Enova International, Inc. (ENVA) Q4 2016 Earnings Report, Transcript and Summary

Good day everyone and welcome to the Enova International Fourth Quarter and Full-Year 2016 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to [indiscernible], Investor Relations. Please go ahead.

Thank you, William and good afternoon everyone. Enova released results for the fourth quarter and full-year 2016 ended December 31, 2016 this afternoon after the market close. If you did not receive a copy of our earnings press release, you may obtain it from the Investor Relations section of our website at ir.enova.com. With me on today’s call are David Fisher, Chief Executive Officer and Steve Cunningham, Chief Financial Officer. This call is being webcast and will be archived on the Investor Relations section of our website. Before I turn the call over to David, I would like to note that today’s discussion will contain certain forward-looking statements based on the business environment as we currently see it and as such, does include certain risks and uncertainties. Please refer to our press release and our SEC filings for more information on the specific risk factors that could cause our actual results to differ materially from the projections described in today’s discussion. Any forward-looking statements that we make on this call are based on assumptions as of today and we undertake no obligation to update these statements as a result of new information or future events. In addition to the GAAP reporting, we report certain financial measures that do not conform to Generally Accepted Accounting Principles. We believe these non-GAAP measures enhance the understanding of our performance. Reconciliations between these GAAP and non-GAAP measures are included in the tables found in today’s press release. As noted in our earnings release, we have posted supplemental financial information on the IR portion of our website. And with that, I would like to turn the call over to David.

