more detail about the Company’s risks and uncertainties. All forward-looking statements involve risks, assumptions and uncertainties. The occurrence of the events described, and the achievement of the expected results, depends on many events, some or all of which are not predictable or within the Company’s control. If one or more events related to these or other risks or uncertainties materialize, or if management’s underlying assumptions prove to be incorrect, actual results may differ materially from what the Company anticipates. The forward-looking statements in this report are made as of the date of this report, and the Company disclaims any intention or obligation to update or revise any forward-looking statements to reflect events or circumstances occurring after the date of this report. All forward-looking statements in this report are expressly qualified in their entirety by the foregoing cautionary statements.

ENOVA INTERNATIONAL, INC.

INDEX TO FORM 10-Q


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets – March 31, 2021 and 2020 and December 31, 2020	1
	Consolidated Statements of Income – Three Months Ended March 31, 2021 and 2020	3
	Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2021 and 2020	4
	Consolidated Statements of Stockholders’ Equity – Three Months Ended March 31, 2021 and 2020	5
	Consolidated Statements of Cash Flows – Three Months Ended March 31, 2021 and 2020	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	40

SIGNATURES		41

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

(Unaudited)

	March 31,						December 31,
	2021			2020			2020
Assets
Cash and cash equivalents⁽¹⁾	$	324,328		$	161,076		$	297,273
Restricted cash⁽¹⁾		49,879			42,742			71,927
Loans and finance receivables at fair value⁽¹⁾		1,230,711			1,093,207			1,241,506
Income taxes receivable		—			35,487			—
Other receivables and prepaid expenses⁽¹⁾		41,630			33,530			40,301
Property and equipment, net		78,899			56,216			79,417
Operating lease right-of-use assets		39,159			19,981			40,123
Goodwill		279,275			267,868			267,974
Intangible assets, net		41,155			1,918			26,008
Other assets⁽¹⁾		48,606			21,276			43,546
Total assets	$	2,133,642		$	1,733,301		$	2,108,075
Liabilities and Stockholders’ Equity
Accounts payable and accrued expenses⁽¹⁾	$	108,982		$	95,893		$	124,071
Operating lease liabilities		66,090			35,783			67,956
Income taxes currently payable		17,378			—			2,624
Deferred tax liabilities, net		61,070			71,679			48,129
Long-term debt⁽¹⁾		874,514			1,091,732			946,461
Total liabilities		1,128,034			1,295,087			1,189,241
Commitments and contingencies (Note 8)
Stockholders’ equity:
Common stock, $0.00001 par value, 250,000,000 shares authorized, 42,862,788, 36,112,268 and 41,936,784 shares issued and 36,598,693, 31,007,899 and 35,762,926 outstanding as of March 31, 2021 and 2020 and December 31, 2020, respectively		—			—			—
Preferred stock, $0.00001 par value, 25,000,000 shares authorized, no shares issued and outstanding		—			—			—
Additional paid in capital		203,765			67,440			187,981
Retained earnings		925,386			477,082			849,466
Accumulated other comprehensive loss		(8,498	)		(7,807	)		(6,898	)
Treasury stock, at cost (6,264,095, 5,104,369 and 6,173,858 shares as of March 31, 2021 and 2020 and December 31, 2020, respectively)		(115,787	)		(98,501	)		(113,201	)
Total Enova International, Inc. stockholders’ equity		1,004,866			438,214			917,348
Noncontrolling interest		742			—			1,486
Total stockholders’ equity		1,005,608			438,214			918,834
Total liabilities and stockholders’ equity	$	2,133,642		$	1,733,301		$	2,108,075

(1)	Includes amounts in wholly owned, bankruptcy-remote special purpose subsidiaries (“VIEs”) presented separately in the table below.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

(Unaudited)

The following table presents the aggregated assets and liabilities of consolidated VIEs, which are included in the Consolidated Balance Sheets above. The assets in the table below may only be used to settle obligations of consolidated VIEs and are in excess of those obligations. See Note 1 for additional information.

	March 31,				December 31,
	2021		2020		2020
Assets of consolidated VIEs, included in total assets above
Cash and cash equivalents	$	1,484	$	525	$	420
Restricted cash		40,254		37,802		64,811
Loans and finance receivables at fair value		348,402		508,276		528,877
Other receivables and prepaid expenses		5,458		4,744		4,827
Other assets		1,062		2,333		1,639
Total assets	$	396,660	$	553,680	$	600,574
Liabilities of consolidated VIEs, included in total liabilities above
Accounts payable and accrued expenses	$	2,448	$	2,790	$	3,056
Affiliate note payable		3,708		—		4,065
Long-term debt		154,608		371,393		329,855
Total liabilities	$	160,764	$	374,183	$	336,976

See notes to consolidated financial statements.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(Unaudited)

	Three Months Ended
	March 31,
	2021			2020
Revenue	$	259,444		$	362,252
Change in Fair Value		(21,078	)		(235,719	)
Net Revenue		238,366			126,533
Expenses
Marketing		28,568			34,558
Operations and technology		35,627			31,266
General and administrative		44,089			27,951
Depreciation and amortization		6,627			3,670
Total Expenses		114,911			97,445
Income from Operations		123,455			29,088
Interest expense, net		(19,914	)		(20,381	)
Foreign currency transaction (loss) gain		(34	)		41
Loss on early extinguishment of debt		(378	)		—
Equity method investment income		558			—
Income before Income Taxes		103,687			8,748
Provision for income taxes		27,716			3,000
Net income from continuing operations before noncontrolling interest		75,971			5,748
Less: Net income attributable to noncontrolling interest		51			—
Net income from continuing operations		75,920			5,748
Net loss from discontinued operations		—			(288	)
Net income attributable to Enova International, Inc.	$	75,920		$	5,460
Earnings (Loss) Per Share attributable to Enova International, Inc.:
Earnings (loss) per common share – basic:
Continuing operations	$	2.10		$	0.18
Discontinued operations		—			(0.01	)
Earnings (loss) per common share – basic	$	2.10		$	0.17
Earnings (loss) per common share – diluted:
Continuing operations	$	2.03		$	0.18
Discontinued operations		—			(0.01	)
Earnings (loss) per common share – diluted	$	2.03		$	0.17
Weighted average common shares outstanding:
Basic		36,109			32,337
Diluted		37,487			32,833

See notes to consolidated financial statements.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)

	Three Months Ended
	March 31,
	2021			2020
Net income including noncontrolling interest	$	75,971		$	5,460
Other comprehensive loss, net of tax:
Foreign currency translation loss⁽¹⁾		(1,330	)		(4,741	)
Ownership change in noncontrolling interest		(270	)		—
Total other comprehensive loss, net of tax		(1,600	)		(4,741	)
Comprehensive Income		74,371			719
Net income attributable to noncontrolling interest		(51	)		—
Foreign currency translation loss attributable to noncontrolling interests		(7	)		—
Ownership change in noncontrolling interest		802			—
Comprehensive income attributable to the noncontrolling interest		744			—
Comprehensive income attributable to Enova International, Inc.	$	75,115		$	719

(1)	Net of tax benefit of $525 and $1,461 for the three months ended March 31, 2021 and 2020, respectively.

See notes to consolidated financial statements.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(Unaudited)

																		Total Enova
									Accumulated									International,
					Additional				Other									Inc.						Total
	Common Stock				Paid in		Retained		Comprehensive			Treasury Stock, at cost						Stockholders’			Noncontrolling			Stockholders’
	Shares		Amount		Capital		Earnings		Loss			Shares			Amount			Equity			Interest			Equity
Balance at December 31, 2019		35,765	$	—	$	63,791	$	372,681	$	(3,066	)		(2,790	)	$	(56,793	)	$	376,613		$	—		$	376,613
Stock-based compensation expense		—		—		3,460		—		—			—			—			3,460			—			3,460
Shares issued for vested RSUs		331		—		—		—		—			—			—			—			—			—
Shares issued for stock option exercises		16		—		189		—		—			—			—			189			—			189
Net income attributable to Enova International, Inc.		—		—		—		5,460		—			—			—			5,460			—			5,460
Foreign currency translation loss, net of tax		—		—		—		—		(4,741	)		—			—			(4,741	)		—			(4,741	)
Purchases of treasury shares, at cost		—		—		—		—		—			(2,314	)		(41,708	)		(41,708	)		—			(41,708	)
Cumulative effect of accounting change		—		—		—		98,941		—			—			—			98,941			—			98,941
Balance at March 31, 2020		36,112	$	—	$	67,440	$	477,082	$	(7,807	)		(5,104	)	$	(98,501	)	$	438,214		$	—		$	438,214

Balance at December 31, 2020		41,937	$	—	$	187,981	$	849,466	$	(6,898	)		(6,174	)	$	(113,201	)	$	917,348		$	1,486		$	918,834
Stock-based compensation expense		—		—		5,804		—		—			—			—			5,804			—			5,804
Shares issued for vested RSUs		534		—		—		—		—			—			—			—			—			—
Shares issued for stock option exercises		392		—		8,908		—		—			—			—			8,908			—			8,908
Net income attributable to Enova International, Inc.		—		—		—		75,920		—			—			—			75,920			—			75,920
Foreign currency translation (loss) gain, net of tax		—		—		—		—		(1,330	)		—			—			(1,330	)		7			(1,323	)
Purchases of treasury shares, at cost		—		—		—		—		—			(90	)		(2,586	)		(2,586	)		—			(2,586	)
Ownership change in noncontrolling interest		—		—		1,072		—		(270	)		—			—			802			(802	)		—
Net income attributable to noncontrolling interest		—		—		—		—		—			—		.				—			51			51
Balance at March 31, 2021		42,863	$	—	$	203,765	$	925,386	$	(8,498	)		(6,264	)	$	(115,787	)	$	1,004,866		$	742		$	1,005,608

See notes to consolidated financial statements.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	Three Months Ended
	March 31,
	2021			2020
Cash Flows from Operating Activities
Net income before noncontrolling interest	$	75,971		$	5,460
Add: net loss from discontinued operations		—			288
Net income from continuing operations		75,971			5,748
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,627			3,670
Amortization of deferred loan costs and debt discount		1,914			1,643
Change in fair value		21,078			235,719
Stock-based compensation expense		5,804			3,460
Loss on early extinguishment of debt		378			—
Operating leases, net		(900	)		(340	)
Deferred income taxes, net		13,442			(3,212	)
Changes in operating assets and liabilities:
Finance and service charges on loans and finance receivables		(255	)		31,686
Other receivables and prepaid expenses and other assets		550			(2,865	)
Accounts payable and accrued expenses		(21,929	)		(28,814	)
Current income taxes		14,348			6,107
Cash flows from operating activities - continuing operations		117,028			252,802
Cash flows from operating activities - discontinued operations		—			(288	)
Net cash provided by operating activities		117,028			252,514
Cash Flows from Investing Activities
Loans and finance receivables originated or acquired		(444,947	)		(397,460	)
Loans and finance receivables repaid		435,932			219,275
Acquisitions, net of cash acquired		(28,358	)		(3,597	)
Purchases of property and equipment		(7,106	)		(5,156	)
Other investing activities		25			57
Cash flows from investing activities - continuing operations		(44,454	)		(186,881	)
Cash flows from investing activities - discontinued operations		—			—
Net cash used in investing activities		(44,454	)		(186,881	)
Cash Flows from Financing Activities
Borrowings under revolving line of credit		102,000			100,250
Repayments under revolving line of credit		—			(67,000	)
Borrowings under securitization facilities		5,161			119,200
Repayments under securitization facilities		(181,139	)		(53,224	)
Debt issuance costs paid		—			(372	)
Proceeds from exercise of stock options		8,908			189
Treasury shares purchased		(2,586	)		(41,708	)
Net cash (used in) provided by financing activities		(67,656	)		57,335
Effect of exchange rates on cash, cash equivalents and restricted cash		89			(114	)
Net increase in cash, cash equivalents and restricted cash		5,007			122,854
Cash, cash equivalents and restricted cash at beginning of year		369,200			80,964
Cash, cash equivalents and restricted cash at end of period	$	374,207		$	203,818

Supplemental Disclosures
Loans and finance receivables renewed	$	45,111		$	22,281

See notes to consolidated financial statements.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1.	Significant Accounting Policies

Nature of the Company

The Company operates an internet-based lending platform to serve customers in need of cash to fulfill their financial responsibilities. Through a network of direct and indirect marketing channels, the Company offers funds to its customers through a variety of unsecured loan and finance receivable products. The business is operated primarily through the internet to provide convenient, fully-automated financial solutions to its customers. The Company originates, arranges, guarantees or purchases consumer loans and provides financing to small businesses through a line of credit account, installment loan or receivables purchase agreement product (“RPAs”). Consumer loans include installment loans and line of credit accounts. RPAs represent a right to receive future receivables from a small business. The Company also provides services related to third-party lenders’ consumer loan products by acting as a credit services organization or credit access business on behalf of consumers in accordance with applicable state laws (“CSO program”).

Basis of Presentation

The consolidated financial statements of the Company reflect the historical results of operations and cash flows of the Company during each respective period. The consolidated financial statements include goodwill and intangible assets arising from businesses previously acquired. The financial information included herein may not be indicative of the consolidated financial position, operating results, changes in stockholders’ equity and cash flows of the Company in the future. Intercompany transactions are eliminated.

The Company consolidates any variable interest entity (“VIE”) where it has been determined it is the primary beneficiary. The primary beneficiary is the entity which has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance as well as the obligation to absorb losses or receive benefits of the entity that could potentially be significant to the VIE.

