Enova expects Q4 2026 adjusted EPS up 30% to 35% year-over-year as revenue growth holds around 25%

• “We’re pleased to report another quarter of healthy growth in credit as originations, receivables, revenue and adjusted EPS all grew 25% or more year-over-year,” said CEO Steven Cunningham. “Originations growth was strong across both consumer and small business, resulting in consolidated originations of $2.6 billion.”

• “Originations growth increased our consolidated portfolio to $5.9 billion,” CEO Steven Cunningham said, adding that “small business products represent 68% of the portfolio and consumer products accounting for 32%.”

• CEO Steven Cunningham highlighted a strategy pivot after abandoning the bank path: “Our ability to continue to deliver meaningful growth and profitability has not been diminished at all by our decision last month to withdraw our regulatory applications to become a bank.” He added that prior planning surfaced “new product, operational and risk management insights” and pointed to potential expansions including “a deposit advance product, secured consumer lending, and SMB embedded finance offerings.”

• CFO Scott Cornelis said results were “another quarter of top and bottom line financial performance that exceeded our expectations,” reporting “total company revenue of $1.01 billion increased 26%” and “adjusted EPS… increased 33% to $4.48 per diluted share.”

Outlook

• “For the fourth quarter of 2026, we expect total company revenue to be around 25% higher year-over-year,” CFO Scott Cornelis said, noting this “will depend upon the level timing and mix of originations growth during the quarter.”

• CFO Scott Cornelis guided to profitability growth: “These expectations should lead to adjusted EPS for the fourth quarter of 2026, that is 30% to 35% higher than the fourth quarter of 2025.”

• On margins and expense bands, CFO Scott Cornelis said: “we expect the total company net revenue margin for the fourth quarter of 2026 to be in the 55% to 60% range,” with “marketing expenses… around 20% of revenue,” “O&T costs… around 8% to 8.5%,” and “G&A costs of 4.5% to 5% of revenue.”

• Compared with Q2 guidance for Q3, management maintained the same consolidated net revenue margin framework (55% to 60%) and repeated the “around 25% higher year-over-year” revenue growth language for the next quarter.

Financial Results

• CFO Scott Cornelis attributed the quarter’s scale to receivables growth: “Total company originations during the third quarter rose 31%… to $2.6 billion,” driven by “a 30% year-over-year growth in total company combined loan and finance receivable balances… on an amortized basis.”

• Segment details: CFO Scott Cornelis reported “revenue from small business lending increased 32%… to $459 million” with “small business receivables… $4 billion,” and “revenue from our consumer businesses increased 21%… to $537 million” with “consumer receivables… $1.9 billion.”

• Credit and margin: CFO Scott Cornelis said “the consolidated net revenue margin for the third quarter was 61%,” while “the consolidated net charge-off ratio… declining to 8.1% from 8.5% in the year ago quarter,” and “the SMB net charge-off rate of 4.8% was flat sequentially.”

• Marketing and operating leverage: CFO Scott Cornelis reported “marketing costs were 23% of revenue or $230 million,” and described scaling as “our nimble and sophisticated technology and analytics and the rapid credit feedback from our products allowed us to efficiently scale our marketing investments.”

• Capital and funding: CFO Scott Cornelis said Enova ended Q3 with “$1.3 billion of liquidity including $508 million of cash and marketable securities and $817 million of available capacity,” while “cost of funds… was 8%,” and the company completed “the largest term securitization in OnDeck’s history.”

Q&A

• John Hecht, Jefferies: asked about “timing” and “prioritize these new products.” CEO Steven Cunningham replied that the list was “a little bit of a sense of what we’re thinking about in terms of innovation,” and that Enova would provide updates “if they start to become more meaningful parts of our business or we hit certain milestones.”

• John Hecht, Jefferies: asked about “new versus recurring” mix and SMB industry composition. CEO Steven Cunningham said consumer growth included “an uptick… with more new customers,” while SMB was “a bit more stable,” and added, “we’re underwriting into hundreds of industries” and are “not really rotating materially different” though watching areas like “trucking or construction.”

