Form 8-K Elevate Credit, Inc. For: Feb 11

February 11, 2019 4:18 PM


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________________
FORM 8-K
____________________________________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
February 11, 2019
____________________________________________________________________
 ELEVATE CREDIT, INC.
(Exact name of registrant as specified in its charter)
____________________________________________________________________

 
Delaware
 
001-37680
 
46-4714474
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)
4150 International Plaza, Suite 300
Fort Worth, Texas 76109
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code (817) 928-1500
Not Applicable
(Former name or former address, if changed since last report.)
____________________________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x





Item 2.02
Results of Operations and Financial Condition.
On February 11, 2019, Elevate Credit, Inc. (the "Company") issued a press release announcing its financial results for the quarter and year ended December 31, 2018. The full text of the press release, along with the slide presentation to be used during the earnings call on February 11, 2019, are furnished herewith as Exhibits 99.1 and 99.2, respectively.
Item 9.01
Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No.
Description
99.1
99.2






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
Elevate Credit, Inc.
Date:
February 11, 2019
By:
/s/ Christopher Lutes
 
 
 
Christopher Lutes
 
 
 
Chief Financial Officer







elevatelogoa24.jpg
ELEVATE CREDIT ANNOUNCES FOURTH QUARTER & FULL YEAR 2018 RESULTS
Announces Record Annual Revenues and Net Income
FORT WORTH, TX - February 11, 2019 - Elevate Credit, Inc. (NYSE: ELVT) (“Elevate” or the “Company”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced results for the fourth quarter and full year ended December 31, 2018.
“We finished 2018 having delivered $12.5 million in net income on $787 million in revenue for the year.  This was a significant improvement over 2017a 17% increase in revenue and more than double the adjusted net income,” said Elevate CEO Ken Rees. “We will continue to be conservative about top-line growth while we focus on execution and earnings in 2019. With today’s announcement of an expanded, billion dollar credit facility with Victory Park Capital, which lowers our cost of capital significantly, and with the continued demand for our products, we remain confident about the core strength of our business and our huge market opportunity to serve the New Middle Class.”
Fourth Quarter 2018 Financial Highlights1 

Net income: Net income for the three months ended December 31, 2018 totaled $4.1 million, or $0.09 per diluted share, compared to a net loss of $12.2 million, or $(0.29) per diluted share, in the fourth quarter of 2017, which included a $12.5 million charge associated with the change in federal tax law in 2017. Excluding the impact from the tax law change, adjusted net income for the fourth quarter of 2017 would have been $0.3 million, or $0.01 per diluted share.
Revenue growth: Revenues increased 7.2% for the fourth quarter of 2018 totaling $207.3 million compared with $193.4 million for the fourth quarter of 2017.
Combined loans receivable - principal: Combined loans receivable - principal totaled $648.5 million, an increase of $30.2 million, or 4.9%, from $618.4 million for the prior-year quarter.
Customer acquisition cost: The average customer acquisition cost was $202 in the fourth quarter of 2018, below the targeted range of $250-$300 and lower than $231 for the prior-year quarter. The total number of new customer loans decreased from approximately 95,000 in the fourth quarter of 2017 to 67,000 in the fourth quarter of 2018.
Adjusted EBITDA margin: Adjusted EBITDA increased to $31.9 million, up 27.7% from $25.0 million in the fourth quarter of 2017. The Adjusted EBITDA margin for the fourth quarter of 2018 was 15.4%, an increase from 12.9% in the prior year quarter.
    







__________________________
1 Adjusted EBITDA, Adjusted EBITDA margin, combined loans receivable - principal, combined loans receivable and adjusted net income are non-GAAP financial measures. These terms are defined elsewhere in this release. Please see the schedules appearing later in this release for reconciliations of these non-GAAP measures to the most directly comparable GAAP measures.

1




Fiscal Year 2018 Financial Highlights

Net income: Net income for the year ended December 31, 2018 totaled $12.5 million, or $0.28 per diluted share, compared to a net loss of $6.9 million, or $(0.20) per diluted share, in the prior year, which included a $12.5 million charge associated with the change in federal tax law in 2017. Excluding the impact of the federal tax law, adjusted net income for the full year 2017 would have been $5.5 million, or $0.16 per diluted share.
Revenue growth: Revenues increased 16.9% for the year ended December 31, 2018, totaling $786.7 million compared to $673.1 million for the prior-year period.
Adjusted EBITDA margin: Adjusted EBITDA increased to $116.1 million from $87.5 million in the prior year. The Adjusted EBITDA margin for the year ended December 31, 2018 was 14.8%, an increase from 13.0% in the prior year.
Customer acquisition cost: The number of new customer loans for the year ended December 31, 2018 totaled approximately 316,000, an increase of 3.6% from 305,000 for the prior year period. The average customer acquisition cost was $245 in 2018, below the targeted range of $250-$300 but slightly higher than $237 for the prior year.

Liquidity and Capital Resources
There were no material changes from a liquidity and funding standpoint during the fourth quarter of 2018.


Recent Business Highlights

Elevate Announces Amended Credit Facility. Today, Elevate announced a billion dollar credit agreement with Victory Park Capital which will significantly lower the Company’s cost of capital. The new agreement encompasses all four of Elevate’s products. See press release for more information.

Elevate’s Rise Product Expansion. In the fourth quarter of 2018, the Company licensed the Rise brand to FinWise Bank ("FinWise") to originate loans in an additional 16 states. The FinWise portfolio originated $31 million of loans in the fourth quarter since its launch in October 2018.

New Chief Credit Officer. Elevate promoted Company veteran David Peterson as Chief Credit Officer. Mr. Peterson has over 15 years of leadership experience in risk management and operations. He served as Senior Vice President of Risk Management and also held various previous leadership roles including positions at Americredit Financial and Washington Mutual.



Financial Outlook

The Company expects revenue growth to be relatively flat during the first half of 2019 with annualized revenue growth of 5% to 10% during the second half of 2019. For the full year 2019, the Company expects total revenue of $811 million to $834 million, net income of $25 million to $30 million, or $0.55 to $0.65 in diluted earnings per share, and Adjusted EBITDA of $130 million to $140 million.


2



Conference Call

The Company will host a conference call to discuss its fourth quarter and full-year 2018 financial results on Monday, February 11th at 4:00pm Central Time / 5:00pm Eastern Time. Interested parties may access the conference call live over the phone by dialing 1-877-407-0792 (domestic) or 1-201-689-8263 (international) and requesting the Elevate Fourth Quarter 2018 Earnings Conference Call. Participants are asked to dial in a few minutes prior to the call to register for the event. The conference call will also be webcast live through Elevate’s website at http://www.elevate.com/investors.
An audio replay of the conference call will be available approximately three hours after the conference call until 11:59 pm ET on February 25, 2019, and can be accessed by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international), and providing the passcode 13686658, or by accessing Elevate’s website.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements contain words such as "may," "will," "might," "expect," "believe," "anticipate," "could," "would," "estimate," "continue," "pursue," or the negative thereof or comparable terminology, and may include (without limitation) information regarding the Company's expectations, goals or intentions regarding future performance. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “likely” and other words and terms of similar meaning. The forward-looking statements include statements regarding: our future financial performance including our outlook for full fiscal year 2019 (including all statements under the heading "Financial Outlook"); our plan to continue to be conservative about growth while we focus on execution and earnings growth in 2019; our beliefs about the core strength of our business and our huge market opportunity to serve the New Middle Class, including in light of the expanded billion dollar credit facility with Victory Park Capital, which lowers our cost of capital significantly, and the continued demand for our products; and the Company’s targeted customer acquisition cost range of $250-$300. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. These risks and uncertainties include, but are not limited to: the Company’s limited operating history in an evolving industry; new laws and regulations in the consumer lending industry in many jurisdictions that could restrict the consumer lending products and services the Company offers, impose additional compliance costs on the Company, render the Company’s current operations unprofitable or even prohibit the Company’s current operations; scrutiny by regulators and payment processors of certain online lenders’ access to the Automated Clearing House system to disburse and collect loan proceeds and repayments; a lack of sufficient debt financing at acceptable prices or disruptions in the credit markets; the impact of competition in our industry and innovation by our competitors; our ability to prevent security breaches, disruption in service and comparable events that could compromise the personal and confidential information held in our data systems, reduce the attractiveness of our platform or adversely impact our ability to service loans; and other risks related to litigation, compliance and regulation. Additional factors that could cause actual results to differ are discussed under the heading "Risk Factors" and in other sections of the Company's most recent Annual Report on Form 10-K, and in the Company's other current and periodic reports filed from time to time with the SEC. All forward-looking statements in this press release are made as of the date hereof, based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement.




