enva-10q_20170930.htm

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

33,464,780 of the Registrant’s common shares, $.00001 par value, were outstanding as of October 30, 2017.

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You should not place undue reliance on these statements. These forward-looking statements give current expectations or forecasts of future events and reflect the views and assumptions of senior management with respect to the business, financial condition, operations and prospects of Enova International, Inc. and its subsidiaries (collectively, the “Company”). When used in this report, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecast,” “project” and similar expressions or variations as they relate to the Company or its management are intended to identify forward-looking statements. Forward-looking statements address matters that involve risks and uncertainties that are beyond the ability of the Company to control and, in some cases, predict. Accordingly, there are or will be important factors that could cause the Company’s actual results to differ materially from those indicated in these statements. Key factors that could cause the Company’s actual financial results, performance or condition to differ from the expectations expressed or implied in such forward-looking statements include, but are not limited to, the following:

The foregoing list of factors is not exhaustive and new factors may emerge or changes to these factors may occur that would impact the Company’s business and cause actual results to differ materially from those expressed in any of our forward-looking statements. Additional information regarding these and other factors may be contained in the Company’s filings with the Securities and Exchange Commission (the “SEC”). Readers of this report are encouraged to review all of the Risk Factors contained in the Company’s filings with the SEC to obtain more detail about the Company’s risks and uncertainties. All forward-looking statements involve risks, assumptions and uncertainties. The occurrence of the events described, and the achievement of the expected results, depends on many events, some or all of which are not predictable or within the Company’s control. If one or more events related to these or other risks or uncertainties materialize, or if management’s underlying assumptions prove to be incorrect, actual results may differ materially from what the Company anticipates. The forward-looking statements in this report are made as of the date of this report, and the Company disclaims any intention or obligation to update or revise any forward-looking statements to reflect events or circumstances occurring after the date of this report. All forward-looking statements in this report are expressly qualified in their entirety by the foregoing cautionary statements.

	September 30,						December 31,
	2017			2016			2016
Assets
Cash and cash equivalents	$	110,054		$	45,681		$	39,934
Restricted cash and cash equivalents (includes restricted cash of consolidated VIEs of $22,161, $18,119 and $19,468 as of September 30, 2017 and 2016 and December 31, 2016, respectively)		29,866			39,272			26,306
Loans and finance receivables, net (includes loans of consolidated VIEs of $296,478, $191,534 and $234,497 and allowance for losses of $22,115, $15,518 and $17,731 as of September 30, 2017 and 2016 and December 31, 2016, respectively)		637,736			542,865			561,550
Income taxes receivable		9,319			—			—
Other receivables and prepaid expenses		23,796			18,649			19,524
Property and equipment, net		46,557			47,486			47,100
Goodwill		267,015			267,012			267,010
Intangible assets, net		4,593			5,675			5,404
Other assets		10,842			8,439			11,051
Total assets	$	1,139,778		$	975,079		$	977,879
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses	$	78,897		$	85,433		$	71,671
Income taxes currently payable		—			5,149			282
Deferred tax liabilities, net		20,681			16,233			14,316
Long-term debt (includes long-term debt of consolidated VIEs of $186,533, $136,953 and $165,419 and debt issuance costs of $762, $2,416 and $1,869, as of September 30, 2017 and 2016 and December 31, 2016, respectively)		765,395			635,179			649,911
Total liabilities		864,973			741,994			736,180
Commitments and contingencies (Note 8)
Stockholders' equity:
Common stock, $0.00001 par value, 250,000,000 shares authorized, 33,828,668, 33,260,017 and 33,364,525 shares issued and 33,608,611, 33,214,594 and 33,293,100 outstanding as of September 30, 2017 and 2016 and December 31, 2016, respectively		—			—			—
Preferred stock, $0.00001 par value, 25,000,000 shares authorized, no shares issued and outstanding		—			—			—
Additional paid in capital		26,749			16,338			18,446
Retained earnings		257,812			226,741			235,455
Accumulated other comprehensive loss		(7,017	)		(9,692	)		(11,578	)
Treasury stock, at cost (220,057, 45,423 and 71,425 shares as of September 30, 2017 and 2016 and December 31, 2016, respectively)		(2,739	)		(302	)		(624	)
Total stockholders' equity		274,805			233,085			241,699
Total liabilities and stockholders' equity	$	1,139,778		$	975,079		$	977,879

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Revenue	$	217,878		$	195,943		$	600,045		$	543,131
Cost of Revenue		107,341			95,391			269,087			230,421
Gross Profit		110,537			100,552			330,958			312,710
Expenses
Marketing		27,000			26,722			69,993			73,500
Operations and technology		27,163			20,637			72,512			61,706
General and administrative		25,164			21,307			77,105			76,747
Depreciation and amortization		3,533			3,789			10,396			12,004
Total Expenses		82,860			72,455			230,006			223,957
Income from Operations		27,677			28,097			100,952			88,753
Interest expense, net		(18,292	)		(16,117	)		(52,526	)		(48,058	)
Foreign currency transaction gain		65			145			354			2,184
Loss on early extinguishment of debt		(14,927	)		—			(14,927	)		—
(Loss) Income before Income Taxes		(5,477	)		12,125			33,853			42,879
(Benefit from) provision for income taxes		(2,109	)		4,288			11,496			16,991
Net (Loss) Income	$	(3,368	)	$	7,837		$	22,357		$	25,888
Earnings Per Share:
Net (loss) income per common share:
Basic	$	(0.10	)	$	0.24		$	0.67		$	0.78
Diluted	$	(0.10	)	$	0.23		$	0.66		$	0.78
Weighted average common shares outstanding:
Basic		33,670			33,211			33,533			33,176
Diluted		33,670			33,558			34,119			33,360

									Accumulated
					Additional				Other									Total
	Common Stock				Paid in		Retained		Comprehensive			Treasury Stock, at cost						Stockholders’
	Shares		Amount		Capital		Earnings		Loss			Shares			Amount			Equity
Balance at December 31, 2015		33,151	$	—	$	9,924	$	200,853	$	(4,622	)		(29	)	$	(187	)	$	205,968
Stock-based compensation expense				—		6,414		—		—						—			6,414
Shares issued under stock-based plans		109		—		—		—		—						—			—
Net income				—		—		25,888		—						—			25,888
Foreign currency translation loss, net of tax				—		—		—		(5,070	)					—			(5,070	)
Purchases of treasury shares, at cost				—		—		—		—			(16	)		(115	)		(115	)
Balance at September 30, 2016		33,260	$	—	$	16,338	$	226,741	$	(9,692	)		(45	)	$	(302	)	$	233,085

Balance at December 31, 2016		33,365	$	—	$	18,446	$	235,455	$	(11,578	)		(71	)	$	(624	)	$	241,699
Stock-based compensation expense				—		8,303		—		—						—			8,303
Shares issued under stock-based plans		464		—		—		—		—						—			—
Net income				—		—		22,357		—						—			22,357
Foreign currency translation gain, net of tax				—		—		—		4,561						—			4,561
Purchases of treasury shares, at cost				—		—		—		—			(149	)		(2,115	)		(2,115	)
Balance at September 30, 2017		33,829	$	—	$	26,749	$	257,812	$	(7,017	)		(220	)	$	(2,739	)	$	274,805

	Nine Months Ended
	September 30,
	2017			2016
Cash Flows from Operating Activities
Net Income	$	22,357		$	25,888
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		10,396			12,004
Amortization of deferred loan costs and debt discount		4,515			5,056
Cost of revenue		269,087			230,421
Stock-based compensation expense		8,303			6,414
Loss on early extinguishment of debt		14,927			—
Deferred income taxes, net		3,802			(1,364	)
Other		—			(151	)
Changes in operating assets and liabilities:
Finance and service charges on loans and finance receivables		(10,232	)		(12,043	)
Other receivables and prepaid expenses		(3,290	)		1,700
Accounts payable and accrued expenses		1,033			22,130
Current income taxes		(9,601	)		10,652
Net cash provided by operating activities		311,297			300,707
Cash Flows from Investing Activities
Loans and finance receivables originated or acquired		(998,333	)		(987,255	)
Loans and finance receivables repaid		672,474			651,865
Change in restricted cash		(3,030	)		(32,776	)
Purchases of property and equipment		(10,804	)		(11,466	)
Other investing activities		1,798			72
Net cash used in investing activities		(337,895	)		(379,560	)
Cash Flows from Financing Activities
Borrowings under revolving line of credit		30,000			45,000
Repayments under revolving line of credit		(30,000	)		(88,400	)
Borrowings under securitization facility		137,200			218,961
Repayments under securitization facility		(116,085	)		(82,008	)
Issuance of senior notes		250,000			—
Repayments of senior notes		(155,000	)		—
Debt issuance costs paid		(9,564	)		(3,516	)
Debt prepayment penalty paid		(11,335	)		—
Treasury shares purchased		(2,115	)		(115	)
Net cash provided by financing activities		93,101			89,922
Effect of exchange rates on cash		3,617			(7,454	)
Net increase in cash and cash equivalents		70,120			3,615
Cash and cash equivalents at beginning of year		39,934			42,066
Cash and cash equivalents at end of period	$	110,054		$	45,681

Supplemental Disclosures
Loans and finance receivables renewed	$	234,258		$	238,696

On September 7, 2011, Cash America International, Inc. (“Cash America,” now known as FirstCash, Inc. due to its merger with First Cash Financial Services, Inc. on September 1, 2016), formed a new company, Enova International, Inc. (the “Company”). On September 13, 2011, Cash America contributed to the Company all of the stock of its wholly-owned subsidiary, Enova Online Services, Inc., in exchange for 33 million shares of the Company’s common stock. The Company became an independent, publicly traded company on November 13, 2014 when Cash America completed the tax-free spin-off of approximately 80% of the outstanding shares of the Company to holders of Cash America’s common stock (the “Spin-off”). Cash America (and then First Cash) retained approximately 20% of the Company’s stock but completed the sale of its entire holding in the Company as of December 6, 2016. The consolidated financial statements of the Company reflect the historical results of operations and cash flows of the Company during each respective period. The financial statements include goodwill and intangible assets arising from businesses previously acquired.

The Company operates an internet-based lending platform to serve customers in need of cash to fulfill their financial responsibilities. Through a network of direct and indirect marketing channels, the Company offers funds to its customers through a variety of unsecured loan and finance receivable products. The business is operated primarily through the internet to provide convenient, fully-automated financial solutions to its customers. The Company originates, arranges, guarantees or purchases consumer loans and provides financing to small businesses through a line of credit account, installment loan or receivables purchase agreement product (“RPAs”). Consumer loans include short-term loans, line of credit accounts and installment loans. RPAs represent a right to receive future receivables from a small business. “Loans and finance receivables” include consumer loans, small business lines of credit, small business installment loans and RPAs.

The Company consolidates any variable interest entity (“VIE”) where it has been determined it is the primary beneficiary. The primary beneficiary is the entity which has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance as well as the obligation to absorb losses or receive benefits of the entity that could potentially be significant to the VIE.

The financial statements presented as of September 30, 2017 and 2016 and for the three and nine-month periods ended September 30, 2017 and 2016 are unaudited but, in management’s opinion, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for such interim periods. Operating results for three and nine-month periods are not necessarily indicative of the results that may be expected for the full fiscal year.

These financial statements and related notes should be read in conjunction with the Company’s audited consolidated financial statements as of December 31, 2016 and 2015 and for the years ended December 31, 2016, 2015 and 2014 and related notes, which are included on Form 10-K filed with the SEC on February 24, 2017.

The Company includes funds to be used for future debt payments relating to its securitization transactions and escrow deposits in restricted cash and cash equivalents.

The Company recognizes revenue based on the financing products and services it offers and on loans it acquires. “Revenue” in the consolidated statements of income includes: interest income, finance charges, fees for services provided through the Company’s credit services organization and credit access business programs (“CSO programs”) (“CSO fees”), revenue on RPAs, service charges, draw fees, minimum billing fees, purchase fees, late fees and non-sufficient funds fees as permitted by applicable laws and pursuant to the agreement with the customer. For short-term loans that the Company offers, interest and finance charges are recognized on an effective yield basis over the term of the loan. For line of credit accounts, interest is recognized over the reporting period based upon the balance outstanding and the contractual interest rate, draw fees are recognized on an effective yield basis over the estimated outstanding period of the draw, and minimum billing fees are recognized when assessed to the customer. For installment loans, interest is recognized on an effective yield basis over the term of the loan. For RPAs, revenue and purchase fees are recognized on an effective yield basis over the projected delivery term of the agreements and fees are recognized when assessed. CSO fees are recognized on an effective yield basis over the term of the loan. Late and nonsufficient funds fees are recognized when assessed to the customer. Direct costs associated with originating loans and purchasing RPAs, such as third-party customer acquisition costs, are deferred and amortized against revenue on an effective yield basis over the term of the loan or the projected delivery term of the finance receivable. Short-term loans, line of credit accounts, installment loans, RPAs, unpaid and accrued interest, fees and revenue and deferred origination costs are included in “Loans and finance receivables, net” in the consolidated balance sheets.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. In accordance with Accounting Standards Codification (“ASC”) 350, Goodwill, the Company tests goodwill and intangible assets with an indefinite life for potential impairment annually as of June 30 and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value below its carrying amount.

The Company first assesses qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. In assessing the qualitative factors, management considers relevant events and circumstances including but not limited to macroeconomic conditions, industry and market environment, overall financial performance of the Company, cash flow from operating activities, market capitalization and stock price. If the Company determines that the two-step quantitative impairment test is required, management uses the income approach to complete its annual goodwill assessment. The income approach uses future cash flows and estimated terminal values for the Company that are discounted using a market participant perspective to determine the fair value, which is then compared to the carrying value to determine if there is impairment. The income approach includes assumptions about revenue growth rates, operating margins and terminal growth rates discounted by an estimated weighted-average cost of capital derived from other publicly-traded companies that are similar but not identical from an operational and economic standpoint. The Company completed its annual assessment of goodwill as of June 30, 2017 based on qualitative factors and determined that the fair value of its goodwill exceeded carrying value, and, as a result, no impairment existed at that date. Although no goodwill impairment was noted, there can be no assurances that future goodwill impairments will not occur.

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The amendments in ASU 2016-09 simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company adopted ASU 2016-09 on January 1, 2017. The adoption of ASU 2016-09 did not have a material impact on the Company’s financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) (“ASU 2016-15”). The amendments in ASU 2016-15 provide guidance on eight specific cash flow issues, including debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, distributions received from equity method investees and beneficial interests in securitization transactions. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted ASU 2016-15 on July 1, 2017. The adoption of ASU 2016-15 did not have a material impact on the Company’s financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation–Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”) clarifying when a change to the terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance requires modification accounting if the fair value, vesting condition or the classification of the award is not the same immediately before and after a change to the terms and conditions of the award. The new guidance is effective on a prospective basis for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. The adoption of ASU 2017-09 is not expected to have a material impact on the Company’s financial statements.

