Enova International, Inc.ENVANYSE
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Operator: Good day, and welcome to the Enova International Fourth Quarter and Full Year 2025 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Lindsay Savarese, Investor Relations for Enova. Please go ahead.
Lindsay Savarese: Thank you, operator, and good afternoon, everyone. Enova released results for the fourth quarter and full year 2025 ended December 31, 2025, this afternoon after market close. If you did not receive a copy of our earnings press release, you may obtain it from the Investor Relations section of our website at ir.enova.com. With me on today's call are David Fisher, Executive Chairman of the Board of Directors; Steve Cunningham, Chief Executive Officer; and Scott Cornelis, Chief Financial Officer. This call is being webcast and will be archived on the Investor Relations section of our website. Before I turn the call over to David, I'd like to note that today's discussion will contain forward-looking statements, and as such, is subject to risks and uncertainties. Actual results may differ materially as a result from various important risk factors, including those discussed in our earnings press release and in our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Please note that any forward-looking statements that are made on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. In addition to U.S. GAAP reporting, Enova reports certain financial measures that do not conform to generally accepted accounting principles. We believe these non-GAAP measures enhance the understanding of our performance. Reconciliations between these GAAP and non-GAAP measures are included in the tables found in today's press release. As noted in our earnings release, we have posted supplemental financial information on the IR portion of our website. And with that, I'd like to turn the call over to David.
David Fisher: Thanks, and good afternoon, everyone. I appreciate you joining our call today. Also with me today are Steve Cunningham and Scott Cornelis. As I'm sure most of you know, effective January 1, Steve became CEO of Enova and Scott became CFO as I transitioned to the Executive Chairman role, have committed to remain as an executive chair for at least 2 years. With the full support of the Board, this move was thoroughly, thoughtfully and deliberately planned over more than a year and having worked closely with both Steve and Scott for many years, I'm confident that they are the right leaders to see Enova through its next phase of growth. And the timing has worked out even better than we had hoped. As Steve and Scott will discuss in more detail, Q4 was another very strong quarter, wrapping up a record year for Enova. And as announced in December, with our pending acquisition of Grasshopper Bank. We believe we have found the perfect partner at the perfect time to take Enova to the next level by simplifying our regulatory structure, opening up additional markets for our consumer products adding additional low-cost funding sources, providing a platform for new product opportunities. When I first joined Enova, I never anticipated staying for more than a few years. But this role unexpectedly grew into the longest, most challenging and most rewarding of my career. I unequivocally attribute that to the extraordinary people and the culture at Enova and due in large part to that team, the future of Enova is bright. Steve and I share a common vision that our focused growth strategy will steer our path forward. We will continue to adapt and innovate and remain committed to producing sustainable and profitable growth, while meeting the needs of our customers and driving shareholder value. With that, I would like to turn the call over to Steve.
Steven Cunningham: Thank you, David, and good afternoon, everyone. I appreciate you joining our call today. Our fourth quarter results capped off another exceptional year for Enova. Strong originations growth and solid credit across our portfolio once again drove strong financial performance. For the full year 2025, originations grew 27%, leading to revenue growth of nearly 20% which when combined with stable credit and the significant operating leverage in our business model drove adjusted EPS growth of 42%. 2025 was our second consecutive year of adjusted EPS growth in excess of 30%, demonstrating the resiliency of our balanced growth strategy, and the ability of our experienced team to deliver consistent and differentiated performance by leveraging our diversified product offerings, flexible online-only model and world-class risk management and technology. Turning to the quarter. We're pleased to deliver fourth quarter results that were in line or better than our expectations. Fourth quarter originations increased 32% year-over-year to $2.3 billion. As a result of the strong originations growth, our portfolio increased 23% year-over-year to a record $4.9 billion. Small Business products represented 68% of our portfolio at the end of the year, while consumer accounted for 32%. Strong demand and solid credit performance enabled us to be more aggressive with our marketing during the quarter as we leveraged our sophisticated technology and analytics to capture this demand at attractive unit economics. Marketing expense was 23% of our total revenue