3



About Elevate
Elevate (NYSE: ELVT), together with its bank partners, has originated $6.7 billion in non-prime credit to more than 2.2 million non-prime consumers to date and has saved its customers more than $4.8 billion versus the cost of payday loans. Its responsible, tech-enabled online credit solutions provide immediate relief to customers today and help them build a brighter financial future. The company is committed to rewarding borrowers’ good financial behavior with features like interest rates that can go down over time, free financial training and free credit monitoring. Elevate’s suite of groundbreaking credit products includes RISE, Elastic, Sunny and Today Card. For more information, please visit http://www.elevate.com.

Investor Relations:

Solebury Communications
Sloan Bohlen, (817) 928-1646
investors@elevate.com

or

Media Inquiries:

Vested
Ishviene Arora, (917) 765-8720
elevate@fullyvested.com








4



Elevate Credit, Inc. and Subsidiaries
Condensed Statements of Operations
(Unaudited)
 
 
Three Months Ended 
 December 31,
 
Years Ended 
 December 31,
(dollars in thousands, except share and per share amounts)
2018
 
2017
 
2018
 
2017
Revenues
 
$
207,288

 
$
193,443

 
$
786,682

 
$
673,132

Cost of sales:
 
 
 
 
 
 
 
 
      Provision for loan losses
 
117,343

 
106,281

 
411,979

 
357,574

      Direct marketing costs
 
13,450

 
21,900

 
77,605

 
72,222

      Other cost of sales
 
5,467

 
6,169

 
26,359

 
20,536

Total cost of sales
 
136,260

 
134,350

 
515,943

 
450,332

Gross profit
 
71,028

 
59,093

 
270,739

 
222,800

Operating expenses:
 
 
 
 
 
 
 
 
Compensation and benefits
 
24,195

 
21,115

 
94,382

 
81,969

Professional services
 
9,389

 
7,803

 
35,864

 
32,848

Selling and marketing
 
1,910

 
1,691

 
9,435

 
8,353

Occupancy and equipment
 
4,245

 
3,892

 
17,547

 
13,895

Depreciation and amortization
 
3,821

 
2,615

 
12,988

 
10,272

Other
 
1,631

 
1,505

 
5,649

 
4,600

Total operating expenses
 
45,191

 
38,621

 
175,865

 
151,937

Operating income
 
25,837

 
20,472

 
94,874

 
70,863

Other income (expense):
 
 
 
 
 
 
 
 
      Net interest expense
 
(20,912
)
 
(18,441
)
 
(79,198
)
 
(73,043
)
      Foreign currency transaction gain (loss)
 
(609
)
 
80

 
(1,409
)
 
2,900

      Non-operating income (loss)
 
(312
)
 
(112
)
 
(350
)
 
2,295

Total other expense
 
(21,833
)
 
(18,473
)
 
(80,957
)
 
(67,848
)
Income before taxes
 
4,004

 
1,999

 
13,917

 
3,015

Income tax expense (benefit)
 
(128
)
 
14,193

 
1,408

 
9,931

Net income (loss)
 
$
4,132

 
$
(12,194
)
 
$
12,509

 
$
(6,916
)
 
 
 
 
 
 
 
 
 
Basic income (loss) per share
 
$
0.10

 
$
(0.29
)
 
$
0.29

 
$
(0.20
)
Diluted income (loss) per share
 
$
0.09

 
$
(0.29
)
 
$
0.28

 
$
(0.20
)
Basic weighted average shares outstanding
 
43,197,914

 
41,897,080

 
42,791,061

 
33,911,520

Diluted weighted average shares outstanding
 
43,838,128

 
41,897,080

 
44,299,304

 
33,911,520





5



Elevate Credit, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(dollars in thousands)
 
December 31, 2018
 
December 31, 2017
ASSETS
 
 
 
 
Cash and cash equivalents*
 
$
58,313

 
$
41,142

Restricted cash
 
2,591

 
1,595
Loans receivable, net of allowance for loan losses of $91,608 and $87,946, respectively*
 
561,694

 
524,619
Prepaid expenses and other assets*
 
11,418

 
10,306
Receivable from CSO lenders
 
16,183

 
22,811
Receivable from payment processors*
 
21,716

 
21,126
Deferred tax assets, net
 
21,628

 
23,545
Property and equipment, net
 
41,579

 
24,249
Goodwill
 
16,027

 
16,027
Intangible assets, net
 
1,712

 
2,123
Derivative assets, net*
 
412

 

Total assets
 
$
753,273

 
$
687,543

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Accounts payable and accrued liabilities *
 
$
44,950

 
$
42,213

State and other taxes payable
 
681

 
884
Deferred revenue
 
28,261

 
33,023

Notes payable, net*
 
562,590

 
513,295
Derivative liability
 

 
1,972
Total liabilities
 
636,482

 
591,387
COMMITMENTS, CONTINGENCIES AND GUARANTEES
 
 
 
 
STOCKHOLDERS’ EQUITY
 
 
 
 
Preferred stock
 

 

Common stock
 
18

 
17
Additional paid-in capital
 
183,244

 
174,090
Accumulated deficit
 
(66,525
)
 
(79,954)
Accumulated other comprehensive income
 
54

 
2,003

Total stockholders’ equity
 
116,791

 
96,156

Total liabilities and stockholders’ equity
 
$
753,273

 
$
687,543


* These balances include certain assets and liabilities of variable interest entities (“VIEs”) that can only be used to settle the liabilities of that respective VIE. All assets of the Company are pledged as security for the Company’s outstanding debt, including debt held by the VIEs.

6



Non-GAAP Financial Measures

This press release and the attached financial tables contain certain non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA margin, combined loans receivable - principal, combined loans receivable and adjusted net income.

Adjusted EBITDA and Adjusted EBITDA margin

In addition to net income (loss) determined in accordance with GAAP, Elevate uses certain non-GAAP measures such as “Adjusted EBITDA” and "Adjusted EBITDA margin" in assessing its operating performance. Elevate believes these non-GAAP measures are appropriate measures to be used in evaluating the performance of its business.

Elevate defines Adjusted EBITDA as net income (loss) excluding the impact of income tax benefit or expense, non-operating income or expense, foreign currency transaction gain or loss associated with our UK operations, net interest expense, share-based compensation expense and depreciation and amortization expense. Elevate defines Adjusted EBITDA margin as Adjusted EBITDA divided by revenue.