On July 28, 2020, the Company and OnDeck Capital Inc. (“OnDeck”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) among the Company, OnDeck and Energy Merger Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), pursuant to which, subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub would merge with and into OnDeck, with OnDeck surviving as an indirect wholly owned subsidiary of the Company. On October 13, 2020, the Company and OnDeck completed the transaction following the approval of OnDeck’s stockholders and the satisfaction of all other closing conditions. The accompanying unaudited consolidated results of operations for the three months ended March 31, 2021 include the results of operations for OnDeck, affecting comparability of 2021 and 2020 amounts. The Company has performed a valuation analysis of identifiable assets acquired and liabilities assumed and allocated the aggregate purchase consideration based on the fair values of those identifiable assets and liabilities. The purchase price allocation is subject to change as the Company finalizes the analysis of the fair value at the acquisition date. The final determination of the fair value of assets acquired and liabilities assumed will be completed within the twelve month measurement period from the acquisition date as required by applicable accounting guidance. Due to the significance of the transaction, the Company may use all of this measurement period to adequately analyze and assess the fair values of assets acquired and liabilities assumed.

With the acquisition of OnDeck, the Company owns a controlling interest in On Deck Capital Australia PTY LTD (“OnDeck Australia”). The remaining interests are owned by an unrelated third party. We consolidate the financial position and results of operations of this entity under the voting interest model. The noncontrolling interest, which is presented as a separate component of consolidated equity, represents the minority owners’ proportionate share of the equity of the entity and is adjusted for the minority owners’ share of the earnings, losses, investments and distributions.

The consolidated financial statements presented as of March 31, 2021 and 2020 and for the three-month periods ended March 31, 2021 and 2020 are unaudited but, in management’s opinion, include all adjustments necessary for a fair presentation of the results for such interim periods. Operating results for the three-month period are not necessarily indicative of the results that may be expected for the full fiscal year. Certain prior period amounts have been reclassified to conform to the current year presentation. With the acquisition of OnDeck, small business loans comprise a significantly larger portion of the Company’s overall loan portfolio. Where presented on a disaggregated basis, loans and finance receivables that were previously grouped as line of credit accounts and installment loans and RPAs, are now grouped at the consumer and small business levels as management has deemed these groupings to be more meaningful to users of the financial statements.

These consolidated financial statements and related notes should be read in conjunction with the Company’s audited consolidated financial statements as of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019 and 2018 and related notes, which are included on Form 10-K filed with the SEC on February 26, 2021.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Discontinued Operations

Beginning in 2007, the Company provided services in the United Kingdom under various brands, including QuickQuid, Pounds to Pocket and On Stride. Due in part to the level of claim and legal settlement costs incurred in conducting our U.K. business and unsuccessful discussions with U.K regulators, on October 24, 2019, the Company announced its intent to exit the U.K. market. On October 25, 2019, Grant Thornton LLP, a licensed U.K. insolvency practitioner, was appointed as administrators (“Administrators”) to take control of management of the U.K. businesses. The effect of the U.K. businesses’ entry into administration was to place their management, affairs, business and property under the direct control of the Administrators. During the three months ended March 31, 2020 the Company recorded an impairment charge of $0.4 million ($0.3 million net of taxes) to write down a receivable on certain expenses incurred by the Company prior to administration that were deemed non-reimbursable by the Administrators.

The Company entered into a service agreement with the Administrators under which the Company provides certain administrative, technical and other services in exchange for compensation by the Administrators. The agreement is scheduled to expire July 8, 2021 but with options to extend the term for three-month periods. During the three months ended March 31, 2021 and 2020, the Company recorded $0.7 million and $1.9 million, respectively, in revenue related to these services. As of March 31, 2021 and 2020 and December 31, 2020, the Administrators owed the Company $1.2 million, $1.0 million and $0.9 million, respectively, related to services provided.

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheets (in thousands):

	March 31,
	2021		2020
Cash and cash equivalents	$	324,328	$	161,076
Restricted cash		49,879		42,742
Total cash, cash equivalents and restricted cash	$	374,207	$	203,818

Loans and Finance Receivables

The Company utilizes the fair value option on its entire loan and finance receivable portfolio. As such, loans and finance receivables are carried at fair value in the consolidated balance sheet with changes in fair value recorded in the consolidated income statement. To derive the fair value, the Company generally utilizes discounted cash flow analyses that factor in estimated losses, prepayments, utilization rates and servicing costs over the estimated duration of the underlying assets. Loss, prepayment, utilization and servicing cost assumptions are determined using historical loss data and include appropriate consideration of recent trends and anticipated future performance. Future cash flows are discounted using a rate of return that the Company believes a market participant would require. Accrued and unpaid interest and fees are included in “Loans and finance receivables” in the consolidated balance sheets.

Current and Delinquent Loans and Finance Receivables

The Company classifies its loans and finance receivables as either current or delinquent. Excluding OnDeck loans and finance receivables, when a customer does not make a scheduled payment as of the due date, that payment is considered delinquent, and the remainder of the receivable balance is considered current. If the customer does not make two consecutive payments, the entire account or loan is classified as delinquent and placed on a non-accrual status. For the OnDeck portfolio, a loan is considered to be delinquent when the scheduled payments are one day past due. Loans are placed in nonaccrual status and the accrual of interest income is stopped on loans that are delinquent and non-paying. Loans are returned to accrual status if they are brought to non-delinquent status or have performed in accordance with the contractual terms for a reasonable period of time and, in the Company’s judgment, will continue to make periodic principal and interest payments as scheduled. The Company allows for normal payment processing time before considering a loan delinquent but does not provide for any additional grace period.

Where permitted by law and as long as a loan is not considered delinquent, a customer may choose to renew or extend the due date on certain installment loans. In order to renew or extend a single-pay loan, a customer must agree to pay the current finance charge for the right to make a later payment of the outstanding principal balance plus an additional finance charge. In order to renew an installment loan, the customer enters into a new installment loan contract and agrees to pay the principal balance and finance charge in accordance with the terms of the new loan contract. If a single-pay loan is renewed, but the customer fails to pay that loan’s current finance charge as of the due date, the unpaid finance charge is classified as delinquent.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

In response to the COVID-19 pandemic, the Company enhanced the forbearance options on its loan products, offering additional relief to impacted customers with features such as payment deferrals without the incurrence of additional finance charges or late fees. If a loan is deemed to be current and the customer makes a deferral or payment modification, the loan is still deemed to be current until the next scheduled payment is missed.

The Company generally charges off loans and finance receivables between 60 and 65 days delinquent. If a loan or finance receivable is deemed uncollectible prior to this, it is charged off at that point. For the OnDeck portfolio, the Company generally charges off a loan when it is probable that that it will be unable to collect all of the remaining principal payments, which is generally after 90 days of delinquency and 30 days of non-activity. Loans and finance receivables classified as delinquent generally have an age of one to 64 days from the date any portion of the receivable became delinquent, as defined above. Recoveries on loans and finance receivables that were previously charged off are generally recognized when collected or sold.

Revenue Recognition

The Company recognizes revenue based on the financing products and services it offers and on loans it acquires. “Revenue” in the consolidated statements of income includes: interest income, finance charges, fees for services provided through the Company’s CSO programs (“CSO fees”), revenue on RPAs, service charges, draw fees, minimum billing fees, purchase fees, origination fees, late fees and non-sufficient funds fees as permitted by applicable laws and pursuant to the agreement with the customer. Interest is generally recognized on an effective yield basis over the contractual term of the loan on installment loans, the estimated outstanding period of the draw on line of credit accounts, or the projected delivery term on RPAs. CSO fees are recognized over the term of the loan. Late and nonsufficient funds fees are recognized when assessed to the customer.

Marketing Expenses

Marketing expenses consist of digital costs, lead purchase costs and offline marketing costs such as television and direct mail advertising. All marketing expenses are expensed as incurred.

Equity Method Investments

With the acquisition of OnDeck, as discussed in Note 2, the Company records its interest in On Deck Capital Canada Holdings, Inc. (“OnDeck Canada”) under the equity method of accounting. As of March 31, 2021 and December 31, 2020, the carrying value of the Company’s investment in OnDeck Canada was $11.4 and $10.5 million, respectively, which the Company has included in “Other assets” on the consolidated balance sheets.

On February 24, 2021 the Company contributed the platform-as-service business assumed in the OnDeck acquisition to Linear Financial Technologies Holding LLC (“Linear”) in exchange for ownership units in that entity. The Company records its interest in Linear under the equity method of accounting. As of March 31, 2021, the carrying value of the Company’s investment in Linear was $6.8 million, which the Company has included in “Other assets” on the consolidated balance sheets.

Equity method income has been included in “Equity method investment income” in the consolidated income statements.

Variable Interest Entities

As part of the Company’s overall funding strategy and as part of its efforts to support its liquidity from varying sources, the Company has established a securitization program through several securitization facilities. The Company transfers certain loan receivables to VIEs, which issue notes backed by the underlying loan receivables and are serviced by another wholly-owned subsidiary of the Company. The cash flows from the loans held by the VIEs are used to repay obligations under the notes.

The Company is required to evaluate the VIEs for consolidation. The Company has the ability to direct the activities of the VIEs that most significantly impact the economic performance of the entities as the servicer of the securitized loan receivables. Additionally, the Company has the right to receive residual payments, which expose it to potentially significant losses and returns. Accordingly, the Company determined it is the primary beneficiary of the VIEs and is required to consolidate them. The assets and liabilities related to the VIEs are included in the Company’s consolidated financial statements and are accounted for as secured borrowings.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Adopted Accounting Standards

In November 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and also clarifying and amending existing guidance to improve consistent application. ASU 2019-12 is effective in fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The adoption of ASU 2019-12 as of January 1, 2021 did not have a material effect on the Company’s consolidated financial statements.

2.	Acquisitions

On July 28, 2020, the Company and OnDeck entered into an Agreement and Plan of Merger among the Company, OnDeck and Energy Merger Sub, Inc., a wholly owned subsidiary of the Company, pursuant to which, subject to the satisfaction or waiver of the conditions set forth therein, Energy Merger Sub, Inc. would merge with and into OnDeck, with OnDeck surviving as an indirect wholly owned subsidiary of the Company. On October 13, 2020, the Company and OnDeck completed the transaction following the approval of OnDeck’s stockholders and the satisfaction of all other closing conditions. The acquisition increases the scale and portfolio diversification of the Company. OnDeck offers a range of term loans and lines of credit customized for the needs of small business owners.

Under the terms of the transaction, each holder of OnDeck common stock received $0.12 per share in cash and a fixed exchange ratio of 0.092 shares of the Company’s common stock for each OnDeck share they owned as of the acquisition date. As a result, the Company issued 5.6 million shares of common stock to OnDeck stockholders. Based on the closing share price of the Company as of October 12, 2020 of $18.74, the value of Company common stock and cash provided in exchange for OnDeck common stock was $111.5 million. In addition to the exchange of common stock, the consideration transferred also included the cancellation or replacement of certain equity awards of OnDeck employees in effect prior to the transaction valued at approximately $4.2 million. For additional information, see “Note 2. Acquisitions” of the Annual Report on Form 10-K for the year ended December 31, 2020.

On March 19, 2021, the Company completed the purchase of Pangea Universal Holdings, Inc. (“PUH”), a Chicago-based payments platform offering mobile international money transfer services. In accordance with the terms of the transaction, PUH was merged into Pangea Transfer Company, LLC (“Pangea”) with the separate corporate existence of PUH thereupon ceasing and Pangea continuing as the surviving, wholly-owned subsidiary of the Company. Pangea serves the international money transfer market with a focus on Latin America and Asia. Customers have the option to transfer funds directly into bank accounts or have cash picked up from partners in minutes. The total consideration of $32.9 million consists of $30.0 million in cash and $2.9 million in loan forgiveness. The preliminary allocation of the purchase consideration includes $19.8 million and $11.3 million of intangible assets and goodwill, respectively, with all other assets acquired and liabilities assumed being nominal. The Company has not yet completed the process of estimating the fair value of assets acquired and liabilities assumed, including, but not limited to, intangible assets, certain tax-related balances and certain other assets and liabilities. The purchase price allocation is subject to change as the Company finalizes the analysis of the fair value as of the acquisition date. The final determination of the fair value of assets acquired and liabilities assumed will be completed within the twelve-month measurement period from the acquisition date as required by applicable accounting guidance.

The operating results of Pangea are included in, but not material to, the Company’s consolidated financial statements from the date of acquisition.