• William Ryan, Seaport: asked about consumer mix shifting toward revolving. CEO Steven Cunningham said, “consumers definitely prefer the line of credit products,” and described Enova as “pretty indifferent in terms of where the growth comes from.”

• William Ryan, Seaport: pressed on SMB delinquencies and whether SMB margin could be a “new normal.” CEO Steven Cunningham answered, “the SMB net revenue margin is in the normal range,” and explained SMB delinquencies can be less predictive because businesses may “quickly catch up as those receivables are collected,” plus more “self-service and digital capabilities.”

• David Scharf, Citizens JMP: asked whether consumer or SMB is a better leading indicator of stress. CEO Steven Cunningham said Enova monitors “initial defaults on recently originated vintages,” and for SMB uses “electronic bank statement data for net cash flow” to detect stress, concluding, “right now, it’s a very constructive environment.”

• David Scharf, Citizens JMP: asked about buybacks and ROE absent covenants. CEO Steven Cunningham said repurchases help “manage opportunism to support valuation,” noting Enova had already “matched what we did in the third quarter” in October.

• Kyle Joseph, Stephens: asked about NIM and cost of funds. CFO Scott Cornelis said “no real change” in expectations for NIM and added on funding, “we expect a pretty stable cost of funds as we move forward,” with spreads tightening though “market interest rates are backing up a little bit.”

Sentiment Analysis

• Analysts’ tone was neutral-to-slightly positive, focusing on product timing, mix shifts, delinquency interpretation, and buyback constraints; questions repeatedly returned to credit leading indicators and sustainability of margins (for example, David Scharf asked whether Enova could “gauge whether consumer or SMB is sort of a better leading indicator of potential credit stress down the road”).

• Management’s tone was positive in prepared remarks and measured in Q&A, repeatedly emphasizing stability and normal ranges, including CEO Steven Cunningham stating, “there absolutely is not” something big going on in credit, and CFO Scott Cornelis reiterating “stable cost of funds.”

• Versus Q2, management commentary shifted from confidence in closing a bank acquisition to emphasizing that withdrawing bank applications “has not… diminished” growth plans, while analysts’ focus moved from regulatory-process timing questions to product expansion timing and capital return pace.

Quarter-over-quarter Comparison

• The most notable strategic change was the move away from the bank path: Q2 described being “excited to build upon our proven capabilities with our planned combination with Grasshopper Bank,” while Q3 said Enova “withdr[e]w our regulatory applications to become a bank” and framed future expansion via testing and partnerships.

• Guidance language stayed consistent quarter-to-quarter on revenue growth cadence (“around 25% higher year-over-year” for the next quarter in both calls) and consolidated net revenue margin range (55% to 60%).

• Credit commentary evolved from Q2 calling the consolidated net charge-off rate “the best we’ve seen in quite some time” to Q3 emphasizing “stable or improving performance,” while also explaining why SMB delinquencies can be noisier than charge-offs.

Risks and Concerns

• CEO Steven Cunningham cited “ongoing concerns about inflation and potential impacts on future interest rates and economic growth,” while CFO Scott Cornelis said Q4 expectations “will depend upon the path of the macroeconomic environment and the resulting impact on demand, customer payment rates and the level, timing and mix of originations growth.”

• CFO Scott Cornelis flagged variability in SMB delinquencies: “the 30-plus delinquency rate can vary more than the net charge-off ratio quarter-to-quarter,” and said outcomes depend on “payment performance” and origination mix.

Final Takeaway

Enova’s Q3 2026 call centered on continued rapid growth in originations and receivables, first-time quarterly revenue above $1B, and stable-to-improving credit trends, while management repositioned strategy after withdrawing bank regulatory applications and pointed to a pipeline of potential adjacent products. For Q4, management reiterated a framework of around 25% year-over-year revenue growth, net revenue margin of 55% to 60%, and adjusted EPS growth of 30% to 35% year-over-year, alongside continued “opportunistic” share repurchases within covenant constraints.

Read the full Earnings Call Transcript

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