Management believes that Adjusted EBITDA and Adjusted EBITDA margin are useful supplemental measures to assist management and investors in analyzing the operating performance of the business and provide greater transparency into the results of operations of our core business. Management uses this non-GAAP financial measure frequently in its decision-making because it provides supplemental information that facilitates internal comparisons to the historical operating performance of prior periods and gives an additional indication of Elevate’s core operating performance. Elevate includes this non-GAAP financial measure in its earnings announcement in order to provide transparency to its investors and enable investors to better compare its operating performance with the operating performance of its competitors.

Adjusted EBITDA and Adjusted EBITDA margin should not be considered as alternatives to net income (loss) or any other performance measure derived in accordance with GAAP. Management's use of Adjusted EBITDA and Adjusted EBITDA margin has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of these limitations are:
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect expected cash capital expenditure requirements for such replacements or for new capital assets;
Adjusted EBITDA does not reflect changes in, or cash requirements for, the Company's working capital needs; and
Adjusted EBITDA does not reflect interest associated with notes payable used for funding customer loans, for other corporate purposes or tax payments that may represent a reduction in cash available to the Company.

Additionally, Elevate’s definition of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

The Company’s Adjusted EBITDA guidance does not include certain charges and costs. The adjustments in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior periods.   The Company is not able to provide a reconciliation of the Company’s non-GAAP financial guidance to the corresponding GAAP measure without unreasonable effort because of the uncertainty and variability of the nature and amount of these future charges and costs.



7



The following table presents a reconciliation of Adjusted EBITDA and Adjusted EBITDA margin to Elevate’s net income (loss) for the three and twelve months ended December 31, 2018 and 2017:
 
 
Three Months Ended
December 31,
 
Years Ended
December 31,
(dollars in thousands)
 
2018
 
2017
 
2018
 
2017
Net income (loss)
 
$
4,132

 
$
(12,194
)
 
$
12,509

 
$
(6,916
)
Adjustments:
 
 
 
 
 
 
 
 
Net interest expense
 
20,912

 
18,441

 
79,198

 
73,043

Share-based compensation
 
2,228

 
1,882

 
8,233

 
6,318

Foreign currency transaction (gains) losses
 
609

 
(80
)
 
1,409

 
(2,900
)
Depreciation and amortization
 
3,821

 
2,615

 
12,988

 
10,272

Non-operating (income) loss
 
312

 
112

 
350

 
(2,295
)
Income tax expense (benefit)
 
(128
)
 
14,193

 
1,408

 
9,931

Adjusted EBITDA
 
$
31,886

 
$
24,969

 
$
116,095

 
$
87,453

 
 
 
 
 
 
 
 
 
Adjusted EBITDA margin
 
15.4
%
 
12.9
%
 
14.8
%
 
13.0
%

Adjusted net income, adjusted diluted income per share and adjusted diluted weighted average shares outstanding
The Tax Cuts and Jobs Act was enacted on December 22, 2017. U.S. GAAP requires the remeasurement of all U.S. deferred income tax assets and liabilities for temporary differences from the previously enacted tax rate of 35% to the new corporate tax rate of 21%. The cumulative adjustment of $12.5 million was recognized in income tax expense in 2017, which included the enactment date. The following table presents a reconciliation of net income (loss) and diluted income (loss) per share to adjusted net income and adjusted diluted income per share, which excludes the impact of the tax reform.
 
 
Three Months Ended
December 31,
 
Years Ended
December 31,
(dollars in thousands except per share amounts)
 
2018
 
2017
 
2018
 
2017
Net income (loss)
 
$
4,132

 
$
(12,194
)
 
$
12,509

 
$
(6,916
)
Impact of tax reform
 

 
12,462

 
(50
)
 
12,462

Adjusted net income
 
$
4,132

 
$
268

 
$
12,459

 
$
5,546

 
 
 
 
 
 
 
 
 
Diluted income (loss) per share
 
$
0.09

 
$
(0.29
)
 
$
0.28

 
$
(0.20
)
Impact of tax reform
 

 
0.30

 

 
0.36

Adjusted diluted income per share
 
$
0.09

 
$
0.01

 
$
0.28

 
$
0.16

 
 
 
 
 
 
 
 
 
Diluted weighted average shares outstanding
 
43,838,128

 
41,897,080

 
44,299,304

 
33,911,520

Effects of potentially dilutive shares outstanding(1)
 

 
1,438,086

 

 
1,446,611

Adjusted diluted weighted average shares outstanding
 
43,838,128

 
43,335,166

 
44,299,304

 
35,358,131

(1) Represents potentially dilutive shares that had not been included in the Company's quarter or year-ended December 31, 2017 diluted weighted average shares outstanding as the Company is in a net loss position under U.S. GAAP. Including these shares would have been anti-dilutive when in a net loss position.

8











Supplemental Schedules

9




Revenue by Product
 
 
Three Months Ended December 31, 2018
(dollars in thousands)
 
Rise (US)(1)
 
Elastic (US)(2)
 
Total Domestic
 
Sunny (UK)
 
Total
 
 
 
Average combined loans receivable – principal(3)
 
$
301,085

 
$
288,917

 
$
590,002

 
$
50,886

 
$
640,888

Effective APR
 
138
%
 
97
%
 
118
%
 
243
%
 
128
%
Finance charges
 
$
104,513

 
$
70,684

 
$
175,197

 
$
31,208

 
$
206,405

Other
 
517

 
320

 
837

 
46

 
883

Total revenue
 
$
105,030

 
$
71,004

 
$
176,034

 
$
31,254

 
$
207,288

 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2017
(dollars in thousands)
 
Rise (US)(1)
 
Elastic (US)
 
Total Domestic
 
Sunny (UK)
 
Total
 
 
 
Average combined loans receivable – principal(3)
 
$
301,941

 
$
236,728

 
$
538,669

 
$
44,427

 
$
583,096

Effective APR
 
141
%
 
97
%
 
121
%
 
242
%
 
130
%
Finance charges
 
$
106,954

 
$
57,751

 
$
164,705

 
$
27,046

 
$
191,751

Other
 
1,080

 
541

 
1,621

 
71

 
1,692

Total revenue
 
$
108,034

 
$
58,292

 
$
166,326

 
$
27,117

 
$
193,443


(1)
Includes loans originated by third-party lenders through the CSO programs, which are not included in the Company's condensed consolidated financial statements.
(2) Includes immaterial balances related to the Today Card, which expanded its test launch in November 2018.
(3)
Average combined loans receivable - principal is calculated using daily principal balances. See the "Combined Loan Information" section for a reconciliation of this non-GAAP measure to the most comparable GAAP measure.


10



Revenue by Product (continued)
 
 
Year ended December 31, 2018
(dollars in thousands)
 
Rise (US)(1)
 
Elastic (US)(2)
 
Total Domestic
 
Sunny (UK)
 
Total
 
 
 
Average combined loans receivable – principal(3)
 
$
293,413

 
$
262,537

 
$
555,950

 
$
51,793

 
$
607,743

Effective APR
 
138
%
 
97
%
 
119
%
 
237
%
 
129
%
Finance charges
 
$
405,224

 
$
254,561

 
$
659,785

 
$
122,688

 
$
782,473

Other
 
2,187

 
1,745

 
3,932

 
277

 
4,209

Total revenue
 
$
407,411

 
$
256,306

 
$
663,717

 
$
122,965

 
$
786,682

 
 
 
 
 
 
 
 
 
 
 
 
 
Year ended December 31, 2017
(dollars in thousands)
 
Rise (US)(1)
 
Elastic (US)
 
Total Domestic
 
Sunny (UK)
 
Total
 
 
 
Average combined loans receivable – principal(3)
 
$
261,101

 
$
202,530

 
$
463,631

 
$
43,297

 
$
506,928

Effective APR
 
141
%
 
97
%
 
122
%
 
237
%
 
131
%
Finance charges
 
$
368,453

 
$
195,592

 
$
564,045

 
$
102,509

 
$
666,554

Other
 
4,345

 
1,926

 
6,271

 
307

 
6,578

Total revenue
 
$
372,798

 
$
197,518

 
$
570,316

 
$
102,816

 
$
673,132



(1)
Includes loans originated by third-party lenders through the CSO programs, which are not included in the Company's condensed consolidated financial statements.
(2) Includes immaterial balances related to the Today Card, which expanded its test launch in November 2018.
(3)
Average combined loans receivable - principal is calculated using daily principal balances. See the "Combined Loan Information" section for a reconciliation of this non-GAAP measure to the most comparable GAAP measure.