3.	Loans and Finance Receivables

Revenue generated from the Company’s loans and finance receivables for the three months ended March 31, 2021 and 2020 was as follows (dollars in thousands):

	Three Months Ended
	March 31,
	2021		2020
Consumer loans and finance receivables revenue	$	181,737	$	335,900
Small business loans and finance receivables revenue		75,560		23,906
Total loans and finance receivables revenue		257,297		359,806
Other		2,147		2,446
Total revenue	$	259,444	$	362,252

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Loans and Finance Receivables at Fair Value

The components of Company-owned loans and finance receivables at March 31, 2021 and 2020 and December 31, 2020 were as follows (dollars in thousands):

	As of March 31, 2021
			Small
	Consumer		Business			Total
Principal balance - accrual	$	493,553	$	668,955		$	1,162,508
Principal balance - non-accrual		29,617		27,723			57,340
Total principal balance		523,170		696,678			1,219,848

Loans and finance receivables at fair value - accrual		577,999		636,953			1,214,952
Loans and finance receivables at fair value - non-accrual		3,399		12,360			15,759
Loans and finance receivables at fair value		581,398		649,313			1,230,711
Difference between principal balance and fair value	$	58,228	$	(47,365	)	$	10,863

	As of March 31, 2020
			Small
	Consumer		Business			Total
Principal balance - accrual	$	801,084	$	179,576		$	980,660
Principal balance - non-accrual		76,419		4,329			80,748
Total principal balance		877,503		183,905			1,061,408

Loans and finance receivables at fair value - accrual		899,808		175,096			1,074,904
Loans and finance receivables at fair value - non-accrual		17,414		889			18,303
Loans and finance receivables at fair value	$	917,222	$	175,985		$	1,093,207
Difference between principal balance and fair value	$	39,719	$	(7,920	)	$	31,799

	As of December 31, 2020
			Small
	Consumer		Business			Total
Principal balance - accrual	$	547,015	$	634,476		$	1,181,491
Principal balance - non-accrual		29,389		52,254			81,643
Total principal balance		576,404		686,730			1,263,134

Loans and finance receivables at fair value - accrual		621,257		592,654			1,213,911
Loans and finance receivables at fair value - non-accrual		3,962		23,633			27,595
Loans and finance receivables at fair value	$	625,219	$	616,287		$	1,241,506
Difference between principal balance and fair value	$	48,815	$	(70,443	)	$	(21,628	)

As of March 31, 2021 and December 31, 2020, the aggregate fair value of loans and finance receivables that were 90 days or more past due was $7.2 million and $14.3 million, respectively, of which, $7.0 million and $14.1 million, respectively, was in non-accrual status. The aggregate unpaid principal balance for loans and finance receivables that were 90 days or more past due was $13.7 million and $33.9 million, respectively. There were no loans and finance receivables that were 90 days or more past due as of March 31, 2020.

Changes in the fair value of Company-owned loans and finance receivables during the three months ended March 31, 2021 were as follows (dollars in thousands):

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

	Three Months Ended March 31, 2021
				Small
	Consumer			Business			Total
Balance at beginning of period	$	625,219		$	616,287		$	1,241,506
Originations or acquisitions		167,947			322,111			490,058
Interest and fees⁽¹⁾		181,737			75,560			257,297
Repayments		(367,075	)		(369,212	)		(736,287	)
Charge-offs, net⁽²⁾		(36,408	)		(18,042	)		(54,450	)
Net change in fair value⁽²⁾		10,335			23,037			33,372
Effect of foreign currency translation		(357	)		(428	)		(785	)
Balance at end of period	$	581,398		$	649,313		$	1,230,711

	Three Months Ended March 31, 2020
				Small
	Consumer			Business			Total
Balance at beginning of period	$	1,015,798		$	171,785		$	1,187,583
Originations or acquisitions		343,306			76,435			419,741
Interest and fees⁽¹⁾		335,900			23,906			359,806
Repayments		(563,835	)		(71,147	)		(634,982	)
Charge-offs, net⁽²⁾		(191,306	)		(11,918	)		(203,224	)
Net change in fair value⁽²⁾		(19,419	)		(13,076	)		(32,495	)
Effect of foreign currency translation		(3,222	)		—			(3,222	)
Balance at end of period	$	917,222		$	175,985		$	1,093,207

(1)	Included in “Revenue” in the consolidated statements of income.

(2)	Included in “Change in Fair Value” in the consolidated statements of income.

Guarantees of Consumer Loans

In connection with its CSO programs, the Company guarantees consumer loan payment obligations to unrelated third-party lenders for consumer loans and is required to purchase any defaulted loans it has guaranteed. The guarantee represents an obligation to purchase specific loans that go into default. As of March 31, 2021 and 2020 and December 31, 2020 the consumer loans guaranteed by the Company had an estimated fair value of $7.2 million, $12.4 million and $10.3 million, respectively and an outstanding principal balance of $5.7 million, $10.3 million and $8.8 million, respectively. As of March 31, 2021 and 2020 and December 31, 2020, the amount of consumer loans, including principal, fees and interest, guaranteed by the Company were $6.8 million, $11.8 million and $10.2 million, respectively. These loans are not included in the consolidated balance sheets as the Company does not own the loans prior to default.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

4.	Long-term debt

The Company’s long-term debt instruments and balances outstanding as of March 31, 2021 and 2020 and December 31, 2020 were as follows (dollars in thousands):

				Weighted					Outstanding
				average	Borrowing				March 31,						December 31,
	Maturity date			interest rate⁽⁸⁾	capacity				2021			2020			2020
Funding Debt:
2018-1 Securitization Facility	July 2023	⁽¹	⁾	5.00%	$	150,000			$	32,774		$	52,000		$	39,901
2018-2 Securitization Facility	October 2022	⁽²	⁾	3.87%		26,850				26,850			110,000			49,519
2019-1 Securitization Facility	February 2022	⁽³	⁾	—		—				—			50,000			30,000
2018-A Notes	May 2026			7.37%		13,138				13,138			34,078			18,140
2019-A Notes	June 2026			6.61%		55,252				55,252			127,798			68,782
OnDeck Account Receivables Trust 2013-1	May 2021	⁽⁴	⁾	—		—				—			—			29,728
Receivable Assets of OnDeck	December 2023	⁽⁵	⁾	2.62%		100,000				—			—			22,915
OnDeck Asset Funding II	August 2022	⁽⁶	⁾	3.12%		175,000				2,605			—			52,773
Other funding debt⁽⁹⁾	Various	⁽⁷	⁾	4.54%		61,218				24,682			—			19,885
Total funding debt				5.50%	$	581,458			$	155,301		$	373,876		$	331,643
Corporate Debt:
8.50% Senior Notes Due 2024	September 2024			8.50%	$	250,000			$	250,000		$	250,000		$	250,000
8.50% Senior Notes Due 2025	September 2025			8.50%		375,000				375,000			375,000			375,000
Revolving line of credit	June 2022			4.25%		125,000	⁽¹⁰	⁾		102,000			105,250			—
Other corporate debt	April 2022			1.00%		795				795			—			—
Total corporate debt				7.90%	$	750,795			$	727,795		$	730,250		$	625,000
Less: Long-term debt issuance costs									$	(8,316	)	$	(12,382	)	$	(9,171	)
Less: Debt discounts										(266	)		(12	)		(1,011	)
Total long-term debt									$	874,514		$	1,091,732		$	946,461

(1)	The period during which new borrowings may be made under this facility expires in July 2021.

(2)	The period during which new borrowings may be made under this facility expired in October 2020.

(3)	The period during which new borrowings may be made under this facility expired in February 2021. This facility was repaid and terminated on February 25, 2021.

(4)	The period during which new borrowings may be made under this facility expired in October 2020. This facility was repaid and terminated on February 19, 2021.

(5)	The period during which new borrowings may be made under this facility expires in December 2022.

(6)	The period during which new borrowings may be made under this facility expires in August 2021.

(7)	The periods during which new borrowings may be made under the various agreements expire between June 2021 and March 2024. Maturity dates range from December 2021 through March 2024.

(8)	The weighted average interest rate is determined based on the rates and principal balances on March 31, 2021. It does not include the impact of the amortization of deferred loan origination costs or debt discounts associated with OnDeck purchase accounting.

(9)	These debt facilities support our operations in Australia and are denominated in Australian dollars. The total local currency borrowing capacity is AU$80.6 million, of which there is AU$32.5 million in principal outstanding at March 31, 2021.

(10)	We had an outstanding letter of credit under the Revolving line of credit of $0.5 million, $1.0 million and $1.0 million as of March 31, 2021 and 2020 and December 31, 2020, respectively.

Weighted average interest rates on long-term debt were 8.61% and 8.15% during the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021 and 2020 and December 31, 2020, the Company was in compliance with all covenants and other requirements set forth in the prevailing long-term debt agreements.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Recent Amendments to Debt Facilities

On March 31, 2021, OnDeck Asset Funding II, LLC (“ODAF II”), a wholly-owned subsidiary of the Company, amended (the “ODAF II Amendment”) its asset-backed revolving debt facility (the “ODAF II Facility”) to modify the Credit Agreement, dated as of August 8, 2018, by and among ODAF II, as Borrower, the Lenders party thereto from time to time, Ares Agent Services, L.P., as Administrative Agent and Collateral Agent, and Wells Fargo Bank, N.A, as Paying Agent. The ODAF II Amendment extends the period during which an Enova Merger Change of Control (as defined in the ODAF II Facility) will not trigger any amortization event under the ODAF II Facility through June 30, 2021, and makes certain technical, definitional, conforming and other changes.

5.	Income Taxes

The Company’s effective tax rate for the three months ended March 31, 2021 was 26.7%, compared to 34.3% for the three months ended March 31, 2020. The decrease is primarily attributable to the significant increase in book operating income as compared to the prior year quarter and a lesser rate impact attributable to nondeductible executive and stock compensation and other nondeductible expenses.

As of March 31, 2021, the balance of unrecognized tax benefits was $38.6 million, which is included in “Accounts payable and accrued expenses” on the consolidated balance sheet, $10.9 million of which, if recognized, would favorably affect the effective tax rate in the period of recognition. The Company had $53.5 million and $39.0 million of unrecognized tax benefits as of March 31, 2020 and December 31, 2020, respectively. The Company believes that it has adequately accounted for any material tax uncertainties in its existing reserves for all open tax years.

The Company’s U.S. tax returns are subject to examination by federal and state taxing authorities. The statute of limitations related to the Company’s consolidated Federal income tax returns is closed for all tax years up to and including 2016. However, the 2014 tax year is still open to the extent of the net operating loss that was carried back from the 2019 tax return. The years open to examination by state, local and foreign government authorities vary by jurisdiction, but the statute of limitation is generally three years from the date the tax return is filed. For jurisdictions that have generated net operating losses, carryovers may be subject to the statute of limitations applicable for the year those carryovers are utilized. In these cases, the period for which the losses may be adjusted will extend to conform with the statute of limitations for the year in which the losses are utilized. In most circumstances, this is expected to increase the length of time that the applicable taxing authority may examine the carryovers by one year or longer, in limited cases.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted and signed into U.S. law to provide economic relief to individuals and businesses facing economic hardship as a result of the COVID-19 pandemic. The Company deferred the timing of federal tax estimates and payroll taxes as permitted by the CARES Act and has availed itself of net operating loss carryback provisions.

6.	Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by giving effect to the potential dilution that could occur if securities or other contracts to issue common shares were exercised and converted into common shares during the period. Restricted stock units issued under the Company’s stock-based employee compensation plans are included in diluted shares upon the granting of the awards even though the vesting of shares will occur over time.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following table sets forth the reconciliation of numerators and denominators of basic and diluted earnings per share computations for the three months ended March 31, 2021 and 2020 (in thousands, except per share amounts):

	Three Months Ended
	March 31,
	2021		2020
Numerator:
Net income from continuing operations	$	75,920	$	5,748
Net loss from discontinued operations		—		(288	)
Net income	$	75,920	$	5,460
Denominator:
Total weighted average basic shares		36,109		32,337
Shares applicable to stock-based compensation		1,378		496
Total weighted average diluted shares		37,487		32,833
Earnings per common share – basic:
Continuing operations	$	2.10	$	0.18
Discontinued operations		—		(0.01	)
Earnings per common share – basic	$	2.10	$	0.17
Earnings per common share – diluted:
Continuing operations	$	2.03	$	0.18
Discontinued operations		—		(0.01	)
Earnings per common share – diluted	$	2.03	$	0.17

For the three months ended March 31, 2021 and 2020, 20,945 and 1,757,937 shares of common stock underlying stock options, respectively, and 80,047 and 351,368 shares of common stock underlying restricted stock units, respectively, were excluded from the calculation of diluted net income per share because their effect would have been antidilutive.

7.	Operating Segment Information

The Company provides online financial services to non-prime credit consumers and small businesses in the United States, Australia and Brazil and has one reportable segment. The Company has aggregated all components of its business into a single operating segment based on the similarities of the economic characteristics, the nature of the products and services, the nature of the production and distribution methods, the shared technology platforms, the type of customer and the nature of the regulatory environment.

Geographic Information

The following table presents the Company’s revenue by geographic region for the three months ended March 31, 2021 and 2020 (dollars in thousands):

	Three Months Ended
	March 31,
	2021		2020
Revenue
United States	$	254,866	$	357,716
Other international countries		4,578		4,536
Total revenue	$	259,444	$	362,252

The Company’s long-lived assets, which consist of the Company’s property and equipment, were $78.9 million, $56.2 million and $79.4 million at March 31, 2021 and 2020 and December 31, 2020, respectively. The operations for the Company’s businesses are primarily located within the United States, and the value of any long-lived assets located outside of the United States is immaterial.

8.	Commitments and Contingencies

Litigation

On April 23, 2018, the Commonwealth of Virginia, through Attorney General Mark R. Herring, filed a lawsuit in the Circuit Court for the County of Fairfax, Virginia against NC Financial Solutions of Utah, LLC (“NC Utah”), a subsidiary of the Company. The lawsuit

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

alleges violations of the Virginia Consumer Protection Act (“VCPA”) relating to NC Utah’s communications with customers, collections of certain payments, its loan agreements, and the rates it charged to Virginia borrowers. The plaintiff sought to enjoin NC Utah from continuing its then-existing lending practices in Virginia, and still seeks restitution, civil penalties, and costs and expenses in connection with the same. Due to a change in the law, NC Utah no longer lends to Virginia residents and the injunctive remedies sought against NC Utah’s lending practices are no longer applicable. Neither the likelihood of an unfavorable decision nor the ultimate liability, if any, with respect to this matter can be determined at this time, and the Company is currently unable to estimate a range of reasonably possible losses, as defined by ASC 450-20-20, Contingencies–Loss Contingencies–Glossary, for this litigation. The Company carefully considered applicable Virginia law before NC Utah began lending in Virginia and, as a result, believes that the Plaintiff’s claims in the complaint are without merit and intends to vigorously defend this lawsuit.