Thanks Lindsey [ph] and good afternoon everyone. I appreciate you joining our call today. I'm going to start by giving a brief overview of the quarter, then I will update you on our strategy for 2017 and finally, I will share our perspective looking forward. After my remarks, I'll turn the call over to Steve Cunningham our CFO to discuss our financial results and guidance in more detail. The fourth quarter wrapped up what we think was a good year for Enova and we're very pleased with the strong performance and momentum we continue to see across the business. Fourth quarter revenue was $202.4 million, an increase of 15% from Q4 of last year and at the high end of our guidance. Driving the increase in revenue was growth in net credit and our US line of credit portfolios. But we also saw healthy demand across our other products. We believe we offer the best products in our markets providing simple fast access to good quality credit for people and small businesses who have limited savings and who frequently do not qualify for bank programs. As we've discussed before over 47% of Americans don't have enough savings to cover a $400 financial emergency. Adjusted EBITDA for the quarter were $35.1 million which was in line with our guidance of 32 to 37 million. Our EBITDA once again benefitted from our efficient marketing as well as continued solid credit performance. While we are aware that some of our competitors have seen pressure on their credit performance over the last 12 months, we have not. The sophistication of our analytics and the extensive experience of our team, which spans over 12 years has allowed us to effectively manage credit quality through product launches, multiple economic cycles, competitor shakeout and regulatory changes. We believe that the solid credit metrics we've been able to sustain are a substantial competitive advantage for us. In total, companywide originations in Q4 declined 6% from the prior year. The primary reason for this decline was the decision we made in Q3 to pull back on our marketing in the back half of that quarter. We discussed this in detail in our last earnings call. During Q3, we made the decision to maintain strong short-term profitability in the face of heavy demand from new customers. As we've discussed in the past, rapid growth in originations especially originations in new customers typically will result and lower near-term profitability from a GAAP perspective as we incur upfront marketing expenses as well as higher levels of loan loss provisions. As a result of our Q3 pullback, Q4 started off a bit slower than we would have liked. But we saw volume improve over the course of the quarter as we increased our marketing spend and we ended the year on a strong note. And while the first quarter is always a seasonably slow quarter for us, we have seen this positive momentum from Q4 carried forward into the early part of 2017. Our total loan book grew 29% year-over-year and 4% sequentially in the fourth quarter giving us a good earnings base as we move into 2017. The largest contributors to this growth were net credit and our line of credit portfolio of products. Installment loans and lines of credit now comprise 75% of our total revenue and 80% of our portfolio. Our success and strong results across our short-term line of credit, and installment and receivable purchase agreement segments have been driven by our focus on our six growth businesses, namely our US subprime business, our US near-prime offering, our UK consumer brand, US small business financing, our installment loan business in Brazil, and Enova Decisions, our analytics as a service business. I’ll touch on each one of those briefly. Our large US subprime consumer business generated another strong quarter of profitability. That business continues to grow and become more diversified with 31% of our US subprime consumer portfolio consisting of installment products, 44% line of credit products and only 25% single-pay product. We still have only single-digit market share in the US subprime market, so we believe there remains a large opportunity to generate substantial growth in that business. In the UK, we continue to demonstrate our ability to grow a profitable business following the regulatory changes that were implemented there in 2014 and 2015. UK loan originations declined 7% from Q4 of last year, primarily due to the currency impact following the Brexit referendum. On a constant currency basis, loan originations actually increased 13% over the same quarter. We remain the leading subprime lender in the UK by market share and our UK business is profitable with approximately $25 million of EBITDA contribution in 2016. Net credit sustained a rapid pace of growth in Q4, with loan balances reaching $279 million. This was up 43% from the fourth quarter of last year. Our US near-prime product represented 46% of our total US loan portfolio at the end of Q4. Throughout the year, we commented that we expected a net credit to generate over $20 million of EBITDA contribution this year. In fact, it ended up being over $25 million of EBITDA contribution due to favorable product mix and efficient marketing. We continue to anticipate that net credit EBITDA contribution will be meaningfully higher in 2017. Our small business financing portfolio represented 12% of our total loan book at the end of Q4. There currently seems to be a bit of a shakeout occurring in the non-bank small business lending and financing industry. A number of our competitors have either ceased funding or completely shut down over the past several months. From the intelligence we were able to gather, this is largely due to credit issues and their portfolios. As we mentioned last quarter, we have taken a more methodical approach than some to growth for our small business products. And we're now seeing the benefits of that approach. Recent advantages of our small business book are performing well and the unit economics continue to improve especially as acquisition costs have dropped following the shakeout I just mentioned. Our Brazilian loan portfolio has grown to almost 70 million at the end of the fourth quarter, which is up over 18% from the end of Q3. Based on the positive unit economics we continue to generate in Brazil, we remain focused on increasing origination levels there as we head into 2017. As anticipated, our Brazilian business produced a small EBITDA loss in 2016 but we expect the business to become EBITDA positive next year - this year, 2017. Finally, I’ll touch on the Enova Decisions, our real time analytics as a service business. Enova Decisions is a customizable real-time scoring and decisioning platform that help companies make data driven decisions instantly and at scale. We've been able to get this business operating very quickly by leveraging our existing analytics tools and expertise such as [indiscernible] acquisition analysis, credit decisioning and fraud prevention. We have signed a number of law clients already across several industries and recorded real revenue in our first year of operation. Moreover, we have built a great pipeline entering 2017. So to wrap up, we are pleased with our performance last year. Over the course of 2016 we further diversified our business to decrease regulatory risk and drive growth. And our commitment to delivering exceptional products and services to customers who trust and counted us will guide us going forward. Finally, we are winning on the competitive front. We have efficient marketing that is resonating with our customers and as a result of our significant experience and solid diversified funding, we've been able to be aggressive as others have had to pull back in the face of credit concerns and liquidity issues. I feel confident in our direction and believe that our world-class team, focused growth strategy, strong competitive position and solid balance sheet will drive continued success in 2017 and beyond. Now I’d like to turn the call over to Steve Cunningham, our CFO who will go over the financials in more detail and following Steve’s remark we'll be happy to answer any questions that you may have. Steve?

