Elevate Credit, Inc., a tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, announced on Thursday its full 2017 results. According to CEO of Elevate, Ken Reese, the company ended its first year as a public company with a strong loan growth and delivered on its goals of growth, margin expansion, and stable credit quality.
- Fourth quarter GAAP net loss due to federal tax law charge, but fourth consecutive quarter of net income on an adjusted basis: Fourth quarter 2017 net loss totaled $12.2 million, or $(0.29) per diluted share, reflecting a one-time $12.5 million charge associated with the change in the federal tax law resulting from the tax reform in 2017. Excluding the impact from the tax law change, net income for the fourth quarter of 2017 would have been $0.3 million, or $0.01 per diluted share, versus a net loss of $4.4 million, or $(0.34) per diluted share, for the fourth quarter of 2016. The net loss for full-year 2017 totaled $6.9 million, or $(0.20) per diluted share. Excluding the impact of the federal tax law, net income for full year 2017 would have been $5.5 million, or $0.16 per diluted share, compared to a net loss of $22.4 million, or $(1.74) per diluted share, for full-year 2016. See “Non-GAAP Financial Measures” for a reconciliation of the tax impact to the GAAP measures of net loss and diluted earnings per share.
- Elevate increased its marketing spend above initial fourth quarter 2017 planned expenditures. This increased marketing spend resulted in $21 million more in year-end 2017 loan balances, which is anticipated to have a positive impact on 2018 revenue growth and profitability. The Company incurred approximately $5.3 million in additional upfront direct marketing and loan loss provision expense as a result of this decision, which negatively impacted net income in the fourth quarter of 2017 by $4.2 million, or $0.09 per diluted share.
- 16% year-over-year revenue growth: Revenues for the fourth quarter of 2017 increased 14.5% from the fourth quarter of 2016 and were up 16.0% for full-year 2017 versus 2016. Revenues totaled $193.4 million in the fourth quarter of 2017 compared to $169.0 million for the prior-year period. Full-year 2017 revenues totaled $673.1 million compared to $580.4 million for full-year 2016.
- More than 28% year-over-year growth in combined loans receivable – principal: Combined loans receivable – principal totaled $618.4 million, a 28.5% increase from $481.2 million for the prior-year period. The Rise installment loan and Elastic line of credit combined loans receivable – principal balances as of December 31, 2017 were up 19.6% and 47.4% over the prior year-end balances, respectively.
- Adjusted EBITDA up 45% compared to prior year: 2017 Adjusted EBITDA totaled $87.5 million, up 44.7% from $60.4 million in 2016. Adjusted EBITDA margin was 13% for both the fourth quarter of 2017 and full-year 2017.
- The ending combined loan loss reserve as a percentage of combined loans receivable was 14.3%, lower than the 16.1% reported for the prior-year period due to the improved credit quality and the continued maturation of the loan portfolio. Charge-offs as a percentage of originations for full-year 2017 continued to trend below previous years at less than 25% of principal originations.
- The total number of new customers acquired during the fourth quarter of 2017 was approximately 95,000 with an average customer acquisition cost of $231, below the targeted range of $250-$300. This represented a 34.6% increase over the approximately 70,000 new customers acquired in the fourth quarter of 2016.
- The company announced appointed Brian Biglin as Chief Credit Officer and the appointment of Bradley Strock as a member of the Board of Directors. Mr. Biglin was Chief Credit Officer at BillMeLater, PayPal and loanDepot, among other positions. Mr. Strock is currently the Chief Information Officer at PayPal, and previously held senior technology roles at Bank of America and J.P. Morgan Chase.
- Elevate’s Rise product surpasses $300 million in outstandings. In November 2017, Rise surpassed $300 million in total combined loans receivable – principal. Since inception, Rise has originated more than $1.8 billion in loans and served more than 500,000 customers.
- Elastic product surpasses $1 billion in total fundings. In December 2017, the Elastic line of credit product, originated by Republic Bank, surpassed $1 billion in total originations, having served more than 200,000 customers since 2013.
- Sunny surpasses $100 million in revenue during 2017. The Company’s profitable UK business, offering installment loans under the brand name Sunny, generated $100 million of annual revenue in 2017 for the first time since its launch in 2013.
In regards to the upcoming year’s goals, Elevate added:
“For the full year 2018, the Company expects total revenue of $780 million to $820 million, net income of $20 million to $45 million, or $0.50 to $1.05 in diluted earnings per share, and Adjusted EBITDA of $120 million to $150 million.”