The Company is also involved in certain routine legal proceedings, claims and litigation matters encountered in the ordinary course of its business. Certain of these matters may be covered to an extent by insurance or by indemnification agreements with third parties. The Company has recorded accruals in its consolidated financial statements for those matters in which it is probable that it has incurred a loss and the amount of the loss, or range of loss, can be reasonably estimated. In the opinion of management, the resolution of these matters will not have a material adverse effect on the Company’s financial position, results of operations or liquidity.

9.	Related Party Transactions

With the acquisition of OnDeck, the Company records its interest in OnDeck Canada under the equity method of accounting; as such, OnDeck Canada is deemed a related party. As of March 31, 2021 and December 31, 2020, the Company had a due from affiliate balance of $1.1 million and $1.2 million, respectively, related to OnDeck Canada that is primarily the result of labor and software charges from people and technology assets at the OnDeck parent company.

On February 24, 2021 the Company contributed the platform-as-service business assumed in the OnDeck acquisition to Linear in exchange for ownership units in that entity. The Company records its interest in Linear under the equity method of accounting. As of March 31, 2021 the Company had a due to affiliate balance of $3.0 million to Linear that is primarily comprised of the remaining balances associated with the contribution and exchange.

10.	Fair Value Measurements

Recurring Fair Value Measurements

The Company uses a hierarchical framework that prioritizes and ranks the market observability of inputs used in its fair value measurements. Market price observability is affected by a number of factors, including the type of asset or liability and the characteristics specific to the asset or liability being measured. Assets and liabilities with readily available, active, quoted market prices or for which fair value can be measured from actively quoted prices generally are deemed to have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The Company classifies the inputs used to measure fair value into one of three levels as follows:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable.

Level 3: Unobservable inputs for the asset or liability measured.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those cases, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level of input that is significant to the entire measurement. Such determination requires significant management judgment.

During the three months ended March 31, 2021 and 2020, there were no transfers of assets or liabilities in or out of Level 1, Level 2 or Level 3 fair value measurements. It is the Company’s policy to value any transfers between levels of the fair value hierarchy based on end of period fair values.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2021 and 2020 and December 31, 2020 are as follows (dollars in thousands):

	March 31,		Fair Value Measurements Using
	2021		Level 1		Level 2		Level 3
Financial assets:
Consumer loans and finance receivables⁽¹⁾⁽²⁾	$	581,398	$	—	$	—	$	581,398
Small business loans and finance receivables⁽¹⁾⁽²⁾		649,313		—		—		649,313
Non-qualified savings plan assets⁽³⁾		4,839		4,839		—		—
Investment in trading security⁽⁴⁾		17,634		17,634		—		—
Total	$	1,253,184	$	22,473	$	—	$	1,230,711

	March 31,		Fair Value Measurements Using
	2020		Level 1		Level 2		Level 3
Financial assets:
Consumer loans and finance receivables⁽¹⁾⁽²⁾	$	917,222	$	—	$	—	$	917,222
Small business loans and finance receivables⁽¹⁾		175,985		—		—		175,985
Non-qualified savings plan assets⁽³⁾		2,989		2,989		—		—
Investment in trading security⁽⁴⁾		9,729		9,729		—		—
Total	$	1,105,925	$	12,718	$	—	$	1,093,207

	December 31,		Fair Value Measurements Using
	2020		Level 1		Level 2		Level 3
Financial assets:
Consumer loans and finance receivables⁽¹⁾⁽²⁾	$	625,219	$	—	$	—	$	625,219
Small business loans and finance receivables⁽¹⁾⁽²⁾		616,287		—		—		616,287
Non-qualified savings plan assets⁽³⁾		3,972		3,972		—		—
Investment in trading security⁽⁴⁾		19,273		19,273		—		—
Total	$	1,264,751	$	23,245	$	—	$	1,241,506

(1)	Consumer and small business loans and finance receivables are included in “Loans and finance receivables at fair value” in the consolidated balance sheets.

(2)

Consumer loans and finance receivables include $213.4 million, $508.3 million and $277.6 million in assets of consolidated VIEs as of March 31, 2021 and 2020 and December 31, 2020, respectively. Small business loans and finance receivables include $135.0 million and $251.3 million in assets of consolidated VIEs as of March 31, 2021 and December 31, 2020, respectively.

(3)	The non-qualified savings plan assets are included in “Other receivables and prepaid expenses” in the Company’s consolidated balance sheets and have an offsetting liability of equal amount, which is included in “Accounts payable and accrued expenses” in the Company’s consolidated balance sheets.

(4)	Investment in trading security is included in “Other assets” in the Company’s consolidated balance sheets.

The Company primarily estimates the fair value of its loan and finance receivables portfolio using discounted cash flow models that have been internally developed. The models use inputs, such as estimated losses, prepayments, utilization rates, servicing costs and discount rates, that are unobservable but reflect the Company’s best estimates of the assumptions a market participant would use to calculate fair value. Certain unobservable inputs may, in isolation, have either a directionally consistent or opposite impact on the fair value of the financial instrument for a given change in that input. An increase to the net loss rate, prepayment rate, servicing cost, or discount rate would decrease the fair value of the Company’s loans and finance receivables. When multiple inputs are used within the valuation techniques for loans, a change in one input in a certain direction may be offset by an opposite change from another input.

The fair value of the nonqualified savings plan assets was deemed Level 1 as they are publicly traded equity securities for which market prices of identical assets are readily observable.

The fair value of the investment in trading security was deemed Level 1 as it is a publicly traded fund with active market pricing that is readily available.

The Company had no liabilities measured at fair value on a recurring basis as of March 31, 2021 and 2020 and December 31, 2020.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Fair Value Measurements on a Non-Recurring Basis

The Company measures non-financial assets and liabilities such as property and equipment and intangible assets at fair value on a non-recurring basis or when events or circumstances indicate that the carrying amount of the assets may be impaired. At March 31, 2021 and 2020 and December 31, 2020, there were no assets or liabilities recorded at fair value on a non-recurring basis.

Financial Assets and Liabilities Not Measured at Fair Value

The Company’s financial assets and liabilities as of March 31, 2021 and 2020 and December 31, 2020 that are not measured at fair value in the consolidated balance sheets are as follows (dollars in thousands):

	Balance at
	March 31,		Fair Value Measurements Using
	2021		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	324,328	$	324,328	$	—	$	—
Restricted cash ⁽¹⁾		49,879		49,879		—		—
Investment in unconsolidated investee⁽²⁾		6,918		—		—		6,918
Total	$	381,125	$	374,207	$	—	$	6,918
Financial liabilities:
Revolving line of credit	$	102,000	$	—	$	—	$	102,000
Securitization notes		155,035		—		156,584		—
8.50% senior notes due 2024		250,000		—		256,655		—
8.50% senior notes due 2025		375,000		—		389,940		—
Other long-term debt		795		—		—		795
Total	$	882,830	$	—	$	803,179	$	102,795

	Balance at
	March 31,		Fair Value Measurements Using
	2020		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	161,076	$	161,076	$	—	$	—
Restricted cash ⁽¹⁾		42,742		42,742		—		—
Investment in unconsolidated investee⁽²⁾		6,918		—		—		6,918
Total	$	210,736	$	203,818	$	—	$	6,918
Financial liabilities:
Revolving line of credit	$	105,250	$	—	$	—	$	105,250
Securitization notes		373,864		—		358,465		—
8.50% senior notes due 2024		250,000		—		216,225		—
8.50% senior notes due 2025		375,000		—		315,926		—
Total	$	1,104,114	$	—	$	890,616	$	105,250

	Balance at
	December 31,		Fair Value Measurements Using
	2020		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	297,273	$	297,273	$	—	$	—
Restricted cash ⁽¹⁾		71,927		71,927		—		—
Investment in unconsolidated investee⁽²⁾		6,918		—		—		6,918
Total	$	376,118	$	369,200	$	—	$	6,918
Financial liabilities:
Revolving line of credit	$	—	$	—	$	—	$	—
Securitization notes		330,632		—		333,532		—
8.50% senior notes due 2024		250,000		—		247,680		—
8.50% senior notes due 2025		375,000		—		367,770		—
Total	$	955,632	$	—	$	948,982	$	—

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(1)	Restricted cash includes $40.3 million, $37.8 million and $64.8 million in assets of consolidated VIEs as of March 31, 2021 and 2020 and December 31, 2020, respectively.

(2)	Investment in unconsolidated investee is included in “Other assets” in the consolidated balance sheets.

Cash and cash equivalents and restricted cash bear interest at market rates and have maturities of less than 90 days. The carrying amount of restricted cash and cash equivalents approximates fair value.

The Company measures the fair value of its investment in unconsolidated investee using Level 3 inputs. Because the unconsolidated investee is a private company and financial information is limited, the Company estimates the fair value based on the best available information at the measurement date.

The Company measures the fair value of its revolving line of credit using Level 3 inputs. The Company considered the fair value of its other long-term debt and the timing of expected payment(s).

The fair values of the Company’s Securitization Notes and senior notes are estimated based on quoted prices in markets that are not active, which are deemed Level 2 inputs.

11.	Subsequent Events

Subsequent events have been reviewed through the date these financial statements were available to be issued.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of financial condition, results of operations, liquidity and capital resources and certain factors that may affect future results, including economic and industry-wide factors, of Enova International, Inc. and its subsidiaries should be read in conjunction with our consolidated financial statements and accompanying notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as with Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2020. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. The matters discussed in these forward-looking statements are subject to risk, uncertainties, and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements. Please see “Risk Factors” and “Cautionary Statement Concerning Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.

BUSINESS OVERVIEW

We are a leading technology and analytics company focused on providing online financial services. In 2020, we extended approximately $1.2 billion in credit or financing to borrowers and for the three months ended March 31, 2021, we extended approximately $0.5 billion in credit or financing to borrowers. As of March 31, 2021, we offered or arranged loans or draws on lines of credit to consumers in 38 states in the United States and Brazil. We also offered financing to small businesses in all 50 states and Washington D.C. in the United States. We use our proprietary technology, analytics and customer service capabilities to quickly evaluate, underwrite and fund loans or provide financing, allowing us to offer consumers and small businesses credit or financing when and how they want it. Our customers include the large and growing number of consumers who and small businesses which have bank accounts but use alternative financial services because of their limited access to more traditional credit from banks, credit card companies and other lenders. We were an early entrant into online lending, launching our online business in 2004, and through March 31, 2021, we have completed over 53.6 million customer transactions and collected more than 49 terabytes of currently accessible customer behavior data since launch, allowing us to better analyze and underwrite our specific customer base. We have significantly diversified our business over the past several years having expanded the markets we serve and the financing products we offer. These financing products include installment loans and receivables purchase agreements (“RPAs”) and line of credit accounts.

We believe our customers highly value our products and services as an important component of their personal or business finances because our products are convenient, quick and often less expensive than other available alternatives. We attribute the success of our business to our advanced and innovative technology systems, the proprietary analytical models we use to predict the performance of loans and finance receivables, our sophisticated customer acquisition programs, our dedication to customer service and our talented employees.

We have developed proprietary underwriting systems based on data we have collected over our more than 16 years of experience. These systems employ advanced risk analytics, including machine learning and artificial intelligence, 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 their funds quickly and efficiently. Our systems closely monitor collection and portfolio performance data that we use to continually refine machine learning-enabled analytical models and statistical measures used in making our credit, purchase, marketing and collection decisions. Approximately 90% of models used in our analytical environment are machine learning-enabled.

Our flexible and scalable technology platform allows us to process and complete customers’ transactions quickly and efficiently. In 2020, we processed approximately 2.0 million transactions, and we continue to grow our loans and finance receivable portfolios and increase the number of customers we serve through desktop, tablet and mobile platforms. Our highly customizable technology platform allows us to efficiently develop and deploy new products to adapt to evolving regulatory requirements and consumer preference, and to enter new markets quickly. In 2012, we launched a new product in the United States designed to serve near-prime customers. In June 2014, we launched our business in Brazil, where we arrange financing for borrowers through a third-party lender. In addition, in July 2014, we introduced a new line of credit product in the United States to serve the needs of small businesses. In June 2015, we further expanded our product offering by acquiring certain assets of a company that provides financing and installment loans to small businesses by offering RPAs. In January 2020, we acquired Cumulus Funding, Inc. (doing business as Align, “Align”), which offers income share agreements to U.S. consumers with repayment rates based on a percentage of customers’ income. In October 2020, we acquired, through a merger, On Deck Capital Inc. (“OnDeck”), a small business lending company offering lending and funding solutions to small businesses in the U.S., Australia and Canada, to expand our small business offerings. In March 2021, we acquired Pangea Universal Holdings (“Pangea”), which provides mobile international money transfer services to customers in the U.S with a focus on Latin America and Asia. These new products have allowed us to further diversify our product offerings and customer base.

We have been able to consistently acquire new customers and successfully generate repeat business from returning customers when they need financing. We believe our customers are loyal to us because they are satisfied with our products and services. We acquire

new customers from a variety of sources, including visits to our own websites, mobile sites or applications, and through direct marketing, affiliate marketing, lead providers and relationships with other lenders. We believe that the online convenience of our products and our 24/7 availability to accept applications with quick approval decisions are important to our customers.