during the fourth quarter, driving record quarterly originations. We expect marketing spend to revert back to more typical levels although we'll continue to opportunistically lean into marketing to meet demand with attractive unit economics. The strong quarterly portfolio growth revenue increased to the top of our expected range, growing 15% year-over-year to $839 million in the fourth quarter and profitability metrics grew even faster as adjusted EPS increased 33%, driven by strong credit and our significant operating leverage. SMB revenue accelerated to 34% year-over-year to $383 million and our consumer revenue increased 3% year-over-year to $446 million, both quarterly records. In addition to our strong growth this quarter, our fourth quarter credit results also demonstrate that both our small business and consumer customers remain on solid footing. The consolidated net charge-off ratio for the fourth quarter of 8.3% was down both sequentially and compared to the fourth quarter of 2024. External data highlighted that the U.S. economy ended 2025 on a good note. The Federal Reserve's recent wage book pointed to economic gains across most of the country. In addition, the unemployment rate ticked down to 4.4% in December, with recent unemployment claims status underscoring that the labor market remains relatively stable and resilient. Further, real wage growth continues to be positive, with average hourly earnings rising 3.8% year-over-year in December after rising 3.6% during November. In early reads indicate December consumer spending grew moderately and continues to support economic activity. Looking at our consumer business. This constructive economic backdrop supported the reacceleration of growth and improvement in credit metrics that we discussed last quarter. With the strong early default performance we were seeing at that time, we leaned into boosting consumer originations, which accelerated as we moved through the fourth quarter. And as we expected, credit metrics for the consumer portfolio improved both sequentially and compared to the year ago quarter. Turning to small business. Our SMB business continues its stream of outstanding performance. Our leading brand presence, scale and competitive landscape again resulted in significant growth in remarkably stable credit performance. Fourth quarter originations for SMB increased 20% sequentially and 48% year-over-year to $1.6 billion, marking the eighth consecutive quarter of year-over-year originations growth of 20% or more. Credit metrics for the small business portfolio continue to be very stable as they have been for the past 2 years. Our internal and external beta highlight that SMBs continue to express confidence in the economy and expect favorable operating conditions during 2026. In conjunction with Ocrolus, we released the nonfederation of our small business cash flow trend report, which offers key insights into the state of small businesses and highlights ongoing trends observed over the past year. Consistent with previous findings, the survey found that small business is still optimistic about future growth. Overall, growth expectations massed an all-time high with 94% of small businesses projecting growth over the next 12 months. Nearly 75% of small business owners reported bypassing traditional banks in favor of alternative lenders like Enova. Of those that went to a traditional bank first, 46% of those reported being denied alone. External data also supports these findings as the NFIB Small Business Optimism Index rose to 99.5% in December and remained above its 52-year average of 98%. NFIB's Chief Economist pointed out that while Main Street business owners remain concerned about taxes, they anticipate favorable economic conditions in 2026 due to waning cost pressures, easing labor challenges in an increase in capital investments. While these surveys and external economic data provide useful context, our proprietary data offers more real time and granular views into trends in the operating environment and the conditions of our customers. This data allows us to react quickly and nimbly as the operating environment is changing. Our deep experience serving non-prime consumers and small businesses, meaningful diversification, powerful technology and analytics and our disciplined unit economics approach have been key to our ability to navigate varying operating environments, while generating consistently strong financial results. And as we've demonstrated for many years, we believe our business is resilient across a wide range of macroeconomic environments. Before I wrap up, I'd like to spend a few moments discussing our strategy and outlook for 2026. We've demonstrated a long track record of consistency between stated priorities and execution and we remain committed to this approach. Our balanced growth strategy works, and we expect to generate sustainable and profitable growth, while delivering on our commitment to driving long-term shareholder value and on our mission of helping hardworking people get access to fast, trustworthy credit. Another key focus for 2026 will be closing the acquisition of Grasshopper branch that we announced last month. We're excited about this powerful combination by uniting Enova's sophisticated online lending platform with Grasshoppers national charter and deposit gathering