In January 2017, the FASB issued ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”) to clarify the scope of Subtopic 610-20, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets, and to add guidance for partial sales of nonfinancial assets. ASU 2017-05 is effective at the same time as the amendments in ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). Therefore, for public entities, the amendments are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. The Company does not expect that the adoption of ASU 2017-05 will have a material effect on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment (“ASU 2017-04”) to simplify the accounting for goodwill impairment. ASU 2017-04 removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a

reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company does not expect that the adoption of ASU 2017-04 will have a material effect on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) – Clarifying the Definition of a Business (“ASU 2017-01”). ASU 2017-01 provides a screen to determine when an asset or group of assets acquired is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. ASU 2017-01 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. The Company does not expect that the adoption of ASU 2017-01 will have a material effect on its consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash (“ASU 2016-18”). ASU 2016-18 clarifies certain existing principles in ASC 230, Statement of Cash Flows, including providing additional guidance related to transfers between cash and restricted cash and how entities present, in their statement of cash flows, the cash receipts and cash payments that directly affect the restricted cash accounts. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The adoption of ASU 2016-18 will modify the Company's current disclosures and classifications within the consolidated statement of cash flows but it is not expected to have a material effect on the Company’s consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”), which requires entities to recognize the income tax impact of an intra-entity sale or transfer of an asset other than inventory when the sale or transfer occurs, rather than when the asset has been sold to an outside party. ASU 2016-16 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted. The Company does not expect that the adoption of ASU 2016-16 will have a material effect on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016‑13”). The amendments in ASU 2016‑13 replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016‑13 is effective for annual periods beginning after December 15, 2019, and interim periods within those annual periods. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. The Company is assessing the impact of ASU 2016‑13, which at the date of adoption will increase the allowance for credit losses with a resulting negative adjustment to retained earnings.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 requires lessee recognition on the balance sheet of a right-of-use asset and a lease liability, initially measured at the present value of the lease payments. It further requires recognition in the income statement of a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis. Finally, it requires classification of all cash payments within operating activities in the statement of cash flows. ASU 2016-02 is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2018. Early adoption is permitted for all entities upon issuance. Upon adoption of ASU 2016-02, the Company expects to report higher assets and liabilities as a result of including additional leases on the consolidated balance sheet. The Company does not expect the adoption of ASU 2016-02 to have a material impact on the consolidated statements of income or the consolidated statements of stockholders' equity.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016‑01”), which requires that equity investments, except for those accounted for under the equity method or those that result in consolidation of the investee, be measured at fair value, with subsequent changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. ASU 2016-01 also impacts the presentation and disclosure requirements for financial instruments. ASU 2016-01 is effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted only for certain provisions. The Company does not expect that the adoption of ASU 2016-01 will have a material effect on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer

contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU No. 2015-14, Deferral of the Effective Date, deferring the effective date of ASU 2014-09 to annual reporting periods beginning after December 15, 2017. In March 2016, the FASB issued ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), to clarify revenue recognition accounting when a third party is involved in providing goods or services to a customer. In April 2016, the FASB issued ASU 2016-10, Identifying Performance Obligations and Licensing, to clarify the implementation guidance on identifying performance obligations and licensing. Early adoption of ASU 2016‑10 is permitted only as of an annual reporting period beginning after December 15, 2016. In May 2016, the FASB issued ASU 2016-12, Narrow-Scope Improvements and Practical Expedients, to reduce the risk of diversity in practice for certain aspects in ASU 2014-09, including collectibility, noncash consideration, presentation of sales tax and transition. In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, which clarifies the guidance in Topic 606 on assessing certain aspects of the new revenue standard. The Company plans to adopt the revenue recognition guidance in the first quarter of 2018 using the modified retrospective method of adoption. The Company has completed its initial assessment of the guidance and determined its loan and finance receivables are excluded from the scope of ASU 2014-09. As a result of this scope exception, the Company has concluded the impact to the consolidated financial statements will not be material in the period of adoption and in future periods. The Company is finalizing its assessment of ASU 2014-09 and the impact on its financial statement disclosures.

In a review of marketing expenses related to the origination of loans, the Company determined during the quarter that certain amounts should be deferred over the life the corresponding loans. The Company recorded a reduction to revenue and marketing expense of $0.7 million and $1.9 million, respectively, in the third quarter of 2017 as an out-of-period adjustment related to amounts from prior periods previously recognized as expense. The Company believes this adjustment was not material to the current period or any previously issued financial statements.

On June 23, 2015, the Company completed the purchase of certain assets of a company operating as The Business Backer, LLC, which purchases discounted future accounts receivables from small businesses in the United States through RPAs, which provide working capital for small businesses. The total consideration of $26.4 million was comprised of $17.7 million in cash at closing, a $3.0 million promissory note (included in “Accounts payable and accrued expenses” in the consolidated balance sheets) and estimated contingent consideration of $5.7 million based on future earn-out opportunities. The contingent purchase consideration was recorded at its estimated fair value at the date of acquisition based upon the Company’s assessment of the probable earnings attributable to the business as defined in the purchase agreement. To the extent operating results exceed the Company’s estimate, additional contingent consideration would be due, however the total consideration paid may not exceed $71 million. The contingent purchase consideration is revalued each reporting period with changes in fair value of the contingent consideration obligations recognized as a gain or loss on fair value remeasurement in our consolidated statements of income. The fair value of the contingent purchase consideration was remeasured as of December 31, 2016 and a gain from the fair value remeasurement of $3.3 million was recognized. There was no change in fair value measurement of contingent consideration for the three and nine months ended September 30, 2017.

This purchase was not material to the Company’s consolidated financial statements. The operating results of the purchased assets, which were not material, have been included in the Company’s consolidated financial statements from the date of acquisition.

Revenue generated from the Company’s loans and finance receivables for the three and nine months ended September 30, 2017 and 2016 was as follows (dollars in thousands):

The Company classifies its loans and finance receivables as either current or delinquent. Short-term loans are considered delinquent when payment of an amount due is not made as of the due date. If a line of credit account or installment loan customer misses one payment, that payment is considered delinquent and the balance of the loan is considered current. If a line of credit account or installment loan customer does not make two consecutive payments, the entire account or loan is classified as delinquent and placed on a non-accrual status. The Company allows for normal payment processing time before considering a loan delinquent but does not provide for any additional grace period.

The Company does not accrue interest on delinquent loans and does not resume accrual of interest on a delinquent loan unless it is returned to current status. In addition, delinquent loans generally may not be renewed, and if, during its attempt to collect on a delinquent loan, the Company allows additional time for payment through a payment plan or a promise to pay, it is still considered delinquent. Generally, all payments received are first applied against accrued but unpaid interest and fees and then against the principal balance of the loan.

The Company monitors the performance of its loan and finance receivable portfolios and maintains either an allowance or liability for estimated losses on loans and finance receivables (including revenue, fees and/or interest) at a level estimated to be adequate to absorb losses inherent in the portfolio. The allowance for losses on the Company’s owned loans and finance receivables reduces the outstanding loans and finance receivables balance in the consolidated balance sheets. The liability for estimated losses related to loans guaranteed under its CSO programs is initially recorded at fair value and is included in “Accounts payable and accrued expenses” in the consolidated balance sheets.

In determining the allowance or liability for estimated losses on loans and finance receivables, the Company applies a documented systematic methodology. In calculating the allowance or liability for receivable losses, outstanding loans and finance receivables are divided into discrete groups of short-term loans, line of credit accounts, installment loans and RPAs and are analyzed as current or delinquent. Increases in either the allowance or the liability, net of charge-offs and recoveries, are recorded as a “Cost of revenue” in the consolidated statements of income.

The allowance or liability for short-term loans classified as current is based on historical loss rates adjusted for recent default trends for current loans. For delinquent short-term loans, the allowance or liability is based on a six-month rolling average of loss rates by stage of collection. For line of credit account, installment loan and RPA portfolios, the Company generally uses either a migration analysis or roll-rate based methodology to estimate losses inherent in the portfolio. The allowance or liability calculation under the migration analysis and roll-rate methodology is based on historical charge-off experience and the loss emergence period, which represents the average amount of time between the first occurrence of a loss event and the charge-off of a loan or RPA. The factors the Company considers to assess the adequacy of the allowance or liability include past due performance, historical behavior of monthly vintages, underwriting changes and recent trends in delinquency in the migration analysis. The roll-rate methodology is based on delinquency status, payment history and recency factors to estimate future charge-offs.

The Company fully reserves for loans and finance receivables once the receivable or a portion of the receivable has been classified as delinquent for 60 consecutive days and generally charges off loans and finance receivables between 60 – 65 days delinquent. If a loan or finance receivable is deemed uncollectible before it is fully reserved, it is charged off at that point. Loans and finance receivables classified as delinquent generally have an age of one to 64 days from the date any portion of the receivable became delinquent, as defined above. Recoveries on loans and finance receivables previously charged to the allowance are credited to the allowance when collected.

The components of Company-owned loans and finance receivables at September 30, 2017 and 2016 and December 31, 2016 were as follows (dollars in thousands):

	As of September 30, 2017
	Short-term			Line of Credit			Installment Loans and
	Loans			Accounts			RPAs			Total
Current receivables	$	40,588		$	146,891		$	480,522		$	668,001
Delinquent receivables:
Delinquent payment amounts⁽¹⁾		—			5,913			3,382			9,295
Receivables on non-accrual status		27,131			1,885			36,484			65,500
Total delinquent receivables		27,131			7,798			39,866			74,795
Total loans and finance receivables, gross		67,719			154,689			520,388			742,796
Less: Allowance for losses		(19,161	)		(26,810	)		(59,089	)		(105,060	)
Loans and finance receivables, net	$	48,558		$	127,879		$	461,299		$	637,736

	As of September 30, 2016
	Short-term			Line of Credit			Installment Loans and
	Loans			Accounts			RPAs			Total
Current receivables	$	35,815		$	120,951		$	412,010		$	568,776
Delinquent receivables:
Delinquent payment amounts⁽¹⁾		—			4,975			1,721			6,696
Receivables on non-accrual status		24,310			6,462			31,368			62,140
Total delinquent receivables		24,310			11,437			33,089			68,836
Total loans and finance receivables, gross		60,125			132,388			445,099			637,612
Less: Allowance for losses		(17,726	)		(26,795	)		(50,226	)		(94,747	)
Loans and finance receivables, net	$	42,399		$	105,593		$	394,873		$	542,865

	As of December 31, 2016
	Short-term			Line of Credit			Installment Loans and
	Loans			Accounts			RPAs			Total
Current receivables	$	35,516		$	130,576		$	413,638		$	579,730
Delinquent receivables:
Delinquent payment amounts⁽¹⁾		—			4,560			2,110			6,670
Receivables on non-accrual status		27,489			9,047			37,559			74,095
Total delinquent receivables		27,489			13,607			39,669			80,765
Total loans and finance receivables, gross		63,005			144,183			453,307			660,495
Less: Allowance for losses		(17,770	)		(26,594	)		(54,581	)		(98,945	)
Loans and finance receivables, net	$	45,235		$	117,589		$	398,726		$	561,550

Changes in the allowance for losses for the Company-owned loans and finance receivables and the liability for losses on the Company’s guarantees of third-party lender-owned loans during the three and nine months ended September 30, 2017 and 2016 were as follows (dollars in thousands):

	Three Months Ended September 30, 2017
	Short-term			Line of Credit			Installment Loans and
	Loans			Accounts			RPAs			Total
Allowance for losses for Company-owned loans and finance receivables:
Balance at beginning of period	$	15,688		$	22,847		$	45,304		$	83,839
Cost of revenue		23,724			23,439			60,102			107,265
Charge-offs		(25,521	)		(22,708	)		(57,228	)		(105,457	)
Recoveries		5,082			3,232			10,630			18,944
Effect of foreign currency translation		188			—			281			469
Balance at end of period	$	19,161		$	26,810		$	59,089		$	105,060
Liability for third-party lender-owned loans:
Balance at beginning of period	$	1,761		$	—		$	180		$	1,941
Increase (decrease) in liability		125			—			(49	)		76
Balance at end of period	$	1,886		$	—		$	131		$	2,017

	Three Months Ended September 30, 2016
	Short-term			Line of Credit			Installment Loans and
	Loans			Accounts			RPAs			Total
Allowance for losses for Company-owned loans and finance receivables:
Balance at beginning of period	$	13,354		$	18,029		$	42,437		$	73,820
Cost of revenue		20,464			29,739			45,293			95,496
Charge-offs		(21,301	)		(24,639	)		(44,804	)		(90,744	)
Recoveries		5,345			3,666			7,421			16,432
Effect of foreign currency translation		(136	)		—			(121	)		(257	)
Balance at end of period	$	17,726		$	26,795		$	50,226		$	94,747
Liability for third-party lender-owned loans:
Balance at beginning of period	$	1,392		$	—		$	441		$	1,833
Increase (decrease) in liability		66			—			(172	)		(106	)
Balance at end of period	$	1,458		$	—		$	269		$	1,727

	Nine Months Ended September 30, 2017
	Short-term			Line of Credit			Installment Loans and
	Loans			Accounts			RPAs			Total
Allowance for losses for Company-owned loans and finance receivables:
Balance at beginning of period	$	17,770		$	26,594		$	54,581		$	98,945
Cost of revenue		55,865			63,138			150,063			269,066
Charge-offs		(70,962	)		(73,252	)		(177,002	)		(321,216	)
Recoveries		16,009			10,330			30,782			57,121
Effect of foreign currency translation		479			—			665			1,144
Balance at end of period	$	19,161		$	26,810		$	59,089		$	105,060
Liability for third-party lender-owned loans:
Balance at beginning of period	$	1,716		$	—		$	280		$	1,996
Increase (decrease) in liability		170			—			(149	)		21
Balance at end of period	$	1,886		$	—		$	131		$	2,017

	Nine Months Ended September 30, 2016
	Short-term			Line of Credit			Installment Loans and
	Loans			Accounts			RPAs			Total
Allowance for losses for Company-owned loans and finance receivables:
Balance at beginning of period	$	14,652		$	15,727		$	36,943		$	67,322
Cost of revenue		47,860			63,461			119,128			230,449
Charge-offs		(59,664	)		(63,236	)		(127,473	)		(250,373	)
Recoveries		15,448			10,843			21,217			47,508
Effect of foreign currency translation		(570	)		—			411			(159	)
Balance at end of period	$	17,726		$	26,795		$	50,226		$	94,747
Liability for third-party lender-owned loans:
Balance at beginning of period	$	1,298		$	—		$	458		$	1,756
Increase (decrease) in liability		160			—			(189	)		(29	)
Balance at end of period	$	1,458		$	—		$	269		$	1,727

In connection with its CSO programs, the Company guarantees consumer loan payment obligations to unrelated third-party lenders for short-term and installment loans and is required to purchase any defaulted loans it has guaranteed. The guarantee represents an obligation to purchase specific loans that go into default. As of September 30, 2017 and 2016 and December 31, 2016, the amount of consumer loans guaranteed by the Company was $28.9 million, $29.7 million and $32.2 million, respectively, representing amounts due under consumer loans originated by third-party lenders under the CSO programs. The estimated fair value of the liability for estimated losses on consumer loans guaranteed by the Company of $2.0 million, $1.7 million and $2.0 million, as of September 30, 2017 and 2016 and December 31, 2016, respectively, is included in “Accounts payable and accrued expenses” in the consolidated balance sheets.

