Enova Originated $712M in Small Business Loans in Q2
July 27, 2023
Enova originated $712M in small business loans in Q2, according to the latest earnings report, up slightly YoY and down slightly QoQ.
Overall, the company says it has been taking a cautious approach even as it continues to grow. There is plenty of demand while the competitive environment remains fairly weak in their opinion.
“During the quarter, we closed our first ever facility secured exclusively by small business lines of credit,” Enova CEO Steve Cunningham said. “The two-year $287 million secured warehouse was priced at SOFR plus 420 basis points. Additionally, last week, we reentered the term securitization market with our first OnDeck deal since 2021. The rated three-year fixed rate $227 million term transaction priced with the blended coupon of 7.7%, demonstrating our confidence in the continued strength of our business relative to our current valuation.”
Enova Originated $770M in Small Business Loans in Q1
April 27, 2023Enova originated $770M in small business loans in Q1, according to the latest earnings report. The company posted an overall impressive net income of $51M to boot.
“We delivered another quarter of solid top- and bottom-line results, with our balanced approach to growth enabling us to successfully navigate the current macroeconomic backdrop,” said David Fisher, Enova’s CEO, in an official statement.
SMB credit products now makeup 65% of Enova’s portfolio, up from 56% last year.
“Given our strong brand presence, minimal competition and diverse portfolio, we continue to see a long runway ahead to drive meaningful volume,” Fisher said.
Although the company’s eye is still on growth they are being intentionally conservative given the macroeconomic conditions.
“…with the good credit metrics and entering a more seasonably attractive time of year, that gives us incentive to accelerate originations a bit, which I also mentioned on the call,” said Fisher. “And those could push up the metrics a bit because, it’s important to remember, there’s 2 ways of accelerating originations. You can open up your credit model and bring in more lower credit quality customers or you can spend more per customer and attract more higher credit quality customers. And we vary those tactics based on what we’re seeing in our data each and every day. And we’re twisting those dials each and every day to adjust marketing spend and adjust where our credit metrics are.”
Enova’s Current Small Business Lending Strategy
February 10, 2023“We are being very conservative with our small business lending right now. There’s a tremendous amount of demand,” said David Fisher, CEO of Enova, on the company’s most recently quarterly earnings call. “I think both demand from businesses who need money coming out of COVID still but also from a lack of competition and a reduction of competition. So there’s a tremendous amount of demand. We’re filling a very small portion of it as we are trying to remain very, very conservative with respect to our originations, so we can manage through any turmoil in the economy.”
Fisher said that for its small business lending right now, the focus is really on diversification, that being “diversification across states, across industries, across product types and across kind of the credit spectrum.”
“…as we’ve just seen over the last 6 to 12 months, there are some industries that are doing well for a couple of quarters and some that are doing worse and then that rotates,” he said. “And having that strong diversification has allowed us to manage through that variability over the last couple of years without too much difficulty.”
Despite the company’s conservative strategy right now, Enova still managed to originate $826M in small business loans in Q4 2022, an increase from the $807M in the previous quarter.
Given all of Enova’s consistent success, especially in the current environment, one analyst asked if there was a play for the company to increase its marketshare.
“So we’re not being super aggressive with taking share right now because we don’t want to be too aggressive with our lending,” Fisher replied. “But we continue to build out products and expand the types of opportunities we can offer to small businesses and we’ll continue to do that over time so that as we do get aggressive hopefully in the next — more aggressive over the next 6 to 12 months, we can take our industry-leading position, combine that with the new products that we can offer customers and we’ll be even in a more dominant position. So we’re gaining share kind of just by the fact that competitors are pulling back even more due to credit concerns or lack of capital and we’re fine with that. But we’re not trying to maximize our market share right now because we do want to make sure that we’re being smart about credit. But continuing to build in the background so that when we do get more aggressive, we’re really well positioned.”
Enova CEO: We’re seeing competitors pull back on originations
October 28, 2022
Enova’s small business loan originations hit $807M in Q3, according to the company’s latest quarterly earnings report. That’s up significantly from Q2’s total of $679M.
Despite the nation’s economic headwinds, the company said that credit quality across their portfolio remained solid and that SMB originations would continue to grow as a percentage of Enova’s overall business thanks to “strong demand and strong unit economics.”
“On the competitive side, we are seeing both consumer and SMB competitors pull back meaningfully on originations as they struggle to manage both credit and their loan portfolios and access to capital, problems that we are not experiencing,” said Enova CEO David Fisher. “Demand has also remained strong for our SMB products. Small business government stimulus has been exhausted, and we believe that we’re seeing additional tailwinds as banks have tightened credit, resulting in high credit quality borrowers who may have otherwise gone to a bank coming to us.”
Fisher attributed Enova’s unique ability to manage the economic circumstances to “deep experience, sophisticated and proven machine-learning-driven analytics, diversified product offerings, strong balance sheet and [a] world class team.”
Notably, Enova has also been emphasizing its shorter-term products and paying attention to segments of the SMB market likely to cause trouble.
“Construction has been a place where we really started backing away from three or four quarters ago, which was a great decision in hindsight,” Fisher said. “Trucking has been a complete mess. That whole industry is just messed up between fuel prices and supply chain issues, both affecting ability to repair your trucks and also keeping trucks full. I mean, that industry is just a complete mess. So we backed away from trucking very early this year as well.”