Thank you, David. And good afternoon everyone. I'll start by reviewing our financial and operating performance for the fourth quarter and then provider our outlook for the first quarter and full-year 2017. Total revenue was $202.4 million in the fourth quarter, a 15.4% increase from the year ago quarter and came in at the high-end of our guidance range of $185 million to $205 million. on a constant currency basis, revenue increased 18.2% year-over-year. Revenue growth was driven by growth in total company loans and finance receivable balances which increased to $692.7 million, up 29.2% year-over-year from $536.1 million in the fourth quarter of last year and that was up 3.8% sequentially. Following one of our strongest quarters of origination volume in recent years, total company origination volume in the fourth quarter decreased 6.1% on a year-over-year basis and 11.8% sequentially. As David mentioned this was largely due to our decision to reduce marketing spend towards the end of the third quarter in order to balance growth and our profitability targets. These actions led to a slow start to originations in the fourth quarter. However, originations for the second half of the year, our typical period of seasonal stream in receivables growth year-over-year and with the strongest we've seen for a similar period since the second half of 2013. Domestically revenue increased 20.7% on a year-over-year basis and 5.2% sequentially to $173.9 million in the fourth quarter and accounted for 86% of our total revenue. In particular, year-over-year revenue growth for domestic installment loans and receivable purchase agreements, and for the line of credit products increased 18% and 39% respectively. During the quarter, we continued to see increased demand for our domestic line of credit in near-prime installment offerings which drove our domestic combined loan and finance receivable balances up 33% year over year. International revenue declined 8.8% on a year over year basis to $28.5 million and accounted for 14% of total company revenue in the fourth quarter. On a constant currency basis however international revenue increased 6.8% on a year over year basis. In addition to the currency impacts the decline was the result of the wind down of our Canadian and Australian businesses and the impact of our discontinued UK line of credit product. On a constant currency basis, excluding these revenue impacts, international revenue increased 19.4% on a year-over-year basis in the fourth quarter. For the sixth quarter in a row, international loan balances saw sequential growth and were up 5% year over year. On a constant currency basis, international loan balances were up 16.4% year over year. Excluding Canada, Australia and discontinued UK line of credit product, international loan balances increased 13.8% over the fourth quarter of last year. Turning to gross profit margins, our fourth quarter gross profit margin for the total company was 51.8%, which compares to a gross profit margin of 59.4% in the fourth quarter of last year. The year-over-year decline in gross profit margin is not the result of credit deterioration but instead continues to be driven by three primary factors that I've discussed in prior quarters. First, continued strong growth of our domestic near-prime installment loan portfolio resulting in a higher mix of those products in the total portfolio. Second, a higher mix of new customers and recent originations which requires higher loss higher loss provisions up front as new customers default at a higher rate than returning customers with a successful history of loan performance. And third, the wind down of the UK line of credit product in the prior year quarter. We expect the consolidated gross profit margin will be in the range of 50% to 60% and will be influenced by the pace of growth in originations, the mix of new versus returning customers in originations and the mix of loans and financing in the portfolio. Our domestic gross profit margin was 49.9% in the fourth quarter compared 55.7% in the prior year quarter for the reasons I previously discussed. Our international gross profit margin was 63.7% in the fourth quarter compared to 76.7% in the prior year quarter. The decline in the international gross profit margin was driven by the impact of the discontinued UK line of credit product. We expect our international gross profit margin to range from 60% to 70% and will be driven by the pace of growth in both the UK and Brazil as well as the mix of new and returning customers. Turning to expenses, we continue to see strong operating leverage as total operating expense decreased 13% year over year to $68.6 million. Marketing expenses declined 26% year over year to $23.9 million in the quarter or 12% of revenue. This compares to 18% of revenue in the prior year quarter. This year, the year-over-year