Once a potential customer submits an application, we quickly provide a credit or purchase decision. If a loan or financing is approved, we or our lending partner typically fund the loan or financing the next business day or, in some cases, the same day. During the entire process, from application through payment, we provide access to our well-trained customer service team. All of our operations, from customer acquisition through collections, are structured to build customer satisfaction and loyalty, in the event that a customer has a need for our products in the future. We have developed a series of sophisticated proprietary scoring models to support our various products. We believe that these models are an integral component of our operations and allow us to complete a high volume of customer transactions while actively managing risk and the related credit quality of our loan and finance receivable portfolios. We believe our successful application of these technological innovations differentiates our capabilities relative to competing platforms as evidenced by our history of strong growth and stable credit quality.

PRODUCTS AND SERVICES

Our online financing products and services provide customers with a deposit of funds to their bank account in exchange for a commitment to repay the amount deposited plus fees, interest and/or revenue on the receivables purchased. We originate, arrange, guarantee or purchase installment loans, line of credit accounts, receivables purchase agreements (“RPAs”) and income share agreements to consumers and small businesses. We also offer an analytics-as-a-service solution for businesses. We have one reportable segment that includes all of our online financial services.

•

Installment loans. Installment loans include longer-term loans that require the outstanding principal balance to be paid down in multiple installments and shorter-term single payment loans. Our installment loans are either written directly by us, purchased as part of our Banking Programs as discussed below, or are those that we arrange and guarantee as part of our credit services organization and credit access business programs, which we refer to as our CSO programs. We offer, or arrange through CSO programs, multi- or single-payment unsecured consumer loan products in 38 states in the United States and small business installment loans in 47 states and in Washington D.C. We also offer or arrange multi-payment unsecured consumer installment loan products in Brazil and small business installment loan products in Australia and Canada. Terms for our installment loan products range between two and 60 months, and single-pay consumer loans generally have terms of seven to 90 days. Loans may be repaid early at any time with no additional prepayment charges.

•

Line of credit accounts. We directly offer, or purchase a participation interest in receivables through our Bank Programs, new consumer line of credit accounts in 38 states (and continue to service existing line of credit accounts in one additional state) in the United States and business line of credit accounts in 47 states and in Washington D.C. in the United States, which allow customers to draw on their unsecured line of credit in increments of their choosing up to their credit limit. Customers may pay off their account balance in full at any time or make required minimum payments in accordance with the terms of the line of credit account. We also offer small business line of credit accounts in Canada. As long as the customer’s account is in good standing and has credit available, customers may continue to borrow on their line of credit.

•

Receivables purchase agreements. Under RPAs, small businesses receive funds in exchange for a portion of the business’s future receivables at an agreed upon discount. In contrast, lending is a commitment to repay principal and interest and/or fees. A small business customer who enters into an RPA commits to delivering a percentage of its receivables through ACH or wire debits or by splitting credit card receipts until all purchased receivables are delivered. We offer RPAs in all 50 states and in Washington D.C. in the United States.

•

Income share agreements. Under income share agreements, consumers receive funds in exchange for a percentage of their future income for a set period of time. Unlike a loan, which is a commitment to repay principal and interest and/or fees, with income share structures, payments are based on the consumer’s income and can go all the way to zero if, among other things, the consumer becomes unemployed. We believe the income share agreement product to be promising but is still a nascent offering for us.

•

CSO Programs. We currently operate a CSO program in Texas. Through CSO programs, we provide services related to third-party lenders’ multi- and single-pay installment consumer loan products by acting as a credit services organization or credit access business on behalf of consumers in accordance with applicable state laws. Services offered under our CSO program include credit-related services such as arranging loans with independent third-party lenders and assisting in the preparation of loan applications and loan documents (“CSO loans”). When a consumer executes an agreement with us under our CSO program, we agree, for a fee payable to us by the consumer, to provide certain services, one of which is to guarantee the consumer’s obligation to repay the loan received by the consumer from the third-party lender if the consumer fails to do so. For CSO loans, each lender is responsible for providing the criteria by which the consumer’s application is underwritten and, if approved, determining the amount of the consumer loan. We, in turn, are responsible for assessing whether or not we will guarantee such

loan. The guarantee represents an obligation to purchase specific single-payment loans, which for our CSO program, generally have terms of less than 90 days, and specific installment loans, which have terms of four to 12 months, if they go into default.

•

Bank program. The Company operates a program with a bank to provide marketing services and loan servicing for near-prime unsecured consumer installment loans and, beginning in January 2021, line of credit accounts. Under the program, the Company receives marketing and servicing fees while the bank receives an origination fee. The bank has the ability to sell and the Company has the option, but not the requirement, to purchase the loans the bank originates and, in the case of line of credit accounts, a participation interest in the receivables from draws on those accounts. The Company does not guarantee the performance of the loans and line of credit accounts originated by the bank. As part of the OnDeck business both prior and subsequent to Enova’s acquisition, OnDeck operates a program with a separate bank to provide marketing services and loan servicing for small business installment loans and line of credit accounts. Under the OnDeck program, the Company receives marketing fees while the bank receives origination fees and certain program fees. The bank has the ability to sell and the Company has the option, but not the requirement, to purchase the installment loans the bank originates and, in the case of line of credit accounts, extensions under those line of credit accounts. The Company does not guarantee the performance of the loans or line of credit accounts originated by the bank.

•

Decision Management Platform-as-a-Service (“dmPaaS”) and Analytics-as-a-Service (“AaaS”). Launched under our Enova Decisions brand in 2016, we help businesses make better decisions faster by providing our decision management platform and analytics expertise as a service. Our solutions are designed to automate or augment customer decisions including, but not limited to, credit risk, fraud risk, identity verification, customer profitability, payments, and collection. Services offered under our dmPaaS include machine learning model deployment, business rules management, data source connectivity, decision flow authoring, decision simulation, experiments, and real-time decision flow execution via API. Through our AaaS offerings, we provide tailored predictive/prescriptive analytic model development, explainable machine learning, and mathematical optimization. Industries served include financial services, communications, telecommunications, healthcare, and higher education in North America and Asia. Although this program constitutes less than 1% of total revenue, we plan to continue to grow this program through increasing the size of our sales team, adding new partners, and continued enhancement of our technology.

•

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

OUR MARKETS

We currently provide our services in the following countries:

•

United States. We began our online business in the United States in May 2004. As of March 31, 2021, we provided services in all 50 states and Washington D.C. We market our financing products under the names CashNetUSA at www.cashnetusa.com, NetCredit at www.netcredit.com, OnDeck at www.ondeck.com, Headway Capital at www.headwaycapital.com, The Business Backer at www.businessbacker.com, Align at www.helloalign.com and Pangea at www.pangeamoneytransfer.com.

•

Brazil. In June 2014, we launched our business in Brazil under the name Simplic at www.simplic.com.br, where we arrange installment loans for a third-party lender. We plan to continue to invest in and expand our financial services program in Brazil.

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Australia. As part of our acquisition of OnDeck in October 2020, we offer installment loans to small businesses in Australia through a majority-owned subsidiary.

•

Canada. As part of our acquisition of OnDeck in October 2020, we offer installment loans and line of credit accounts to small businesses in Canada through an affiliate that we classify as an equity method investment.

Our internet websites and the information contained therein or connected thereto are not intended to be incorporated by reference into this Quarterly Report on Form 10-Q.

RECENT REGULATORY DEVELOPMENTS

Consumer Financial Protection Bureau (“CFPB”)

On October 6, 2017, the CFPB issued its final rule entitled “Payday, Vehicle Title, and Certain High-Cost Installment Loans” (the “Small Dollar Rule”), which covers certain loans that we offer. The Small Dollar Rule requires that lenders who make short-term loans and longer-term loans with balloon payments reasonably determine consumers’ ability to repay the loans according to their terms before issuing the loans. The Small Dollar Rule also introduces new limitations on repayment processes for those lenders as well as lenders of other longer-term loans with an annual percentage rate greater than 36 percent that include an ACH authorization or

similar payment provision. If a consumer has two consecutive failed payment attempts, the lender must obtain the consumer’s new and specific authorization to make further withdrawals from the consumer’s bank account. For loans covered by the Small Dollar Rule, lenders must provide certain notices to consumers before attempting a first payment withdrawal or an unusual withdrawal and after two consecutive failed withdrawal attempts. On June 7, 2019, the CFPB issued a final rule to set the compliance date for the mandatory underwriting provisions of the Small Dollar Rule to November 19, 2020. On July 7, 2020, the CFPB issued a final rule rescinding the ability to repay (“ATR”) provisions of the Small Dollar Rule along with related provisions, such as the establishment of registered information systems for checking ATR and reporting loan activity.

Virginia SB 421

On March 7, 2020, SB 421 passed through both houses of the Virginia Legislature. The bill amends laws governing open-end lines of credit to cap interest and fees at 36% annual interest plus a $50 annual participation fee. Further, the law would allow Virginia-licensed lenders to make installment loans at 36% APR plus a loan processing fee equal to the greater of $75 or 5% of the principal loan amount, but not exceeding $150. The law went into effect on January 1, 2021.

Illinois SB 1792

On March 23, 2021, the Economic Equity Act (“EEA”) became effective in Illinois. The EEA implements a 36% rate cap on all consumer lending, with the APR calculated consistent with the Military Lending Act’s Military Annual Percentage Rate. The EEA applies to consumer loans originated on or after the effective date. In addition, the EEA provides for the application of a predominant economic interest test for bank service arrangements. Pursuant to the economic interest test, a broker or service with a predominant economic interest in a loan is considered to be the “true lender” for purposes of applying the EEA and the 36% rate cap.

Brazil General Data Privacy Law

On August 14, 2018, Brazil adopted the General Data Privacy Law (Lei Geral de Proteção de Dados Pessoais or “LGPD”). The key provisions of LGPD are quite similar to the European Union’s General Data Protection Regulation (“GDPR”) in that it grants certain rights to data subjects, imposes obligations on companies with regard to the processing of data, and allows authorities to impose substantial fines on companies that violate the law. LGPD was originally anticipated to go into effect on February 15, 2020; however, several amendments to LGPD have been proposed, one of which could delay the effective date of the legislation to August 2020. Compliance with LGPD may increase the cost of conducting business in Brazil, and we could see regulatory compliance costs and enforcement activity once the law goes into effect.

RESULTS OF OPERATIONS

COVID-19

The COVID-19 pandemic has, and will likely continue to, severely impact global economic conditions, resulting in substantial volatility in the financial markets, increased unemployment, and operational challenges resulting from measures that governments have imposed to control its spread. We have implemented a number of procedures in response to the pandemic to support the safety and well-being of our employees, customers and stockholders that continue through the date of this report:

•

As shelter-in-place orders and general distancing guidelines were released, we moved quickly to transition virtually all of our employees to a remote work environment, in which we continue to operate.

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We are actively working with our customers to understand their financial situations, waive late fees, offer a variety of repayment options to increase flexibility and reduce or defer payments for impacted customers.

•

We took measures to adjust our underwriting procedures, which reduced exposure to more heavily impacted consumers and businesses.

•

We adjusted loan and draw sizes as well as shortened duration in an effort to reduce risk in this volatile environment.

From a loan valuation perspective, the COVID-19 pandemic significantly increases the potential variability of our expected cash flows. We deemed it appropriate to increase the discount rate to capture the increase in potential volatility in expected cash flows due to the unprecedented nature of this pandemic and governmental response. As of March 31, 2020, after adjusting the discount rate for the decrease in underling interest rates, we increased the rate by 500 basis points based on what we deemed a market participant would require to assume the additional risk. Consequently, the associated fair values of these loans were adjusted lower as part of the standard process in our internally-developed valuation models. These rates remained consistent for the remainder of 2020. During the current quarter, we noted a tightening of credit spreads in observable pricing in the market; as such, we reduced the discount rate used in our valuations as of March 31, 2021 by 100 basis points. Our discount rates are still higher than those used immediately prior to the

COVID-19 pandemic, which we believe is representative of what a market participant would use due to the continued high level of risk and potential volatility.

The number of loans with payment deferrals or other modifications increased meaningfully toward the end of the first quarter and into the second quarter of 2020. These requests for deferrals and modifications decreased meaningfully over the remainder of 2020 and into 2021. Since the beginning of the pandemic, we have assessed performance of borrowers that had elected to defer or modify loan payments during the pandemic. As of March 31, 2021, our collection data does not appear to indicate increased risk with these borrowers. As modifications and deferrals do not appear to be a strong indicator of future activity, we did not make an adjustment to the fair value of these loans at March 31, 2021 based on current or past modification or deferral.

After seeing increases in delinquency and charge-offs early in the pandemic, we experienced significant improvements to these metrics over the remainder of 2020 and into 2021. Both delinquencies and charge-offs in the first quarter of 2021 are below the pre-COVID period. The U.S. government passed additional stimulus packages in December 2020 and March 2021, which included stimulus checks to consumers and additional funding into the Paycheck Protection Program (“PPP”) for businesses. Positive COVID-19 test counts generally decreased across the current quarter as vaccine distribution accelerated. However, the momentum slowed and reversed by the end of March, causing significant concern among public health officials and governmental bodies. Questions on the efficacy of the vaccines in use against new variants of COVID-19 were increasing. In evaluating inputs to our valuation models as of March 31, 2021, we noted that delinquencies and charge-off experience were low, both of which were likely to have been favorably impacted by governmental stimulus efforts. Future stimulus is uncertain and, if not provided at the same levels or at all, could cause future behavior to deviate from past performance. Similar to our loan valuations at December 31, 2020, management concluded that the probability of future charge-offs was higher than what we had experienced in the past and, therefore, increased anticipated charge-offs in our fair value models, which reduced the fair value of our portfolio at March 31, 2021. We deemed the resulting fair value to be an appropriate market-based exit price that considers current market conditions at March 31, 2021.