In order to leverage its online lending platform, the Company launched a program with a bank in 2016 to provide technology, marketing services, and loan servicing for near-prime unsecured consumer installment loans. Under the program, the Company receives marketing and servicing fees while the bank receives an origination fee. The bank has the ability to sell the loans it originates to the Company. The Company does not guarantee the performance of the loans originated by the bank.

The Company records an investment in the preferred stock of a privately-held developing financial services entity under the cost method. The carrying value of the Company’s investment in this unconsolidated investee was $6.7 million as of September 30, 2017 and 2016 and December 31, 2016, and was held in “Other assets” in the Company’s consolidated balance sheets. The Company evaluates this investment for impairment if an event occurs or circumstances change that would more likely than not reduce the fair value of the investment below carrying value. Based on the Company’s evaluation of this investment at September 30, 2017, the Company determined that an impairment loss was not probable at that date.

The Company’s long-term debt instruments and balances outstanding as of September 30, 2017 and 2016 and December 31, 2016 were as follows (dollars in thousands):

On September 1, 2017, the Company issued and sold $250.0 million in aggregate principal amount of 8.50% Senior Notes due 2024 (the “2024 Senior Notes”). The 2024 Senior Notes were sold to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and outside the United States pursuant to Regulation S under the Securities Act. The 2024 Senior Notes bear interest at a rate of 8.50% annually on the principal amount payable semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1, 2018. The 2024 Senior Notes were sold at a price of 100%. The 2024 Senior Notes will mature on September 1, 2024. The 2024 Senior Notes are unsecured debt obligations of the Company, and are unconditionally guaranteed by certain of the Company’s domestic subsidiaries.

The 2024 Senior Notes are redeemable at the Company’s option, in whole or in part, (i) at any time prior to September 1, 2020 at 100% of the aggregate principal amount of 2024 Senior Notes redeemed plus the applicable “make whole” premium specified in the indenture that governs the Company’s 2024 Notes (the "2024 Senior Notes Indenture"), plus accrued and unpaid interest, if any, to the redemption date and (ii) at any time on or after September 1, 2020 at the premium, if any, specified in the 2024 Senior Notes Indenture that will decrease over time, plus accrued and unpaid interest, if any, to the redemption date. In addition, prior to September 1, 2020, at its option, the Company may redeem up to 40% of the aggregate principal amount of the 2024 Senior Notes at a redemption price of 108.5% of the aggregate principal amount of 2024 Senior Notes redeemed, plus accrued and unpaid interest, if any, to the redemption date, with the proceeds of certain equity offerings as described in the 2024 Senior Notes Indenture.

The 2024 Senior Notes and the related guarantees have not been and will not be registered under the Securities Act, or the securities laws of any state or other jurisdiction, and may not be offered or sold in the United States without registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities or blue sky laws and foreign securities laws.

In connection with the issuance of the 2024 Senior Notes, the Company incurred approximately $7.6 million of issuance costs, which primarily consisted of underwriting fees, legal and other professional expenses.

The Company used the net proceeds of the 2024 Senior Notes offering to retire a portion of its outstanding 9.75% senior notes due 2021, to pay the related accrued interest, premiums, fees and expenses associated therewith and for general corporate purposes, which may include working capital and future repurchases of its outstanding debt securities.

As of September 30, 2017, the carrying amount of the 2024 Senior Notes was $242.5 million, which includes unamortized issuance costs of $7.5 million. The total interest expense recognized was $1.9 million for the nine months ended September 30, 2017.

On January 15, 2016, the Company and certain of its subsidiaries entered into a receivables securitization (as amended, the “2016‑1 Securitization Facility”) with certain purchasers, Jefferies Funding LLC, as administrative agent (the “Administrative Agent”) and Bankers Trust Company, as indenture trustee and securities intermediary (the “Indenture Trustee”). The 2016‑1 Securitization Facility securitizes unsecured consumer installment loans (“Receivables”) that have been, or will be, originated or acquired under the Company’s

NetCredit brand and that meet specified eligibility criteria. Under the 2016‑1 Securitization Facility, Receivables are sold to EFR 2016‑1, LLC, a wholly-owned special purpose subsidiary (the “Issuer”), and serviced by another subsidiary.

The Issuer issued an initial term note of $107.4 million (the “Initial Term Note”), which was secured by $134 million in unsecured consumer loans, and variable funding notes (the “Variable Funding Notes”) with an aggregate availability of $20 million per month; the 2016‑1 Securitization Facility was amended to increase the availability to $40 million until December 31, 2016, and $30 million thereafter, as discussed below. As described below, the Issuer has issued and will subsequently issue term notes (the “Term Notes” and, together with the Initial Term Note and the Variable Funding Notes, the “Securitization Notes”). The maximum principal amount of the Securitization Notes that may be outstanding at any time under the 2016‑1 Securitization Facility was limited to $175 million; the 2016‑1 Securitization Facility was amended to increase the maximum principal amount to $275 million, as discussed below.

At the end of each month during the nine-month revolving period, the Receivables funded by the Variable Funding Notes have been and will be refinanced through the creation of two Term Notes, which Term Notes have been and will be issued to the holders of the Variable Funding Notes. The non-recourse Securitization Notes mature at various dates, the latest of which will be October 15, 2020 (the “Final Maturity Date”). The 2016‑1 Securitization Facility has been amended to extend the revolving period to October 2017 and the latest maturity to October 2021, as discussed below.

The Securitization Notes are issued pursuant to an indenture, dated as of January 15, 2016 (the “Closing Date”). The Securitization Notes bear interest at an annual rate equal to the one month London Interbank Offered Rate (“LIBOR”) (subject to a floor of 1%) plus 7.75%, which rate was initially 8.75%. In addition, the Issuer paid certain customary upfront closing fees and will pay customary annual commitment and other fees to the purchasers under the 2016‑1 Securitization Facility. The Issuer is permitted to voluntarily prepay any outstanding Securitization Notes, subject to an optional redemption premium. Interest and principal payments on outstanding Securitization Notes are made monthly. Any remaining amounts outstanding will be payable no later than the Final Maturity Date. The Securitization Notes are supported by the cash flows from the underlying Receivables. The holders of the Securitization Notes have no recourse to the Company if the cash flows from the underlying Receivables are not sufficient to pay all of the principal and interest on the Securitization Notes unless the underlying Receivables breach the representations and warranties made by us as of the related sale date as described below. Additionally, the Receivables will be held by the Issuer at least until the obligations under the Securitization Notes are satisfied. For so long as the Receivables are owned by the Issuer, the outstanding Receivables will not be available to satisfy the Company’s other debts and obligations.

All amounts due under the Securitization Notes are secured by all of the Issuer’s assets, which include the Receivables transferred to the Issuer, related rights under the Receivables, specified bank accounts, and certain other related collateral.

The 2016‑1 Securitization Facility documents contain customary provisions for securitizations, including: representations and warranties as to the eligibility of the Receivables and other matters; indemnification for specified losses not including losses due to the inability of consumers to repay their loans; covenants regarding special purpose entity matters and other subjects; and default and termination provisions which provide for the acceleration of the Securitization Notes under the 2016‑1 Securitization Facility in circumstances including, but not limited to, failure to make payments when due, servicer defaults, certain insolvency events, breaches of representations, warranties or covenants, failure to maintain the security interest in the receivables, defaults under other material indebtedness and certain regulatory matters.

The agreements evidencing the 2016‑1 Facility, all dated as of the Closing Date, include (i) an Indenture between the Issuer and the Indenture Trustee, (ii) a Note Purchase Agreement among the Issuer, NetCredit Loan Services, LLC (f/k/a Enova Lending Services, LLC), as the Master Servicer, the Administrative Agent and certain purchasers, and (iii) a Receivables Purchase Agreement between the Company and Enova Finance 5, LLC. On July 26, 2016, the Company and certain of its subsidiaries entered into a First Omnibus Amendment (the “First Amendment”) of the 2016‑1 Facility that was established on the Closing Date, pursuant to various agreements with certain purchasers, the Administrative Agent and the Indenture Trustee. The First Amendment effected a variety of minor technical changes to the Indenture, the Note Purchase Agreement, the Receivables Purchase Agreement and the servicing agreement for the 2016‑1 Facility. These changes included revised procedures under the Note Purchase Agreement for the disbursement to the Issuer of proceeds from draws under the Variable Funding Notes and clarification of modifications that the servicer is permitted to effect to the terms of the Receivables that have been transferred into the EFR 2016‑1 Facility.

On August 17, 2016, the Company and one of its subsidiaries entered into an Amendment to the Receivables Purchase Agreement. This amendment modified an eligibility criterion for Receivables that the Company sells under the Agreement.

On September 12, 2016, the Company and certain of its subsidiaries entered into a Second Omnibus Amendment (the “Second Amendment”) to amend the Indenture and the Receivables Purchase Agreement. The Second Amendment authorized the Company to

include in the 2016‑1 Facility Receivables originated by a state-chartered bank and acquired by a subsidiary of the Company from that bank, and it adjusted the Investment Pool Cumulative Net Loss Trigger for the Initial Term Note Investment Pool (as such terms are defined in the Indenture), which was the seasoned pool of receivables securitized under the 2016‑1 Facility on the Closing Date.

On October 20, 2016, the Company and certain of its subsidiaries entered into a Third Amendment and Limited Waiver (the “Third Amendment”) to amend the Indenture and Receivables Purchase Agreement. The Third Amendment increased the maximum principal amount of the 2016‑1 Facility to $275 million, increased the Variable Funding Notes maximum principal amount to $40 million until December 31, 2016, and $30 million thereafter, and extended the revolving period of the facility to October 2017. The Third Amendment also adjusted the Note Interest Rate on Term Notes issued after, and amounts outstanding under the Variable Funding Notes after, the date of the Third Amendment (as such terms are defined in the Indenture). The weighted average interest rate on such adjusted Notes is 9.5%.

On November 14, 2016, the Company and certain of its subsidiaries entered into a Fourth Amendment (the “Fourth Amendment”) to amend the Indenture and Receivables Purchase Agreement. The Fourth Amendment adjusted the Investment Pool Cumulative Delinquency Trigger (as such term is defined in the Indenture), with an effective date of October 31, 2016.

On December 14, 2016, the Company and certain of its subsidiaries entered into a Fifth Amendment (the “Fifth Amendment”) to amend the Indenture and Receivables Purchase Agreement. The Fifth Amendment adjusted the Investment Pool Cumulative Delinquency Trigger (as such term is defined in the Indenture) for the Initial Term Notes, with an effective date of November 30, 2016, expanded the categories of Receivables that could be financed through the 2016‑1 Facility and made certain other minor changes. These changes provide the Company with additional flexibility under the 2016‑1 Facility.

As of September 30, 2017 and 2016, the carrying amount of the 2016‑1 Securitization Facility was $173.7 million and $134.5 million, respectively, which included unamortized issuance costs of $0.8 million and $2.4 million, respectively. The issuance costs are being amortized to interest expense over a period of four years. The total interest expense recognized was $11.4 million and $9.5 million of which $1.1 million and $2.6 million represented the non-cash amortization of the issuance costs for the nine months ended September 30, 2017 and 2016, respectively.

On December 1, 2016, the Company and certain of its subsidiaries entered into a receivables securitization (the “2016‑2 Facility”) with Redpoint Capital Asset Funding, LLC, as lender (the “Lender”). The 2016‑2 Facility securitizes unsecured consumer installment loans (“Redpoint Receivables”) that have been and will be originated or acquired under the Company’s NetCredit brand by several of the Company’s subsidiaries (the “Originators”) and that meet specified eligibility criteria, including that the annual percentage rate for each securitized consumer loan is greater than or equal to 90%. Under the 2016‑2 Facility, Redpoint Receivables are sold to a wholly-owned special purpose subsidiary of the Company (the “Debtor”) and serviced by another subsidiary of the Company.

The Debtor has issued a revolving note with an initial maximum principal balance of $20.0 million (the “Initial Facility Size”), which is required to be secured by $25.0 million in unsecured consumer loans. The Initial Facility Size may be increased under the 2016‑2 Facility to $40 million. The 2016‑2 Facility is non-recourse to the Company and matures on December 1, 2019.

The 2016‑2 Facility is governed by a loan and security agreement, dated as of December 1, 2016, between the Lender and the Debtor. The 2016‑2 Facility bears interest at a rate per annum equal to LIBOR (subject to a floor) plus an applicable margin, which rate per annum was initially 12.50%. In addition, the Debtor paid certain customary upfront closing fees to the Lender. Interest payments on the 2016‑2 Facility will be made monthly. Subject to certain exceptions, the Debtor is not permitted to prepay the 2016‑2 Facility prior to October 1, 2018. Following such date, the Debtor is permitted to voluntarily prepay the 2016‑2 Facility without penalty. Any remaining amounts outstanding will be payable no later than December 1, 2019.

All amounts due under the 2016‑2 Facility are secured by all of the Debtor’s assets, which include the Redpoint Receivables transferred to the Debtor, related rights under the Redpoint Receivables, a bank account and certain other related collateral.

The 2016‑2 Facility documents contain customary provisions for securitizations, including: representations and warranties as to the eligibility of the Redpoint Receivables and other matters; indemnification for specified losses not including losses due to the inability of consumers to repay the related Receivables; and default and termination provisions which provide for the acceleration of the 2016‑2 Facility in circumstances including, but not limited to, failure to make payments when due, certain insolvency events, breaches of representations, warranties or covenants, failure to maintain the security interest in the receivables and defaults under other material indebtedness of the Debtor.

As of September 30, 2017, the carrying amount of the 2016‑2 Facility was $12.1 million. In connection with the issuance of the 2016‑2 Facility, the Company incurred debt issuance costs of approximately $0.2 million. The unamortized balance of these costs as of September 30, 2017 is included in “Other assets” in the consolidated balance sheets. These costs are being amortized to interest expense over a period of 36 months, the term of the 2016‑2 Facility. The total interest expense recognized was $1.4 million for the nine months ended September 30, 2017.

On May 14, 2014, the Company and certain of its subsidiaries as guarantors entered into a credit agreement among the Company, the guarantors, Jefferies Finance LLC as administrative agent and Jefferies Group LLC as lender (the “2014 Credit Agreement”). The 2014 Credit Agreement was terminated on June 30, 2017. The Company had no outstanding borrowings under the 2014 Credit Agreement as of September 30, 2016 and December 31, 2016.