capabilities, we'll be able to expand access to more consumers and small businesses, who've been traditionally underserved by banks. In addition, this combination simplifies our product and operational model under a national bank charter, providing significant opportunities to accelerate the growth of our existing products with an enhanced ability to serve our customers in more states and an ability to expand into new complementary products. Since our announcement of the energy and excitement from the teams for both companies have been tremendous. As together, we recognize the opportunities in our complementary capabilities, cultural alignment and significant synergies. As a reminder, we expect net synergies related to the transaction to increase adjusted net income by $125 million to $220 million annually within the first 2 years post closing. Driving adjusted EPS accretion of more than 25% once the synergies are fully realized. We filed our regulatory applications earlier this month, seeking approval from the Federal Reserve and the OCC and we continue to make great progress on integration planning in anticipation of closing during the second half of 2026. Overall, we're pleased to end the year with another strong quarter of solid revenue and profit growth. We have considerable momentum heading into 2026. And while it's still very early in the year, we're off to a great start with solid originations growth across our businesses. As Scott will discuss in more detail, and based on what we're seeing today, we expect 2026 to be another year of significant origination revenue and adjusted EPS growth. Before turning the call over to Scott, I'd like to sincerely thank the entire Enova team for all their hard work and dedication. You all are the force behind our success. We're thrilled to celebrate our 13-year streak on Computerworld's 2026 Best Places to Work in IT list, reflecting the creativity, collaboration and passion that fuel our technology teams. We're looking forward to another great year ahead. Thank you. And with that, I'd like to turn the call over to Scott Cornelis, our CFO, and who will discuss our financial results and outlook in more detail. And following Scott's remarks, we'll be happy to answer any questions you may have. Scott?
Scott Cornelis: Thank you, Steve, and good afternoon, everyone. We're pleased to close 2025 with solid fourth quarter financial results that once again met or exceeded our expectations. Our strong financial performance in the fourth quarter and the full year 2025 continues to demonstrate how the powerful combination of our diversified product offerings, scalable operating model, world-class risk management capabilities and balance sheet flexibility allow us to consistently deliver strong top and bottom line results. Turning to our fourth quarter results. Total company revenue of $839 million increased 15% from the fourth quarter of 2024 at the top end of our expectations as total company combined loan and finance receivable balances on an amortized basis increased 23% from the end of the fourth quarter of 2024. Total company originations during the fourth quarter rose 32% from the fourth quarter of 2024 to $2.3 billion. Revenue from small business lending increased 34% from the fourth quarter of 2024 to $383 million as small business receivables on an amortized basis ended the quarter at $3.3 billion or 34% higher than the end of the fourth quarter of 2024. Small business originations rose 48% year-over-year to $1.6 billion. Revenue from our consumer businesses increased approximately 3% from the fourth quarter of 2024 to $446 million as consumer receivables on an amortized basis ended the fourth quarter at $1.6 billion or approximately 6% higher than the end of the fourth quarter of 2024. Consumer originations grew 2% from the fourth quarter of 2024, to $613 million. As Steve mentioned earlier, we successfully reaccelerated our consumer originations as we move through the quarter, particularly in December, thanks to strong demand and credit. For the first quarter of 2026, we expect total company revenue to be flat to slightly higher sequentially. This expectation will depend on the level, timing and mix of originations growth during the quarter. Now turning to credit, which is the most significant driver of net revenue and portfolio fair value. The consolidated net revenue margin of 60% for the fourth quarter was also at the higher end of our expected range and reflects continued strong credit performance across our portfolios. The consolidated net charge-off ratio in the fourth quarter declined 60 basis points from the fourth quarter a year ago to 8.3%. As we expected, the consumer net charge-off ratio improved to 16%, which was flat sequentially and compared to the year-over-year quarter. The small business net charge-off ratio was 4.6% which was within our expected range. And as Steve noted, has been remarkably stable over the past 2 years. Expectations for our future credit performance remains solid. As reflected by sequential and year-over-year stability or improvement in the 30-plus day delinquency rates and fair value premiums for the consolidated consumer and small business portfolios. The consolidated 30-plus day delinquency ratio at the end of the fourth quarter declined 70 basis points from the end of the fourth