11




Loan Loss Reserve by Product

 
 
Three Months Ended December 31, 2018
(dollars in thousands)
 
Rise (US)
 
Elastic (US)(1)
 
Total Domestic
 
Sunny (UK)
 
Total
 
 
 
Combined loan loss reserve(2):
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
48,522

 
$
34,534

 
$
83,056

 
$
10,876

 
$
93,932

Net charge-offs
 
(61,638
)
 
(40,441
)
 
(102,079
)
 
(12,938
)
 
(115,017
)
Provision for loan losses
 
63,713

 
41,957

 
105,670

 
11,673

 
117,343

Effect of foreign currency
 

 

 

 
(206
)
 
(206
)
Ending balance
 
$
50,597

 
$
36,050

 
$
86,647

 
$
9,405

 
$
96,052

Combined loans receivable(2)(3)
 
$
333,001

 
$
303,418

 
$
636,419

 
$
56,709

 
$
693,128

Combined loan loss reserve as a percentage of ending combined loans receivable
 
15
%
 
12
%
 
14
%
 
17
%
 
14
%
Net charge-offs as a percentage of revenues
 
59
%
 
57
%
 
58
%
 
41
%
 
55
%
Provision for loan losses as a percentage of revenues
 
61
%
 
59
%
 
60
%
 
37
%
 
57
%

 
 
Three Months Ended December 31, 2017
(dollars in thousands)
 
Rise (US)
 
Elastic (US)
 
Total Domestic
 
Sunny (UK)
 
Total
 
 
 
Combined loan loss reserve(2):
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
49,756

 
$
27,802

 
$
77,558

 
$
8,511

 
$
86,069

Net charge-offs
 
(60,024
)
 
(30,653
)
 
(90,677
)
 
(7,941
)
 
(98,618
)
Provision for loan losses
 
66,135

 
31,721

 
97,856

 
8,425

 
106,281

Effect of foreign currency
 

 

 

 
57

 
57

Ending balance
 
$
55,867

 
$
28,870

 
$
84,737

 
$
9,052

 
$
93,789

Combined loans receivable(2)(3)
 
$
342,652

 
$
261,222

 
$
603,874

 
$
54,156

 
$
658,030

Combined loan loss reserve as a percentage of ending combined loans receivable
 
16
%
 
11
%
 
14
%
 
17
%
 
14
%
Net charge-offs as a percentage of revenues
 
56
%
 
53
%
 
55
%
 
29
%
 
51
%
Provision for loan losses as a percentage of revenues
 
61
%
 
54
%
 
59
%
 
31
%
 
55
%

(1)
Includes immaterial balances related to the Today Card, which expanded its test launch in November 2018.
(2)
Not a financial measure prepared in accordance with GAAP. See the "Combined Loan Information" section for a reconciliation of this non-GAAP measure to the most comparable GAAP measure.
(3)
Includes loans originated by third-party lenders through the CSO programs, which are not included in the Company's consolidated financial statements.

12





Loan Loss Reserve by Product (continued)

 
 
Year ended December 31, 2018
(dollars in thousands)
 
Rise (US)
 
Elastic (US)(1)
 
Total Domestic
 
Sunny (UK)
 
Total
 
 
 
Combined loan loss reserve(2):
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
55,867

 
$
28,870

 
$
84,737

 
$
9,052

 
$
93,789

Net charge-offs
 
(228,569
)
 
(131,719
)
 
(360,288
)
 
(48,872
)
 
(409,160
)
Provision for loan losses
 
223,299

 
138,899

 
362,198

 
49,781

 
411,979

Effect of foreign currency
 

 

 

 
(556
)
 
(556
)
Ending balance
 
$
50,597

 
$
36,050

 
$
86,647

 
$
9,405

 
$
96,052

Combined loans receivable(2)(3)
 
$
333,001

 
$
303,418

 
$
636,419

 
$
56,709

 
$
693,128

Combined loan loss reserve as a percentage of ending combined loans receivable
 
15
%
 
12
%
 
14
%
 
17
%
 
14
%
Net charge-offs as a percentage of revenues
 
56
%
 
51
%
 
54
%
 
40
%
 
52
%
Provision for loan losses as a percentage of revenues
 
55
%
 
54
%
 
55
%
 
40
%
 
52
%

 
 
Year ended December 31, 2017
(dollars in thousands)
 
Rise (US)
 
Elastic (US)
 
Total Domestic
 
Sunny (UK)
 
Total
 
 
 
Combined loan loss reserve(2):
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
53,336

 
$
19,389

 
$
72,725

 
$
9,651

 
$
82,376

Net charge-offs
 
(209,533
)
 
(99,283
)
 
(308,816
)
 
(38,194
)
 
(347,010
)
Provision for loan losses
 
212,064

 
108,764

 
320,828

 
36,746

 
357,574

Effect of foreign currency
 

 

 

 
849

 
849

Ending balance
 
$
55,867

 
$
28,870

 
$
84,737

 
$
9,052

 
$
93,789

Combined loans receivable(2)(3)
 
$
342,652

 
$
261,222

 
$
603,874

 
$
54,156

 
$
658,030

Combined loan loss reserve as a percentage of ending combined loans receivable
 
16
%
 
11
%
 
14
%
 
17
%
 
14
%
Net charge-offs as a percentage of revenues
 
56
%
 
50
%
 
54
%
 
37
%
 
52
%
Provision for loan losses as a percentage of revenues
 
57
%
 
55
%
 
56
%
 
36
%
 
53
%

(1)
Includes immaterial balances related to the Today Card, which expanded its test launch in November 2018.
(2)
Not a financial measure prepared in accordance with GAAP. See the "Combined Loan Information" section for a reconciliation of this non-GAAP measure to the most comparable GAAP measure.
(3)
Includes loans originated by third-party lenders through the CSO programs, which are not included in the Company's consolidated financial statements.