We continue to closely monitor this pandemic and expect to make future changes to respond to the situation as it continues to evolve.

HIGHLIGHTS

Our financial results for the three-month period ended March 31, 2021, or the current quarter, are summarized below.

•

Consolidated total revenue decreased $102.8 million, or 28.4%, to $259.4 million in the current quarter compared to $362.2 million for the three months ended March 31, 2020, or the prior year quarter.

•

Consolidated net revenue was $238.4 million compared to $126.5 million in the prior year quarter.

•

Consolidated income from operations increased $94.4 million, or 324.4%, to $123.5 million in the current quarter, compared to $29.1 million in the prior year quarter.

•

Consolidated net income was $75.9 million in the current quarter compared to $5.5 million in the prior year quarter. Consolidated diluted income per share was $2.03 in the current quarter compared to $0.17 in the prior year quarter.

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):

	Three Months Ended March 31,
	2021			2020
Revenue
Loans and finance receivables revenue	$	257,297		$	359,806
Other		2,147			2,446
Total Revenue		259,444			362,252
Change in Fair Value		(21,078	)		(235,719	)
Net Revenue		238,366			126,533
Expenses
Marketing		28,568			34,558
Operations and technology		35,627			31,266
General and administrative		44,089			27,951
Depreciation and amortization		6,627			3,670
Total Expenses		114,911			97,445
Income from Operations		123,455			29,088
Interest expense, net		(19,914	)		(20,381	)
Foreign currency transaction (loss) gain		(34	)		41
Loss on early extinguishment of debt		(378	)		—
Equity method investment income		558			—
Income before Income Taxes		103,687			8,748
Provision for income taxes		27,716			3,000
Net income from continuing operations before noncontrolling interest		75,971			5,748
Less: Net income attributable to noncontrolling interest		51			—
Net income from continuing operations		75,920			5,748
Net loss from discontinued operations		—			(288	)
Net income attributable to Enova International, Inc.	$	75,920		$	5,460
Earnings (Loss) Per Share attributable to Enova International, Inc.:
Earnings (loss) per common share - diluted:
Continuing operations	$	2.03		$	0.18
Discontinued operations		—			(0.01	)
Total earnings (loss) common share - diluted	$	2.03		$	0.17

Revenue
Loans and finance receivables revenue		99.2	%		99.3	%
Other		0.8			0.7
Total Revenue		100.0			100.0
Change in Fair Value		(8.1	)		(65.1	)
Net Revenue		91.9			34.9
Expenses
Marketing		11.0			9.6
Operations and technology		13.7			8.6
General and administrative		17.0			7.7
Depreciation and amortization		2.6			1.0
Total Expenses		44.3			26.9
Income from Operations		47.6			8.0
Interest expense, net		(7.7	)		(5.6	)
Foreign currency transaction (loss) gain		—			—
Loss on early extinguishment of debt		(0.1	)		—
Equity method investment income		0.2			—
Income before Income Taxes		40.0			2.4
Provision for income taxes		10.7			0.8
Net income from continuing operations before noncontrolling interest		29.3			1.6
Less: Net income attributable to noncontrolling interest		—			—
Net income from continuing operations		29.3			1.6
Net loss from discontinued operations		—			(0.1	)
Net income attributable to Enova International, Inc.		29.3	%		1.5	%

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 believe that presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of our operations. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our business that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business.

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

In addition to reporting financial results in accordance with GAAP, we have provided adjusted earnings and adjusted earnings per share, or, collectively, the Adjusted Earnings Measures, which are non-GAAP measures. We believe that the presentation of these measures provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments and amortization methods, which provides a more complete understanding of our financial performance, competitive position and prospects for the future. We also believe that investors regularly rely on non-GAAP financial measures, such as the Adjusted Earnings Measures, to assess operating performance and that such measures may highlight trends in our business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. In addition, we believe that the adjustments shown below are useful to investors in order to allow them to compare our financial results during the periods shown without the effect of each of these income or expense items.

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):

	Three Months Ended
	March 31,
	2021			2020
Net income from continuing operations	$	75,920		$	5,748
Adjustments:
Transaction-related costs^(a)		1,412			—
Loss on early extinguishment of debt^(b)		378			—
Intangible asset amortization		1,151			267
Stock-based compensation expense		5,804			3,460
Foreign currency transaction loss (gain)		34			(41	)
Cumulative tax effect of adjustments		(2,209	)		(868	)
Adjusted earnings	$	82,490		$	8,566

Diluted earnings per share from continuing operations	$	2.03		$	0.18
Adjustments:
Transaction-related costs		0.04			—
Loss on early extinguishment of debt		0.01			—
Intangible asset amortization		0.03			0.01
Stock-based compensation expense		0.15			0.10
Foreign currency transaction loss (gain)		—			—
Cumulative tax effect of adjustments		(0.06	)		(0.03	)
Adjusted earnings per share	$	2.20		$	0.26

(a)	In the first quarter of 2021, the Company incurred expenses totaling $1.4 million ($1.1 million net of tax) related to acquisitions and a divestiture of a subsidiary.

(b)	In the first quarter of 2021, the Company recorded a loss on early extinguishment of debt of $0.4 million ($0.3 million net of tax) related to the repurchase of securitization notes.

Adjusted EBITDA

The table below shows Adjusted EBITDA, which is a non-GAAP measure that we define as earnings excluding depreciation, amortization, interest, foreign currency transaction gains or losses, taxes and stock-based compensation expense. We believe Adjusted EBITDA is used by investors to analyze operating performance and evaluate our ability to incur and service debt and our capacity for making capital expenditures. Adjusted EBITDA is also useful to investors to help assess our estimated enterprise value. In addition, we believe that the adjustments for transaction-related costs, loss on early extinguishment of debt and equity method investment income shown below are useful to investors in order to allow them to compare our financial results during the periods shown without the effect of the income or expense items. The computation of Adjusted EBITDA, as presented below, may differ from the computation of similarly-titled measures provided by other companies (in thousands):

	Three Months Ended
	March 31,
	2021			2020
Net income from continuing operations	$	75,920		$	5,748
Depreciation and amortization expenses		6,621			3,670
Interest expense, net		19,755			20,381
Foreign currency transaction loss		34			(41	)
Provision for income taxes		27,716			3,000
Stock-based compensation expense		5,804			3,460
Adjustment:
Transaction-related costs^(a)		1,412			—
Loss on early extinguishment of debt^(b)		378			—
Equity method investment income		(558	)		—
Adjusted EBITDA	$	137,082		$	36,218

Adjusted EBITDA margin calculated as follows:
Total Revenue	$	259,444		$	362,252
Adjusted EBITDA		137,082			36,218
Adjusted EBITDA as a percentage of total revenue		52.8	%		10.0	%

(a)	In the first quarter of 2021, the Company incurred expenses totaling $1.4 million ($1.1 million net of tax) related to acquisitions and a divestiture of a subsidiary.

(b)	In the first quarter of 2021, the Company recorded a loss on early extinguishment of debt of $0.4 million ($0.3 million net of tax) related to the repurchase of securitization notes.

Constant Currency Basis

In addition to reporting financial results in accordance with GAAP, we have provided certain other non-GAAP financial information on a constant currency basis. Outside of the United States, we currently operate in Brazil and, with the acquisition of OnDeck Australia. During the current quarter, 1.8% of our revenue originated in currencies other than the U.S. Dollar, principally the Brazilian Real and Australian Dollar. As a result, changes in our reported revenue and profits include the impacts of changes in foreign currency exchange rates. We provide constant currency assessments in the following discussion and analysis to isolate the impact of the fluctuation in foreign exchange rates and utilize constant currency results in our analysis of performance. Our constant currency assessment assumes foreign exchange rates in the current fiscal periods remained the same as in the prior fiscal year periods. All conversion rates below are based on the U.S. Dollar equivalent to the applicable foreign currency:

	Three Months Ended
	March 31,
	2021		2020		% Change
Australian dollar		0.7726	N/A		N/A
Brazilian Real		0.1827		0.2517		(27.4	)%

We believe that our non-GAAP constant currency assessments are a useful measure, as they indicate the actual growth and profitability of our operations.

Combined Loans and Finance Receivables Measures

In addition to reporting loans and finance receivables balance information in accordance with GAAP (see Note 2 in the Notes to Consolidated Financial Statements included in this report), we have provided metrics on a combined basis. The Combined Loans and

Finance Receivables Measures are non-GAAP measures that include both loans and RPAs we own or have purchased and loans we guarantee, which are either GAAP items or disclosures required by GAAP. See “—Loan and Finance Receivable Balances” and “—Credit Performance of Loans and Finance Receivables” below for reconciliations between Company owned and purchased loans and finance receivables, gross, change in fair value and charge-offs (net of recoveries) calculated in accordance with GAAP to the Combined Loans and Finance Receivables Measures.

We believe these non-GAAP measures provide investors with important information needed to evaluate the magnitude of potential receivable losses and the opportunity for revenue performance of the loans and finance receivable 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 sheet 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.

THREE MONTHS ENDED MARCH 31, 2021 COMPARED TO THREE MONTHS ENDED MARCH 31, 2020

Revenue, Net Revenue and Gross Profit

Revenue decreased $102.8 million, or 28.4%, to $259.4 million for the current quarter as compared to $362.2 million for the prior year quarter. On a constant currency basis, revenue decreased by $102.8 million, or 28.4%, for the current quarter compared to the prior year quarter. The decrease was driven by a 50.2% decrease in revenue from our sub-prime consumer portfolio and a 35.0% decrease in revenue from our near-prime consumer portfolio due to lower loan originations and lower average loan balances in the current quarter compared to the prior year quarter, partially offset by a 216.1% increase in revenue from our small business portfolio, primarily due to the acquisition of OnDeck.

Net revenue for the current quarter was $238.4 million compared to $126.5 million for the prior year quarter. Our consolidated net revenue margin was 91.9% for the current quarter compared to 34.9% for the prior year quarter. The increase in net revenue margin was driven by lower delinquency rates and lower than expected charge-offs as a result of portfolio seasoning and lower originations.

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

	Three Months Ended March 31,
	2021			2020			$ Change			% Change
Revenue by product:
Consumer loans and finance receivables revenue	$	181,737		$	335,900		$	(154,163	)		(45.9	)%
Small business loans and finance receivables revenue		75,560			23,906			51,654			216.1
Total loans and finance receivables revenue		257,297			359,806			(102,509	)		(28.5	)
Other		2,147			2,446			(299	)		(12.2	)
Total revenue		259,444			362,252			(102,808	)		(28.4	)
Change in fair value		(21,078	)		(235,719	)		214,641			(91.1	)
Net revenue	$	238,366		$	126,533		$	111,833			88.4	%

Revenue by product (% to total):
Consumer loans and finance receivables revenue		70.1	%		92.7	%
Small business loans and finance receivables revenue		29.1			6.6
Total loans and finance receivables revenue		99.2			99.3
Other		0.8			0.7
Total revenue		100.0			100.0
Change in fair value		(8.1	)		(65.1	)
Net revenue		91.9	%		34.9	%

Loan and Finance Receivable Balances

The fair value of our loan and finance receivable portfolio in our consolidated financial statements at March 31, 2021 was $1,230.7 million and $1,093.2 million as of March 31, 2021 and 2020, respectively. The outstanding principal balance of our loan and finance receivables portfolio was $1,219.8 million and $1,061.4 million as of March 31, 2021 and 2020, respectively. The fair value of the combined loan and finance receivables portfolio includes $7.2 million and $12.4 million with an outstanding principal balance of $5.7 million and $10.3 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 March 31, 2021 and 2020, respectively.

With the acquisition of OnDeck, our portfolio of loans and finance receivables serving the needs of small businesses increased significantly to 55.1% of our combined loan and finance receivable portfolio as of March 31, 2021, compared to 16.1% as of March 31, 2020. The consumer portfolio balance decreased to 44.9% of our combined loan and finance receivable portfolio balance as of March 31, 2021, compared to 83.9% as of March 31, 2020. See “—Non-GAAP Disclosure—Combined Loans and Finance Receivables Measures” above for additional information related to combined loans and finance receivables.

The following tables summarize loan and finance receivable balances outstanding as of March 31, 2021 and 2020 (in thousands):

	As of March 31, 2021									As of March 31, 2020
				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	$	523,170		$	5,691		$	528,861		$	877,503		$	10,287		$	887,790
Fair value		581,398			7,246			588,644			917,222			11,798			929,020
Fair value as a % of principal		111.1	%		127.3	%		111.3	%		104.5	%		114.7	%		104.6	%
Small business loans and finance receivables
Principal	$	696,678		$	—		$	696,678		$	183,905		$	—		$	183,905
Fair value		649,313			—			649,313			175,985			—			175,985
Fair value as a % of principal		93.2	%		—	%		93.2	%		95.7	%		—	%		95.7	%
Total loans and finance receivables
Principal	$	1,219,848		$	5,691		$	1,225,539		$	1,061,408		$	10,287		$	1,071,695
Fair value		1,230,711			7,246			1,237,957			1,093,207			11,798			1,105,005
Fair value as a % of principal		100.9	%		127.3	%		101.0	%		103.0	%		114.7	%		103.1	%

(a)	GAAP measure. The loans and finance receivables balances guaranteed by us relate to loans originated by third-party lenders through the CSO programs that we have not yet purchased and, therefore, are not included in our consolidated financial statements.