decline was driven by increased marketing spend efficiency as well as lower levels of originations in the fourth quarter. Operations and technology expensive increased 18% year-over-year in the fourth quarter, primarily as a result of higher legal expenses associated with the UK and a shift in personnel costs from general and administrative expenses. This expense shift aligned underwriting cost for our receivables purchase agreements product with similar expenses across our other businesses. General and administrative expenses decreased 21% year-over-year to $21.2 million in the fourth quarter, primarily due to the aforementioned shift in personnel costs to operations and technology expense as well as the reversal of a portion of the earnout accrual associated with our acquisition of The Business Backer. When we acquired the assets of TBB, we established a liability related to an earnout that we would owe if TBB achieved certain business goals. During the quarter, we reduced that liability given the current estimate of the earnout based on recent and expected performance of TBB. Adjusted EBITDA, a non-GAAP performance measure increased 24% year over year to $35.1 million in the fourth quarter from 28.3 million in the fourth quarter of last year and came in above the midpoint of our guidance range of $32 million to $37 million. Our adjusted EBITDA margin increased to 17.3% from 16.1% in the prior year quarter. Our stock-based compensation expense was down 7% sequentially and totaled $2.1 million in the fourth quarter. Net income increased to $8.7 million in the fourth quarter or $0.26 per diluted share from net income of $4.2 million or $0.13 per diluted share in the fourth quarter of last year. Our effective tax rate for the fourth quarter decreased to 40.1% from 46.5% for the fourth quarter of last year. Our effective tax rate for the full-year 2016 was 39.8% compared to 37.6% in 2015. This was in line with our prior expectations that our full-year 2016 effective tax rate would be approximately 40% as the rate continues to be heavily influenced by the significant decline in intrinsic value of previously granted restricted stock units resulting in adjustments to the deferred tax asset balance related to those units that invested to-date. Adjusted earnings, a non-GAAP measure increased to $8.5 million in the quarter or $0.25 per diluted share from $6.2 million or $0.19 per diluted share in the prior year quarter. Cash flow from operations for the fourth quarter totaled $92.7 million and we ended the fourth quarter with cash and cash equivalents of $39.9 million and total debt of $649.9 million. Our debt balance includes $165 million outstanding under the $295 million of combined installment loan securitization facility. There was no balance outstanding on our $35 million revolving line of credit at year-end 2016. With that I'd like to turn to our outlook for the first quarter and full-year 2017. Our outlook reflects continued strong growth in each of our businesses, a continued higher mix of new customers and originations, no significant changes in the competitive landscape in the UK and no impact to our US business from proposed the CFPB rulemaking during 2017. Any significant volatility in the British pound from current levels could also impact our results. As noted in our earnings release in the first quarter of 2017 we expect total revenues to be between $180 million and $200 million, and adjusted EBITDA to be between $35 million and $45 million. For the full-year 2017, we expect total revenue to be between $810 million and $880 million and adjusted EBITDA to be between $145 million and $175 million. When thinking about our guidance, there are some items that make the prior-year comparisons difficult. These include the wind down of our Canadian and Australian businesses, the discontinued UK line of credit product and the impact of the exchange rate for the British pound following the Brexit vote. For the full-year excluding these impacts, growth in revenue from the midpoint of our 2017 guidance range versus actual 2016 results would increase from 13% to 26%. Similarly, excluding these impacts, growth in adjusted EBITDA from the midpoint of our full-year 2017 guidance range versus 2016 would increase from 13% to 22%. I would also note that the endpoint estimates for our revenue and adjusted EBITDA ranges are not linked. For example, we could achieve the high end of our revenue guidance range, while falling in the low end of the adjusted EBITDA range during a period of high growth with a high proportion of new customers. This is due to the higher upfront marketing expenses in provision for loan losses in such a scenario. Similarly, a period of slower growth suppress revenue, but increase adjusted EBITDA for the opposite reasons. And with that, I'd like to hand the call back over to David.