The 2014 Credit Agreement also included a sub-limit of up to $20.0 million for standby or commercial letters of credit. In the event that an amount was paid by the issuing bank under a letter of credit, it would have been due and payable by the Company on demand. The Company had outstanding letters of credit under the 2014 Credit Agreement of $6.6 million as of each of September 30, 2016 and December 31, 2016.

In connection with the issuance of the 2014 Credit Agreement, as amended, the Company incurred debt issuance costs of approximately $1.6 million, which primarily consisted of underwriting fees and legal expenses. The unamortized balance of these costs was included in “Other assets” in the consolidated balance sheets. These costs were amortized to interest expense over a period of 37 months, the term of the 2014 Credit Agreement.

On June 30, 2017, the Company and certain of its operating subsidiaries entered into an asset-backed secured revolving credit agreement with a syndicate of banks including TBK Bank, SSB (“TBK”), as Administrative Agent and Collateral Agent, Jefferies Finance LLC and TBK as Joint Lead Arrangers and Joint Lead Bookrunners, and Green Bank, N.A., as Lender (the “2017 Credit Agreement”).

The 2017 Credit Agreement is secured by domestic receivables and replaced the 2014 Credit Agreement. The borrowing limit in the 2017 Credit Agreement increased to $40 million from $35 million in the 2014 Credit Agreement, and its maturity date is May 1, 2020. The Company had no outstanding borrowings under the 2017 Credit Agreement as of September 30, 2017.

The 2017 Credit Agreement provides for a revolving credit line with interest on borrowings under the facility at prime rate plus 1.00%. In addition, the 2017 Credit Agreement provides for payment of a commitment fee calculated with respect to the unused portion of the line, and ranges from 0.30% per annum to 0.50% per annum depending on usage. A portion of the revolving credit facility, up to a maximum of $20 million, is available for the issuance of letters of credit. The Company had outstanding letters of credit under the 2017 Credit Agreement of $8.0 million as of September 30, 2017. The 2017 Credit Agreement provides for certain prepayment penalties if it is terminated on or before its first and second anniversary date, subject to certain exceptions.

The 2017 Credit Agreement contains certain limitations on the incurrence of additional indebtedness, investments, the attachment of liens to the Company’s property, the amount of dividends and other distributions, fundamental changes to the Company or its business and certain other activities of the Company. The 2017 Credit Agreement contains standard financial covenants for a facility of this type based on a leverage ratio and a fixed charge coverage ratio. The 2017 Credit Agreement also provides for customary affirmative covenants, including financial reporting requirements, and certain events of default, including payment defaults, covenant defaults and other customary defaults.

In connection with the issuance of the 2017 Credit Agreement, as amended, the Company incurred debt issuance costs of approximately $2.0 million, which primarily consisted of underwriting fees and legal expenses. The unamortized balance of these costs as of September 30, 2017 is included in “Other assets” in the consolidated balance sheets. These costs are being amortized to interest expense over a period of 34 months, the term of the 2017 Credit Agreement.

On May 30, 2014, the Company issued and sold $500.0 million in aggregate principal amount of 9.75% Senior Notes due 2021 (the “2021 Senior Notes”). The 2021 Senior Notes bear interest at a rate of 9.75% annually on the principal amount payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2014. The 2021 Senior Notes were sold at a discount of the principal amount to yield 10.0% to maturity and will mature on June 1, 2021.

During the three months ended September 30, 2017, the Company repurchased $155.0 million principal amount of the 2021 Senior Notes for aggregate cash consideration of $166.3 million plus accrued interest. In connection with these purchases, the Company recorded a loss on extinguishment of debt of approximately $14.9 million ($9.2 million net of tax), which is included in “Loss on early extinguishment of debt” in the consolidated statements of income.

As of September 30, 2017 and 2016, the carrying amount of the 2021 Senior Notes was $337.1 million and $485.6 million, respectively, which included an unamortized discount of $2.6 million and $4.6 million, respectively, and unamortized issuance costs of $5.3 million and $9.8 million, respectively. The discount and issuance costs are being amortized to interest expense over a period of seven years, through the maturity date of June 1, 2021. The total interest expense recognized for the nine months ended September 30, 2017 and 2016 was $38.0 million and $38.7 million, respectively, of which $0.6 million for each period represented the non-cash amortization of the discount and $1.5 million and $1.6 million, respectively, represented the non-cash amortization of the issuance costs.

Weighted-average interest rates on long-term debt were 10.58% and 10.75% during the nine months ended September 30, 2017 and 2016, respectively.

As of September 30, 2017 and 2016 and December 31, 2016, the Company was in compliance with all covenants and other requirements set forth in the prevailing long-term debt agreement(s).

Basic earnings per share is computed by dividing net (loss) income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by giving effect to the potential dilution that could occur if securities or other contracts to issue common shares were exercised and converted into common shares during the period. Restricted stock units issued under the Company’s stock-based employee compensation plans are included in diluted shares upon the granting of the awards even though the vesting of shares will occur over time.

The following table sets forth the reconciliation of numerators and denominators of basic and diluted earnings per share computations for the three and nine months ended September 30, 2017 and 2016 (in thousands, except per share amounts):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2017			2016		2017		2016
Numerator:
Net (loss) income	$	(3,368	)	$	7,837	$	22,357	$	25,888
Denominator:
Total weighted average basic shares		33,670			33,211		33,533		33,176
Shares applicable to stock-based compensation		—			347		586		184
Total weighted average diluted shares		33,670			33,558		34,119		33,360
Earnings per share:
Net (loss) income per share – basic	$	(0.10	)	$	0.24	$	0.67	$	0.78
Net (loss) income per share – diluted	$	(0.10	)	$	0.23	$	0.66	$	0.78

For the three months ended September 30, 2017 and 2016, 2,138,180 and 1,467,202 shares of common stock underlying stock options, respectively, and 1,592,937 and 343,663 shares of common stock underlying restricted stock units, respectively, were excluded from the calculation of diluted net (loss) income per share because their effect would have been antidilutive. For the nine months ended September 30, 2017 and 2016, 1,552,045 and 1,783,073 shares of common stock underlying stock options, respectively, and 242,677 and 520,688 shares of common stock underlying restricted stock units, respectively, were excluded from the calculation of diluted net (loss) income per share because their effect would have been antidilutive.

The Company provides online financial services to alternative credit consumers and small businesses in the United States, United Kingdom and Brazil and has one reportable segment, which is composed of the Company’s domestic and international operations and corporate services. Corporate services primarily includes personnel, occupancy and other operating expenses for shared functions, such as executive management, technology, analytics, business development, legal and licensing, compliance, risk management, internal audit, human resources, payroll, treasury, finance, accounting, and tax. Corporate Services assets primarily include: corporate property

and equipment, nonqualified savings plan assets, marketable securities, restricted cash and prepaid expenses. The Company has aggregated all components of its business into a single reportable segment based on the similarities of the economic characteristics, the nature of the products and services, the nature of the production and distribution methods, the type of customer and the nature of the regulatory environment.

The following tables present information on the Company’s domestic, international operations and corporate services as of and for the three and nine months ended September 30, 2017 and 2016 (dollars in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Revenue
Domestic	$	181,584		$	165,330		$	504,326		$	449,100
International		36,294			30,613			95,719			94,031
Total revenue	$	217,878		$	195,943		$	600,045		$	543,131

Income (Loss) from operations
Domestic	$	55,767		$	44,015		$	176,402		$	148,717
International		(1,983	)		5,659			3,939			16,136
Corporate services		(26,107	)		(21,577	)		(79,389	)		(76,100	)
Total income from operations	$	27,677		$	28,097		$	100,952		$	88,753

Depreciation and amortization
Domestic	$	1,634		$	1,385		$	4,692		$	4,552
International		396			409			1,136			1,813
Corporate services		1,503			1,995			4,568			5,639
Total depreciation and amortization	$	3,533		$	3,789		$	10,396		$	12,004

Expenditures for property and equipment
Domestic	$	2,231		$	2,395		$	4,271		$	5,425
International		1,281			1,043			3,401			2,489
Corporate services		1,991			379			3,132			3,552
Total expenditures for property and equipment	$	5,503		$	3,817		$	10,804		$	11,466

The following table presents the Company’s revenue by geographic region for the three and nine months ended September 30, 2017 and 2016 (dollars in thousands):

The Company’s long-lived assets, which consist of the Company’s property and equipment, were $46.6 million and $47.5 million at September 30, 2017 and 2016, respectively. The operations for the Company’s domestic and international businesses are primarily located within the United States, and the value of any long-lived assets located outside of the United States is immaterial.

On March 8, 2013, Flemming Kristensen, on behalf of himself and others similarly situated, filed a purported class action lawsuit in the U.S. District Court of Nevada against the Company and other unaffiliated lenders and lead providers. The lawsuit alleges that the lead provider defendants sent unauthorized text messages to consumers on behalf of the Company and the other lender defendants in violation of the Telephone Consumer Protection Act. The complaint seeks class certification, statutory damages, an injunction against “wireless spam activities,” and attorneys’ fees and costs. The Company filed an answer to the complaint denying all liability. On March 26, 2014, the Court granted class certification. On July 20, 2015, the court granted the Company’s motion for summary judgment, denied Plaintiff’s motion for summary judgment and, on July 21, 2015, entered judgment in favor of the Company. Plaintiff filed a motion for reconsideration, which was denied. On May 3, 2016, Plaintiff filed a notice of appeal of the order granting summary judgment for the Company, the judgment in favor of the company, and the order denying Plaintiff’s motion to reconsider. Appellate briefing is now complete, and the court has heard oral arguments. Neither the likelihood of an unfavorable appellate decision nor the ultimate liability, if any, with respect to this matter can be determined at this time, and the Company is currently unable to estimate a range of reasonably possible losses, as defined by ASC 450-20-20, Contingencies–Loss Contingencies–Glossary, for this litigation. The Company believes that the Plaintiff’s claims in the complaint are without merit and intends to vigorously defend this lawsuit.

The Company is also involved in certain routine legal proceedings, claims and litigation matters encountered in the ordinary course of its business. Certain of these matters may be covered to an extent by insurance or by indemnification agreements with third parties. The Company has recorded accruals in its consolidated financial statements for those matters in which it is probable that it has incurred a loss and the amount of the loss, or range of loss, can be reasonably estimated. In the opinion of management, the resolution of these matters will not have a material adverse effect on the Company’s financial position, results of operations or liquidity.

During 2014 the Company accelerated the lease expiration date for approximately 86,000 rentable square feet at its prior headquarters office space effective June 30, 2015. The Company relocated to its current headquarters in 2015 and recognized an expense of $3.7 million which was included as “General and administrative expense” and consisted of a lease exit liability of $2.9 million for the remaining lease payments, net of estimated sublease income of $1.7 million, and $0.8 million for the removal of property and restoration costs related to the prior headquarters lease. The Company did not incur further material costs related to the relocation.

The following table is a summary of the exit and disposal activity and liability balances as a result of the headquarters relocation for the nine months ended September 30, 2017 and the twelve months ended December 31, 2016 (in thousands):

The Company has periodically used derivative instruments to manage risk from changes in market conditions that may affect the Company’s financial performance. The Company has primarily used derivative instruments to manage its primary market risks, which are interest rate risk and foreign currency exchange rate risk.

The Company has periodically used forward currency exchange contracts to minimize the effects of foreign currency risk in the United Kingdom. The forward currency exchange contracts are non-designated derivatives. Any gain or loss resulting from these contracts is recorded as income or loss and is included in “Foreign currency transaction gain” in the Company’s consolidated statements of income. As of September 30, 2017, the Company did not manage its exposure to risk from foreign currency exchange rate fluctuations through the use of forward currency exchange contracts in the United Kingdom or Brazil.

The Company had no outstanding derivative instruments as of September 30, 2017 and 2016 and December 31, 2016.

There were no effects of derivative instruments on the consolidated results of operations and accumulated other comprehensive income (“AOCI”) for the three months ended September 30, 2017 and 2016.

The following table presents information on the effect of derivative instruments on the consolidated results of operations and accumulated other comprehensive income for the nine months ended September 30, 2017 and 2016 (dollars in thousands):

	Gains (Losses)								Gains (Losses)
	Recognized in				Gains (Losses)				Reclassified From
	Income				Recognized in AOCI				AOCI into Income
	Nine Months Ended				Nine Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,
	2017		2016		2017		2016		2017		2016
Non-designated derivatives:
Forward currency exchange contracts⁽¹⁾	$	—	$	3,020	$	—	$	—	$	—	$	—
Total	$	—	$	3,020	$	—	$	—	$	—	$	—

A current officer of the Company has an ongoing ownership interest in the small business from which the Company acquired certain assets and assumed certain liabilities in June 2015 (see Note 2 for additional information). In the normal course of business, the Company attains certain customer relationships from the small business by entering into transactions with the customers to provide additional RPA financing. In these transactions, the Company satisfies the customer’s existing RPA balance with the small business which terminates such customer’s responsibilities to the small business. During the nine months ended September 30, 2017 the Company did not attain any relationships through these transactions with the small business. During the nine months ended September 30, 2016, the Company paid $0.4 million to the small business to satisfy customers’ existing RPA balances. Pursuant to the acquisition, a subsidiary of the Company issued a promissory note to the small business in the amount of $3.0 million (the “Promissory Note”) and granted the company an opportunity to earn certain contingent purchase consideration (see Note 2 for additional information), both of which are

guaranteed by the Company. The Promissory Note accrues interest at a rate of 4.0% per annum and will mature on June 23, 2018. During the nine months ended September 30, 2017 and 2016, the Company incurred interest expense of $95 thousand and $91 thousand, respectively, related to the Promissory Note. In addition, as a condition precedent to the acquisition, a subsidiary of the Company executed a Transition Services Agreement with the small business from which the Company acquired certain assets whereby it agreed to provide certain transition services to the business for three years following the acquisition. During the nine months ended September 30, 2017 and 2016, the Company was paid $24 thousand and $27 thousand, respectively, for such services.

The Company and Cash America entered into an agreement in conjunction with the Spin-off for the Company to administer the consumer loan underwriting model utilized by Cash America’s Retail Services Division in exchange for a fee per transaction paid to the Company as well as the reimbursement of the Company’s direct third-party costs incurred in providing the service. The Company received $0.6 million and $0.7 million for the nine months ended September 30, 2017 and 2016, respectively, pursuant to this agreement.

Since May 30, 2014, amounts due from or due to Cash America or FirstCash have been settled a month in arrears. The balance due from FirstCash of $0.1 million as of September 30, 2017 and 2016 and December 31, 2016, respectively, is included in “Other receivables and prepaid expenses” in the consolidated balance sheets.

As part of the Company’s overall funding strategy and as part of its efforts to support its liquidity from sources other than its traditional capital market sources, the Company has established a securitization program through the 2016-1 and 2016-2 Securitization Facilities. The Company transferred certain consumer loan receivables to wholly owned, bankruptcy-remote special purpose subsidiaries (VIEs), which issue term notes backed by the underlying consumer loan receivables and are serviced by another wholly owned subsidiary.