quarter a year ago to 6.7% and the consolidated fair value premium of 115% remains stable and consistent with levels we have reported over the past 2 years. Looking ahead, we expect the total company net revenue margin for the first quarter of 2026 to be between 55% to 60% as the impact of lower consolidated originations from our typical consumer seasonality is offset by the sequential improvement in the consolidated net charge-off rate we typically see in the first quarter. This expectation will depend upon portfolio payment performance and the level, timing and mix of originations growth during the first quarter. Now turning to expenses. Total operating expenses for the fourth quarter, including marketing, were 36% of revenue compared to 34% of revenue in the fourth quarter of 2024. As Steve noted, we leaned into our efficient marketing spend to meet demand with strong unit economics, resulting in record originations growth. Fourth quarter marketing increased to $192 million or 23% of revenue compared to $151 million or 21% of revenue in the fourth quarter of 2024. With the seasonality we typically experienced during the first quarter of the year, we expect marketing expenses as a percentage of revenue to range in the upper teens for the first quarter and will depend upon the growth and mix of originations. Operations and technology expenses for the fourth quarter increased to $68 million or 8% of revenue compared to $58 million or 8% of revenue in the fourth quarter of 2024, driven by growth in receivables and originations over the past year. Given the significant variable component of this expense category, sequential increases in O&T costs should be expected in an environment, where originations and receivables are growing and should be around 8% of total revenue. Our fixed costs continue to scale as we focus on operating efficiencies and thoughtful of expense management. General and administrative expenses for the fourth quarter were $47 million or 5.6% of revenue compared to $38 million or 5.2% of revenue in the fourth quarter of 2024. The current quarter included $6.7 million of onetime deal-related expenses associated with the pending Grasshopper acquisition. Excluding these items, G&A expenses were $41 million or 4.8% of revenue, reflecting continued operating leverage and disciplined expense management. While there may be slight variations from quarter-to-quarter, we expect G&A expenses in the near term will be between 5% and 5.5% of total revenue, excluding any onetime costs. Our balance sheet and liquidity position remain strong and give us financial flexibility to successfully navigate a range of operating environments, while delivering on our commitment to drive long-term shareholder value through continued investment in our business and disciplined capital allocation. During the fourth quarter, we acquired approximately 278,000 shares at a cost of $35 million. And we started 2026 with share repurchase capacity of approximately $106 million available under our senior note covenants. We were pleased to see the improvement in our valuation during 2025. Though we believe there remains additional upside given our track record of consistent growth and earnings, our expectations for 2026 and the significant future opportunities associated with the Grasshopper acquisition. With that in mind, we will continue stock repurchases opportunistically, while ensuring we are well prepared to close the Grasshopper Bank acquisition and transition to a bank holding company later this year. We ended the fourth quarter with approximately $1.1 billion of liquidity, including $422 million of cash and marketable securities and $649 million of available capacity on our debt facilities, providing us with flexibility to support our strategic objectives. Our cost of funds for the fourth quarter was 8.3% down from 8.6% in the third quarter, reflecting lower SOFR rates and strong execution on recent financing transactions. Even with no additional rate cuts by the Fed, we expect some reduction in our cost of funds during 2026. But the level will depend upon credit spreads on new financing transactions, our funding mix and the level of timing and mix of originations growth. Our effective tax rate for the fourth quarter was 20%. The sequential decline was driven by favorable state changes, a decrease in our uncertain tax position reserve and related interest and tax benefits resulting from share price increases on stock options exercised during the fourth quarter. While there may be variations from quarter-to-quarter, we expect our normalized annual effective tax rate to remain in the mid-20% range. Finally, we continue to deliver solid profitability this quarter. Compared to the fourth quarter of 2024, adjusted EPS, a non-GAAP measure, increased 33% to $3.46 per diluted share and adjusted EBITDA a non-GAAP measure increased 21% to $211 million. To wrap up, let me summarize our first quarter and full year 2026 expectations. For the first quarter, we expect revenue to follow our typical seasonality and to be flat to slightly higher sequentially. We expect net revenue margin of 55% to 60% on a consolidated basis as seasonally lower originations are offset by an improvement in the net charge-off rate. In addition, we expect marketing expenses as a percentage of revenue to be in the upper