Great. Thanks, Steve and thanks everybody for joining us today. I will now open it up for your questions.

[Operator Instructions] And the first questioner is David Scharf with JMP Securities. Please go ahead with your question.

Hi. Good afternoon. Thanks for taking my questions. David, a couple of things on the origination front and I appreciate all the color and I recall how you had mentioned you had hold back a bit, reined in some of the activity in the end of the third quarter. Can you provide a little more color on ultimately what are some of the factors maybe that are driving your decision to increase and decrease and fine tune the marketing spend from months to months. I mean, is there any material difference in just the quality of applicants, I’m just trying to get a sense for what some of the variables come into play are?

Yeah. Sure. Happy to provide a little more color there. So Q3, business is doing great, quality was doing great, acquisition cost was doing great, but new customer volume was running so high as we discussed at the time, that if we would have kept going, we would have had really strong revenue, but very high marketing expense and very high provisioning and we had probably missed our EBITDA number. And we decided not to do that. So we slowed down new customer marketing, which resulted in lower levels of originations plus higher profitability and the decision we made as a public company that as a private company, we probably never would have made. As we enter Q4, we had to then get the growth engine back going and it's not a switch you can just flip immediately. You got to, if you’ve got TV, you’ve got to get it going again. If your pipeline with lead providers has dried up, you've got to get it restarted, reactivation of that customer acquisition model just takes a little bit of time and we try to build a little bit of that in to our Q4 numbers. We didn't and we built enough that we still were able to hit our numbers, but it's just that ramp up in October in to the beginning part of November just took a little -- just took some time. And some of it was expected and most of it was expected, which is why we're able to still hit our numbers, but we just wanted to highlight that it did take some time and that's why origination, new originations in dollars were down somewhat year-over-year. We ended the quarter just fine. December was a really, really good month. We started off 2017 strong. We got those acquisition channels opened back up during the quarter and they're all working great now. So we're feeling really good heading into the beginning of 2017 here.

Good. I appreciate that color and just digging into the product mix, sort of same kind of question once again relating to the type of customer you're seeing, the falloff in origination, well, the deliberate kind of pullback in originations from Q3 to Q4, it seemed to be most pronounced in the near prime segment and I hadn't really noticed, but taking a look back now sequentially, I really see just how rapidly that net credit product had been growing from the beginning of the year to Q3. And any growing pains you’re seeing in that product performance in particular or any?

It's a longer buying cycle in that product in the short term, short term product, we cut some direct mail, the larger channel for the near prime product and that just goes through cycles that take longer to reactivate than maybe the short term product where there's more lead providers, which you can turn back on a little more quickly. So just took a little bit longer to reactivate net credit than it did the shorter term products, but the business still grew 43% year-over-year. The flip side of the slower growth in the fourth quarter was good profitability as we mentioned, we ended up over $25 million of EBITDA contribution, which was well above the 20 million we were guiding to. So that business is still looking great. Credit performance has been really good. Unit economics continued to improve. So we don't have any serious concerns over the net credit product right now.

Our next questioner is Bob Ramsey with FBR. Please go ahead.

Hey, good evening, guys. Maybe a quick follow-up to David's question. So it sounds like it would be fair to expect originations to be up year-over-year in the first quarter here, now that the marketing is kind of ramping back up?

We feel -- origination volumes start off the year at or above our expectations. Q1 last year was particularly strong for origination numbers. I don't exactly have our forecast this year versus last year right in front of me. Q1, if you go back and listen -- if you go back and look at our conference call from last year, we usually see a pretty sharp drop in originations in Q1, just because the tax season in the US, we saw less of a drop last year and that's the only reason I'm hesitating because Q1 origination levels were pretty high last year, but all in all, the business is doing well in Q1. Origination levels have started, originations have started to get so much stronger than we expected. So we’re feeling really good about the strength of the products heading into the New Year.

Okay. And then on the marketing line, I mean, the expense came in certainly better this quarter than I was looking for. I don't know how much of that is timing as they say it sort of maybe took a little longer to restart the engines on that front and maybe how much is marketing efficiency. How should we think about the marketing spend in the first quarter of ’17?

Yeah. I think it's a mix of both. It definitely again took a little bit time to reactivate the marketing kind of at -- especially October and the first half of November. And so that's a low number for Q4. As you know, we typically spend less in terms of marketing in Q1 than we do in other quarters, again just in the face of softer demand, especially in the US as we talked about because of tax season. And so I think, as a result of the combination of the two, you can see marketing expense for Q1 of this year probably be below what we saw in Q1 of last year and maybe even a little below what we saw in Q4.

Okay. All right. That's helpful. And then thinking about the other expense line, so I know you said there was the reversal of the business factor now or some piece of it. How much was that of a benefit this quarter?

I'm sorry you're asking the TVB or earn an adjustment?

Yes please.

That was just a little above $3 million.

Okay. Got it. I guess actually maybe I did see that then broken out in the release, so I just didn’t realize what I was looking at, which line was that in, you said that was in the G&A, right?

That’s correct. And it is broken out in the adjusted EBITDA lines.