The Company is required to evaluate the VIEs for consolidation. The Company has the ability to direct the activities of the VIEs that most significantly impact the economic performance of the entities as the servicer of the securitized loan receivables. Additionally, the Company has the right to receive residual payments, which expose it to potentially significant losses and returns. Accordingly, the Company determined it is the primary beneficiary of the VIEs and is required to consolidate them.

The assets and liabilities related to the VIEs are included in the Company’s consolidated financial statements and are accounted for as secured borrowings.

The Company parenthetically discloses on its consolidated balance sheets the VIE’s assets that can only be used to settle the VIE’s obligations and the VIE liabilities if the VIE’s creditors have no recourse against the Company’s general credit. The carrying amounts of consolidated VIE assets and liabilities associated with the Company’s securitization entities were as follows (dollars in thousands):

	September 30,				December 31,
	2017		2016		2016
Assets
Cash and cash equivalents	$	—	$	105	$	—
Restricted cash and cash equivalents		22,161		18,119		19,468
Loans and finance receivables, net		274,363		176,016		216,766
Other receivables and prepaid expenses		—		3		3
Other assets		2,056		—		2,459
Total assets	$	298,580	$	194,243	$	238,696
Liabilities
Accounts payable and accrued expenses	$	1,793	$	991	$	1,350
Long-term debt		185,771		134,537		163,550
Total liabilities	$	187,564	$	135,528	$	164,900

In accordance with ASC 820, Fair Value Measurements and Disclosures, certain of the Company’s assets and liabilities, which are carried at fair value, are classified in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

During the nine months ended September 30, 2017 and 2016, there were no transfers of assets or liabilities in or out of Level 1, Level 2 or Level 3 fair value measurements. It is the Company’s policy to value any transfers between levels of the fair value hierarchy based on end of period fair values.

The Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2017 and 2016 and December 31, 2016 are as follows (dollars in thousands):

	September 30,			Fair Value Measurements Using
	2017			Level 1		Level 2		Level 3
Financial assets (liabilities):
Non-qualified savings plan assets⁽¹⁾	$	1,443		$	1,443	$	—	$	—
Contingent consideration		(2,358	)		—		—		(2,358	)
Total	$	(915	)	$	1,443	$	—	$	(2,358	)

	September 30,			Fair Value Measurements Using
	2016			Level 1		Level 2		Level 3
Financial assets (liabilities):
Non-qualified savings plan assets⁽¹⁾	$	1,528		$	1,528	$	—	$	—
Contingent consideration		(5,658	)		—		—		(5,658	)
Total	$	(4,130	)	$	1,528	$	—	$	(5,658	)

	December 31,			Fair Value Measurements Using
	2016			Level 1		Level 2		Level 3
Financial assets (liabilities):
Non-qualified savings plan assets⁽¹⁾	$	1,590		$	1,590	$	—	$	—
Contingent consideration		(2,358	)		—		—		(2,358	)
Total	$	(768	)	$	1,590	$	—	$	(2,358	)

The Company determined the fair value of the liability for the contingent consideration based on a probability-weighted discounted cash flow analysis. This analysis reflects the contractual terms of the purchase agreement and utilizes assumptions with regard to future earnings, probabilities of achieving such future earnings, the timing of expected payments and a discount rate. Significant increases with respect to assumptions as to future earnings and probabilities of achieving such future earnings would result in a higher fair value measurement while an increase in the discount rate would result in a lower fair value measurement. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in the fair value hierarchy.

The changes in the fair value of the contingent consideration, which is a Level 3 liability measured at fair value on a recurring basis, are summarized in the tables below for the nine months ended September 30, 2017 and 2016 (dollars in thousands):

The Company measures non-financial assets and liabilities such as property and equipment and intangible assets at fair value on a non-recurring basis or when events or circumstances indicate that the carrying amount of the assets may be impaired. At September 30, 2017 and 2016 and December 31, 2016, there were no assets or liabilities recorded at fair value on a non-recurring basis.

The Company’s financial assets and liabilities as of September 30, 2017 and 2016 and December 31, 2016 that are not measured at fair value in the consolidated balance sheets are as follows (dollars in thousands):

	Balance at
	September 30,		Fair Value Measurements Using
	2017		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	110,054	$	110,054	$	—	$	—
Short-term loans and line of credit accounts, net ⁽¹⁾		176,437		—		—		176,437
Installment loans and RPAs, net ⁽¹⁾⁽⁴⁾		461,299		—		—		496,377
Restricted cash ⁽⁵⁾		29,866		29,866		—		—
Investment in unconsolidated investee⁽²⁾⁽³⁾		6,703		—		—		6,703
Total	$	784,359	$	139,920	$	—	$	679,517
Financial liabilities:
Liability for estimated losses on consumer loans guaranteed by the Company	$	2,017	$	—	$	—	$	2,017
Promissory note		3,000		—		—		3,245
Securitization Notes		186,533		—		189,005		—
9.75% senior notes due 2021		342,407		—		363,796		—
8.50% senior notes due 2024		250,000		—		252,000		—
Total	$	783,957	$	—	$	804,801	$	5,262

	Balance at
	September 30,		Fair Value Measurements Using
	2016		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	45,681	$	45,681	$	—	$	—
Short-term loans and line of credit accounts, net ⁽¹⁾		147,992		—		—		147,992
Installment loans and RPAs, net ⁽¹⁾⁽⁴⁾		394,873		—		—		448,111
Restricted cash ⁽⁵⁾		39,272		39,272		—		—
Investment in unconsolidated investee⁽²⁾⁽³⁾		6,703		—		—		6,703
Total	$	634,521	$	84,953	$	—	$	602,806
Financial liabilities:
Liability for estimated losses on consumer loans guaranteed by the Company	$	1,727	$	—	$	—	$	1,727
Promissory note		3,000		—		—		3,076
Credit agreement borrowings		15,000		—		—		15,000
Securitization Notes		136,953		—		139,911		—
9.75% senior notes due 2021		495,427		—		455,875		—
Total	$	652,107	$	—	$	595,786	$	19,803

	Balance at
	December 31,		Fair Value Measurements Using
	2016		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	39,934	$	39,934	$	—	$	—
Short-term loans and line of credit accounts, net ⁽¹⁾		162,824		—		—		162,824
Installment loans and RPAs, net ⁽¹⁾⁽⁴⁾		398,726		—		—		430,895
Restricted cash ⁽⁵⁾		26,306		26,306		—		—
Investment in unconsolidated investee⁽²⁾⁽³⁾		6,703		—		—		6,703
Total	$	634,493	$	66,240	$	—	$	600,422
Financial liabilities:
Liability for estimated losses on consumer loans guaranteed by the Company	$	1,996	$	—	$	—	$	1,996
Promissory note		3,000		—		—		3,111
Securitization Notes		165,419		—		168,216		—
9.75% senior notes due 2021		495,622		—		495,940		—
Total	$	666,037	$	—	$	664,156	$	5,107

Cash and cash equivalents and restricted cash bear interest at market rates and have original maturities of less than 90 days. The carrying amount of restricted cash and cash equivalents approximates fair value.

Short-term loans, line of credit accounts, installment loans and RPAs are carried in the consolidated balance sheet net of the allowance for estimated losses, which is calculated by applying historical loss rates combined with recent default trends to the gross receivable balance. Short-term loans and line of credit accounts have relatively short maturity periods that are generally 12 months or less. The unobservable inputs used to calculate the fair value of these receivables include historical loss rates, recent default trends and estimated remaining loan term; therefore, the carrying value approximates the fair value. The fair value of installment loans and RPAs is estimated using discounted cash flow analyses, which consider interest rates on loans and discounts offered for receivables with similar terms to customers with similar credit quality, the timing of expected payments, estimated customer default rates and/or valuations of comparable portfolios. As of September 30, 2017 and 2016 and December 31, 2016, the fair value of the Company’s installment loans and RPAs was greater than the carrying value of these loans and finance receivables. Unsecured installment loans typically have terms between two and 60 months. RPAs typically have estimated delivery terms between six and 18 months.

The Company measures the fair value of its investment in unconsolidated investee using Level 3 inputs. Because the unconsolidated investee is a private company and financial information is limited, the Company estimates the fair value based on the best available information at the measurement date. As of September 30, 2017 and 2016 and December 31, 2016 the Company estimated the fair value of its investment to be approximately equal to the book value.

In connection with its CSO programs, the Company guarantees consumer loan payment obligations to unrelated third-party lenders for short-term and installment loans the Company arranges for consumers on the third-party lenders’ behalf and is required to purchase any defaulted loans it has guaranteed. The estimated fair value of the liability for estimated losses on consumer loans guaranteed by the Company was $2.0 million, $1.7 million and $2.0 million as of September 30, 2017 and 2016 and December 31, 2016, respectively. The Company measures the fair value of its liability for third-party lender-owned consumer loans under Level 3 inputs. The fair value of these liabilities is calculated by applying historical loss rates combined with recent default trends to the gross consumer loan balance. The unobservable inputs used to calculate the fair value of these loans include historical loss rates, recent default trends and estimated remaining loan terms; therefore, the carrying value of these liabilities approximates the fair value.

The Company measures the fair value of the Promissory Note using Level 3 inputs. The fair value of the Promissory Note is estimated using a discounted cash flow analysis. As of September 30, 2017 and 2016 and December 31, 2016, the Promissory Note had a higher fair value than the carrying value.

The Company measures the fair value of its Securitization Notes using Level 2 inputs. The fair value of the Company’s Securitization Notes is estimated based on quoted prices in markets that are not active. As of September 30, 2017 and 2016 and December 31, 2016, the Company’s Securitization Notes had a higher fair value than the carrying value.

The Company measures the fair value of its 9.75% senior notes due 2021 using Level 2 inputs. The fair value of the Company’s 9.75% senior notes due 2021 is estimated based on quoted prices in markets that are not active. As of September 30, 2017 and December 31, 2016, the Company’s 9.75% senior notes due 2021 had a higher fair value than the carrying value. As of September 30, 2016, the fair value of the Company’s 9.75% senior notes due 2021 was lower than the carrying value.

The Company measures the fair value of its 8.50% senior notes due 2024 using Level 2 inputs. The fair value of the Company’s 8.50% senior notes due 2024 is estimated based on quoted prices in markets that are not active. As of September 30, 2017 the Company’s 8.50% senior notes due 2024 had a higher fair value than the carrying value.

The Company’s Senior Notes are unconditionally guaranteed by certain of the Company’s subsidiaries (the “Guarantor Subsidiaries”) and are not secured by its other subsidiaries (the “Non-Guarantor Subsidiaries”). The Guarantor Subsidiaries are 100% owned, all guarantees are full and unconditional, and all guarantees are joint and several. As a result of the guarantee arrangements, the Company is required, in accordance with Rule 3-10 of Regulation S-X, to present the following condensed consolidating financial statements.

The condensed consolidating financial statements reflect the investments in subsidiaries of the Company using the equity method of accounting. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. Condensed consolidating financial statements of Enova International, Inc. (the “Parent”), its Guarantor Subsidiaries and Non-Guarantor Subsidiaries as of September 30, 2017 and 2016 and December 31, 2016 and for the periods ended September 30, 2017 and 2016 are shown on the following pages.

				Guarantor			Non-Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Assets
Cash and cash equivalents	$	54,055		$	50,996		$	5,003		$	—		$	110,054
Restricted cash		—			7,705			22,161			—			29,866
Loans and finance receivables, net		—			351,627			286,109			—			637,736
Income taxes receivable		105,140			(95,852	)		31			—			9,319
Other receivables and prepaid expenses		245			21,271			2,280			—			23,796
Property and equipment, net		—			45,925			632			—			46,557
Goodwill		—			267,015			—			—			267,015
Intangible assets, net		—			4,593			—			—			4,593
Investment in subsidiaries		362,991			45,924			—			(408,915	)		—
Intercompany receivable		343,514			—			—			(343,514	)		—
Other assets		1,826			6,960			2,056			—			10,842
Total assets	$	867,771		$	706,164		$	318,272		$	(752,429	)	$	1,139,778
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses	$	13,795		$	62,348		$	2,754		$	—		$	78,897
Intercompany payables		—			252,154			91,360			(343,514	)		—
Deferred tax liabilities, net		(453	)		21,634			(500	)		—			20,681
Long-term debt		579,624			—			185,771			—			765,395
Total liabilities		592,966			336,136			279,385			(343,514	)		864,973
Commitments and contingencies
Stockholders' equity		274,805			370,028			38,887			(408,915	)		274,805
Total liabilities and stockholders' equity	$	867,771		$	706,164		$	318,272		$	(752,429	)	$	1,139,778

				Guarantor		Non-Guarantor
	Parent			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Assets
Cash and cash equivalents	$	—		$	43,127	$	2,554		$	—		$	45,681
Restricted cash		—			21,152		18,120			—			39,272
Loans and finance receivables, net		—			358,142		184,723			—			542,865
Income taxes receivable		—			—		—			—			—
Other receivables and prepaid expenses		141			18,222		286			—			18,649
Property and equipment, net		—			47,050		436			—			47,486
Goodwill		—			267,012		—			—			267,012
Intangible assets, net		—			5,670		5			—			5,675
Investment in subsidiaries		278,999			22,358		—			(301,357	)		—
Intercompany receivable		413,472			—		—			(413,472	)		—
Other assets		460			7,979		—			—			8,439
Total assets	$	693,072		$	790,712	$	206,124		$	(714,829	)	$	975,079
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses	$	16,386		$	67,931	$	1,116		$	—		$	85,433
Intercompany payables		—			357,650		55,826			(413,476	)		—
Income taxes currently payable		(56,364	)		61,521		(8	)		—			5,149
Deferred tax liabilities, net		(677	)		17,394		(484	)		—			16,233
Long-term debt		500,642			—		134,537			—			635,179
Total liabilities		459,987			504,496		190,987			(413,476	)		741,994
Commitments and contingencies
Stockholders' equity		233,085			286,216		15,137			(301,353	)		233,085
Total liabilities and stockholders' equity	$	693,072		$	790,712	$	206,124		$	(714,829	)	$	975,079

				Guarantor		Non-Guarantor
	Parent			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Assets
Cash and cash equivalents	$	—		$	36,057	$	3,877		$	—		$	39,934
Restricted cash		—			6,838		19,468			—			26,306
Loans and finance receivables, net		—			335,160		226,390			—			561,550
Other receivables and prepaid expenses		127			19,095		302			—			19,524
Property and equipment, net		—			46,507		593			—			47,100
Goodwill		—			267,010		—			—			267,010
Intangible assets, net		—			5,400		4			—			5,404
Investment in subsidiaries		294,646			25,131		—			(319,777	)		—
Intercompany receivable		363,942			—		—			(363,942	)		—
Other assets		597			7,995		2,459			—			11,051
Total assets	$	659,312		$	749,193	$	253,093		$	(683,719	)	$	977,879
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses	$	4,310		$	65,714	$	1,647		$	—		$	71,671
Intercompany payables		—			295,763		68,179			(363,942	)		—
Income taxes currently payable		(72,704	)		73,006		(20	)		—			282
Deferred tax liabilities, net		(354	)		15,156		(486	)		—			14,316
Long-term debt		486,361			—		163,550			—			649,911
Total liabilities		417,613			449,639		232,870			(363,942	)		736,180
Commitments and contingencies
Stockholders' equity		241,699			299,554		20,223			(319,777	)		241,699
Total liabilities and stockholders' equity	$	659,312		$	749,193	$	253,093		$	(683,719	)	$	977,879