Enova Originated $679M in Small Business Loans in Q2
July 28, 2022Enova announced another strong quarter on Thursday. Net income for the second quarter was $52M.
Business lending originations were up, increasing 3% quarter over quarter to $679M. During the earnings call, Enova CEO David Fisher spoke glowingly about the company’s marketing capabilities and overall loan growth.
“We are pleased to report continued strong loan growth and solid credit metrics across our portfolio,” he said. “We have successfully demonstrated our ability to quickly adapt to changes, including shifting macro-economic conditions. We continue to see strength in consumers and small businesses as high employment and rising wages provides an ideal backdrop for solid credit performance. Looking forward, we are confident that our highly flexible, online-only business model and well-diversified portfolio positions us well to continue to drive profitable growth while also effectively managing risk.”
Enova Doubles Small Business Loan Originations YOY
May 4, 2022Enova’s small business lending arm, powered mostly by OnDeck, originated $659M in Q1 of 2022. That was more than double the volume over the same period in 2021 and up 14% sequentially from Q4 2021. Overall, Enova reported a Q1 net income of $52M.
“The first quarter net charge-off ratio for small business receivables was 1.9%, up from 80 basis points last quarter, but below the prior year ratio of 2.6% and below pre-pandemic periods as we continue to see strong payment performance across all of our small business products,” said Enova CFO Steven Cunningham during the quarterly earnings call.
Company CEO David Fisher said that Enova felt really good about its market position in the small business lending space and considered itself the largest player in the non-prime sector of it overall. “We are not feeling APR pressure in our small business products,” Fisher said when asked if competitive forces might drive the company’s loan prices down. He attributed the company’s rapid originations growth to both an increase in marketing spend and an increase in customer awareness that they can access capital quickly online.
“…small businesses have a pretty strong appetite for growth, but also for kind of more traditional non-bank small business lenders,” Fisher said. “I think kind of the online approach with kind of the speed and the ease and the transparency is really appealing to businesses.”
Enova and Nav Partner Up, Leveraging Data for Instant Funding
February 9, 2022
Intelligent financing platform Nav has announced an expanded partnership with small business lender Enova, bringing a mass amount of data to the X’s and O’s of small business financing approvals and funding processes of companies like OnDeck and Headway Capital, subsidiaries of Enova.
According to a joint press release, the move will create the first two-sided open marketplace in small business lending.
“Two-sided means we are bringing together both the demand and the supply,” said Greg Ott, CEO of Nav. [Nav] is the platform in the middle which allows small businesses to compare their options using the real data that the supplier, say lenders like Enova, use so that the small business owner can understand what they qualify for before they apply.”
As the head of a company that uses the value of data as a business model, Ott spoke about the harvesting of such data in ways that’s mutually benefits all parties.
“It’s all permissible, part of the desire for a lot of companies to get more data is you have to have a value proposition for small business owners to share their data,” said Ott. “Because Nav allows you to compare your options, we connect three commercial bureaus, we connect two personal bureaus, and then we connect the bank accounts so we can see the cash flow data. In certain cases, we may connect with merchant processing data, accounting data, and other data sets that the small business owners connect into our platform.”
While data will provide the merchant with options on different types of financing, the lenders also have a benefit in leveraging data provided by merchants to Nav from a marketing perspective. By having merchants input their own information, Enova and its subsidiaries like OnDeck and Headway Capital can offer those potential borrowers ‘instant funding’.
“I think [instant funding] is something that Enova has tried to do for a long time,” said Jim Granat, Head of Enova SMB. We’re trying to make things where the access to capital is as effortless as possible for the hard working Americans or business owners. We try really hard to take that approach in the way we design our product because in today’s world of ‘always online’ expectations for business owners, we want to provide the type of experience that allows them to have certainty, if it’s at all possible, as fast as they can.”
Granat stressed that effortless access to capital for merchants is the best way to differentiate one funder from another when trying to lend a small business money.
“An effortless experience allows [merchants] to know what they can do for their business as well [lenders] being able to capture the different business owners’ attention at the moment that they need it.”
Enova/OnDeck Originated $580M in Q4 Small Business Loans
February 7, 2022Enova reported Q4 small business loan originations of $580M in its latest quarterly earnings report.
“As is evident by these numbers, our acquisition of OnDeck continues to pay dividends,” said Enova CEO David Fischer. “SMB Q4 originations were 26% higher than Q3 and 99% higher than a year ago, as it was enabled to effectively leverage the strong OnDeck brand and expertise.”
The company’s cost of funds has shrank from 8.3% in the 4th quarter of 2020 to 6.5% in the 4th quarter of 2021. This was made possible in part by adding a new two-year $150M revolving warehouse with JP Morgan.
Enova’s overall small business lending operation is complemented by a consumer arm. As of year-end 2021, small business lending represented 52% of the company’s portfolio while 48% was attributable to the consumer side.
“Within consumer, line of credit products represented 31%, installment products accounted for 67%, and short-term loans represented just 2%,” Fischer said.
Enova finished Q4 with a net income of $49M and full-year 2021 with a net income of $256M.
