Elevate Credit Announces Second Quarter 2019 Results

Elevate Credit announces strong second quarter earnings growth

Names Jason Harvison as Interim CEO

FORT WORTH, Texas--(BUSINESS WIRE)--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 second quarter ended June 30, 2019. The Company grew year-over-year net income by approximately 87%, primarily due to improved credit quality and lower customer acquisition costs. Additionally, the Company announced the resignation of CEO Ken Rees. Jason Harvison has been named as interim CEO, and Saundra Schrock as Chairman of the Board of Directors. Ken Rees will remain on the Elevate Board.

“Elevate continues to deliver strong earnings growth as a result of new underwriting models and strategies that have significantly reduced both fraud and credit losses” said outgoing CEO Ken Rees. “We remain on track to double net income for the second straight year. On a personal note, I have decided now is a good time to step aside as CEO. I am very proud to have led Elevate during this period of growth and transformation alongside Jason Harvison and the rest of the incredible leadership team. I look forward to continuing to serve on the Elevate Board of Directors.”

“On behalf of the Board and the Company, I want to thank Ken for his contributions to Elevate’s success,” said Saundra Schrock, Chairman of the Board. “I am confident the leadership transition will be seamless. The world-class leadership at Elevate, led by interim CEO Jason Harvison, is well-positioned to achieve even greater levels of earnings growth and shareholder value.”

“I am honored to have the opportunity to lead Elevate and build on the successes of the past few years as a public company,” said interim CEO Jason Harvison. “Thus far in 2019, we have delivered excellent performance with net income significantly higher than all of 2018. In the second half of the year, we intend to continue our focus on building a strong foundation for measured growth, further improving credit quality, and delivering value to our shareholders.”

Second Quarter 2019 Financial Highlights¹

• Net income: Net income for the three months ended June 30, 2019 totaled $5.8 million, up $2.7 million, or 87.1%, compared to $3.1 million in the second quarter of 2018. Fully diluted earnings per share for the second quarter of 2019 was $0.13, an increase from $0.07 per fully diluted share a year ago.
• Revenue: Revenues decreased 3.6% for the second quarter of 2019 totaling $177.8 million compared to $184.4 million for the second quarter of 2018 due to a decline in the effective APR of the combined loans receivable. Revenues less net charge-offs totaled $98.2 million for the second quarter of 2019, an increase of 6.0% from $92.6 million in the second quarter of 2018.

__________________________

^1Adjusted EBITDA, Adjusted EBITDA margin, combined loans receivable - principal, combined loans receivable, and combined loan loss reserve 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.

• Combined loans receivable - principal: Combined loans receivable - principal totaled $601.2 million, an increase of $11.7 million, or 2.0%, from $589.5 million for the prior-year quarter.
• Improving credit quality: The ending combined loan loss reserve, as a percentage of combined loans receivable, was 12.3%, lower than 12.9% reported for the prior-year period due to an improvement in credit quality and the continued maturation of the loan portfolio.
• Customer acquisition cost: The average customer acquisition cost was $229 in the second quarter of 2019, which is lower than the targeted range of $250-$300 and lower than $260 for the prior-year quarter. The total number of new customer loans decreased from approximately 85,000 in the second quarter of 2018 to 71,000 in the second quarter of 2019.
• Adjusted EBITDA margin: Adjusted EBITDA increased to $33.9 million, up 18.0% from $28.7 million in the second quarter of 2018. The Adjusted EBITDA margin for the second quarter of 2019 was 19.0%, up from 15.6% in the prior-year quarter.

