Elevate Credit, Inc. (NYSE:ELVT) Q2 2019 Earnings Conference Call - Final Transcript

Jul 29, 2019 • 05:00 pm ET


Elevate Credit, Inc. (NYSE:ELVT) Q2 2019 Earnings Conference Call - Final Transcript


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Kenneth Rees

the company and deliver excellent performance. I'm fortunate to have worked with Jason for 15 years now and hold him in the highest regard, intellectually, professionally and personally. He's been the catalyst for our 2019 earnings growth and brings the highest levels of integrity and commitment to both customers and employees.

I will continue to serve on Elevate's Board of Directors and look forward to ongoing involvement as Elevate continues to grow and drive shareholder value as a public company. With that, let me thank all of the employees and customers of Elevate for these very rewarding years, and I'll turn the call over to Jason and Chris.

Jason Harvison

Thank you, Ken, and on behalf of Elevate, thank you for all that you have done, and we wish you the best in your new endeavors. I look forward to continuing our many years of work together and your continued role on the Board.

For those of you who don't know me, I've been with Elevate and its predecessor company since 2003 and was appointed Chief Operating Officer back in 2014. As COO, I've been deeply involved with the development of our strategic priorities and also with the implementation of those strategies at the operating level.

Additionally, it shouldn't surprise you that a significant amount of my time has been dedicated this year to the deployment of our new credit models, which we are proud to say have been completed as of the halfway mark of 2019. I'll give my perspective on Elevate's approach to credit and what it means for the company in a second. But before I do, let me first provide a summary of our second quarter results, which Chris will expand on.

If you'll turn to Slide 4, you can see the summary of our second quarter results, which similar to our first quarter, were highlighted by the outsized growth we had in profitability despite a slower pace of originations and revenue growth, which we'll speak to in a minute. Specifically, our results for the quarter include 87% growth in net income over last year to $5.8 million or $0.13 per fully diluted share compared to $0.07 a year ago. Again, this performance was driven by excellent credit quality. To be clear, we are still in the early stages of our new credit models, but we've been very encouraged with the results so far.

For the quarter, our loan loss reserve as a percent of receivables stood at 12.3%, which is down from 12.9% a year ago. Also, similar to the first quarter, our customer acquisition costs of $229 remained below our targeted range of $250 to $300. Recall last quarter we had noted that we would likely realize a range for CAC closer to $225 to $250 in 2019 given our expansion with FinWise.

With the improvements in credit quality and CAC, we drove another quarter of strong adjusted EBITDA growth and margin expansion. Adjusted EBITDA for the second quarter of 2019 grew 18% year-over-year to $33.9