teens. O&T costs of around 8% of revenue and G&A costs of between 5% and 5.5% of revenue. Interest expense as a percentage of revenue is expected to be around 10.5% with a more normalized tax rate, these expectations should lead to adjusted EPS for the first quarter of 2026, that is 20% to 25% higher than the first quarter of 2025. Our first quarter expectations will depend upon customer payment rates and the level, timing and mix of originations growth. Now turning to our expectations for the full year of 2026. Assuming a stable macroeconomic environment with no material changes in the employment situation and a largely unchanged interest rate environment, we would expect growth in originations for the full year 2026 compared to the full year of 2025 to increase by around 15%. The resulting growth in receivables with stable credit continued operating leverage and a reduced cost of funds should result in full year 2026 revenue growth similar to originations growth and adjusted EPS growth of at least 20%. Our expectations for 2026 will depend on the macroeconomic environment and the resulting impact on demand, customer payment rates and the level timing and mix of originations growth. As a reminder, our 2026 financial expectations do not assume any contribution from the pending acquisition of Grasshopper Bank, which we expect to close in the second half of 2026. Our results in 2025 reinforce the flexibility and scalability of our business model. As we move into 2026, we are well positioned to drive meaningful financial results supported by a diversified product set, a continued focus on unit economics, favorable competitive positioning and balance sheet flexibility. And with that, we'd be happy to take your questions. Operator?
Operator: [Operator Instructions] The first question comes from Moshe Orenbuch with TD Cohen.
Moshe Orenbuch: Great. And congrats, David, Steve and Scott on all of the management changes and promotions. I'm hoping, Steve, if you could talk a little bit about the consumer business. You talked about the growth having slowed and then accelerated. How much faster kind of is the exit rate? How should we think about it? And are there impacts that we should be aware of given this upcoming tax season and new withholding types of patterns?
Steven Cunningham: Moshe, thanks for the question. So as I mentioned in my comments and as we expected after seeing really remarkably good credit last quarter, we did accelerate the growth in the consumer business. And that growth rate accelerated as we went through the quarter. Similar to last year, we saw December exceptionally strong. So sometimes the seasonal pattern of consumer growth in the fourth quarter can vary depending on the timing of the holidays, but really for the second year in a row, we saw a significant amount of the growth coming in, in December. So we were really pleased with that. And as you can see, our nimble and efficient marketing allowed us to continue to kind of lean into that. I think we learned from last year, where we saw sort of a similar pattern and new -- if that demand sort of showed up the same way, we could take more of that down. So we're really pleased with that. When you look forward to the first quarter, similarly, we're seeing some of that strength continue into early January, similar to what we saw last year. And so we'll continue to meet that demand, where it is. It tends to fall off fairly quickly once it does fall off as you move through later January and into the -- further into the first quarter. With the tax refund season, I mean I would -- based on what we know today, it sounds like there's potential for some larger refunds this year, which would be great for credit for us. And so a lot of the originations that we put on should perform very, very well. And what we've tended to see over time is that can just shift around the demand curve a little bit in terms of when the demand timing restarts. But typically, it's just a matter of weeks. So -- we have a lot of experience with different tax refund seasons over our history, and our guidance reflects sort of our expectations, and we're feeling really good about how the fourth quarter wrapped up for consumer and how the 2026 consumer business is starting.
Moshe Orenbuch: Great. And good to hear that you're moving, I'm sorry -- is it good to hear that you're moving forward with all the steps for Grasshopper. Are there things that you're going to do differently in your core portfolio prior to closing or maybe talk a little bit about what the early kind of earliest impacts that you might see starting in the second half of the year after closing?
Steven Cunningham: I mean until we close the transactions -- the transaction, both companies are business as usual. So the outlook that Scott gave you is our expectation of continuing that track record of strong growth in our business and being opportunistic as we see demand and following our balanced growth approach. So you should expect more of that. And as we talked about on the Grasshopper call, I think once we're beyond the close of that transaction, step #1 is really with the product set that we have today, expanding our footprint to continue to serve more customers. And that's really the basis for the revenue synergies that we laid out and that I discussed on the call as well.