Year-to-date 2019 Financial Highlights¹

• Net income: Net income for the six months ended June 30, 2019 totaled $19.1 million, up $6.5 million, or 51.6%, compared to $12.6 million in the first half of 2018. Fully diluted earnings per share was $0.43, an increase from $0.29 fully diluted per share a year ago.
• Revenue: Revenues decreased 2.8% for the first half of 2019 totaling $367.3 million compared to $377.9 million for the first half of 2018 due to a decline in the effective APR of the combined loans receivable. Revenues less net charge-offs totaled $183.7 million for the first six months of 2019, down slightly from $184.1 million for the first six months of 2018.
• Customer acquisition cost: The average customer acquisition cost was $226 in the first half of 2019, which is lower than the targeted range of $250-$300 and lower than $276 for the first half of 2018. The total number of new customer loans decreased from approximately 155,000 in the first half of 2018 to 121,000 in the first half of 2019.
• Adjusted EBITDA margin: Adjusted EBITDA increased to $78.5 million, up 19.6% from $65.7 million in the first half of 2018. The Adjusted EBITDA margin for the first half of 2019 was 21.4%, up from 17.4% in the prior-year.

Liquidity and Capital Resources

The Company repaid $17.0 million in subordinated debt early during the second quarter of 2019. As previously disclosed in a press release issued on February 11, 2019, the Company announced amendments to the credit facilities for its four products with Victory Park Capital.

Additionally, the Company's Board of Directors authorized a share repurchase program providing for the repurchase of up to $10 million of our common stock through July 31, 2024. Repurchases will be made in accordance with applicable securities laws from time-to-time in the open market and/or in privately negotiated transactions at our discretion, subject to market conditions and other factors. The stock buyback plan does not require the purchase of any minimum number of shares and may be implemented, modified, suspended or discontinued in whole or in part at any time without further notice. Any repurchased shares will be available for use in connection with equity plans and for other corporate purposes.

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^1Adjusted EBITDA, Adjusted EBITDA margin, combined loans receivable - principal and combined loans receivable 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.

Financial Outlook

The Company is revising the full year 2019 revenue guidance down while leaving the net income, diluted earnings per share and Adjusted EBITDA guidance unchanged. For the full year 2019, the Company expects total revenue of $750 million to $770 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.

Conference Call

The Company will host a conference call to discuss its second quarter 2019 financial results on Monday, July 29th 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 Credit Second Quarter 2019 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 August 12, 2019, and can be accessed by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international), and providing the passcode 13692053, 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 expectations of future financial performance including our outlook for full fiscal year 2019 (including all statements under the heading "Financial Outlook"); our potential to drive long-term earnings growth; our expectation of continued strong earnings through 2019 and that we will see the added benefit from new credit models and reduced cost of capital; 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.

About Elevate

Elevate (NYSE: ELVT), together with its bank partners, has originated $7.4 billion in non-prime credit to more than 2.3 million non-prime consumers to date and has saved its customers more than $5.6 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.

Elevate Credit, Inc. and Subsidiaries Condensed Consolidated Income Statements (Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands, except share and per share amounts)	2019			2018			2019			2018
Revenues	$	177,760		$	184,377		$	367,264		$	377,914
Cost of sales:
Provision for loan losses	78,025			88,598			165,456			180,740
Direct marketing costs	16,194			22,180			27,348			42,875
Other cost of sales	8,562			6,566			13,622			12,895
Total cost of sales	102,781			117,344			206,426			236,510
Gross profit	74,979			67,033			160,838			141,404
Operating expenses:
Compensation and benefits	25,638			23,380			51,348			45,807
Professional services	8,860			8,374			18,559			16,686
Selling and marketing	2,205			2,403			4,051			5,355
Occupancy and equipment	5,179			4,630			10,231			8,749
Depreciation and amortization	4,324			2,962			8,590			5,677
Other	1,710			1,568			3,017			2,785
Total operating expenses	47,916			43,317			95,796			85,059
Operating income	27,063			23,716			65,042			56,345
Other expense:
Net interest expense	(17,947		)	(19,263		)	(37,166		)	(38,476		)
Foreign currency transaction loss	(710		)	(1,231		)	(97		)	(475		)
Non-operating loss	—			—			—			(38		)
Total other expense	(18,657		)	(20,494		)	(37,263		)	(38,989		)
Income before taxes	8,406			3,222			27,779			17,356
Income tax expense	2,634			94			8,649			4,745
Net income	$	5,772		$	3,128		$	19,130		$	12,611
Basic income per share	$	0.13		$	0.07		$	0.44		$	0.30
Diluted income per share	$	0.13		$	0.07		$	0.43		$	0.29
Basic weighted average shares outstanding	43,681,159			42,561,403			43,514,862			42,386,660
Diluted weighted average shares outstanding	44,291,816			44,239,007			44,142,947			43,937,066