13




Customer Loan Data by Product
 
 
Three Months Ended December 31, 2018
 
 
Rise (US)
 
Elastic (US)(1)
 
Total Domestic
 
Sunny (UK)
 
Total
Beginning number of combined loans outstanding
 
140,218

 
167,045

 
307,263

 
94,173

 
401,436

New customer loans originated
 
28,838

 
18,388

 
47,226

 
19,450

 
66,676

Former customer loans originated
 
24,645

 
140

 
24,785

 

 
24,785

Attrition
 
(50,943
)
 
(19,176
)
 
(70,119
)
 
(24,174
)
 
(94,293
)
Ending number of combined loans outstanding
 
142,758

 
166,397

 
309,155

 
89,449

 
398,604

Customer acquisition cost
 
$
216

 
$
253

 
$
231

 
$
132

 
$
202

Average customer loan balance
 
$
2,167

 
$
1,746

 
$
1,940

 
$
544

 
$
1,627

 
 
Three Months Ended December 31, 2017
 
 
Rise (US)
 
Elastic (US)
 
Total Domestic
 
Sunny (UK)
 
Total
Beginning number of combined loans outstanding
 
123,978

 
126,677

 
250,655

 
74,924

 
325,579

New customer loans originated
 
41,856

 
30,986

 
72,842

 
21,822

 
94,664

Former customer loans originated
 
18,871

 

 
18,871

 

 
18,871

Attrition
 
(43,915
)
 
(16,991
)
 
(60,906
)
 
(16,236
)
 
(77,142
)
Ending number of combined loans outstanding
 
140,790

 
140,672

 
281,462

 
80,510

 
361,972

Customer acquisition cost
 
$
243

 
$
222

 
$
234

 
$
223

 
$
231

Average customer loan balance
 
$
2,276

 
$
1,784

 
$
2,030

 
$
584

 
$
1,708

(1)
Includes immaterial balances related to the Today Card, which expanded its test launch in November 2018.

14



Customer Loan Data by Product (continued)
 
 
Year ended December 31, 2018
 
 
Rise (US)
 
Elastic (US)(1)
 
Total Domestic
 
Sunny (UK)
 
Total
Beginning number of combined loans outstanding
 
140,790

 
140,672

 
281,462

 
80,510

 
361,972

New customer loans originated
 
111,860

 
99,820

 
211,680

 
104,803

 
316,483

Former customer loans originated
 
86,278

 
746

 
87,024

 

 
87,024

Attrition
 
(196,170
)
 
(74,841
)
 
(271,011
)
 
(95,864
)
 
(366,875
)
Ending number of combined loans outstanding
 
142,758

 
166,397

 
309,155

 
89,449

 
398,604

Customer acquisition cost
 
$
275

 
$
240

 
$
259

 
$
218

 
$
245

Average customer loan balance
 
$
2,167

 
$
1,746

 
$
1,940

 
$
544

 
$
1,627

 
 
Year ended December 31, 2017
 
 
Rise (US)
 
Elastic (US)
 
Total Domestic
 
Sunny (UK)
 
Total
Beginning number of combined loans outstanding
 
121,996

 
89,153

 
211,149

 
78,044

 
289,193

New customer loans originated
 
116,030

 
110,145

 
226,175

 
79,011

 
305,186

Former customer loans originated
 
71,109

 

 
71,109

 

 
71,109

Attrition
 
(168,345
)
 
(58,626
)
 
(226,971
)
 
(76,545
)
 
(303,516
)
Ending number of combined loans outstanding
 
140,790

 
140,672

 
281,462

 
80,510

 
361,972

Customer acquisition cost
 
$
281

 
$
182

 
$
233

 
$
249

 
$
237

Average customer loan balance
 
$
2,276

 
$
1,784

 
$
2,030

 
$
584

 
$
1,708

(1)
Includes immaterial balances related to the Today Card, which expanded its test launch in November 2018.


15





Combined Loan Information
The Elastic line of credit product is originated by a third party lender, Republic Bank, which initially provides all of the funding for that product. Republic Bank retains 10% of the balances of all of the loans originated and sells a 90% loan participation in the Elastic lines of credit to a third party SPV, Elastic SPV, Ltd. Elevate is required to consolidate Elastic SPV, Ltd. as a variable interest entity under GAAP and the consolidated financial statements include revenue, losses and loans receivable related to the 90% of Elastic lines of credit originated by Republic Bank and sold to Elastic SPV, Ltd.
Beginning in the fourth quarter of 2018, the Company also licenses its Rise installment loan brand to a third party lender, FinWise Bank, which originates Rise installment loans in sixteen states. FinWise Bank initially provides all of the funding and retains 5% of the balances of all of the loans originated and sells a 95% loan participation in those Rise installment loans to a third party SPV, EF SPV, Ltd. Elevate is required to consolidate EF SPV, Ltd. as a variable interest entity under GAAP and the consolidated financial statements include revenue, losses and loans receivable related to the 95% of Rise installment loans originated by FinWise Bank and sold to EF SPV, Ltd.
Elevate defines combined loans receivable - principal as loans owned by the Company plus loans originated and owned by third-party lenders pursuant to our CSO programs. In Texas and Ohio, the Company does not make Rise loans directly, but rather act as a Credit Services Organization (which is also known as a Credit Access Business in Texas), or, collectively, “CSO,” and the loans are originated by an unaffiliated third party. Elevate defines combined loan loss reserve as the loan loss reserve for loans owned by the Company plus the loan loss reserve for loans originated and owned by third-party lenders and guaranteed by the Company. The information presented in the tables below on a combined basis are non-GAAP measures based on a combined portfolio of loans, which includes the total amount of outstanding loans receivable that the Company owns and that are on the Company's consolidated balance sheets plus outstanding loans receivable originated and owned by third parties that the Company guarantees pursuant to CSO programs in which the Company participates.
The Company believes these non-GAAP measures provide investors with important information needed to evaluate the magnitude of potential loan losses and the opportunity for revenue performance of the combined loan portfolio on an aggregate basis. The Company also believes that the comparison of the combined amounts from period to period is more meaningful than comparing only the amounts reflected on the Company's consolidated balance sheets since both revenues and cost of sales as reflected in the Company's consolidated financial statements are impacted by the aggregate amount of loans the Company owns and those CSO loans the Company guarantees.
The Company's use of total combined loans and fees receivable has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of these limitations are:
Rise CSO loans are originated and owned by a third party lender; and
Rise CSO loans are funded by a third party lender and are not part of the VPC Facility.
As of each of the period ends indicated, the following table presents a reconciliation of:
Loans receivable, net, Company owned (which reconciles to the Company's consolidated balance sheets included elsewhere in this press release);
Loans receivable, net, guaranteed by the Company;
Combined loans receivable (which the Company uses as a non-GAAP measure); and
Combined loan loss reserve (which the Company uses as a non-GAAP measure).





16



 
 
2016
 
2017
 
2018
(dollars in thousands)
 
December 31
 
March 31
 
June 30
 
September 30
 
December 31
 
March 31
 
June 30
 
September 30
 
December 31
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company Owned Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans receivable – principal, current, company owned
 
$
387,142

 
$
367,744

 
$
403,944

 
$
450,891

 
$
514,147

 
$
471,996

 
$
493,908

 
$
525,717

 
$
543,405

Loans receivable – principal, past due, company owned
 
57,342

 
48,007

 
45,839

 
61,040

 
61,856

 
60,876

 
58,949

 
69,934

 
68,251

Loans receivable – principal, total, company owned
 
444,484

 
415,751

 
449,783

 
511,931

 
576,003

 
532,872

 
552,857

 
595,651

 
611,656

Loans receivable – finance charges, company owned
 
25,630

 
21,359

 
21,866

 
27,625

 
36,562

 
31,181

 
31,519

 
36,747

 
41,646

Loans receivable – company owned
 
470,114

 
437,110

 
471,649

 
539,556

 
612,565

 
564,053

 
584,376

 
632,398

 
653,302

Allowance for loan losses on loans receivable, company owned
 
(77,451
)
 
(69,798
)
 
(66,030
)
 
(80,972
)
 
(87,946
)
 
(80,497
)
 
(76,575
)
 
(89,422
)
 
