Enova International, Inc. (ENVA) Q2 2017 Earnings Report, Transcript and Summary

Good day, everyone and welcome to the Enova International Second Quarter 2017 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] And please do note that this event is being recorded. I would now like to turn the conference over to Monica Gould, Investor Relations for Enova. Please go ahead.

Thank you, William, and good afternoon, everyone. Enova released results for the second quarter of 2017 ended June 30, 2017, this afternoon after market closed. If 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'd like to note that today's discussion will contain 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 U.S. 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'd like to turn the call over to David.

Thanks, Monica, and thanks everyone, for joining our call today. I'm going to start off by giving a brief overview of the quarter, then I'll update you on our strategy and finally, I will share our perspectives, looking forward. Then I'll turn the call over to Steve Cunningham, our CFO, to discuss our financial results and guidance in more detail. We had a good second quarter and remained pleased with the performance and profitability of our business. Second quarter revenue increased 10% over last year as demand remained healthy across our products. Revenue was in line with the low end of our guidance at $189.9 million, generally revenue came in as expected in Q2, however, the delay in income tax returns – income tax refunds this year puts many of those refunds into Q2, which resulted in lower demand in our U.S. subprime business early in the quarter. Positively though, we saw growth accelerate both in that business as well as others as we move through the second quarter and we exited the quarter with good momentum. Adjusted EBITDA for the quarter was $41.6 million, up 18% from a year ago and net income rose 45% over the same period to $11.9 million or $0.35 per share. EPS and adjusted EBITDA were towards the higher end of our guidance as we are creating meaningful operating leverage with both EBITDA and net income benefiting from solid credit performance, efficient marketing and the leverage inheritance in our online model. During Q1, there were lots of questions about macro credit trends following some weaker credit metrics in subprime auto and prime credit cards. As we discussed at that time, we believe that rapid expansion by companies in those industries was underlying their credit issues and we do not see any credit issues in our book, and we also do not anticipate credit to deteriorate more broadly. Since then, a number of companies in our space and others have reported relatively stable credit metrics and we are seeing the same trends in our portfolio. While our net charge-offs are higher than last year, this is almost exclusively attributable to the strong new customer volumes we have seen over the last several quarters. In addition, our gross profit margin in Q2 was near the upper end of our guidance range, as our near-term credit performance has been good and we're receiving adequate yields for the credit risk in our portfolio. Total company wide originations in Q2, declined slightly from the second quarter of last year, however, we originated significantly more loans in financings this year as both our U.S. subprime and UK subprime businesses have seen good year-over-year growth. In the UK, the number of new customers is up 20% year-over-year, even with the higher new customer volumes, we are able to keep marketing costs low through effective and efficient marketing efforts. Our total portfolio grew 14% year-over-year in the second quarter, driven by strong growth in our installment and line of credit products. Notably, our near prime installment loan balances rose 23% year-over-year to $300 million and now count for over half of our customer loan portfolio in total. Including our small business offerings, installment loans and lines of credits now comprise 87% of our portfolio and 75% of our revenue, leaving just over 12% of single-pay. Our success and strong results across our short-term line of credit and installment and receivables purchase agreement segments have been driven by our continued focus on our six growth businesses, namely: our U.S. subprime business, our U.S. near-prime offerings, our UK consumer brands, U.S. small business financing, our installment loan business in Brazil and lastly, Enova Decisions, our analytics as a service business. Our large U.S. subprime consumer business generated another strong quarter of profitability. That business continues to grow and become more diversified with 46% of its portfolio consisting of line of credit products, 29% installment products and only 25% single-pay products. And as I mentioned, while the demand in this business was a little soft in the beginning of the quarter as a result of the delay in tax refunds, volume strengthened throughout the quarter. In the UK, loan originations increased 9% from Q2 of last year despite the currency impact following the Brexit referendum. On a constant currency basis, loan originations increased a very strong 22% year-over-year. We remain the number one subprime lender by market share in the UK and see this business generating even higher levels of profitability over time, especially if the pound strengthens. NetCredit originations accelerated in the quarter, up 67% from Q1 of this year. NetCredit loan balances ended the quarter at $286 million, which is up 24% from the second quarter of last year. The result is that our U.S. near-prime product is grown to nearly 50% of our total U.S. loan portfolio. And recently, we've seen some meaningful improvements in our marketing efforts through this product, which should help generate continued growth during the back half of this year and beyond. Our small business financing portfolio increased 3% year-over-year and represented 13% of our portfolio at the end of Q2. We're still taking a measured approach to growth with our small business products as we continue to see a shakeout in the nonbank small business lending and financing industry, following some overheating last year that we