Elevate Credit, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)	June 30, 2019			December 31, 2018
ASSETS
Cash and cash equivalents*	$	63,399		$	58,313
Restricted cash.	2,491			2,591
Loans receivable, net of allowance for loan losses of $75,896 and $91,608, respectively*	535,405			561,694
Prepaid expenses and other assets*	11,990			11,418
Operating lease right of use assets	11,858			—
Receivable from CSO lenders	10,246			16,183
Receivable from payment processors*	27,129			21,716
Deferred tax assets, net	13,605			21,628
Property and equipment, net	47,629			41,579
Goodwill	16,027			16,027
Intangible assets, net	1,462			1,712
Derivative assets, net*	—			412
Total assets	$	741,241		$	753,273
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued liabilities*	$	41,445		$	44,950
Operating lease liabilities	16,160			—
State and other taxes payable	1,222			681
Deferred revenue*	15,246			28,261
Notes payable, net*	527,237			562,590
Total liabilities	601,310			636,482
COMMITMENTS, CONTINGENCIES AND GUARANTEES
STOCKHOLDERS’ EQUITY
Preferred stock	—			—
Common stock	18			18
Additional paid-in capital	187,521			183,244
Accumulated deficit	(47,395		)	(66,525		)
Accumulated other comprehensive income (loss)	(213		)	54
Total stockholders’ equity	139,931			116,791
Total liabilities and stockholders’ equity	$	741,241		$	753,273

* 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.

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 combined loan loss reserve.

Adjusted EBITDA and Adjusted EBITDA margin

In addition to net income 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 excluding the impact of income tax expense, non-operating loss, foreign currency transaction 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 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.

The following table presents a reconciliation of Adjusted EBITDA and Adjusted EBITDA margin to Elevate’s net income for the three and six months ended June 30, 2019 and 2018:

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2019			2018			2019			2018
Net income	$	5,772		$	3,128		$	19,130		$	12,611
Adjustments:
Net interest expense	17,947			19,263			37,166			38,476
Share-based compensation	2,476			2,010			4,911			3,647
Foreign currency transaction loss	710			1,231			97			475
Depreciation and amortization	4,324			2,962			8,590			5,677
Non-operating loss	—			—			—			38
Income tax expense	2,634			94			8,649			4,745
Adjusted EBITDA	$	33,863		$	28,688		$	78,543		$	65,669
Adjusted EBITDA margin	19.0		%	15.6		%	21.4		%	17.4		%

 

Supplemental Schedules

 

Revenue by Product
	Three Months Ended June 30, 2019
(Dollars in thousands)	Rise (US)(1)			Elastic (US)(2)			Total Domestic			Sunny (UK)			Total
Average combined loans receivable – principal(3)	$	287,073		$	243,691		$	530,764		$	50,173		$	580,937
Effective APR	126		%	98		%	113		%	219		%	122		%
Finance charges	$	90,384		$	59,317		$	149,701		$	27,330		$	177,031
Other	387			288			675			54			729
Total revenue	$	90,771		$	59,605		$	150,376		$	27,384		$	177,760
	Three Months Ended June 30, 2018
(Dollars in thousands)	Rise (US)(1)			Elastic (US)			Total Domestic			Sunny (UK)			Total
Average combined loans receivable – principal(3)	$	277,281		$	244,583		$	521,864		$	52,092		$	573,956
Effective APR	137		%	97		%	118		%	226		%	128		%
Finance charges	$	94,716		$	59,298		$	154,014		$	29,380		$	183,394
Other	435			460			895			88			983
Total revenue	$	95,151		$	59,758		$	154,909		$	29,468		$	184,377

(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.