Operator: The next question comes from Bill Ryan with Seaport Research Partners.
William Ryan: Following Moshe, I'd like to say congratulations to everybody. A couple of questions. I mean you talked about mix of origination -- or the origination growth being about 15% in 2026. If you can maybe elaborate on kind of what you're expecting in terms of the mix between consumer and small business?
Steven Cunningham: Yes. Bill. So yes, we feel like we're in a pretty good position with what we know today to grow around 15% for the year. With the resumption of the consumer growth that we just talked about, we think we'll settle in at more typical levels than maybe what we saw for some quarters in 2025. We think we'll continue a pattern that you've seen with SMB. Obviously, some of the growth rates that we've seen have been really, really strong, but we've had a track record of growing that business now at 20%-plus now for quite a while. So you may see what we've seen over the past couple of years, which is a slow tilt in our portfolio towards SMB, just in terms of where the demand has been, but we'll continue to be opportunistic. And then in prior years, we've seen sometimes where there's more opportunity in the consumer business, and it's grown faster. And we've seen in recent times, the SMB portfolio is growing a bit faster. We'll continue to follow that approach that we follow with the balanced growth approach to make sure that we're meeting the demand in both that makes sense to follow our unit economics and so that's what we expect from where we sit today.
William Ryan: Okay. And just 1 follow-up. I know you guys can continue to make adjustments on your underwriting -- if you can maybe talk about that, any changes that you made on the consumer side in the fourth quarter? And specific to small businesses, was there any change in industry focus. Anything you dialed back on, anything you kind of opened back up a little bit?
Steven Cunningham: Yes. As you know, Bill, we are making credit adjustments all the time. We talked an awful lot about that in 2025. So we continue to follow that same approach continue to be very nimble. So as we see -- sometimes there's always adjustments that we're going to make in both of the portfolios. In consumer, in particular, after we saw sort of the exceptionally strong credit in the third quarter we did try to move back to more typical levels of credit. And you can see that the consumer net charge-off ratio settled in as sort of the middle of the expected range we would have had that we would have expected for the fourth quarter. So we're really pleased about how that landed. And so I feel like we are sort of back to that making adjustments as we need sometimes opportunistic, sometimes pulling it back where we see things we don't like. I think on the small business side, it's been remarkably stable. I think our industry focus, we've talked about over time. We continue to keep a close eye on things like construction and transportation as well as some of those industries that we had felt could be most impacted by tariff and the trade policies. But we've been pleased to see that those have fell in really well. And it's business as usual in our credit space there, similar to consumer. We're always always making adjustments to make sure that we're serving as many customers as we can, while generating the returns that our shareholders expect.
Operator: [Operator Instructions] The next question comes from David Scharf with Citizens Capital Markets.
David Scharf: Great. I'll echo the congrats to the new team or new physicians actually. Steve, I wanted to switch just to sort of the post Grasshopper operations, and you may have discussed this when you first announced the transaction. But can you remind us post close, how we ought to think about regulatory capital ratios, you're going to adhere to and whether or not existing levels of buybacks are likely to continue under the new structure?
Steven Cunningham: Yes. David, thanks for the question. So we did talk about regulatory capital a bit on that call. I think where we sit today, we're sitting at around 17%, 18% tangible capital ratio, which feels that's sort of analogous to the Tier 1 leverage ratio. We would expect to sort of be in that same ZIP code. So I would not expect us to be changing our leverage position dramatically 1 way or the other. And as we've done, with that said, then we get back to as we get post close, there should be opportunities with the strong ROEs that we expect to generate versus the strong asset growth to have some opportunity to return capital. But I think our focus early on will be investing in the opportunities that the new structure will present to us and the combination in making sure, as you know, our rank ordering on our capital allocation is organic opportunities that generate really strong returns in our unit economic model. Share buybacks and then inorganic is sort of down the list at [ 1/3 ]. We have the capital to do all of those things. But I think we will be most focused on all the opportunities that are in front of us with the new structure after we get past the close.