				Guarantor			Non-Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Revenue	$	—		$	178,908		$	40,374		$	(1,404	)	$	217,878
Cost of Revenue		—			79,349			27,992			—			107,341
Gross Profit		—			99,559			12,382			(1,404	)		110,537
Expenses
Marketing		—			26,423			577			—			27,000
Operations and technology		—			22,911			4,252			—			27,163
General and administrative		131			25,746			691			(1,404	)		25,164
Depreciation and amortization		—			3,486			47			—			3,533
Total Expenses		131			78,566			5,567			(1,404	)		82,860
(Loss) Income from Operations		(131	)		20,993			6,815			—			27,677
Interest expense, net		(14,238	)		(33	)		(4,021	)		—			(18,292	)
Foreign currency transaction gain		65			—			—			—			65
Loss on early extinguishment of debt		(14,927	)		—			—			—			(14,927	)
(Loss) Income before Income Taxes and Equity in Net Earnings of Subsidiaries		(29,231	)		20,960			2,794			—			(5,477	)
(Benefit from) provision for income taxes		(9,760	)		6,746			905			—			(2,109	)
(Loss) Income before Equity in Net Earnings of Subsidiaries		(19,471	)		14,214			1,889			—			(3,368	)
Net earnings of subsidiaries		16,103			1,889			—			(17,992	)		—
Net (Loss) Income	$	(3,368	)	$	16,103		$	1,889		$	(17,992	)	$	(3,368	)
Other comprehensive gain (loss), net of tax:
Foreign currency translation gain (loss)		2,052			1,304			749			(2,053	)		2,052
Total other comprehensive gain (loss), net of tax		2,052			1,304			749			(2,053	)		2,052
Comprehensive (Loss) Income	$	(1,316	)	$	17,407		$	2,638		$	(20,045	)	$	(1,316	)

				Guarantor			Non-Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Revenue	$	—		$	170,288		$	24,157		$	1,498		$	195,943
Cost of Revenue		—			78,283			17,108			—			95,391
Gross Profit		—			92,005			7,049			1,498			100,552
Expenses
Marketing		—			26,348			374			—			26,722
Operations and technology		—			19,505			1,132			—			20,637
General and administrative		37			18,539			1,233			1,498			21,307
Depreciation and amortization		—			3,761			28			—			3,789
Total Expenses		37			68,153			2,767			1,498			72,455
(Loss) Income from Operations		(37	)		23,852			4,282			—			28,097
Interest expense, net		(13,342	)		(123	)		(2,652	)		—			(16,117	)
Foreign currency transaction gain		145			—			—			—			145
(Loss) Income before Income Taxes and Equity in Net Earnings of Subsidiaries		(13,234	)		23,729			1,630			—			12,125
(Benefit from) provision for income taxes		(4,832	)		8,451			669			—			4,288
(Loss) Income before Equity in Net Earnings of Subsidiaries		(8,402	)		15,278			961			—			7,837
Net earnings of subsidiaries		16,239			961			—			(17,200	)		—
Net Income (Loss)	$	7,837		$	16,239		$	961		$	(17,200	)	$	7,837
Other comprehensive (loss) gain, net of tax:
Foreign currency translation (loss) gain		(1,245	)		(1,084	)		(160	)		1,244			(1,245	)
Total other comprehensive (loss) gain, net of tax		(1,245	)		(1,084	)		(160	)		1,244			(1,245	)
Comprehensive Income (Loss)	$	6,592		$	15,155		$	801		$	(15,956	)	$	6,592

				Guarantor			Non-Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Revenue	$	—		$	497,081		$	106,902		$	(3,938	)	$	600,045
Cost of Revenue		—			197,281			71,806			—			269,087
Gross Profit		—			299,800			35,096			(3,938	)		330,958
Expenses
Marketing		—			68,686			1,307			—			69,993
Operations and technology		—			65,090			7,422			—			72,512
General and administrative		265			76,060			4,718			(3,938	)		77,105
Depreciation and amortization		—			10,261			135			—			10,396
Total Expenses		265			220,097			13,582			(3,938	)		230,006
(Loss) Income from Operations		(265	)		79,703			21,514			—			100,952
Interest expense, net		(40,780	)		(97	)		(11,649	)		—			(52,526	)
Foreign currency transaction gain		349			5			—			—			354
Loss on early extinguishment of debt		(14,927	)		—			—			—			(14,927	)
(Loss) Income before Income Taxes and Equity in Net Earnings of Subsidiaries		(55,623	)		79,611			9,865			—			33,853
(Benefit from) provision for income taxes		(18,889	)		27,034			3,351			—			11,496
(Loss) Income before Equity in Net Earnings of Subsidiaries		(36,734	)		52,577			6,514			—			22,357
Net earnings of subsidiaries		59,091			6,514			—			(65,605	)		—
Net Income (Loss)	$	22,357		$	59,091		$	6,514		$	(65,605	)	$	22,357
Other comprehensive gain (loss), net of tax:
Foreign currency translation gain (loss)		4,561			4,197			365			(4,562	)		4,561
Total other comprehensive gain (loss), net of tax		4,561			4,197			365			(4,562	)		4,561
Comprehensive Income (Loss)	$	26,918		$	63,288		$	6,879		$	(70,167	)	$	26,918

				Guarantor			Non-Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Revenue	$	—		$	478,434		$	64,697		$	—		$	543,131
Cost of Revenue		—			182,729			47,692			—			230,421
Gross Profit		—			295,705			17,005			—			312,710
Expenses
Marketing		—			72,488			1,012			—			73,500
Operations and technology		—			58,642			3,064			—			61,706
General and administrative		185			72,867			3,695			—			76,747
Depreciation and amortization		—			11,936			68			—			12,004
Total Expenses		185			215,933			7,839			—			223,957
(Loss) Income from Operations		(185	)		79,772			9,166			—			88,753
Interest (expense) income, net		(39,793	)		613			(8,878	)		—			(48,058	)
Foreign currency transaction gain		2,184			—			—			—			2,184
(Loss) Income before Income Taxes and Equity in Net Earnings of Subsidiaries		(37,794	)		80,385			288			—			42,879
(Benefit from) provision for income taxes		(14,977	)		31,853			115			—			16,991
(Loss) Income before Equity in Net Earnings of Subsidiaries		(22,817	)		48,532			173			—			25,888
Net earnings of subsidiaries		48,705			173			—			(48,878	)		—
Net Income (Loss)	$	25,888		$	48,705		$	173		$	(48,878	)	$	25,888
Other comprehensive (loss) gain, net of tax:
Foreign currency translation (loss) gain		(5,070	)		(6,342	)		1,270			5,072			(5,070	)
Total other comprehensive (loss) gain, net of tax		(5,070	)		(6,342	)		1,270			5,072			(5,070	)
Comprehensive Income (Loss)	$	20,818		$	42,363		$	1,443		$	(43,806	)	$	20,818

				Guarantor			Non-Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash Flows from Operating Activities	$	(17,931	)	$	346,948		$	(8,712	)	$	(9,008	)	$	311,297
Cash Flows from Investing Activities
Loans and finance receivables originated or acquired		—			(974,211	)		(24,122	)		—			(998,333	)
Securitized loans transferred		—			201,518			(201,518	)		—			—
Loans and finance receivables repaid		—			467,011			205,463			—			672,474
Change in restricted cash		—			(337	)		(2,693	)		—			(3,030	)
Purchases of property and equipment		—			(10,651	)		(153	)		—			(10,804	)
Capital contributions to subsidiaries		—			(11,785	)		—			11,785			—
Other investing activities		—			1,798			—			—			1,798
Net cash (used in) provided by investing activities		—			(326,657	)		(23,023	)		11,785			(337,895	)
Cash Flows from Financing Activities
(Payments for) proceeds from member's equity		—			(9,008	)		11,785			(2,777	)		—
Debt issuance costs paid		(9,564	)		—			—			—			(9,564	)
Debt prepayment penalty		(11,335	)		—			—			—			(11,335	)
Treasury shares purchased		(2,115	)		—			—			—			(2,115	)
Issuance of Senior Notes		250,000			—			—			—			250,000
Repayments of Senior Notes		(155,000	)		—			—			—			(155,000	)
Borrowings under revolving line of credit		30,000			—			—			—			30,000
Repayments under revolving line of credit, net		(30,000	)		—			—			—			(30,000	)
Borrowings under securitization facility		—			—			137,200			—			137,200
Repayments under securitization facility		—			—			(116,085	)		—			(116,085	)
Net cash provided by (used in) financing activities		71,986			(9,008	)		32,900			(2,777	)		93,101
Effect of exchange rates on cash		—			3,656			(39	)		—			3,617
Net increase in cash and cash equivalents		54,055			14,939			1,126			—			70,120
Cash and cash equivalents at beginning of year		—			36,057			3,877			—			39,934
Cash and cash equivalents at end of period	$	54,055		$	50,996		$	5,003		$	—		$	110,054

				Guarantor			Non-Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash Flows from Operating Activities	$	87,477		$	216,799		$	40,569		$	(44,138	)	$	300,707
Cash Flows from Investing Activities
Loans and finance receivables originated or acquired		—			(976,614	)		(10,641	)		—			(987,255	)
Securitized loans transferred		—			278,076			(278,076	)		—			—
Loans and finance receivables repaid		—			525,636			126,229			—			651,865
Change in restricted cash		—			(14,656	)		(18,120	)		—			(32,776	)
Purchases of property and equipment		—			(11,262	)		(204	)		—			(11,466	)
Capital contributions to subsidiaries		(43,962	)		(8,005	)		—			51,967			—
Other investing activities		—			72			—			—			72
Net cash (used in) provided by investing activities		(43,962	)		(206,753	)		(180,812	)		51,967			(379,560	)
Cash Flows from Financing Activities
(Payments for) proceeds from member's equity		—			(176	)		8,005			(7,829	)		—
Debt issuance costs paid		—			—			(3,516	)		—			(3,516	)
Treasury shares purchased		(115	)		—			—			—			(115	)
Borrowings under revolving line of credit		45,000			—			—			—			45,000
Repayments under revolving line of credit		(88,400	)		—			—			—			(88,400	)
Borrowings under securitization facility		—			—			218,961			—			218,961
Repayments under securitization facility		—			—			(82,008	)		—			(82,008	)
Net cash (used in) provided by financing activities		(43,515	)		(176	)		141,442			(7,829	)		89,922
Effect of exchange rates on cash		—			(7,670	)		216			—			(7,454	)
Net increase in cash and cash equivalents		—			2,200			1,415			—			3,615
Cash and cash equivalents at beginning of year		—			40,927			1,139			—			42,066
Cash and cash equivalents at end of period	$	—		$	43,127		$	2,554		$	—		$	45,681

Subsequent events have been reviewed through the date these financial statements were available to be issued.

On October 20, 2017, the Company and certain of its subsidiaries amended and restated the 2016‑1 Securitization Facility (the “Amended Facility”). The counterparties to the Amended Facility included certain purchasers, the Administrative Agent and the Indenture Trustee. The Amended Facility relates to Receivables that have been and will be originated or acquired under the Company’s NetCredit brand by the Originators and that meet specified eligibility criteria. Under the Amended Facility, additional Receivables may be sold to the Issuer and serviced by another subsidiary of the Company. As of the Closing Date, the Issuer owned eligible Receivables with an outstanding principal balance equal to $226.4 million.

In connection with the amendment and restatement, all of the outstanding notes issued by the Issuer prior to the Closing Date were redeemed and the Issuer issued an initial term note with an initial principal amount of $181.1 million (the “2017 Initial Term Note”) and variable funding notes (the “2017 Variable Funding Notes”) with an aggregate committed availability of $75 million per quarter with an option to increase the commitment to $90 million with the consent of the holders of the 2017 Variable Funding Notes. As described below, the Issuer will subsequently issue term notes (the “2017 Term Notes”) and, together with the 2017 Initial Term Note and the 2017 Variable Funding Notes, (the “2017 Securitization Notes”) at the end of each calendar quarter. The maximum principal amount of the 2017 Securitization Notes that may be outstanding at any time under the Amended Facility is $275 million.

On each of January 2, 2018, April 2, 2018, July 2, 2018, October 1, 2018, December 31, 2018 and April 1, 2019, the Receivables financed under the 2017 Variable Funding Notes will be allocated to a 2017 Term Note, which 2017 Term Note will be issued to the holders of the 2017 Variable Funding Notes and the 2017 Variable Funding Note on such date will be reduced to zero. The 2017

Securitization Notes are non-recourse to the Company and mature at various dates, the latest of which will be April 15, 2021 (the “2017 Final Maturity Date”).

The 2017 Securitization Notes are issued pursuant to an amended and restated indenture, dated as of the Closing Date, between the Issuer and the Indenture Trustee. The 2017 Securitization Notes bear interest at a rate per annum equal to One-Month LIBOR (subject to a floor) plus 7.50%. In addition, the Issuer paid certain customary upfront closing fees to the Administrative Agent and will pay customary annual commitment and other fees to the purchasers under the Amended Facility. Subject to certain exceptions, the Issuer is not permitted to prepay or redeem any of the 2017 Securitization Notes prior to April 15, 2019 except for a one-time prepayment of the 2017 Securitization Notes related to a removal of Receivables in an amount no greater than $100 million. Following such date, the Issuer is permitted to voluntarily prepay any of the 2017 Securitization Notes, subject to an optional redemption premium. Interest and principal payments on the 2017 Securitization Notes will be made monthly. Any remaining amounts outstanding will be payable no later than the 2017 Final Maturity Date.

All amounts due under the 2017 Securitization Notes are secured by all of the Issuer’s assets, which include the Receivables transferred to the Issuer, related rights under the Receivables, specified bank accounts and certain other related collateral.

The Amended Facility documents contain customary provisions for securitizations, including: representations and warranties as to the eligibility of the Receivables and other matters; indemnification for specified losses not including losses due to the inability of consumers to repay their loans; covenants regarding special purpose entity matters and other subjects; and default and termination provisions which provide for the acceleration of the 2017 Securitization Notes under the Amended Facility in circumstances including, but not limited to, failure to make payments when due, servicer defaults, certain insolvency events, breaches of representations, warranties or covenants, failure to maintain the security interest in the receivables, and defaults under other material indebtedness.