Revenue by Product, Continued
	Six Months Ended June 30, 2019
(Dollars in thousands)	Rise (US)(1)			Elastic (US)(2)			Total Domestic			Sunny (UK)			Total
Average combined loans receivable – principal(3)	$	288,941		$	254,980		$	543,921		$	51,254		$	595,174
Effective APR	129		%	98		%	115		%	223		%	124		%
Finance charges	$	185,269		$	124,050		$	309,319		$	56,701		$	366,020
Other	738			384			1,122			122			1,244
Total revenue	$	186,007		$	124,434		$	310,441		$	56,823		$	367,264
	Six Months Ended June 30, 2018
(Dollars in thousands)	Rise (US)(1)			Elastic (US)			Total Domestic			Sunny (UK)			Total
Average combined loans receivable – principal(3)	$	289,565		$	244,980		$	534,545		$	51,970		$	586,515
Effective APR	138		%	97		%	119		%	231		%	129		%
Finance charges	$	197,924		$	118,201		$	316,125		$	59,527		$	375,652
Other	1,265			825			2,090			172			2,262
Total revenue	$	199,189		$	119,026		$	318,215		$	59,699		$	377,914

(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.

Loan Loss Reserve by Product
	Three Months Ended June 30, 2019
(Dollars in thousands)	Rise (US)			Elastic (US)(1)			Total Domestic			Sunny (UK)			Total
Combined loan loss reserve(2):
Beginning balance	$	39,350		$	28,341		$	67,691		$	12,008		$	79,699
Net charge-offs	(40,970		)	(27,130		)	(68,100		)	(11,509		)	(79,609		)
Provision for loan losses	43,013			25,268			68,281			9,744			78,025
Effect of foreign currency	—			—			—			(236		)	(236		)
Ending balance	$	41,393		$	26,479		$	67,872		$	10,007		$	77,879
Combined loans receivable(2)(3)	$	324,620		$	258,200		$	582,820		$	51,852		$	634,672
Combined loan loss reserve as a percentage of ending combined loans receivable	13		%	10		%	12		%	19		%	12		%
Net charge-offs as a percentage of revenues	45		%	46		%	45		%	42		%	45		%
Provision for loan losses as a percentage of revenues	47		%	42		%	45		%	36		%	44		%

	Three Months Ended June 30, 2018
(Dollars in thousands)	Rise (US)			Elastic (US)			Total Domestic			Sunny (UK)			Total
Combined loan loss reserve(2):
Beginning balance	$	44,209		$	28,098		$	72,307		$	11,939		$	84,246
Net charge-offs	(49,494		)	(28,490		)	(77,984		)	(13,772		)	(91,756		)
Provision for loan losses	46,081			29,786			75,867			12,731			88,598
Effect of foreign currency	—			—			—			(557		)	(557		)
Ending balance	$	40,796		$	29,394		$	70,190		$	10,341		$	80,531
Combined loans receivable(2)(3)	$	305,674		$	265,959		$	571,633		$	52,128		$	623,761
Combined loan loss reserve as a percentage of ending combined loans receivable	13		%	11		%	12		%	20		%	13		%
Net charge-offs as a percentage of revenues	52		%	48		%	50		%	47		%	50		%
Provision for loan losses as a percentage of revenues	48		%	50		%	49		%	43		%	48		%

(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 condensed consolidated financial statements.

Loan Loss Reserve by Product, Continued
	Six Months Ended June 30, 2019
(Dollars in thousands)	Rise (US)			Elastic (US)(1)			Total Domestic			Sunny (UK)			Total
Combined loan loss reserve(2):
Beginning balance	$	50,597		$	36,050		$	86,647		$	9,405		$	96,052
Net charge-offs	(98,010		)	(64,401		)	(162,411		)	(21,183		)	(183,594		)
Provision for loan losses	88,806			54,830			143,636			21,820			165,456
Effect of foreign currency	—			—			—			(35		)	(35		)
Ending balance	$	41,393		$	26,479		$	67,872		$	10,007		$	77,879
Combined loans receivable(2)(3)	$	324,620		$	258,200		$	582,820		$	51,852		$	634,672
Combined loan loss reserve as a percentage of ending combined loans receivable	13		%	10		%	12		%	19		%	12		%
Net charge-offs as a percentage of revenues	53		%	52		%	52		%	37		%	50		%
Provision for loan losses as a percentage of revenues	48		%	44		%	46		%	38		%	45		%