(b)	Except for allowance and liability for estimated losses, amounts shown represent non-GAAP measures.

At March 31, 2021 and 2020, the ratio of fair value as a percentage of principal was 100.9% and 103.0%, respectively, on company owned loans and finance receivables and 101.0% and 103.1%, respectively, on combined loans and finance receivables. These ratios decreased compared to the prior year due primarily to loans acquired in the OnDeck acquisition in October 2020, as these loans have a lower ratio of fair value as a percentage of principal compared to the legacy Enova portfolio. These decreases were partially offset by the seasoning of the portfolio with reduced level of originations, particularly to new customers, which carry a higher risk of charge-off.

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 March 31, 2021 and 2020:

	As of March 31,
	2021		2020
Average amount outstanding per loan and finance receivable (in ones)^(a)
Consumer loans and finance receivables^(b)	$	1,843	$	1,854
Small business loans and finance receivables		29,433		23,603
Total loans and finance receivables^(b)	$	3,809	$	2,178

(a)	The disclosure regarding the average amount per loan and finance receivable 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 programs that we have not yet purchased and, therefore, are not included in our consolidated financial statements.

The average amount outstanding per loan and finance receivable increased to $3,809 from $2,178 during the current quarter compared to the prior year quarter, due primarily to an increase in the mix of loans and finance receivables held by small businesses in our portfolio as a result of our acquisition of OnDeck in October 2020.

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 the current quarter compared to the prior year quarter:

	Three Months Ended
	March 31,
	2021		2020
Average loan and finance receivable origination amount (in ones)^(a)
Consumer loans and finance receivables^(b)(c)	$	491	$	515
Small business loans and finance receivables^(c)		14,186		11,108
Total loans and finance receivables^(b)	$	1,273	$	610

(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 programs that we have not yet purchased and, therefore, are not included in our consolidated financial statements.

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

The average loan and finance receivable origination amount increased to $1,273 from $610 during the current quarter compared to the prior year quarter, due primarily to an increase in the mix of higher dollar amount loans and finance receivables to small businesses as a result of our acquisition of OnDeck in 2020.

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 five quarters (in thousands):

	2020												2021
	First			Second			Third			Fourth			First
	Quarter			Quarter			Quarter			Quarter			Quarter
Ending combined loans and finance receivables, including principal and accrued fees/interest outstanding:
Company owned	$	1,145,748		$	816,905		$	698,964		$	1,310,171		$	1,265,987
Guaranteed by the Company^(a)		11,798			6,054			8,100			10,163			6,792
Ending combined loan and finance receivables balance^(b)	$	1,157,546		$	822,959		$	707,064		$	1,320,334		$	1,272,779
> 30 days delinquent		86,294			36,797			25,841			122,666			96,228
> 30 days delinquency rate		7.5	%		4.5	%		3.7	%		9.3	%		7.6	%

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

(b)	Non-GAAP measure.

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 (in thousands):

	2020												2021
	First			Second			Third			Fourth			First
	Quarter			Quarter			Quarter			Quarter			Quarter
Consumer loans and finance receivables:
Consumer combined loan and finance receivable principal balance:
Company owned	$	877,503		$	646,534		$	569,556		$	576,404		$	523,170
Guaranteed by the Company^(a)		10,287			5,195			6,905			8,845			5,691
Total combined loan and finance receivable principal balance^(b)	$	887,790		$	651,729		$	576,461		$	585,249		$	528,861
Consumer combined loan and finance receivable fair value balance:
Company owned	$	917,222		$	690,957		$	617,921		$	625,219		$	581,398
Guaranteed by the Company^(a)		12,445			6,614			7,411			10,289			7,246
Ending combined loan and finance receivable fair value balance^(b)	$	929,667		$	697,571		$	625,332		$	635,508		$	588,644
Fair value as a % of principal^(b)(c)		104.7	%		107.0	%		108.5	%		108.6	%		111.3	%
Consumer combined loan and finance receivable balance, including principal and accrued fees/interest outstanding:
Company owned	$	959,286		$	693,991		$	614,676		$	619,088		$	564,934
Guaranteed by the Company^(a)		11,798			6,054			8,100			10,163			6,792
Ending combined loan and finance receivable balance^(b)	$	971,084		$	700,045		$	622,776		$	629,251		$	571,726
Average consumer combined loan and finance receivable balance, including principal and accrued fees/interest outstanding:
Company owned^(d)	$	1,007,336		$	813,497		$	646,137		$	613,683		$	598,900
Guaranteed by the Company^(a)(d)		17,846			7,553			6,855			8,861			8,670
Average combined loan and finance receivable balance^(b)(d)	$	1,025,182		$	821,050		$	652,992		$	622,544		$	607,570

Revenue	$	335,900		$	236,772		$	192,567		$	196,880		$	181,737
Change in fair value		(210,725	)		(102,159	)		(24,378	)		(31,167	)		(26,073	)
Net revenue		125,175			134,613			168,189			165,713			155,664
Net revenue margin		37.3	%		56.9	%		87.3	%		84.2	%		85.7	%
Change in fair value as a % of average combined loan and finance receivable balance^(b)(d)		20.6	%		12.4	%		3.7	%		5.0	%		4.3	%

Delinquencies:
> 30 days delinquent	$	81,654		$	31,149		$	21,559		$	24,793		$	24,589
> 30 days delinquent as a % of combined loan and finance receivable balance^(b)(c)		8.4	%		4.4	%		3.5	%		3.9	%		4.3	%

Charge-offs:
Charge-offs (net of recoveries)	$	191,306		$	141,193		$	30,670		$	34,035		$	36,408
Charge-offs (net of recoveries) as a % of average combined loan and finance receivable balance^(b)(d)		18.7	%		17.2	%		4.7	%		5.5	%		6.0	%

(a)	Represents loans originated by third-party lenders through the CSO programs 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 ending balance, including principal and accrued fees/interest outstanding, of combined consumer loans and finance receivables at March 31, 2021 decreased 41.1% to $571.7 million compared to $971.1 million at March 31, 2020, due primarily to lower originations driven by our strategic efforts to mitigate risks associated with the COVID-19 pandemic since March 2020.

The percentage of loans greater than 30 days delinquent decreased to 4.3% at March 31, 2021, compared to 8.4% at March 31, 2020. The decrease was driven primarily by having a more seasoned and lower risk portfolio remaining as originations have remained lower since the onset of the COVID-19 pandemic in the first quarter of 2020 and the majority of higher risk loans to new customers originated in prior quarters have been charged off.

Charge-offs (net of recoveries) as a percentage of average combined loan balance decreased to 6.0% for the current quarter, compared to 18.7% for the prior year quarter, driven primarily by having a more seasoned and lower risk portfolio remaining as originations have remained lower since the onset of the COVID-19 pandemic in the first quarter of 2020 and the majority of higher risk loans to new customers originated in prior quarters have been charged off.

The ratio of fair value as a percentage of principal on consumer loans and finance receivables was 111.3% at March 31, 2021, compared to 104.7% at March 31, 2020. The increase was primarily driven by the seasoning of the portfolio with reduced level of originations, particularly to new customers, partially offset by higher expected future charge-offs at March 31, 2021, as discussed in “Results of Operations—COVID-19” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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 (in thousands):

	2020												2021
	First			Second			Third			Fourth			First
	Quarter			Quarter			Quarter			Quarter			Quarter
Small business loans and finance receivables:
Total loan and finance receivable principal balance	$	183,905		$	121,070		$	81,733		$	686,730		$	696,678
Ending loan and finance receivable fair value balance		175,985			108,705			75,449			616,287			649,313
Fair value as a % of principal^(a)		95.7	%		89.8	%		92.3	%		89.7	%		93.2	%

Ending loan and finance receivable balance, including principal and accrued fees/interest outstanding	$	186,462		$	122,914		$	84,288		$	691,083		$	701,053

Average loan and finance receivable balance^(b)	$	182,862		$	158,684		$	101,819		$	539,675		$	700,348

Revenue	$	23,906		$	14,930		$	10,830		$	64,419		$	75,560
Change in fair value		(24,994	)		(18,513	)		1,601			10,818			4,995
Net revenue		(1,088	)		(3,583	)		12,431			75,237			80,555
Net revenue margin		(4.6	)%		(24.0	)%		114.8	%		116.8	%		106.6	%
Change in fair value as a % of average loan balance^(b)		13.7	%		11.7	%		(1.6	)%		(2.0	)%		(0.7	)%

Delinquencies:
> 30 days delinquent	$	4,640		$	5,648		$	4,282		$	97,873		$	71,639
> 30 days delinquent as a % of loan balance^(a)		2.5	%		4.6	%		5.1	%		14.2	%		10.2	%

Charge-offs:
Charge-offs (net of recoveries)	$	11,918		$	14,782		$	4,496		$	21,052		$	18,042
Charge-offs (net of recoveries) as a % of average loan and finance receivable balance^(b)		6.5	%		9.3	%		4.4	%		3.9	%		2.6	%

(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 ending balance, including principal and accrued fees/interest outstanding, of small business loans and finance receivables at March 31, 2021 increased 276.0% to $701.1 million compared to $186.5 million at March 31, 2020, due primarily to the acquisition of OnDeck in the fourth quarter of 2020. Excluding OnDeck, the ending balance, including principal and accrued fees/interest

outstanding, of small business loans and finance receivables at March 31, 2021 decreased due primarily to lower originations driven by our strategic efforts to mitigate risks associated with the COVID-19 pandemic since March 2020.

The percentage of loans greater than 30 days delinquent increased to 10.2% at March 31, 2021, compared to 2.5% at March 31, 2020. The increase was driven primarily by the impact of the COVID-19 pandemic on our small business customers, as we have actively worked with them to understand their financial situations, offering a variety of repayment options to increase flexibility and reducing or deferring payments for impacted customers. The increase was partially offset by having a more seasoned portfolio remaining as originations were lower since the COVID-19 pandemic and a significant number of higher risk customers in more heavily impacted industries have already been charged off.

Charge-offs (net of recoveries) as a percentage of average loan balance decreased to 2.6% for the current quarter, compared to 6.5% in the prior year quarter, due primarily having a more seasoned and lower risk portfolio remaining as originations have remained low since the onset of the COVID-19 pandemic in the first quarter of 2020 and the majority of higher risk loans to new customers originated in prior quarters have been charged off.

The ratio of fair value as a percentage of principal on small business loans and finance receivables was 93.2% at March 31, 2021, compared to 95.7% at March 31, 2020. The decrease was due primarily to the loans acquired in the OnDeck acquisition in October 2020, as these loans have a lower ratio of fair value as a percentage of principal compared to the legacy Enova portfolio. The decrease was partially offset by the seasoning of the portfolio with reduced level of originations, particularly to new customers. The ratio of fair value as a percentage of principal has improved for the legacy Enova portfolio since the second quarter of 2020 and the OnDeck portfolio since acquisition.

Total Expenses

Total expenses increased $17.5 million, or 17.9%, to $114.9 million in the current quarter, compared to $97.4 million in the prior year quarter. On a constant currency basis, total expenses increased $17.4 million, or 17.9%, in the current quarter as compared to the prior year quarter.

Marketing expense decreased to $28.6 million in the current quarter compared to $34.5 million in the prior year quarter due primarily to our strategic actions to mitigate risks associated with the COVID-19 pandemic.

Operations and technology expense increased to $35.6 million in the current quarter compared to $31.3 million in the prior year quarter, due primarily to the acquisition of OnDeck in October 2020, partially offset by lower variable underwriting costs and various cost containment initiatives implemented to mitigate the impact of COVID-19.

General and administrative expense increased $16.2 million, or 57.7%, to $44.1 million in the current quarter compared to $27.9 million in the prior year quarter, due primarily to the acquisition of OnDeck in October 2020, partially offset by various cost containment initiatives implemented to mitigate the impact of COVID-19 and synergies achieved on the OnDeck acquisition.

Depreciation and amortization expense increased $2.9 million or 80.6% compared to the prior year quarter driven primarily by fixed assets and intangible assets acquired with OnDeck and, to a lesser extent, additional internally-developed software placed into service.

Interest Expense, Net

Interest expense, net decreased $0.5 million, or 2.3%, to $19.9 million in the current quarter compared to $20.4 million in the prior year quarter. The decrease was due primarily to a decrease in the average amount of debt outstanding, which decreased $61.9 million to $946.4 million during the current quarter from $1,008.3 million during the prior year quarter, partially offset by an increase in the weighted average interest rate on our outstanding debt to 8.61% during the current quarter from 8.15% during the prior year quarter.

Provision for Income Taxes

The effective tax rate from continuing operations of 26.7% in the current quarter was lower than the 34.3% rate recorded in the prior year quarter due primarily to the significant increase in book operating income as compared to the prior year quarter and a lesser rate impact attributable to nondeductible executive and stock compensation and other nondeductible expenses.

As of March 31, 2021, the balance of unrecognized tax benefits was $38.6 million which is included in “Accounts payable and accrued expenses” on the consolidated balance sheet, $10.9 million of which, if recognized, would favorably affect the effective tax rate in the period of recognition. We had $53.5 million and $39.0 million of unrecognized tax benefits as of March 31, 2020 and December 31, 2020, respectively. We believe that we have adequately accounted for any material tax uncertainties in our existing reserves for all open tax years.