On October 26, 2017, the Issuer and the Indenture Trustee amended the Amended Facility to permit a holder of a 2017 Term Note or the 2017 Initial Term Note to exchange its notes for notes with an alternative structure with terms not materially different to the Issuer than the exchanged Term Notes or Initial Term Notes.

The following discussion of financial condition, results of operations, liquidity and capital resources and certain factors that may affect future results, including economic and industry-wide factors, of Enova International, Inc. and its subsidiaries should be read in conjunction with our consolidated financial statements and accompanying notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as with Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2016. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. The matters discussed in these forward-looking statements are subject to risk, uncertainties, and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements. Please see “Risk Factors” and “Cautionary Statement Concerning Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.

We are a leading technology and analytics company focused on providing online financial services to consumers and small businesses. In 2016, we extended approximately $2.1 billion in credit to borrowers. As of September 30, 2017, we offered or arranged loans or draws on lines of credit to consumers in 33 states in the United States and in the United Kingdom and Brazil. We also offered financing to small businesses in all 50 states and Washington D.C. in the United States. We use our proprietary technology, analytics and customer service capabilities to quickly evaluate, underwrite and fund loans or provide financing, allowing us to offer consumers and small businesses credit or financing when and how they want it. Our customers include the large and growing number of consumers who and small businesses which have bank accounts but use alternative financial services because of their limited access to more traditional credit from banks, credit card companies and other lenders. We were an early entrant into online lending, launching our online business in 2004, and through September 30, 2017, we have completed over 42.2 million customer transactions and collected approximately 16 terabytes of currently accessible customer behavior data since launch, allowing us to better analyze and underwrite our specific customer base. We have significantly diversified our business over the past several years having expanded the markets we serve and the financing products we offer. These financing products include short-term loans, line of credit accounts, installment loans and receivables purchase agreements (“RPAs”).

We believe our customers highly value our products and services as an important component of their personal or business finances because our products are convenient, quick and often less expensive than other available alternatives. We attribute the success of our business to our advanced and innovative technology systems, the proprietary analytical models we use to predict the performance of loans and finance receivables, our sophisticated customer acquisition programs, our dedication to customer service and our talented employees.

We have developed proprietary underwriting systems based on data we have collected over our 13 years of experience. These systems employ advanced risk analytics to decide whether to approve financing transactions, to structure the amount and terms of the financings we offer pursuant to jurisdiction-specific regulations and to provide customers with their funds quickly and efficiently. Our systems closely monitor collection and portfolio performance data that we use to continually refine the analytical models and statistical measures used in making our credit, purchase, marketing and collection decisions.

Our flexible and scalable technology platform allows us to process and complete customers’ transactions quickly and efficiently. In 2016, we processed approximately 3.8 million transactions, and we continue to grow our loans and finance receivable portfolios and increase the number of customers we serve through desktop, tablet and mobile platforms. Our highly customizable technology platform allows us to efficiently develop and deploy new products to adapt to evolving regulatory requirements and consumer preference, and to enter new markets quickly. In 2012, we launched a new product in the United States designed to serve near-prime customers, and in April 2014 we introduced a similar product in the United Kingdom. In June 2014, we launched our business in Brazil, where we arrange financing for borrowers through a third party lender. In addition, in July 2014, we introduced a new line of credit product in the United States to serve the needs of small businesses. In June 2015, we further expanded our product offering by acquiring certain assets of a company that provides financing to small businesses by offering RPAs (see Note 2 in the Notes to Consolidated Financial Statements included in this report). In May 2017, we expanded products available to small businesses by offering installment loans. These new products are intended to allow us to further diversify our product offerings, customer base and geographic scope. In the nine-month period ended September 30, 2017, we derived 84.0% of our total revenue from the United States and 16.0% of our total revenue internationally, with 86.2% of international revenue (representing 13.8% of our total revenue) generated in the United Kingdom.

We have been able to consistently acquire new customers and successfully generate repeat business from returning customers when they need financing. We believe our customers are loyal to us because they are satisfied with our products and services. We acquire new customers from a variety of sources, including visits to our own websites, mobile sites or applications, and through direct marketing, affiliate marketing, lead providers and relationships with other lenders. We believe that the online convenience of our products and our 24/7 availability to accept applications with quick approval decisions are important to our customers.

Once a potential customer submits an application, we quickly provide a credit or purchase decision. If a loan or financing is approved, we or our lending partners typically fund the loan or financing the next business day or, in some cases, the same day. During the entire process, from application through payment, we provide access to our well-trained customer service team. All of our operations, from customer acquisition through collections, are structured to build customer satisfaction and loyalty, in the event that a customer has a need for our products in the future. We have developed a series of sophisticated proprietary scoring models to support our various products. We believe that these models are an integral component of our operations and they allow us to complete a high volume of customer transactions while actively managing risk and the related quality of our loan and finance receivable portfolios. We believe our successful application of these technology innovations differentiates our capabilities relative to competitive platforms as evidenced by our history of strong growth and stable portfolio quality.

Our online financing products and services provide customers with a deposit of funds into their bank account in exchange for a commitment to repay the amount deposited plus fees, interest and/or revenue. We originate, arrange, guarantee or purchase short-term consumer loans, line of credit accounts, installment loans and RPAs. We have one reportable segment that includes all of our online financial services.

As of September 30, 2017 and 2016, the outstanding amount of active short-term consumer loans originated by third-party lenders under the CSO programs was $24.2 million and $23.4 million, respectively, which were guaranteed by us.

As of September 30, 2017 and 2016, the outstanding amount of active installment loans originated by third-party lenders under the CSO programs was $4.7 million and $6.3 million, respectively, which were guaranteed by us.

Our internet websites and the information contained therein or connected thereto are not intended to be incorporated by reference into this Quarterly Report on Form 10-Q.

We previously provided services under the name DollarsDirect at www.dollarsdirect.com.au in Australia, and we began providing services there in May 2009. We previously provided services in Canada in the provinces of Ontario, British Columbia, Alberta and Saskatchewan under the name DollarsDirect at www.dollarsdirect.ca, and we began providing services there in October 2009. Due to the small size of the Australian and Canadian markets and our limited operations there, we decided to exit those markets in 2016 and reallocate our resources to our other existing businesses. As a result, we have stopped lending activities and have wound down our loan portfolios.

On November 29, 2016, the Financial Conduct Authority (“FCA”), our primary regulator in the United Kingdom, issued a Call for Input seeking evidence and feedback to further inform its previous reviews of the high-cost credit market, including a review of the loan price cap that was implemented on January 2, 2015. On July 31, 2017, the FCA published the outcome of its review and decided not to change the price cap but to review it again in three years. The FCA found that regulation of high-cost short-term credit, including the price cap, has led to substantial benefits to consumers. The FCA validated concerns about specific products and segments of the high-cost credit market, including unarranged overdrafts and long-term use of high-cost credit and the rent-to-own, home-collected credit and catalog credit markets. The FCA plans to investigate those products and segments further and issue a Consultation Paper on proposed solutions in the spring of 2018.

On July 4, 2017, the FCA issued a Consultation Paper on proposed changes to its rules and guidance on staff incentives, remuneration and performance management in consumer credit. The FCA completed a thematic review of staff incentives, remuneration and performance management and found that some firms have inadequate systems and controls to manage the risks of staff incentives. The FCA is consulting on measures to address risks that can arise from the way consumer credit firms pay or incentivize their staff. The FCA requested responses to the consultation paper by October 4, 2017, and expects to publish its Policy Statement and finalized guidance in the first quarter of 2018.

On July 26, 2017, the FCA issued a Consultation Paper on proposed changes to its rules and guidance on individual accountability. The Senior Managers and Certification Regime currently applies to deposit taking institutions and, following the Bank of England and Financial Services Act 2016, is now being extended to FCA solo-regulated firms. The Senior Managers and Certification Regime would replace the Approved Persons Regime, changing how individuals working in financial services are regulated. The objective of the new Senior Managers and Certification Regime is to reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence. The FCA has requested responses to the consultation paper by November 3, 2017, and expects to publish its Policy Statement in the summer of 2018.

On July 10, 2017, the CFPB issued a final rule on arbitration. The rule would have prohibited class action waivers in certain consumer financial services contracts beginning on March 19, 2018 and would have required financial services providers to submit certain records to the CFPB if arbitration were used to resolve disputes with consumers. However, on July 25, 2017, and October 24, 2017, respectively, the House and Senate each passed a resolution of disapproval of the rule, pursuant to their powers under the Congressional Review Act, and the President signed the bill on November 1, 2017. Because the rule was disapproved, it cannot be reissued in substantially the same form, and the CFPB cannot issue a substantially similar rule unless the new rule is specifically authorized by a law enacted after the date of the joint resolution disapproving the original rule.

On October 6, 2017, the CFPB issued its final rule on payday and certain high-cost installment loans, which would cover some of the loans we offer. The rule requires that lenders who make short-term loans and longer-term loans with balloon payments reasonably determine consumers’ ability to repay the loans according to their terms before issuing the loans. The rule also introduces new limitations on repayment processes for those lenders as well as lenders of other longer-term loans with an annual percentage rate greater than 36 percent that include an ACH authorization or similar payment provision. If a consumer has two consecutive failed payment attempts, the lender must obtain the consumer’s new and specific authorization to make further withdrawals from the consumer’s bank account. For loans covered by the rule, lenders must provide certain notices to consumers before attempting a first payment withdrawal or an unusual withdrawal and after two consecutive failed payment attempts. The rule will apply to loan contracts entered into beginning in mid-2019. However, under the Congressional Review Act, Congress has 60 legislative days after publication of the rule in the Federal Register (which has not yet occurred) to overturn it by a majority vote in both Houses of Congress. It is also likely that there will be legal challenges to the final rule.

There have been no changes in critical accounting policies as described in our Annual Report on Form 10-K for the year ended December 31, 2016.

See Note 1 in the Notes to Consolidated Financial Statements included in this report for a discussion of recent accounting pronouncements.

Our financial results for the three-month period ended September 30, 2017, or the current quarter, are summarized below.

The following tables reflect our results of operations for the periods indicated, both in dollars and as a percentage of total revenue (dollars in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenue
Loans and finance receivables revenue	$	217,693		$	195,912		$	599,315		$	541,895
Other		185			31			730			1,236
Total Revenue		217,878			195,943			600,045			543,131
Cost of Revenue		107,341			95,391			269,087			230,421
Gross Profit		110,537			100,552			330,958			312,710
Expenses
Marketing		27,000			26,722			69,993			73,500
Operations and technology		27,163			20,637			72,512			61,706
General and administrative		25,164			21,307			77,105			76,747
Depreciation and amortization		3,533			3,789			10,396			12,004
Total Expenses		82,860			72,455			230,006			223,957
Income from Operations		27,677			28,097			100,952			88,753
Interest expense, net		(18,292	)		(16,117	)		(52,526	)		(48,058	)
Foreign currency transaction gain		65			145			354			2,184
Loss on early extinguishment of debt		(14,927	)		—			(14,927	)		—
(Loss) Income before Income Taxes		(5,477	)		12,125			33,853			42,879
(Benefit from) provision for income taxes		(2,109	)		4,288			11,496			16,991
Net (Loss) Income	$	(3,368	)	$	7,837		$	22,357		$	25,888
Diluted net (loss) income per share	$	(0.10	)	$	0.23		$	0.66		$	0.78

Revenue
Loans and finance receivables revenue		99.9	%		100.0	%		99.9	%		99.8	%
Other		0.1			—			0.1			0.2
Total Revenue		100.0			100.0			100.0			100.0
Cost of Revenue		49.3			48.7			44.8			42.4
Gross Profit		50.7			51.3			55.2			57.6
Expenses
Marketing		12.4			13.7			11.7			13.6
Operations and technology		12.5			10.5			12.1			11.4
General and administrative		11.5			10.9			12.9			14.1
Depreciation and amortization		1.6			1.9			1.7			2.2
Total Expenses		38.0			37.0			38.4			41.3
Income from Operations		12.7			14.3			16.8			16.3
Interest expense, net		(8.4	)		(8.2	)		(8.8	)		(8.8	)
Foreign currency transaction gain		—			0.1			0.1			0.4
Loss on early extinguishment of debt		(6.8	)		—			(2.5	)		—
(Loss) Income before Income Taxes		(2.5	)		6.2			5.6			7.9
(Benefit from) provision for income taxes		(1.0	)		2.2			1.9			3.1
Net (Loss) Income		(1.5	%)		4.0	%		3.7	%		4.8	%

In addition to the financial information prepared in conformity with generally accepted accounting principles, or GAAP, we provide historical non-GAAP financial information. Management believes that presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of our operations. Management believes that these non-GAAP financial measures reflect an additional way of viewing aspects of our business that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting our business.

Management provides non-GAAP financial information for informational purposes and to enhance understanding of our GAAP consolidated financial statements. Readers should consider the information in addition to, but not instead of or superior to, our financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.

In addition to reporting financial results in accordance with GAAP, we have provided adjusted earnings and adjusted earnings per share, or, collectively, the Adjusted Earnings Measures, which are non-GAAP measures. Management believes that the presentation of these measures provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments and amortization methods, which provides a more complete understanding of our financial performance, competitive position and prospects for the future. Management also believes that investors regularly rely on non-GAAP financial measures, such as the Adjusted Earnings Measures, to assess operating performance and that such measures may highlight trends in our business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. In addition, management believes that the adjustments shown below are useful to investors in order to allow them to compare our financial results during the periods shown without the effect of each of these expense items.