	Six Months Ended June 30, 2018
(Dollars in thousands)	Rise (US)			Elastic (US)			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	(112,941		)	(58,175		)	(171,116		)	(22,682		)	(193,798		)
Provision for loan losses	97,870			58,699			156,569			24,171			180,740
Effect of foreign currency	—			—			—			(200		)	(200		)
Ending balance	$	40,796		$	29,394		$	70,190		$	10,341		$	80,531
Combined loans receivable(2)(3)	$	305,674		$	265,959		$	571,633		$	52,128		$	623,761
Combined loan loss reserve as a percentage of ending combined loans receivable	13		%	11		%	12		%	20		%	13		%
Net charge-offs as a percentage of revenues	57		%	49		%	54		%	38		%	51		%
Provision for loan losses as a percentage of revenues	49		%	49		%	49		%	40		%	48		%

(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 condensed consolidated financial statements.

Customer Loan Data by Product
	Three Months Ended June 30, 2019
	Rise (US)			Elastic (US)(1)			Total Domestic			Sunny (UK)			Total
Beginning number of combined loans outstanding	125,021			145,760			270,781			93,898			364,679
New customer loans originated	30,177			13,826			44,003			26,647			70,650
Former customer loans originated	18,850			18			18,868			—			18,868
Attrition	(38,277		)	(17,043		)	(55,320		)	(27,659		)	(82,979		)
Ending number of combined loans outstanding	135,771			142,561			278,332			92,886			371,218
Customer acquisition cost	$	243		$	271		$	252		$	192		$	229
Average customer loan balance	$	2,253		$	1,738		$	1,989		$	512		$	1,620

	Three Months Ended June 30, 2018
	Rise (US)			Elastic (US)			Total Domestic			Sunny (UK)			Total
Beginning number of combined loans outstanding	127,263			138,555			265,818			86,791			352,609
New customer loans originated	27,149			26,305			53,454			31,692			85,146
Former customer loans originated	22,816			127			22,943			—			22,943
Attrition	(46,331		)	(15,847		)	(62,178		)	(25,928		)	(88,106		)
Ending number of combined loans outstanding	130,897			149,140			280,037			92,555			372,592
Customer acquisition cost	$	307		$	234		$	271		$	243		$	260
Average customer loan balance	$	2,187		$	1,711		$	1,934		$	519		$	1,582

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

Customer Loan Data by Product, Continued
	Six Months Ended June 30, 2019
	Rise (US)			Elastic (US)(1)			Total Domestic			Sunny (UK)			Total
Beginning number of combined loans outstanding	142,758			166,397			309,155			89,449			398,604
New customer loans originated	47,542			18,664			66,206			54,920			121,126
Former customer loans originated	36,641			27			36,668			—			36,668
Attrition	(91,170		)	(42,527		)	(133,697		)	(51,483		)	(185,180		)
Ending number of combined loans outstanding	135,771			142,561			278,332			92,886			371,218
Customer acquisition cost	$	276		$	277		$	276		$	165		$	226

	Six Months Ended June 30, 2018
	Rise (US)			Elastic (US)			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	49,414			47,185			96,599			58,682			155,281
Former customer loans originated	38,199			216			38,415			—			38,415
Attrition	(97,506		)	(38,933		)	(136,439		)	(46,637		)	(183,076		)
Ending number of combined loans outstanding	130,897			149,140			280,037			92,555			372,592
Customer acquisition cost	$	318		$	252		$	286		$	260		$	276

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

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 condensed 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 nineteen 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 condensed 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, the Company does not make Rise loans directly, but rather acts as a Credit Services Organization (which is also known as a Credit Access Business), or, “CSO,” and the loans are originated by an unaffiliated third party. There are no new loan originations in Ohio commencing in April 2019, but the Company continues to have obligations as the CSO until the wind-down of this portfolio is complete. 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 condensed 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 condensed consolidated balance sheets since both revenues and cost of sales as reflected in the Company's condensed 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 condensed 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).