Our U.S. tax returns are subject to examination by federal and state taxing authorities. The statute of limitations related to our consolidated Federal income tax returns is closed for all tax years up to and including 2016. However, the 2014 tax year is still open to the extent of the net operating loss that was carried back from the 2019 tax return. The years open to examination by state, local and foreign government authorities vary by jurisdiction, but the statute of limitation is generally three years from the date the tax return is filed. For jurisdictions that have generated net operating losses, carryovers may be subject to the statute of limitations applicable for the year those carryovers are utilized. In these cases, the period for which the losses may be adjusted will extend to conform with the statute of limitations for the year in which the losses are utilized. In most circumstances, this is expected to increase the length of time that the applicable taxing authority may examine the carryovers by one year or longer, in limited cases.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted and signed into U.S. law to provide economic relief to individuals and businesses facing economic hardship as a result of the COVID-19 pandemic. We deferred the timing of federal tax estimates and payroll taxes as permitted by the CARES Act and have availed ourselves of net operating loss carryback provisions.

Net Income

Net income increased $70.4 million, or 1,290.5%, to $75.9 million during the current quarter compared to $5.5 million during the prior year quarter. The increase was due primarily to favorable credit performance in the loan portfolio in the current quarter and the negative impact of the COVID-19 pandemic on loan values in the prior year quarter.

LIQUIDITY AND CAPITAL RESOURCES

Capital Funding Strategy

Given the unprecedented economic circumstances resulting from the COVID-19 pandemic and high degree of uncertainty, we have taken several actions to create a stable and flexible balance sheet that ensures liquidity and funding available to meet our business obligations. We elected to access our committed funding lines prior to March 31, 2020 to preserve optionality in the face of uncertainty, and prior to June 30, 2020 we repaid the outstanding balance of our revolving credit agreement. Despite our higher than normal cash balances, we drew funds in January 2021 to meet the minimum utilization requirements of the revolving credit agreement. As of March 31, 2021, we had cash, cash equivalents, and restricted cash of $374.2 million, of which $49.9 million was restricted, compared to $369.2 million, of which $71.9 million was restricted, as of December 31, 2020. As of March 31, 2021, we had committed and undrawn funding capacity of $412 million for our domestic operations and an additional $36.5 million (AU$48.1 million) available to support our operations in Australia. 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 2022.

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, and to meet the continued growth in the demand for our loan products. On May 30, 2014, we issued and sold $500.0 million in aggregate principal amount of 9.75% senior notes due 2021 (the “2021 Senior Notes”). On September 1, 2017, we issued and sold $250.0 million in aggregate principal amount of 8.50% Senior Notes due 2024 (the “2024 Senior Notes”) and used the net proceeds, in part, to retire $155.0 million in 2021 Senior Notes. On January 21, 2018, we redeemed an additional $50.0 million in principal amount of the outstanding 2021 Senior Notes. On September 19, 2018, we issued and sold $375.0 million in aggregate principal amount of 8.50% Senior Notes due 2025 (the “2025 Senior Notes”) and used the net proceeds, in part, to retire the remaining $295.0 million in principal amount of the outstanding 2021 Senior Notes.

On June 30, 2017, we entered into a secured revolving credit agreement (as amended, the “Credit Agreement”). On April 13, 2018, October 5, 2018 and July 1, 2019, we and certain of our operating subsidiaries entered into amendments to our Credit Agreement. As of April 29, 2021, our available borrowings under the Credit Agreement were $22.5 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 installment loan business. As a result of our acquisition of OnDeck in 2020, we added several additional securitization facilities and asset-backed notes supported by OnDeck’s small business loans, as summarized below under “Current Debt Facilities.” As of April 29, 2021, we had committed and undrawn funding capacity of $417 million for our domestic operations and an additional $35.3 million (AU$45.5 million) available to support our operations in Australia. 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 March 31, 2021, 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 increased by $86.8 million to $1,005.6 million at March 31, 2021 from $918.8 million at December 31, 2020. The increase of stockholders’ equity was driven primarily by net income for the three months ended March 31, 2021. Our book value per share outstanding increased to $27.48 at March 31, 2021 from $25.69 at December 31, 2020, which was primarily driven by our net income in the period.

On November 5, 2020, we announced the Board of Directors had authorized a share repurchase program for up to $50.0 million of our outstanding common stock through December 31, 2021 (the “2020 Authorization”). The 2020 Authorization was an expansion of the 2019 Authorization. Repurchases under our repurchase programs will be made in accordance with applicable securities laws from time to time in the open market, through privately negotiated transactions or otherwise. The share repurchase program does not obligate us to purchase any shares of our common stock. The authorization for the share repurchase programs may be terminated, increased or decreased by the Board of Directors in its discretion at any time. During the three months ended March 31, 2021, we had no repurchases of common stock under the share repurchase programs.

Cash

At March 31, 2021, we had $324.3 million of available unrestricted cash to fund our future operations compared to approximately $297.3 million at December 31, 2020.

Our cash and cash equivalents at March 31, 2021 were held primarily for working capital purposes and were used to fund a portion of our lending activities. We may, from time to time, 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.

Our restricted cash represents 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.

Current Debt Facilities

The following table summarizes our debt facilities as of March 31, 2021.

	Maturity date		Weighted average interest rate^(h)	Borrowing capacity			Principal outstanding
Funding Debt:
2018-1 Securitization Facility	July 2023	^(a)	5.00%		150,000			32,774
2018-2 Securitization Facility	October 2022	^(b)	3.87%		26,850			26,850
2019-1 Securitization Facility	February 2022	^(c)	—		—			—
2018-A Notes	May 2026		7.37%		13,138			13,138
2019-A Notes	June 2026		6.61%		55,252			55,252
OnDeck Account Receivables Trust 2013-1	May 2021	^(d)	—		—			—
Receivable Assets of OnDeck	December 2023	^(e)	2.62%		100,000			—
OnDeck Asset Funding II	August 2022	^(f)	3.12%		175,000			2,605
Other funding debt⁽ⁱ⁾	Various	^(g)	4.54%		61,218			24,682
Total funding debt			5.50%	$	581,458		$	155,301
Corporate Debt:
8.50% Senior Notes Due 2024	September 2024		8.50%		250,000			250,000
8.50% Senior Notes Due 2025	September 2025		8.50%		375,000			375,000
Revolving line of credit	June 2022		4.25%		125,000	^(j)		102,000
Other corporate debt	April 2022		1.00%		795			795
Total corporate debt			7.90%	$	750,795		$	727,795

(a)	The period during which new borrowings may be made under this facility expires in July 2021.

(b)	The period during which new borrowings may be made under this facility expired in October 2020.

(c)	The period during which new borrowings may be made under this facility expired in February 2021. This facility was repaid and terminated on February 25, 2021.

(d)	The period during which new borrowings may be made under this facility expired in October 2020. This facility was repaid and terminated on February 19, 2021.

(e)	The period during which new borrowings may be made under this facility expires in December 2022.

(f)	The period during which new borrowings may be made under this facility expires in August 2021.

(g)	The periods during which new borrowings may be made under the various agreements expire between June 2021 and March 2024. Maturity dates range from December 2021 through March 2024.

(h)	The weighted average interest rate is determined based on the rates and principal balances on March 31, 2021. It does not include the impact of the amortization of deferred loan origination costs or debt discounts associated with OnDeck purchase accounting.

(i)	These debt facilities support our operations in Australia and are denominated in Australian dollars. The total local currency borrowing capacity is AU$80.6 million, of which there is AU$32.5 million in principal outstanding at March 31, 2021.

(j)	We had an outstanding letter of credit under the Revolving line of credit of $0.5 million as of March 31, 2021.

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):

	Three Months Ended March 31,
	2021			2020
Cash flows provided by operating activities
Cash flows from operating activities - continuing operations	$	117,028		$	252,802
Cash flows from operating activities - discontinued operations		—			(288	)
Total cash flows provided by operating activities		117,028			252,514
Cash flows used in investing activities
Loans and finance receivables		(9,015	)		(178,185	)
Acquisitions, net of cash acquired		(28,358	)		(3,597	)
Purchases of property and equipment		(7,106	)		(5,156	)
Other investing activities		25			57
Cash flows from investing activities - continuing operations		(44,454	)		(186,881	)
Cash flows from investing activities - discontinued operations		—			—
Total cash flows used in investing activities		(44,454	)		(186,881	)
Cash flows (used in) provided by financing activities	$	(67,656	)	$	57,335

Cash Flows from Operating Activities

Net cash provided by operating activities from continuing operations decreased $135.8 million, or 53.7%, to $117.0 million in the current quarter from $252.8 million for the prior year quarter. The decrease was driven primarily by the mix shift from consumer to small business loans and finance receivables, which generally yield less revenue.

We believe cash flows from operations and available cash balances and borrowings under our consumer loan securitization facilities and Credit Agreement, which may include increased borrowings under our Credit Agreement, any refinancing or replacement thereof, and additional securitization of consumer 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 used in investing activities from continuing operations decreased $142.4 million, or 76.2%, for the current quarter compared to the prior year quarter. This decrease was due primarily to the strategic reduction in originations and acquisitions of loans and finance receivables to mitigate risks associated with the COVID-19 pandemic.

Cash Flows from Financing Activities

Cash flows used in financing activities for the current quarter were driven primarily by $176.0 million in net payments made under our securitization facilities and $2.6 million in treasury shares purchased, partially offset by borrowings under our revolving line of credit of $102.0 million and proceeds from the exercise of stock options of $8.9 million. Cash flows provided by financing activities for the prior year quarter were driven primarily by $66.0 million in net borrowings under our securitization facilities and $33.3 million in net borrowings under the Credit Agreement, partially offset by $41.7 million in treasury shares purchased.

On October 24, 2019, we announced the Board of Directors had authorized a share repurchase program totaling $75.0 million that expired December 31, 2020. On November 5, 2020, we announced the Board of Directors had authorized the 2020 Authorization discussed above. The 2020 Authorization was an expansion of the 2019 Authorization. During the prior year quarter, we repurchased $40.8 million of common stock under the share repurchase programs; we had no repurchases of common stock under the share repurchase programs during the current year quarter.

CRITICAL ACCOUNTING ESTIMATES

There have been no material changes to the information on critical accounting estimates described in our Annual Report on Form 10‑K for the year ended December 31, 2020.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

See Note 1 in the Notes to Consolidated Financial Statements included in this report for a discussion of recent accounting pronouncements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is a broad term related to economic losses due to adverse changes in the fair value of a financial instrument. While market risk may embody several elements, including liquidity and basis risk, the SEC’s market risk rules focus on pricing risk, which relates to changes in the level of prices due to changes in interest rates, foreign currency exchange rates, commodity prices, equity prices, and other market changes that affect market risk-sensitive instruments.

We carry our loans and finance receivables at fair value with changes in fair value recognized directly in earnings. As of March 31, 2021, we were exposed to interest rate risk on our loans and finance receivables, which have fixed interest rates. The fair values of loans are estimated using a discounted cash flow methodology, where the discount rate represents an estimate of the required rate of return by market participants. The pricing on many fixed income securities is highly dependent upon interest rates and credit spreads that change on a daily basis. The discount rates utilized in the valuation of our products are not as reactive to minor shifts in underlying interest rates as i.) the interest component is relatively minor in size compared with the non-interest rate component of the discount rate and ii.) a market participant’s basis for adjusting the required rate of return is less likely to be impacted by minor shifts in the underlying interest rates.

ITEM 4.

CONTROLS AND PROCEDURES

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and

15d-15(e) under the Securities Exchange Act of 1934, or the “Exchange Act”) as of March 31, 2021 (the “Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective and provide reasonable assurance (i) to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms; and (ii) to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

There was no change in our internal control over financial reporting during the quarter ended March 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or internal controls will prevent or detect all possible misstatements due to error or fraud. Our disclosure controls and procedures and internal controls are, however, designed to provide reasonable assurance of achieving their objectives, and our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective at that reasonable assurance level.

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

See the “Litigation” section of Note 8 of the notes to our consolidated financial statements (unaudited) of Part I, “Item 1 Financial Statements.”

ITEM 1A.

RISK FACTORS

There have been no material changes from the Risk Factors described in Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides the information with respect to purchases made by us of shares of our common stock.

Period	Total Number of Shares Purchased^(a)			Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan^(b)		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan^(b) (in thousands)
January 1 – January 31, 2021		3,051	^(a)	$	22.14		—	$	50,000
February 1 – February 28, 2021		87,186	^(a)		28.88		—		50,000
March 1 – March 31, 2021		—			—		—		50,000
Total		90,237		$	28.65		—	$	50,000

(a)	Includes shares withheld from employees as tax payments for shares issued under the Company’s stock-based compensation plans of 3,051 and 87,186 for the months of January and February, respectively.

(b)	On November 5, 2020, the Board of Directors authorized a share repurchase program for the repurchase of up to $50.0 million of the Company’s common stock through December 31, 2021.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

Exhibit No.		Exhibit Description

10.1		Consent and Amendment No. 5 to Credit Agreement, dated as of March 31, 2021, by and among OnDeck Asset Funding II LLC, the Lenders party hereto and Ares Agent Services, L.P. as Administrative Agent for the Lenders

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 3, 2021	ENOVA INTERNATIONAL, INC.

	By:	/s/ Steven E. Cunningham
		Steven E. Cunningham
		Chief Financial Officer
		(On behalf of the Registrant and as Principal Financial Officer)