David Scharf: Got it. No, that's helpful. And maybe just a follow-up on the consumer products. It's been quite a while. I mean as we look at sort of the quarterly disclosures that you provide in sort of the company schedules. It's been quite a while since line of credit volumes have materially eclipsed installment. And can you just speak to maybe not just today where we sit, but as you think about the risk-adjusted returns of those 2 products going forward, is there anything on the installment side that would lead us to believe that, that's going to kind of regain maybe its position is half the consumer sort of product suite? Or is there just something about either the credit profile or anything else structurally that is going to continue to kind of lean into a line of credit? Because it seems like there's less competition in line of credit, certainly.
Steven Cunningham: Well, as you know, David, we're pretty agnostic across our products in terms of the growth. What we try to do is meet the demand that meets our unit economic hurdle rates. And so I think if you look back in our supplement, I think you can probably see that LOC sometimes is leading the way. We've had some opportunities in 2025 with our consumer installment products, particularly as it relates to refinance, which I spoke about last quarter. And so I don't think we're sitting back thinking we're going to grow 1 faster necessarily than the other. We let the demand kind of push us there, and we follow our unit economic approach and our ROEs to take down, we think the demand that's going to, again, meet as many customers as we can while generating really strong returns. So I think from time to time, you're going to see variations just like you have over time where you might see 1 quarter or 2, 1 product might be growing more strongly than the other and not just with consumer but across SMB and consumer as well.
Operator: The next question comes from John Hecht with Jefferies.
John Hecht: Again, congratulations on all the movement at the executive level. You definitely a testament to the long success of the company. I guess most of my questions have been asked. I guess when it comes to Grasshopper. Are there -- and forgive me if you mentioned this, are there certain geographies that you know you can go into that are not approachable by you or limited access at this point in time that would be somewhat meaningful?
Steven Cunningham: John, thanks. So when we talked about some of that expansion last month on the call, -- there definitely are some states with our NetCredit brand that we would like to take on that perhaps we could with our current licensing and partnerships today, but we just haven't chosen to do so that a national bank charter will make it easier for us to do that. So there definitely are specific states that we have in mind when you think about states like California, Pennsylvania, Ohio, which we're in, but not to the extent that we might otherwise if we were a bank, just to kind of give you some flavor. So we definitely have a hit list and a plan for where we want to go first.
John Hecht: Okay. And then I know this gives you some benefits from a regulatory perspective, just because you'll be able to centralize some of that that's within the bank. But then you'll have some stuff still outside the bank and the CFPB has really become less active -- so question is, can you just give me the quick description of how the regulatory framework and reporting mechanisms will look? And then are you observing any activity at the state level at this point in time that's worth pointing out?
Steven Cunningham: So starting with that last question, it's relatively quiet at the state level. There's not really any -- outside of some of the noise that you've heard in the political arena, we haven't really heard any real policy or regulatory changes at the state level that we're particularly concerned about. As it relates to post-close structure, we will -- we expect to have CashNet in Brazil sitting outside of the National Bank as part of our nonbank affiliates under the holding company. The Federal Reserve will have some oversight of that. And obviously, -- we've talked to them for many years about that plan. In terms of reporting, I mean, I think we'll continue there'll be some transparency, obviously, continue with our SEC filings, that we call reports at the National Bank and then the Federal Reserve suite of filings for holding companies as well. So that's the -- that's our plan that we're working against today, and we hope to get that done here later this year.
Operator: The next question comes from Vincent Caintic with BTIG.
Vincent Caintic: Actually, another regulatory question, and it's kind of a broader topic, but when I was getting a lot from investors earlier in January about kind of broader consumer finance, and it was specifically, when the government started contemplating rate caps, and that was specifically on credit cards. But I wanted to get your thoughts, if you had any on this push for affordability and maybe how rate caps might have a potential positive or negative benefits to Enova and the industry beyond just the credit cards?