previously discussed. Due to a number of companies exiting space recently, we're experiencing stronger demand now and pricing continues to improve. If these trends continue, we will likely get moderately more aggressive in this business, particularly given that recent vintages of our small business book are performing well with improving unit economics. Our Brazilian loan portfolio has grown to over $14 million at the end of the second quarter. We've been successful in increasing originations in Brazil with Q2 originations up 55% from Q1 and 184% from Q2 of last year. Demand remains strong in Brazil and our unit economics are solid, which creates a good backdrop for additional growth in that market. Finally, Enova Decisions, our real-time analytics as a service business is gaining traction. We now have customers in a number of verticals including credit, telecom and most recently for-profit education. It is still the very early days for Enova Decisions and for this business to be successful and meaningful to Enova, we will need to ensure that our existing customers are getting great value from our products and then we will need to focus on increasing the rate of customer signings over time. Before I wrap up today, I want to briefly touch on the regulatory and legislative environment. On the Federal side, there's not much new to report regarding the CFPB and the small-dollar rule. As we've discussed in our prior calls, there are no clear signs and timing for substance of the small-dollar rule from the CFPB. As I'm sure most of you are aware, the CFPB did recently released a final arbitration rule after much delay and there's been a significant amount of pushback to that announcement. We would certainly be watching those developments closely as they could foretell the fate of the small-dollar rule in the future. But as we've said before, we support good regulation based on facts and consumer needs and we will be prepared no matter the outcome. As we discussed last quarter, we've been seeing more activity at the state level than we had over the last couple of years seemingly from a backlash of the Trump election with some legislature considering new small dollar lending legislation under the premise that it's less likely there will be rule making from the CFPB. As we discussed last quarter, Maryland passed a bill, which has since become law imposing a 33% rate cap on new lines of credit. At this time, we don't see any other states at high risk and don't expect any meaningful activity for the remainder of this year, although we are monitoring developments closely. In sum, we remain dedicated to our mission of helping hard-working people fulfill their financial responsibilities with fast, trustworthy credit. Our commitment to delivering exceptional products and services to these customers, who trust and count on us is driving growth in our business and we continue to diversify to decrease regulatory risk and spur growth. We remain confident in our direction and believe that world-class team, focused growth strategy, strong competitive position and solid balance sheet will drive continued success. Now I would like to turn the call over to Steve Cunningham, our CFO, who will go over the financials in more detail. Following Steve's remarks, we would 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 second quarter and then provide our outlook for the third quarter and the full year of 2017. We are pleased to report another quarter of solid financial performance. Our diluted earnings per share for the quarter increased 40% from the prior year as revenue increased 10% year-over-year. Credit continues to perform in line with our expectations and operating leverage in our online business model was strong. These factors contributed to an 18% increase in adjusted EBITDA for the second quarter of 2017 versus the prior year quarter. Total revenue was $189.9 million in the second quarter, a 10.1% increase from the year-ago quarter. On a constant currency basis, total revenue increased 11.8%. Year-over-year revenue growth was driven by growth in total company combined loans and finance receivable balances, which increased 13.6% year-over-year to a total of $675.8 million from $595 million in the second quarter of last year. Line of credit products and installment loan products continue to drive the year-over-year increases in total loans and finance receivables balances. Total company originations rose sequentially by 14.5% and decreased less than 1% year-over-year. The year-over-year change was partially driven by slower growth early in the second quarter due to delayed tax refunds. However, as David mentioned, we saw an acceleration in year-over-year originations due to last two months of the quarter, especially for short-term and consumer installment loans. Domestically, revenue increased 12.6% on a year-over-year basis and declined 4% sequentially to $158.1 million in the second quarter. Domestic revenue accounted for 83.2% of our total revenue in the second quarter of 2017. Domestic year-over-year revenue growth was driven primarily by a 17.3% increase in domestic line of credit revenue and a 14.2% increase in domestic installment loan, and receivable purchase agreement revenue. Continued strong demand for these products drove our domestic combined loan and finance receivables balances up 13.9% year-over-year. International revenue declined 1.1% on a year-over-year basis to $31.8 million and accounted for 16.8% of total company revenue in the second quarter. On a constant currency basis, international revenue increased 8.2% on a year-over-year basis. The year-over-year decline was primarily the result of the wind down of our Canadian and Australian businesses and the devaluation of the pound following the Brexit vote last year. Excluding the impact of the wind down of Canada and Australia, international revenue increased 18% year-over-year on a constant currency basis. International loan balances were up 11.4% year-over-year and 15.6% sequentially. On a constant currency basis, international loan balances were up 14% year-over-year. Excluding the impact of the wind down of our Canadian and Australian businesses, international loan