(91,608
)
Loans receivable, net, company owned
 
$
392,663

 
$
367,312

 
$
405,619

 
$
458,584

 
$
524,619

 
$
483,556

 
$
507,801

 
$
542,976

 
$
561,694

Third Party Loans Guaranteed by the Company:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans receivable – principal, current, guaranteed by company
 
$
34,466

 
$
27,841

 
$
30,210

 
$
35,690

 
$
41,220

 
$
33,469

 
$
35,114

 
$
36,649

 
$
35,529

Loans receivable – principal, past due, guaranteed by company
 
2,260

 
957

 
1,066

 
1,267

 
1,152

 
1,123

 
1,494

 
1,661

 
1,353

Loans receivable – principal, total, guaranteed by company(1)
 
36,726

 
28,798

 
31,276

 
36,957

 
42,372

 
34,592

 
36,608

 
38,310

 
36,882

Loans receivable – finance charges, guaranteed by company(2)
 
3,772

 
2,754

 
2,365

 
2,751

 
3,093

 
2,612

 
2,777

 
3,103

 
2,944

Loans receivable – guaranteed by company
 
40,498

 
31,552

 
33,641

 
39,708

 
45,465

 
37,204

 
39,385

 
41,413

 
39,826

Liability for losses on loans receivable, guaranteed by company
 
(4,925
)
 
(3,565
)
 
(3,810
)
 
(5,097
)
 
(5,843
)
 
(3,749
)
 
(3,956
)
 
(4,510
)
 
(4,444
)
Loans receivable, net, guaranteed by company(3)
 
$
35,573

 
$
27,987

 
$
29,831

 
$
34,611

 
$
39,622

 
$
33,455

 
$
35,429

 
$
36,903

 
$
35,382

Combined Loans Receivable(3):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined loans receivable – principal, current
 
$
421,608

 
$
395,585

 
$
434,154

 
$
486,581

 
$
555,367

 
$
505,465

 
$
529,022

 
$
562,366

 
$
578,934

Combined loans receivable – principal, past due
 
59,602

 
48,964

 
46,905

 
62,307

 
63,008

 
61,999

 
60,443

 
71,595

 
69,604

Combined loans receivable – principal
 
481,210

 
444,549

 
481,059

 
548,888

 
618,375

 
567,464

 
589,465

 
633,961

 
648,538

Combined loans receivable – finance charges
 
29,402

 
24,113

 
24,231

 
30,376

 
39,655

 
33,793

 
34,296

 
39,850

 
44,590

Combined loans receivable
 
$
510,612

 
$
468,662

 
$
505,290

 
$
579,264

 
$
658,030

 
$
601,257

 
$
623,761

 
$
673,811

 
$
693,128



17



 
 
2016
 
2017
 
2018
(dollars in thousands)
 
December 31
 
March 31
 
June 30
 
September 30
 
December 31
 
March 31
 
June 30
 
September 30
 
December 31
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Combined Loan Loss Reserve(3):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses on loans receivable, company owned
 
$
(77,451
)
 
$
(69,798
)
 
$
(66,030
)
 
$
(80,972
)
 
$
(87,946
)
 
$
(80,497
)
 
$
(76,575
)
 
$
(89,422
)
 
$
(91,608
)
Liability for losses on loans receivable, guaranteed by company
 
(4,925
)
 
(3,565
)
 
(3,810
)
 
(5,097
)
 
(5,843
)
 
(3,749
)
 
(3,956
)
 
(4,510
)
 
(4,444
)
Combined loan loss reserve
 
$
(82,376
)
 
$
(73,363
)
 
$
(69,840
)
 
$
(86,069
)
 
$
(93,789
)
 
$
(84,246
)
 
$
(80,531
)
 
$
(93,932
)
 
$
(96,052
)
Combined loans receivable – principal, past due(3)
 
$
59,602

 
$
48,964

 
$
46,905

 
$
62,307

 
$
63,008

 
$
61,999

 
$
60,443

 
$
71,595

 
$
69,604

Combined loans receivable – principal(3)
 
481,210

 
444,549

 
481,059

 
548,888

 
618,375

 
567,464

 
589,465

 
633,961

 
648,538

Percentage past due
 
12
%
 
11
%
 
10
%
 
11
%
 
10
%
 
11
%
 
10
%
 
11
%
 
11
%
Combined loan loss reserve as a percentage of combined loans receivable(3)
 
16
%
 
16
%
 
14
%
 
15
%
 
14
%
 
14
%
 
13
%
 
14
%
 
14
%
Allowance for loan losses as a percentage of loans receivable – company owned
 
16
%
 
16
%
 
14
%
 
15
%
 
14
%
 
14
%
 
13
%
 
14
%
 
14
%

(1) Represents loans originated by third-party lenders through the CSO programs, which are not included in the Company's consolidated financial statements.
(2) Represents finance charges earned by third-party lenders through the CSO programs, which are not included in the Company's consolidated financial statements.
(3) Non-GAAP measure.

 


# # #


18
Q4 and Full Year 2018 Earnings Call February 2019


 
Forward-Looking Statements This presentation and responses to various questions contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements present our current expectations and projections relating to our business, financial condition and results of operations, and do not refer to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “likely” and other words and terms of similar meaning. The forward-looking statements include statements regarding: our future financial performance including our outlook for full fiscal year 2019; our expectation that our new credit models will be rolled out in the first half of 2019 and that our partner credit models and strategies will be rolled out in the first half of 2019; our perspectives on 2019, including our expectations regarding revenue, growth rate of revenue, net charge-offs, gross margin, operating expenses, operating margins, Adjusted EBITDA, net income, loan loss provision, direct marketing and other cost of sales and Adjusted EBITDA margin; our expectations regarding regulatory trends; our expectations regarding the cumulative loss rate as a percentage of originations for the 2018 vintage; our growth strategies and our ability to effectively manage that growth; anticipated key marketing and underwriting initiatives; new and expanded products like a lower-priced installment product in the UK; our expectations regarding the future expansion of the states in which our products are offered; the cost of customer acquisition, new customer originations, the efficacy and cost of our marketing efforts, our plan to maintain our UK portfolio balances through the second half of 2019 in advance of regulatory clarity on complaints; expanded marketing channels and new and growing marketing partnerships; continued growth and investment in data science and analytics; and additional bank partnerships. Forward‐looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. These risks and uncertainties include, but are not limited to: the Company’s limited operating history in an evolving industry; new laws and regulations in the consumer lending industry in many jurisdictions that could restrict the consumer lending products and services the Company offers, impose additional compliance costs on the Company, render the Company’s current operations unprofitable or even prohibit the Company’s current operations; scrutiny by regulators and payment processors of certain online lenders’ access to the Automated Clearing House system to disburse and collect loan proceeds and repayments; a lack of sufficient debt financing at acceptable prices or disruptions in the credit markets; the impact of competition in our industry and innovation by our competitors; our ability to prevent security breaches, disruption in service and comparable events that could compromise the personal and confidential information held in our data systems, reduce the attractiveness of our platform or adversely impact our ability to service loans; customer complaints or negative public perception could harm our business and other risks related to litigation, compliance and regulation. Additional factors that could cause actual results to differ are discussed under the heading "Risk Factors" and in other sections of the most recent Quarterly Report on Form 10-Q and in the Company's other current and periodic reports filed from time to time with the SEC. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements regarding risks and uncertainties that are included in our public communications. You should evaluate all forward-looking statements made in this presentation in the context of these risks and uncertainties. Neither we nor any of our respective agents, employees or advisors intend or have any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this presentation. This presentation also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Neither we nor any other person makes any representation as to the accuracy or completeness of such data or undertakes any obligation to update such data after the date of this presentation. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk. The information and opinions contained in this presentation are provided as of the date of this presentation and are subject to change without notice. This presentation has not been approved by any regulatory or supervisory agency. See Appendix for additional information and definitions. 2