	2018												2019
(Dollars in thousands)	March 31			June 30			September 30			December 31			March 31			June 30
Company Owned Loans:
Loans receivable – principal, current, company owned	$	471,996		$	493,908		$	525,717		$	543,405		$	491,208		$	523,785
Loans receivable – principal, past due, company owned	60,876			58,949			69,934			68,251			55,286			55,711
Loans receivable – principal, total, company owned	532,872			552,857			595,651			611,656			546,494			579,496
Loans receivable – finance charges, company owned	31,181			31,519			36,747			41,646			32,491			31,805
Loans receivable – company owned	564,053			584,376			632,398			653,302			578,985			611,301
Allowance for loan losses on loans receivable, company owned	(80,497		)	(76,575		)	(89,422		)	(91,608		)	(76,457		)	(75,896		)
Loans receivable, net, company owned	$	483,556		$	507,801		$	542,976		$	561,694		$	502,528		$	535,405
Third Party Loans Guaranteed by the Company:
Loans receivable – principal, current, guaranteed by company	$	33,469		$	35,114		$	36,649		$	35,529		$	27,941		$	21,099
Loans receivable – principal, past due, guaranteed by company	1,123			1,494			1,661			1,353			696			596
Loans receivable – principal, total, guaranteed by company(1)	34,592			36,608			38,310			36,882			28,637			21,695
Loans receivable – finance charges, guaranteed by company(2)	2,612			2,777			3,103			2,944			2,164			1,676
Loans receivable – guaranteed by company	37,204			39,385			41,413			39,826			30,801			23,371
Liability for losses on loans receivable, guaranteed by company	(3,749		)	(3,956		)	(4,510		)	(4,444		)	(3,242		)	(1,983		)
Loans receivable, net, guaranteed by company(3)	$	33,455		$	35,429		$	36,903		$	35,382		$	27,559		$	21,388
Combined Loans Receivable(3):
Combined loans receivable – principal, current	$	505,465		$	529,022		$	562,366		$	578,934		$	519,149		$	544,884
Combined loans receivable – principal, past due	61,999			60,443			71,595			69,604			55,982			56,307
Combined loans receivable – principal	567,464			589,465			633,961			648,538			575,131			601,191
Combined loans receivable – finance charges	33,793			34,296			39,850			44,590			34,655			33,481
Combined loans receivable	$	601,257		$	623,761		$	673,811		$	693,128		$	609,786		$	634,672
Combined Loan Loss Reserve(3):
Allowance for loan losses on loans receivable, company owned	$	(80,497	)	$	(76,575	)	$	(89,422	)	$	(91,608	)	$	(76,457	)	$	(75,896	)
Liability for losses on loans receivable, guaranteed by company	(3,749		)	(3,956		)	(4,510		)	(4,444		)	(3,242		)	(1,983		)
Combined loan loss reserve	$	(84,246	)	$	(80,531	)	$	(93,932	)	$	(96,052	)	$	(79,699	)	$	(77,879	)
Combined loans receivable – principal, past due(3)	$	61,999		$	60,443		$	71,595		$	69,604		$	55,982		$	56,307
Combined loans receivable – principal(3)	567,464			589,465			633,961			648,538			575,131			601,191
Percentage past due	11		%	10		%	11		%	11		%	10		%	9		%
Combined loan loss reserve as a percentage of combined loans receivable(3)(4)	14		%	13		%	14		%	14		%	13		%	12		%
Allowance for loan losses as a percentage of loans receivable – company owned	14		%	13		%	14		%	14		%	13		%	12		%

(1)	Represents loans originated by third-party lenders through the CSO programs, which are not included in the Company's condensed consolidated financial statements.
(2)	Represents finance charges earned by third-party lenders through the CSO programs, which are not included in the Company's condensed consolidated financial statements.
(3)	Non-GAAP measure.
(4)	Combined loan loss reserve as a percentage of combined loans receivable is determined using period-end balances.