balances increased 20.9% year-over-year on a constant currency basis. Turning to gross profit margins, our second quarter gross profit margin for the total company was 57.9%, which compares to a gross profit margin of 62.1% in the second quarter of last year. The decline in gross profit margin was expected given the continued growth in new customer originations and the higher mix of near-prime installment loans in the portfolio. A higher mix of new customers and originations requires higher loss provisions upfront, as new customers default at a higher rate than returning customers with a successful history of payment performance. Given these recent trends, net charge-offs as a percentage of average combined loans and finance receivables increased as expected for the second quarter of 2017 to 12.2% from 10.7% in the prior year quarter. The increase year-over-year was driven primarily by the continued seasoning of new customers originated in recent quarters. I should note that this ratio for the prior year quarter was the lowest quarterly level ever seen for the company and this quarter's NetCredit losses remain in line with our recent historical performance. We continue to expect the consolidated gross profit margin will remain 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 financings receivables in the portfolio. Our domestic gross profit margin was 57.4% in the second quarter compared to 58.8% in the prior year quarter for the reasons I've previously discussed. Our international gross profit margin was 60.8% in the second quarter compared to 76.1% in the prior year quarter. The decline in international gross profit margin from the prior year quarter was driven by strong new customer originations this year and from last year's wind down of the UK line of credit product. We expect our international gross profit margin to range from 55% to 65% 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 saw a strong operating leverage this quarter as our total operating expenses decreased 3.5% year-over-year to $71.5 million. Marketing expenses declined 8.5% year-over-year to $23.4 million in the second quarter and accounted for 12.3% of revenue. This compares to 14.8% of revenue in the prior year quarter. The year-over-year decline was by increased marketing spend efficiency across our channels. We expect marketing spend will increase for the remainder of the year in range in the mid-teens as a percentage of revenue. Operations and technology expenses in the second quarter increased 4.2% year-over-year to $21.8 million, primarily due to volume related servicing, underwriting and transaction expenses. General and administrative expenses decreased 4.6% year-over-year to $26.2 million in the second quarter, primarily due to lower consulting and outsourcing related costs. Adjusted EBITDA, a non-GAAP measure, increased 18% year-over-year to $41.6 million in the second quarter, from $35.2 million in the second quarter of last year. Our adjusted EBITDA margin increased to 21.9% from 20.4% in the second quarter of last year. Our stock-based compensation expense was $3 million in the second quarter, which compared to $2.2 million in the second quarter of last year. Our effective tax rate for the second quarter decreased to 35% from 38.2% in the prior year quarter. The decrease in the effective tax rate in the current quarter was driven primarily by tax benefits from restricted stock units that vested during the second quarter at a price above the original grand price. Net income increased 45% to $11.9 million in the second quarter or $0.35 per diluted share, from net income of $8.2 million or $0.25 per diluted share in the second quarter of last year. Adjusted earnings, a non-GAAP measure, increased to $14 million in the quarter or $0.41 per diluted share, from $9.4 million or $0.28 per diluted share in the prior year quarter. Cash flows from operations in the second quarter totaled $66.2 million and we ended the second quarter with unrestricted cash and cash equivalents of $46.2 million, and total debt of $638.7 million. Our debt balance includes $152 million outstanding under the $295 million of combined installment loan securitization facilities. Additionally, we finalized the refinancing of our revolving line of credit on June 30, to replace our existing line of credit. We increased the total amount of the credit line from $35 million to $40 million and expanded the facility from a single lender to a syndicate. There was no balance outstanding on our $40 million revolving line of credit at the end of the second quarter. With that, I'd like to turn to our outlook for the third quarter and full year 2017. We remain focused on continuing to produce strong profitability as we further grow our six businesses. Our outlook reflects continued strong growth in each of our businesses, a continued higher mix of new customers and originations, and no impact to our U.S. business from proposed CFPB rule making during 2017. Any significant volatility in the British pound from current levels could also impact our results. We expect the momentum in originations and receivables growth that we saw as we exited the second quarter to continue into the third quarter as marketing spend increases seasonally and we add more new customers. As we've discussed in prior quarters, this should lead to increases in revenue that could pressure gross margins and EBITDA due to higher marketing spend and increase provisioning for higher credit losses that we typically see from new customers. As noted in our earnings release, in the third quarter of 2017, we expect total revenue to be between $200 million and $220 million, GAAP diluted earnings per share to be between $0.02 and $0.21 per share, adjusted EBITDA to be between $25 million and $35 million and adjusted earnings per share to be between $0.07 and $0.25 per share. For the full year 2017, we expect total revenue to be between $810 million and $860 million. Diluted earnings per share to be between $0.88 and $1.24 per share, adjusted EBITDA to be between $145 million and $165 million and adjusted earnings per share to be between $1.07 and $1.43 per share. And with that, I will hand the call back over to David.