 
Elevate is reinventing non-prime credit with online products that provide financial relief today, and help people build a brighter financial future. So far, we’ve originated $6.7 billion to 2.2 million customers1 and saved them more than $4.8 billion over payday loans2 33


 
Fiscal Year 2018 Highlights Growth Product Expansion Revenue1 Adjusted EBITDA2 17% +33% $116 $787 $673 $87 2017 2018 2017 2018 Net Income3 116% $13 $6 As adjusted 2017 2018 Adjusted EBITDA and adjusted net income are non-GAAP financial measures. See Appendix for a reconciliation to GAAP measures. 4


 
Headway on 2018 Challenges Issue Status Delays in new credit Developed and being rolled out in 1H 2019 models & strategies Expansion of partner Partner credit models and strategies developed channels and being rolled out over 1H 2019 Lower complaint volumes, still looking for UK Complaints regulatory clarity 5


 
Growth in key financial measures ($ in millions) Ending Combined Loans Revenue 1 +5% Receivables - Principal +17% +28% $649 $618 +16% $787 +35% $481 +34% $673 $580 +77% $356 +59% $434 +177% +7% $202 +280% $274 $193 $207 $73 $72 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 4Q17 4Q18 Net Income / (Loss) 3 Adjusted EBITDA2 +33% 116% +45% $116 $6 $13 $0 $4 $87 As adjusted +223% +28% $60 As adjusted $32 $19 $25 ($20) ($22) ($43) ($55) ($47) ($52) 2013 2014 2015 2016 2017 2018 4Q17 4Q18 2013 2014 2015 2016 2017 2018 4Q17 4Q18 Ending combined loans receivable – principal, Adjusted EBITDA and Adjusted Net Income are non-GAAP financial measures. See appendix for a reconciliation to a GAAP measure. 6


 
Stable credit quality and customer acquisition costs Cumulative principal loss rates as a % of originations Customer Acquisition Costs by loan vintage $350 35% 30% $297 $300 25% $255 $256 $245 $250 20% 2017 2018 $235 $237 15% $200 10% $150 5% 0% $100 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 2013 2014 2015 2016 2017 2018 Months since origination 2013 2014 2015 2016 2017 2018 CAC Bottom Target Range $250 Top Target Range $300 2018 loan vintage is not yet fully matured. 7


 
Continued margin expansion % of Gross Revenues 2015 2016 2017 2018 LT Target Gross Revenue 100% 100% 100% 100% 100% Loan Loss Provision 54% 55% 53% 52% 50% Direct Marketing and 18% 14% 14% 13% 10% Other Cost of Sales Gross Margin 29% 31% 33% 35% 40% Operating Expenses 25% 21% 20% 20% 20% Adjusted EBITDA 1 4% 10% 13% 15% 20% Margin Adjusted EBITDA margin is a non-GAAP financial measure. See Appendix for a reconciliation to GAAP measure. 8


 
Amended Credit Facilities with Victory Park Capital • Significant reduction in cost of capital to LIBOR +7.5% from LIBOR +13% • New funds locked at 10.3% for existing $530 million of debt for five years • Total size of facilities increases to more than $1B ($500 million in availability) including new facility (SPV) for FinWise • 20% revolver component every Q1 (allows us to paydown during Q1 seasonality and reborrow at later time) • $2.4 million amendment fee in Q1 (no other prepayment penalty) See press release: “Elevate Announces Amended Credit Facilities with Victory Park Capital” February 11, 2018 9


 
2019 Outlook – Margin Expansion with Slower Growth ($ in millions) Revenue Adjusted EBITDA1 +3-6% $811-$834 +12-21% $130-$140 +17% $787 - $673 +33% $116 - $87 2017 2018 2019 Guidance 2017 2018 2019 Guidance Net Income2 Diluted EPS3 $25-$30 $0.55-$0.65 +96-132% +100-140% +75% +116% $13 $0.28 $6 $0.16 As adjusted As adjusted 2017 2018 2019 Guidance 2017 2018 2019 Guidance Adjusted EBITDA and Adjusted Net Income are non-GAAP financial measures. See appendix for a reconciliation to a GAAP measure. 10


 
2019: Focus on Foundation for Growth Amended VPC Deploy next Optimize partner Maintain UK credit facilities generation credit underwriting portfolio models and and technology balances in strategies advance of regulatory clarity on complaints 1H 1H 2H 11


 
Long Term Prospects Remain Strong Enormous Market Demand 40% 170 MM Americans living paycheck underserved consumers in to paycheck1 US and UK2 Limited Competitive Pressures $143 B Legacy reduction competitors primarily high in bank non-prime lending3 cost and inconvenient Regulatory and Product 4 3 2 Diversification Products Bank Countries partners 12


 
We believe everyone deserves a lift. 1313


 
Appendix 14


 
Footnotes Page 3: 1 Originations and customers from 2002-December 2018, attributable to the combined current and predecessor direct and branded products. 2 For the period from 2013 to December 31, 2018. Based on the average effective APR of 129% for the twelve months ended December 31, 2018. This estimate, which has not been independently confirmed, is based on our internal comparison of revenues from our combined loan portfolio and the same portfolio with an APR of 400%, which is the approximate average APR for a payday loan according to the Consumer Financial Protection Bureau, or the "CFPB.“ Page 4: 1 Full year 2018 revenue of $786.7 million and full year 2017 revenue of $673.1 million. 2 Full year ended December 31, 2018 Adjusted EBITDA of $116 million and full year ended December 31, 2017 Adjusted EBITDA of $87 million. Adjusted EBITDA is not a financial measure prepared in accordance with GAAP. Adjusted EBITDA represents our net income (loss), adjusted to exclude: net interest expense primarily associated with notes payable under the VPC Facility and ESPV Facility used to fund or purchase loans; foreign currency gains and losses associated with our UK operations; depreciation and amortization expense on fixed assets and intangible assets; non- operating income (loss); share-based compensation expense and income tax expense (benefit). See the Appendix for a reconciliation to GAAP net income (loss). Adjusted EBITDA margin is Adjusted EBITDA divided by revenue. 3 Full year 2017 adjusted net income of $5.5 million, and full year 2018 net income of $12.5 million. 2017 adjusted net income of $5.5 million is not a financial measure prepared in accordance with GAAP. Adjusted net income for 2017 represents our $6.9 million net loss for the year ended December 31, 2017, adjusted to exclude the impact of $12.5 million in tax expense incurred during the fourth quarter of 2017 due to the enactment of the Tax Cuts and Jobs Act. Page 6: 1 Ending combined loans receivable - principal is a non-GAAP financial measure. See appendix for a reconciliation to a GAAP measure. 2 Adjusted EBITDA is not a financial measure prepared in accordance with GAAP. Adjusted EBITDA represents our net income (loss), adjusted to exclude: net interest expense primarily associated with notes payable under the VPC Facility and ESPV Facility used to fund or purchase loans; foreign currency gains and losses associated with our UK operations; depreciation and amortization expense on fixed assets and intangible assets; loss on discontinued operations, non-operating income (loss); share-based compensation expense and income tax expense (benefit). See the Appendix for a reconciliation to GAAP net income (loss). 3 2017 adjusted net income of $5.5 million and fourth quarter 2017 adjusted net income of $0.3 million are not financial measures prepared in accordance with GAAP. Adjusted net income for 2017 represents our $6.9 million net loss for the year ended December 31, 2017, adjusted to exclude the impact of $12.5 million in tax expense incurred during the fourth quarter of 2017 due to the enactment of the Tax Cuts and Jobs Act. Adjusted net income for the fourth quarter 2017 represents our $12.2 million net loss, adjusted to exclude the impact of $12.5 million in tax expense incurred during the fourth quarter of 2017 due to the enactment of the Tax Cuts and Jobs Act. Page 8: 1 Adjusted EBITDA margin is not a financial measure prepared in accordance with GAAP. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenue. Adjusted EBITDA represents our net income (loss), adjusted to exclude: net interest expense primarily associated with notes payable under the VPC Facility and ESPV Facility used to fund or purchase loans; foreign currency gains and losses associated with our UK operations; depreciation and amortization expense on fixed assets and intangible assets; loss on discontinued operations; non-operating income (loss); share-based compensation expense and income tax expense (benefit). See the Appendix for a reconciliation to GAAP net income (loss). 15