Steven Cunningham: Yes. So I think the cap that's been discussed very specific to credit cards for 1 year. I think there's been a lot of commentary from the card banks on that and not just from them but from a lot of others, I think if that was to happen, that actually would probably be a positive for us, particularly for I think that there's a lot of studies that have shown rate caps tend to reduce availability for the very folks who need it the most, which tend to be those that are less served and so to the extent that some of those credit card customers are not able to access credit, we would be an alternative for them. So we would view that positively. And Vincent, you know over the years, I think 17, 18 years in a row that Congress or a member of Congress has introduced a federal rate cap. It tends to revolve around election time. It's a very popular topic around affordability, but hasn't really had any meat to it. And I think -- if anything, this ongoing conversation is probably highlighted how irrational rate caps can be as it tends to hurt again, the very people that you're trying to help. So while the probability is likely not exactly 0, it's very, very low. And obviously, from a policy point of view, we're not supportive of any actions that reduce the ability to provide credit to those who need it the most.
Vincent Caintic: Okay. Great. That's super helpful and clear. And then switching over to small business. So you gave helpful color earlier about the kind of the improvement to consumer loan growth. But consumer loan growth that accelerated quite a bit beyond your run rate. So it was up 34% year-over-year and you highlighted some of the surveys in your prepared remarks, but maybe you could talk about what you're seeing on the ground, how the environment is for small business and kind of what you think is sustainable for 2026 and the health of that's a small business customer.
Steven Cunningham: Yes, you bet. So I mean, clearly, the numbers kind of speak for themselves. SMB is a -- now has a long track record of successful growth. And the credit profile has been remarkably stable in sort of a very narrow range that we've expected. So I think that reflects the strength of our ability to underwrite those customers, but it also reflects the stability of the customer base that we're serving. So there's been a lot of noise over the year of 2025 around the impacts of tariffs and the macro economy and where we are. But I think what I wanted to highlight in my commentary is that it's not quite as gloomy it seems on the ground. It seems that small businesses are looking forward positively. And I think it's reflecting in the demand that we're seeing. And clearly, our brands and our scale are allowing us to win competitively and grow very quickly. Sustaining 30%, 40% growth rates is not something that I would just be planning on. that would be fantastic. But I think we're expecting to continue a strong growth rate with the guide that Scott gave and continue to have a successful credit profile for 2026.
Operator: Next question comes from Kyle Joseph with Stephens. .
Kyle Joseph: You've had some solid year and reiterate all the congratulations on promotions, et cetera. Yes, most of my questions have been taken, but just kind of wanted to get your perspective. We talked a bit about the expected changes in tax refunds on the consumer side of things. Anything we should be thinking about on the SMB side from changes to the -- as a result of the BBB and any sort of implications for seasonality on that business for '26?
Steven Cunningham: No, I don't anticipate any big changes in seasonality for 2026. And I think to the extent that customers, again, have a larger refund. It's good for our credit profile, but it also probably means they're going to spend it, which is going to be good for the economy, and that tends to be very good for our small business customers as well. So I think we're not expecting any disruption for our small business customers in 2026. If anything, it should be a positive.
Kyle Joseph: Great. And then on the expense side, I appreciate the guidance you gave for the first quarter. And then obviously, we know what your EPS expectations are for the year, but kind of just walk us through maybe a little bit more color in terms of how you're thinking about the scalability of the business in '26, obviously, because first quarter has some seasonal impacts on marketing and whatnot?
Steven Cunningham: Yes. Well, we think we're going to continue to generate that operating leverage and scale that you've seen. I mean, listen, the marketing, I think last quarter, we were remarking that we hadn't been quite at our 20% level of marketing spend. I think this quarter, we showed that when the market presents itself, we will lean into it to drive profitable growth. And I think you should continue to expect, as Scott laid out some of those numbers, you're going to continue to see a grind lower in some of those expense categories as we continue to grow overall. So you should continue to expect us to scale the OpEx and invest in marketing, where we see the demand, and we know we can generate the unit economics that we need.
Operator: This concludes our question and other session. I would like to turn the conference back over to Steve Cunningham for any closing remarks. Please go ahead.
Steven Cunningham: We thank you all for joining our call today, and we look forward to updating you next quarter. Have a good night.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.