Great. Thanks, Steve. We'll now open up the call for any questions you might have.

We will now begin the question-and-answer session. [Operator Instructions] And our first questioner of today is going to be David Scharf with JMP. Please go ahead.

Hi, good afternoon. Thanks for taking my questions. A couple of things to start, maybe first just the credit side. David, I know you reiterated that you generally felt it was pretty stable and not a lot of red flags on the horizon, I'm wondering as I look at the ending allowance rate, 12.7%, I mean is the right way to be thinking about this is that, it's basically the same as it was the same period last year, despite what should be a bigger mix of new customers and that's probably as much of an indication of your forward outlook as anything else? I'm just trying to get a feel – I mean there's always product mix shiftings going on, but as I look at the overall allowance rate is that signaling to me that, setting aside all the noise of shifting mix and so forth it's pretty much the same outlook as it was 12 months ago?

Yes. I think if you compare it to the same quarter last year, it can be a little misleading because that quarter was the lowest quarter ever, as Steve mentioned. And so taking a longer-term perspective, I think, it's helpful. I say yes. But the short answer is yes, I think the other really important metric to look at is gross margin because gross margin gives you more of a near-time view and also takes into account kind of revenue. The revenue levels you're getting per dollar of loan origination changes based on mix and based on kind of changes in the products over time. And you can see this quarter that gross margin came in strong and near the upper end of the 50% to 60% guidance range that Steve has given and that's a pretty good indication that we have the right level of credit performance given the level of yields in our portfolio.

Got it. And along those lines, in terms of how you're pricing for that risk, is there anything in any of your subprime product categories on the competitive front that have changed noticeably in terms of price competition? Or is the market pretty stable and rational this far?

I would say not – yes, there's been no changes on the competitive front that has influenced our pricing or level of risk taking on the consumer side.

Okay. Got it. I'll ask one more, an obvious one then I'll get back in queue. If you had to sum up in a nutshell, what may have changed in the second half guidance versus three months ago? What would that be?

