Elevate Credit, Inc. (NYSE:ELVT) Q2 2019 Earnings Conference Call - Final Transcript
Jul 29, 2019 • 05:00 pm ET
Thank you. [Operator Instructions] Our first question comes from John Hecht with Jefferies. Please state your question.
Afternoon, thanks for taking my questions and welcome, Jason.
The -- I think just in terms of modeling, how should we think about originations by product? Clearly, there was a pretty big step down. Or I guess of the Elastic, I'm wondering how we think about that on a quarterly basis for the next few quarters.
Hey, John, it's Chris. Elastic was the last model that we rolled out here during the second quarter, and we're partnering with Republic Bank on it. Candidly, last year, we grew the product a little bit too fast and had higher-than-expected losses in Q4, Q1 of this year. Right now, as we roll out the new credit models, we, along with our bank partners have decided to more gradually market the product in Q2 and Q3 until we're sure that we're happy with the actual performance, and that it's meeting our expectations. I do, at least in my model, think that by the end of Q4 on a year-over-year basis, Elastic new customer volumes are going to be significantly higher than what they were in the prior year.
So from an Elastic perspective, that's what I think. I think Q3, you'll see more moderate growth. We were still growing it pretty heavily last year. So it will probably be down in Q3 versus a year ago in terms of new customer growth, but Q4, we should see a material growth in new customers year-over-year.
Okay, that's helpful. The U.K., when -- is there a point in time where you'll give up and just jettison [Phonetic] it, like we've seen others in the market do? Or how do we think about your decision-making there?
Yes, John, as we stand today, the UK, from the core business actually is operating relatively well. CACs are at all-time lows, our losses are very stable and actually Sunny just won an award for Best Lender, under GBP2,500, voted on by consumers. But obviously, the big topic over there is the complaints and how the FOS and FCA are working to resolve some of that.
From where we sit today, we actually see complaint volumes for the last quarter were slightly down. The UK business, for the first half of the year, has been right at a breakeven. It's forecasted to show profitability for the second half of the year, even at the current volumes that we're at right now from a complaint standpoint. But it's really going to come down to an economics decision. I mean luckily, the portfolio is generating good cash flow, but we can't sit out there forever without having the clarity. So we think over the next three to six months, we'll get more clarity to make a decision on is the common ground a viable business solution to make that work for us.
Okay. And then real quickly in California, if you shifted to your 100%