Perfect. Got it. Thank you. And then do you have the yield on the net credit loans this quarter?

Yes. It’s hanging around, right around 55%.

Got it. And is the yield on new production any different than the yield on the portfolio at this point or is there still a bit of a drift there?

Yeah. I would say it's probably holding fairly steady to a slight maybe upward drift, but not dramatically. It's been hanging around the mid-50s for quite a few quarters now.

Our next questioner today is John Rowan with Janney. Please go ahead.

Good afternoon, guys. David, in your prepared remarks, you talked about credit not getting worse. But there was a little bit of a deterioration in net credit or in, not in net credit, but in the net charge-off rate that you guys report in one of these tables. Can you just put that up, I know it wasn’t a big change, but just curious how you see credit being stable and the number was up just a little bit?

Yeah, I mean look, it always moves around a little bit month to month, quarter to quarter, there are seasonal variations. There is product mix variations and it's also, even like the day of the month, the quarter can end on can have a pretty meaningful difference in those numbers. So we're looking at the more finite version, metrics that we look at on credit. First, payment defaults, ultimate charge-offs. We're seeing very, very stable. So it's really just factor of seasonality, kind of month timing and the mix.

Okay. And then Steve, you gave some guidance for the gross profit margin, you said 50% to 60%, I assume that's an appropriate range for 2017 and maybe discuss what type of seasonality we're going to see. There has been so many moving changes over the last couple of years. I just want to make sure that we encompass the right type of seasonality in the gross profit line?

Yeah. You typically see stronger gross profit margins in the first half of the year. And then you see it weaken as we grow and again it gets back to that, those factors that I mentioned, it tends to be lower in the later quarters of the year.

But that number, that 50% to 60% is appropriate for 2017, correct?

Yeah. That’s correct. That’s the right way to think about it.

And just near the higher end of that range, middle to higher end of that range, earlier in the year and kind of middle to lower end of that range later in the year.

Okay. And maybe can you guys just talk a little bit about the ABS facility that you set up for the high rate loans. It's not -- there aren't a lot of these facilities out there, and you’re not the only one who issues them, but maybe just talk about how it's structured, what type or rates and advance rates you're seeing in them. I just want to get a better understanding of how these high rate ABS facilities are structured?

Yes. So I mean this was an opportunity to create liquidity across the final segment of net credit and it was an opportunistic trade, which made a lot of economic sense for us. In our release, our 8-K, we actually posted the rate, it's right around 13% in terms of the cost and the advance rates are pretty similar to what you see at around 80%. So it's a pretty straightforward structure that we can add to and utilize to create liquidity across that higher end of the APR spectrum.

And I would just tell you the way to think about the margin on that with that rate of around 13% that I mentioned, the average APR on the collateral is around 120%.

Okay. I'm not going to ask you guys about the CFPB, but what about the TCPA? If the Trump administration takes a different approach on it, do you see any benefits in your collection efforts by, basically you'll be able to call people on their cell phones through an automated dialer?

Yeah. I mean the changes to the rules this year have had a small, but not huge impact to our business. We found some good ways of engaging with our customers that we haven't been able to that to kind of make up for some of the change in the regulations, to the extent that gets changed, it'll probably be a win for us, because we’ll be able to do the things we’re doing now plus the things we were doing before, but it wasn't a huge negative for us. So it wouldn’t be a huge upside if those get rolled back.

Okay, last question. What's the tax rate for 2017?

Yeah. I don't expect it to be radically different, but probably just a little below 40%.

[Operator Instructions] Our next questioner today is John Hecht with Jefferies. Please go ahead.

Good afternoon guys. Steve, you discussed some, I guess we’d call it opportunistic flexibilities in your business in the sense that you got to basically estimate your numbers. And if you get more cautious in credit, you can reduce growth and you get the benefit from a lower provision and vice versa to get to your final goals. I guess the simple question is, maybe you don't have to go line by line, but generally speaking from a trend set in terms of origination growth, marketing margins, gross margins. I mean should we just sort of fake that your base case scenario is maybe a continuation of what we saw last year and that you have flexibilities on both sides of that. Anything meaningfully changed in terms of what we should think about in terms of the big inputs there?