So the second half guidance, I think, revenue, we're looking pretty strong and EBITDA we are taking a more conservative view because if we bring on the stronger levels of new customers that we kind of exited Q2 with and that we see continuing in Q3 that relate to slightly higher marketing spend. We've been guiding to higher marketing spend, so last couple of quarters, it's taken us a little while to get there. It was higher in Q2, but probably not as high as we thought. But we continue to think there is opportunity to invest in more new customer volumes. So with higher levels of marketing spend and, obviously, the higher levels of loan loss provisioning that come along with a greater percentage of new customers that will put some pressure on EBITDA in the short-term. Obviously, we are very, very confident that those are profitable customers that will generate strong profitability over time, we wouldn't be originating those loans. So if you look at kind of second half guidance, that's probably the way of summing up. If you look at annual guidance, it's probably just that combined with just incorporating the lower level of revenue in Q2 just kind of pushing that through to the year, which, as we mentioned, was largely attributed to just the delay – first of all, it wasn't that low. It's that kind of low end of our guidance. It wasn't abnormally low and it's almost solely attributable to the delay in tax refund that we saw in April with momentum picking up through the quarter.

Got it. I apologize, I'm going to cheat, one more follow-up. Just following up on the thought of adding more new customers. I mean when you think about this strategically, should we read into that anything that suggests that repeat borrowing isn't as strong as usual? Or is it more, let's go out and acquire customers while we're still in the nice macro background?

It's much more that latter point. We – existing customer volume is strong. It's right where we anticipated to be for the year. There is – it's kind of dead on. And increase in new customer volume is, I think, just strengthening our business, good demand and good execution by our teams and growing these businesses that still have lots and lots of headroom. So – no, it's not a decrease in existing customer volume at all, it's the growth in new customer volume.

Got it. Thanks very much.

Yes.

And our next questioner today is going to be John Rowan with Janney. Please go ahead.

Good afternoon, guys.

Hi, John.

Just kind of going back to David's question a little bit here. Obviously, you are talking a lot about provision expense being higher or the charge-off rate being higher because of the new customers. David, I think you gave in your prepared remarks that in UK new customers were up 20% year-over-year, is that correct?

Yes. That's right.

So, is that the reason why the reason why the international provision expense went from like $7.7 million to $12.5million? And then if you have maybe the U.S. numbers, is there a comparable number for like total new customers, unique customers that we can use?

We don't break out provision by new versus existing customers and obviously provision for both of them although at different rate. But let me say, it's really the charge-off levels that charge-off percentage that's higher. Provision is still really, really strong in the upper 50s. I think that's a sign that credit performance is good and especially – you got it – there's – its credit relative to yield, right. So it's not just credit in a vacuum. We have higher defaults than a prime lender and the question is whether you're getting paid for those higher levels of defaults, and that can change over time. And one indication of that, other than trying to do a bunch of math around mix, which is really, really hard is to look at those gross margin percentages. And those gross margin percentage being high is a pretty good indication and more of a leading indicator that we're getting adequate returns for the risk we're taking in our portfolio where net charge-offs are really more of a backwards looking indicator.

And then the second part of my question, do you also have a comparable number for total customers for U.S. customers relative to that UK customer count that you gave?

You're talking about the increase in domestic customers?

We have domestic originations, right?

Yes, we do.

Yes, we can get you domestic originations.

I was trying to understand what the rate of the new unique customers are, not necessarily originations that would be to an existing customer because that's kind of – that should correlate then with just rising charge-offs.

Yes. We don't break that out. And on the UK – and then even on the UK the number I quoted was loan originations were up 22% year-over-year. That is both new and existing. That could include an increase in existing customer borrowings as well, that's not a pure new customer number.

Okay. And then just last question. What would be the guidance for the tax rate, going forward?

Yes. The tax rate, I would expect it to be around the mid-30s percent based on our first half performance.

All right. Thanks very much.

You bet.

And the next questioner is going to be John Hecht with Jefferies. Please go ahead.

Hey, guys thanks very much. Just I think it's sort of a moderate question based on – you mentioned resurgence in growth after the effects of the tax delay wore off during the quarter. I mean, do you think – could you advise us that the pace you've seen over the last two months, are they ahead of where they were last year to the point where we could, I guess, safely model year-over-year growth at the product level of originations? Or we're still kind of working through some of the ongoing effects of the tax refunds?