 
Footnotes (continued) Page 10: 1 Adjusted EBITDA is not a financial measure prepared in accordance with GAAP. Adjusted EBITDA represents our net income (loss), adjusted to exclude: net interest expense primarily associated with notes payable under the VPC Facility and ESPV Facility used to fund or purchase loans; foreign currency gains and losses associated with our UK operations; depreciation and amortization expense on fixed assets and intangible assets; non-operating income (loss); share-based compensation expense and income tax expense (benefit). See the Appendix for a reconciliation to GAAP net income (loss). 2 2017 adjusted net income of $5.5 million is not a financial measure prepared in accordance with GAAP. Adjusted net income for 2017 represents our $6.9 million net loss for the year ended December 31, 2017, adjusted to exclude the impact of $12.5 million in tax expense incurred during the fourth quarter of 2017 due to the enactment of the Tax Cuts and Jobs Act. 3 Adjusted diluted EPS for 2017 represents our $(0.20) diluted loss per share for the year ended December 31, 2017, adjusted to exclude the $0.36 per share impact of tax expense incurred during the fourth quarter of 2017 due to the enactment of the Tax Cuts and Jobs Act. Page 12: 1 According to the Federal Reserve’s Board Report on the Economic Well-Being of US Households in 2017. 2 According to our analysis based on CFSP report, “Data Point: Credit Invisibles.” May 2015 and 2018 Average US FICO data. 3 According to our analysis of master pool trust data of securitizations for the five major credit card issuers, we estimate that from 2008-2016, revolving credit US borrowers with FICO scores less than 680 was reduced by approximately $142 billion. 16


 
Non-GAAP financials reconciliation Adjusted EBITDA Reconciliation Three months ended December 31, For the years ended December 31, ($mm) 2018 2017 2018 2017 2016 2015 2014 2013 Net income (loss) $ 4 (12) $ 13 (7) (22) (20) (55) $ (45) Adjustments: Net interest expense 21 18 79 73 64 37 13 - Stock-based compensation 2 2 8 6 2 1 1 - Foreign currency transaction (gain) loss 1 - 2 (3) 9 2 1 - Depreciation and amortization 4 3 13 10 11 9 8 5 Non-operating expense (income) - - - (2) - (6) - (1) Income tax expense (benefit) - 14 1 10 (3) (5) (21) (9) Loss on discontinued operations - - - - - - - 2 Adjusted EBITDA $ 32 25 $ 116 87 60 19 (53) $ (47) Adjusted EBITDA Margin 15% 13% 15% 13% 10% 4% -19% -65% Adjusted EBITDA is a non-GAAP financial measure. The Company’s Adjusted EBITDA guidance does not include certain charges and costs. The adjustments in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior periods, such as the impact of income tax benefit or expense, non-operating income, foreign currency transaction gain or loss associated with our UK operations, net interest expense, stock-based compensation expense and depreciation and amortization expense, among others. The Company is not able to provide a reconciliation of the Company’s non-GAAP financial guidance to the corresponding GAAP measure without unreasonable effort because of the uncertainty and variability of the nature and amount of these future charges and costs. 17


 
Combined loans reconciliation Combined Loan Adjustment Summary (dollars in thousands) Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Company Owned Loans Loans receivable - principal, current, company owned 543,405 525,717 493,908 471,996 514,147 450,891 403,944 367,744 Loans receivable - principal, past due, company owned 68,251 69,934 58,949 60,876 61,856 61,040 45,839 48,007 Loans receivable - principal, total, company owned 611,656 595,651 552,857 532,872 576,003 511,931 449,783 415,751 Loans receivable - finance charges, company owned 41,646 36,747 31,519 31,181 36,562 27,625 21,866 21,359 Loans receivable - company owned 653,302 632,398 584,376 564,053 612,565 539,556 471,649 437,110 Allowance for loan losses on loans receivable, company owned (91,608) (89,422) (76,575) (80,497) (87,946) (80,972) (66,030) (69,798) Loans receivable, net, company owned 561,694 542,976 501,801 483,556 524,619 458,584 405,619 367,312 Third Party Loans Company Guaranteed Loans receivable - principal, current, guaranteed by company 35,529 36,649 35,114 33,469 41,220 35,690 30,210 27,841 Loans receivable - principal, past due, guaranteed by company 1,353 1,661 1,494 1,123 1,152 1,267 1,066 957 Loans receivable - principal, total, guaranteed by company1 36,882 38,310 36,608 34,592 42,372 36,957 31,276 28,798 Loans receivable - finance charges, guaranteed by company2 2,944 3,103 2,777 2,612 3,093 2,751 2,365 2,754 Loans receivable - guaranteed by company 39,826 41,413 39,385 37,204 45,465 39,708 33,641 31,552 Liability for losses on loans receivable, guaranteed by company (4,444) (4,510) (3,956) (3,749) (5,843) (5,097) (3,810) (3,565) Loans receivable, net, guaranteed by company2 35,382 36,903 35,429 33,455 39,622 34,611 29,831 27,987 1 Represents loans originated by third-party lenders through the CSO programs, which are not included in our financial statements. 2 Represents finance charges earned by third-party lenders through CSO programs, which are not included in our financial statements. 3 Non-GAAP measure. . 18


 
Combined loans reconciliation (continued) Combined Loan Adjustment Summary (dollars in thousands) Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Combined Loans Receivable3 Combined loans receivable - principal, current 578,934 562,366 529,022 505,465 555,367 486,581 434,154 395,585 Combined loans receivable - principal, past due 69,604 71,595 60,443 61,999 63,008 62,307 46,905 48,964 Combined loans receivable - principal 648,538 633,961 589,465 567,464 618,375 548,888 481,059 444,549 Combined loans receivable - finance charges 44,590 39,850 34,296 33,793 39,655 30,376 24,231 24,113 Combined loans receivable 693,128 673,811 623,761 601,257 658,030 579,264 505,290 468,662 Combined Loan Loss Reserve3 Allowance for loan losses on loans receivable, company owned (91,608) (89,422) (76,575) (80,497) (87,946) (80,972) (66,030) (69,798) Liability for losses on loans receivable, guaranteed by company (4,444) (4,510) (3,956) (3,749) (5,843) (5,097) (3,810) (3,565) Combined loan loss reserve (96,052) (93,932) (80,531) (84,246) (93,789) (86,069) (69,840) (73,363) 1 Represents loans originated by third-party lenders through the CSO programs, which are not included in our financial statements. 2 Represents finance charges earned by third-party lenders through CSO programs, which are not included in our financial statements. 3 Non-GAAP measure. . 19


 
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