Yeah. I mean I think we talked about an expectation of continuing with a higher proportion of new customers, which David talked about how that impacts marketing. That also will have an impact on how we provide for losses, but that was a trend that we saw for most of 2016. So it is a little bit of a continuation forward and you will notice that we did widen ranges on a few things to take into consideration and to give us some flexibility around being able to accommodate demand and new customer mix coming in.

Okay. And then when I count for that, I guess the reverse expense this quarter, did your G&A was in the, I don’t know, like 24, 24.5 range. Is that a good base case that we should think about through 2017?

Yeah. We want to hold the line on G&A.

Okay. And then final question, just given where your -- the growth in the net credit product and so forth, what -- are you guys set for funding for 2017 or do you need to expand the facility or how do we think about any funding requirements?

Yeah. I think we are in good shape with our capacity for net credit.

Our next questioner today is Tom White with Macquarie. Please go ahead.

Great. Thanks for taking my question. So I guess somebody else didn't want to ask about CFPB, but maybe I’ll ask one in there. I imagine your visibility there maybe is not that great, but if you could just comment a bit on whether, how you guys are thinking about prior timeline for implementation, whether things may change between now and then? And then just a little bit more color on the small business opportunity. It seems like you guys are standing a bit more constructive on that. Is that kind of purely opportunism because of some of the shake-out or is there, just maybe a bit more color there on how your views changed about that opportunity? Thanks.

Yeah, sure. So on the CFPB, I wish we had more visibility. I can tell you, as days go on, we feel and we felt pretty good the day after the election and I think as time goes on, we feel even better that the rules, if there are any eventual rules, will be more favorable to us than the proposed rules that we’ve previously seen. I wish we knew more than that, we don't. For all we know, a year from now, there's no more CFPB. I mean, it could be that dramatic or it could just be a delay in implementation. I would say the one thing we feel more sure about is it's highly unlikely there will be any new rules before 2019. And so that that continues to get pushed back. And I would say there's a good chance it would be later 2019 at the earliest. And so that that's certainly a positive from that perspective, one time, we were talking end of ’17 and we were talking early ’18 and late ’18 and now I think we're talking sometime later in ‘19. So to the extent there are rules, I think it's 2019. To the extent there are rules, they’re certainly likely to be more favorable to us than the proposed rules, but there certainly is a scenario where there aren't any rules. There aren't any significant rules. So, obviously we’ll keep an eye on it going forward. I think we'll know more, although not a complete visibility, complete clarity, I think we'll know more at our next earnings call and certainly be willing to talk more about it, more about that. And in the small business space, it's always a space we saw had a lot of opportunity. It did looked really crowded for a while with a lot of money flowing in and not always smart money. And despite that, we’ve stuck with it because we saw that we could underwrite loans successfully in that space and knew that if we acquire customers at the right cost and be able to charge the right prices too, there was a large market to be tapped. We did go at it a little more slowly than some competitors and I think that's paid off. We spent our time learning and developing the product, improving our underwriting models and building a portfolio that hasn’t blown ourselves unlike what we're seeing out there in the marketplace or number of our competitors’ portfolios have blown them so, them up because they were, they moved too quickly. So as we look forward, the market still looks as vague as ever. The competitive landscape looks a lot more favorable. So yeah, I think we are meaningfully more positive about the small business space heading into 2017 than we were heading into 2016. That being said, it's a very, very long game. And, we'll grow that business this year. We think we'll be successful, but it's still a number of years before we know just how big of an opportunity that could be, but as we talked about in the past, there's absolutely no reason why that couldn't be $100 million EBITDA business for us down the road.

[Operator Instructions] This will conclude our question-and-answer session. I would now like to turn the conference back over to David Fisher for any closing remarks.

Great. Thank you and thanks everyone for joining us today. It was great to be able to wrap up 2016 on a strong note and as we said, we're very optimistic heading into the New Year. So we look forward to speaking with you again at the end of Q1. Thanks and have a good evening.

The conference has now concluded. Thank you all for attending today's presentation. You may now disconnect.