The problem is so much changes in our business year-over-year. I think the better methodology, quite frankly, is to look at sequential quarters adjusted for seasonality. So if you look at the seasonality over the last couple of years and then apply that to where we kind of exited Q2, really what you saw – what we saw in Q2 was just – if you look at the revenue kind of revenue being more towards the lower end of our guidance as opposed to the top end or the middle. You're talking about $5 million to $10 million of revenue almost solely from our U.S. subprime business, largely in April with May and June being kind of right on where we expected it to be. So if you just kind of adjust the U.S. subprime business up by have $5 million or so in revenue, you would get more kind of apples-to-apples comparison versus Q2 of last year where the tax refunds weren't delayed.

Okay. So you're advocating use this kind of base from here and then grow at what we saw Q2 to Q3 last year will give us a more fair kind of way of modeling it.

It's just the business mix that's changed a lot year-over-year.

Okay. That makes sense. I think you mentioned – nitpicky question here, I guess, the Maryland law, any change was there any impact you guys on that, that's meaningful? Or you're just diversified enough that it's not worth mentioning?

There's nothing in Q2. We don't expect anything meaningful in the rest of the year that changes in the guidance that Steve gave and certainly with our diversified product base and kind of the way that law operates, we don't see any meaningful impact to our numbers.

Okay. And we don't see a lot of this until we get the Q. But I'm wondering is there any – can you tell us maybe how like if you have these numbers available, have delinquency numbers, maybe aggregate levels or something might have trended relative to the year-ago quarter just to give us – that's the pipeline of potential charge-offs that will help us think about the charge-off content coming in Q3.

Yes. We'll have that when the Q comes out, John.

Okay. Appreciate it. All right, thanks a lot guys.

All right, thank you.

[Operator Instructions] And the next questioner is going to be Vincent Caintic with Stephens. Please go ahead.

Hey, good afternoon guys. Just a question also on originations, how much of your originations in the second quarter are to new customers versus existing customers? Because I guess, historically, it's usually 15%, but I'm kind of wondering what the basis of growth in that?

Yes. So in the second quarter, new customers across all of our businesses based on dollar originations was just a little over 25%, which is where we were really in the third –second, third quarters of last year as well. So we've seen it kind of hang between 20% and 25% here over the past year or so, which is up quite a bit from 2015.

Okay, got it. And so when kind of we think about the EPS and EBITDA range that you have and you kind of tying it to the levels of growth maybe marketing expense and provision expense. Can we sort of think about it as – if you're having – if that mix increases then you're kind of going to be in the lower end of the range here and the converse is true so you're kind of working towards more new originations?

That's right. So we've talked about this for a few quarters where strong growth we have a higher average portfolio is going to drive revenue but that mix could drive you to the lower half of the EBITDA range, which is linked to that lower half of our EPS and adjusted EPS guidance ranges as well.

Okay, got it. And then separately, David, you touched on this in the prepared remarks but on the kind of the macro environment and some of the other lenders having previously worst losses but maybe it stabilizing part of that stabilization at least when I'm hearing with some of the credit cards, even some of the subprime once they're pulling back and that seems to be tightening their credit and pulling back on loan growth and that's helping them out. But I'm wondering if that's an opportunity for you, overall credit is supplied and the market is coming down maybe that's a benefit for you guys. I'm just kind of wondering what your thoughts are maybe that's driving some of this new customer growth.

Yes, again, I think, maybe a teeny bit around the fringes but again the pullbacks have largely been, as you mentioned, in the prime credit cards guys, that's not really our customer. Subprime model, there's been a little pull back and that could be a little bit that can't – customers can't lever up their card they might be coming to NetCredit for example for an installment loan instead. And so there could be some growth from there, we haven’t seen those – that story though of kind of bad credit and pulling back and improving credit has been largely limited to those two portions of the finance industry. I think to look deeper in the subprime, you look at some of the installment lenders, good credit has been more of a stable story for the last several quarters as we've been talking about all along. I think some of the noise in Q1 was really just that and I think over time, has shown – has really been focused on those two specific segments of the industry.

Okay, very helpful. Thank you.

Yes.

Yes.

We look to have no further questions, so this will conclude the question-and-answer session. I would like to turn the conference back over to David Fisher, CEO, for any closing remarks.

Great, thank you. Thanks, everybody, for joining us today. We look forward to updating you on our progress next quarter. Have a good rest of your day. Bye-bye.

And the conference is now concluded. Thank you all for attending today's presentation. You may now disconnect your lines.