The following table provides reconciliations between net (loss) income and diluted earnings per share calculated in accordance with GAAP to the Adjusted Earnings Measures, which are shown net of tax (in thousands, except per share data):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Net (Loss) Income	$	(3,368	)	$	7,837		$	22,357		$	25,888
Adjustments:
Loss on early extinguishment of debt		14,927			—			14,927			—
Intangible asset amortization		269			271			811			867
Stock-based compensation expense		2,996			2,265			8,303			6,414
Foreign currency transaction gain		(65	)		(145	)		(354	)		(2,184	)
Cumulative tax effect of adjustments		(6,121	)		(902	)		(8,044	)		(2,020	)
Adjusted earnings	$	8,638		$	9,326		$	38,000		$	28,965

Diluted net (loss) income per share	$	(0.10	)	$	0.23		$	0.66		$	0.78
Adjustments:
Loss on early extinguishment of debt		0.44			—			0.44			—
Intangible asset amortization		0.01			0.01			0.02			0.03
Stock-based compensation expense		0.08			0.07			0.24			0.19
Foreign currency transaction gain		—			—			(0.01	)		(0.07	)
Cumulative tax effect of adjustments		(0.18	)		(0.03	)		(0.24	)		(0.06	)
Adjusted earnings per share	$	0.25		$	0.28		$	1.11		$	0.87

The table below shows Adjusted EBITDA, which is a non-GAAP measure that we define as earnings excluding depreciation, amortization, interest, foreign currency transaction gains or losses, taxes, and stock-based compensation expense. Management believes Adjusted EBITDA is used by investors to analyze operating performance and evaluate our ability to incur and service debt and our capacity for making capital expenditures. Adjusted EBITDA is also useful to investors to help assess our estimated enterprise value. In addition, management believes that the adjustment for loss on early extinguishment of debt shown below is useful to investors in order to allow them to compare our financial results during the periods shown without the effect of the expense item. The computation of Adjusted EBITDA, as presented below, may differ from the computation of similarly-titled measures provided by other companies (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Net (Loss) Income	$	(3,368	)	$	7,837		$	22,357		$	25,888
Depreciation and amortization expenses		3,533			3,789			10,396			12,004
Interest expense, net		18,292			16,117			52,526			48,058
Foreign currency transaction gain		(65	)		(145	)		(354	)		(2,184	)
(Benefit from) provision for income taxes		(2,109	)		4,288			11,496			16,991
Stock-based compensation expense		2,996			2,265			8,303			6,414
Adjustment:
Loss on early extinguishment of debt		14,927			—			14,927			—
Adjusted EBITDA	$	34,206		$	34,151		$	119,651		$	107,171

Adjusted EBITDA margin calculated as follows:
Total Revenue	$	217,878		$	195,943		$	600,045		$	543,131
Adjusted EBITDA		34,206			34,151			119,651			107,171
Adjusted EBITDA as a percentage of total revenue		15.7	%		17.4	%		19.9	%		19.7	%

In addition to reporting financial results in accordance with GAAP, we have provided certain other non-GAAP financial information on a constant currency basis. We operate in the United Kingdom and Brazil. During the current quarter and nine months ended September 30, 2017 16.7% and 16.0%, respectively, of our revenue originated in currencies other than the U.S. Dollar, principally the British Pound Sterling. As a result, changes in our reported revenue and profits include the impacts of changes in foreign currency exchange rates. As additional information to the reader, we provide constant currency assessments in the following discussion and analysis to remove and/or quantify the impact of the fluctuation in foreign exchange rates and utilize constant currency results in our analysis of performance. Our constant currency assessment assumes foreign exchange rates in the current fiscal periods remained the same as in the prior fiscal year periods. All conversion rates below are based on the U.S. Dollar equivalent to one of the applicable foreign currencies:

Management believes that our non-GAAP constant currency assessments are a useful measure, as they indicate the actual growth and profitability of our operations.

In addition to reporting loans and finance receivables balance information in accordance with GAAP (see Note 3 in the Notes to Consolidated Financial Statements included in this report), we have provided metrics on a combined basis. The Combined Loans and

Finance Receivables Measures are non-GAAP measures that include both loans and RPAs we own or have purchased and loans we guarantee, which are either GAAP items or disclosures required by GAAP. See “—Loan and Finance Receivable Balances,” “—Loans and Finance Receivables Loss Experience” and “—Loans and Finance Receivables Loss Experience by Product” below for reconciliations between Company owned and purchased loans and finance receivables, gross, allowance and liability for losses, cost of revenue and charge-offs (net of recoveries) calculated in accordance with GAAP to the Combined Loans and Finance Receivables Measures.

Management believes these non-GAAP measures provide investors with important information needed to evaluate the magnitude of potential receivable losses and the opportunity for revenue performance of the loans and finance receivable portfolio on an aggregate basis. Management also believes that the comparison of the aggregate amounts from period to period is more meaningful than comparing only the amounts reflected on our balance sheet since both revenue and cost of revenue are impacted by the aggregate amount of receivables we own and those we guarantee as reflected in our financial statements.

THREE MONTHS ENDED SEPTEMBER 30, 2017 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2016

Revenue increased $22.0 million, or 11.2%, to $217.9 million for the current quarter as compared to $195.9 million for the prior year quarter. Foreign currency exchange rates did not have a significant impact on revenue in the current quarter as compared to the prior year quarter. Our domestic operations contributed an increase of $16.3 million, primarily resulting from a 16.8% increase in line of credit account revenue and a 13.4% increase in installment loan and RPA revenue in the current quarter compared to the prior year quarter driven by strong customer demand for these products. Our international operations contributed an increase of $5.7 million, primarily resulting from a 34.6% increase in installment loan and RPA revenue and a 6.3% increase in short-term loan revenue.

Our gross profit increased by $10.0 million to $110.5 million for the current quarter from $100.5 million for the prior year quarter. Foreign currency exchange rates did not have a significant impact on gross profit in the current quarter as compared to the prior year quarter. Our consolidated gross profit as a percentage of revenue, or our gross profit margin, decreased to 50.7% for the current quarter, from 51.3% for the prior year quarter. The decrease in gross profit margin was primarily driven by the continued strong new customer growth of our installment and short-term portfolios, which requires higher loss provisions as new customers default at a higher rate than returning customers with a successful history of loan performance.

The following tables set forth the components of revenue and gross profit, separated by product and between domestic and international for the current quarter and the prior year quarter (in thousands):

	Three Months Ended September 30,
	2017			2016			$ Change			% Change
Revenue by product:
Short-term loans	$	49,875		$	51,999		$	(2,124	)		(4.1	)%
Line of credit accounts		68,889			59,090			9,799			16.6
Installment loans and RPAs		98,929			84,823			14,106			16.6
Total loans and finance receivables revenue		217,693			195,912			21,781			11.1
Other		185			31			154			496.8
Total revenue	$	217,878		$	195,943		$	21,935			11.2	%

Revenue by product (% to total):
Short-term loans		22.9	%		26.5	%
Line of credit accounts		31.6			30.2
Installment loans and RPAs		45.4			43.3
Total loans and finance receivables revenue		99.9			100.0
Other		0.1			—
Total revenue		100.0	%		100.0	%

	Three Months Ended September 30,
	2017			2016			$ Change			% Change
Domestic:
Revenue	$	181,584		$	165,330		$	16,254			9.8	%
Cost of revenue		88,419			85,862			2,557			3.0
Gross profit	$	93,165		$	79,468		$	13,697			17.2
Gross profit margin		51.3	%		48.1	%		3.2	%		6.7	%
International:
Revenue	$	36,294		$	30,613		$	5,681			18.6	%
Cost of revenue		18,922			9,529			9,393			98.6
Gross profit	$	17,372		$	21,084		$	(3,712	)		(17.6	)
Gross profit margin		47.9	%		68.9	%		(21.0	)%		(30.5	)%
Total:
Revenue	$	217,878		$	195,943		$	21,935			11.2	%
Cost of revenue		107,341			95,391			11,950			12.5
Gross profit	$	110,537		$	100,552		$	9,985			9.9
Gross profit margin		50.7	%		51.3	%		(0.6	)%		(1.2	)%

Our loan and finance receivable balance in our consolidated financial statements for September 30, 2017 and 2016 was $742.8 million and $637.6 million, respectively, before the allowance for losses of $105.1 million and $94.7 million, respectively. The combined loan and finance receivable balance includes $28.9 million and $29.7 million as of September 30, 2017 and 2016, respectively, of consumer loan balances that are guaranteed by us but not owned by us, which are not included in our consolidated financial statements for September 30, 2017 and 2016, respectively, before the liability for estimated losses of $2.0 million and $1.7 million provided in “Accounts payable and accrued expenses” in our consolidated financial statements for September 30, 2017 and 2016, respectively.

The ending portfolio balance of loans and finance receivables, net of allowance for losses, increased $94.9 million, or 17.5%, to $637.7 million as of September 30, 2017 from $542.9 million as of September 30, 2016, and the outstanding combined portfolio balance of loans and finance receivables, net of allowance and liability for estimated losses, increased $93.8 million, or 16.4%, to $664.7 million as of September 30, 2017 from $570.8 million as of September 30, 2016, primarily due to increased demand for all of our installment products and, to a lesser extent, our short-term and line of credit products. The outstanding loan balance for our domestic near-prime product increased 20.0% in the current quarter compared to the prior year quarter resulting in a domestic near-prime portfolio balance that comprises 42.8% of our total loan and finance receivable portfolio balance while short-term loans comprised approximately 11.9% of our total loan and finance receivable portfolio balance in the current quarter, compared to 12.5% in the prior year quarter. We expect this trend to continue as we increase the number of states offering a near-prime installment lending product under our bank program. Management expects the loan balances for our domestic near-prime installment loan product will continue to comprise a larger percentage of the total loan and finance receivable portfolio, due to customer demand for these products and their longer loan term. Our portfolio of loans and finance receivables serving the needs of small businesses decreased slightly to 10.9% in the current quarter from 13.3% in the prior year quarter as growth in the installment products has outpaced the growth of the small-business portfolio. See “—Non-GAAP Disclosure—Combined Loans and Finance Receivables” above for additional information related to combined loans and finance receivables.

The following tables summarize loan and finance receivable balances outstanding as of September 30, 2017 and 2016 (in thousands):

	As of September 30,
	2017									2016
				Guaranteed									Guaranteed
	Company			by the						Company			by the
	Owned^(a)			Company^(a)			Combined^(b)			Owned^(a)			Company^(a)			Combined^(b)
Ending loans and finance receivables balances:
Short-term loans	$	67,719		$	24,248		$	91,967		$	60,124		$	23,379		$	83,503
Line of credit accounts		154,689			—			154,689			132,388			—			132,388
Installment loans and RPAs		520,388			4,695			525,083			445,100			6,321			451,421
Total ending loans and finance receivables, gross		742,796			28,943			771,739			637,612			29,700			667,312
Less: Allowance and liabilities for losses^(a)		(105,060	)		(2,017	)		(107,077	)		(94,747	)		(1,727	)		(96,474	)
Total ending loans and finance receivables, net	$	637,736		$	26,926		$	664,662		$	542,865		$	27,973		$	570,838
Allowance and liability for losses as a % of loans and finance receivables, gross		14.1	%		7.0	%		13.9	%		14.9	%		5.8	%		14.5	%

	As of September 30,
	2017						2016
			Guaranteed						Guaranteed
	Company		by the				Company		by the
	Owned^(a)		Company^(a)		Combined^(b)		Owned^(a)		Company^(a)		Combined^(b)
Ending loans and finance receivables:
Total domestic, gross	$	640,793	$	28,943	$	669,736	$	556,056	$	29,700	$	585,756
Total international, gross		102,003		—		102,003		81,556		—		81,556
Total ending loans and finance receivables, gross	$	742,796	$	28,943	$	771,739	$	637,612	$	29,700	$	667,312

The average amount outstanding per loan is calculated as the total combined loans, gross balance at the end of the period divided by the total number of combined loans outstanding at the end of the period. The following table shows the average amount outstanding per loan by product at September 30, 2017 and 2016:

The average amount outstanding per loan increased to $1,333 from $1,252 during the current quarter compared to the prior year quarter, primarily due to a greater mix of installment loans and line of credit accounts, which have higher average amounts outstanding relative to short-term loans, in the current quarter compared to the prior year quarter.

The average loan origination amount is calculated as the total amount of combined loans originated and renewed for the period divided by the total number of combined loans originated and renewed for the period. The following table shows the average loan origination amount by product for the current quarter compared to the prior year quarter:

The average loan origination amount increased to $560 from $539 during the current quarter compared to the prior year quarter, mainly due to a greater mix of installment loan originations which have higher principal amounts. The average installment loan origination decreased to $1,661 from $1,849 as sub-prime installment loan originations, which have lower origination amounts, outpaced the near-prime originations in the current quarter.

The allowance and liability for estimated losses as a percentage of combined loans and RPAs decreased to 13.9% as of September 30, 2017 from 14.5% as of September 30, 2016, primarily due to improved credit quality in the line of credit portfolio.

The cost of revenue in the current quarter was $107.4 million, which was composed of $107.3 million related to Company-owned loans and finance receivables and a $0.1 million increase in the liability for estimated losses related to loans we guaranteed through the CSO programs. The cost of revenue in the prior year quarter was $95.4 million, which was composed of $95.5 million related to Company-owned loans and finance receivables offset by a $0.1 million decrease in the liability for estimated losses related to loans we guaranteed through the CSO programs. Total charge-offs, net of recoveries, were $86.5 million and $74.3 million in the current quarter and the prior year quarter, respectively.

The following tables show loan and finance receivable balances and fees receivable and the relationship of the allowance and liability for losses to the combined balances of loans and finance receivables for each of the last five quarters (in thousands):

	2016						2017
	Third			Fourth			First			Second			Third
	Quarter			Quarter			Quarter			Quarter			Quarter
Loans and finance receivables:
Gross - Company owned	$	637,612		$	660,495		$	598,717		$	647,835		$	742,796
Gross - Guaranteed by the Company^(a)		29,700			32,199			22,546			28,013			28,943
Combined loans and finance receivables, gross^(b)		667,312			692,694			621,263			675,848			771,739
Allowance and liability for losses on loans and finance receivables		96,474			100,941			84,441			85,780			107,077
Combined loans and finance receivables, net^(b)	$	570,838		$	591,753		$	536,822		$	590,068		$	664,662
Allowance and liability for losses as a % of loans and finance receivables, gross^(b)		14.5	%		14.6	%		13.6	%		12.7	%		13.9	%

Management evaluates loss rates for all financing products in our portfolio to determine credit quality and evaluate trends. For our products, we evaluate loans and finance receivables losses as a percentage of the average loan and finance receivable balance outstanding or the average combined loan and finance receivable balance outstanding, whichever is applicable, for each portfolio.

Demand for our short-term loan product in the United States has historically been highest in the third and fourth quarters of each year, corresponding to the holiday season, and lowest in the first quarter of each year, corresponding to our customers’ receipt of income tax refunds. Customer demand for short-term loans in both the United States and the United Kingdom has been very strong in 2017. This led to higher short-term consumer loan balances.

Our gross profit margin for short-term loans is typically highest in the first quarter of each year, corresponding to the seasonal decline in consumer loan balances outstanding. The cost of revenue as a percentage of the average combined loan balance for short-term loans outstanding is typically lower in the first quarter and generally peaks in the second half of the year with higher loan demand.

The following table includes information related only to short-term loans and shows our loss experience trends for short-term loans for each of the last five quarters (in thousands):

	2016						2017
	Third			Fourth			First			Second			Third
	Quarter			Quarter			Quarter			Quarter			Quarter
Short-term loans:
Cost of revenue	$	20,531		$	21,600		$	15,602		$	16,584		$	23,849
Charge-offs (net of recoveries)		15,956			21,021			18,975			15,539			20,439
Average short-term combined loan balance, gross:
Company owned^(a)		60,761			59,728			58,729			57,653			65,949
Guaranteed by the Company^(a)(b)		24,678			24,709			23,153			21,368			25,787
Average short-term combined loan balance, gross^(a)(c)	$	85,439		$	84,437		$	81,882		$	79,021		$	91,736
Ending short-term combined loan balance, gross:
Company owned	$	60,124		$	63,005		$	53,205		$	61,565		$	67,719
Guaranteed by the Company^(b)		23,379			26,092			18,854			24,123			24,248
Ending short-term combined loan balance, gross^(c)	$	83,503		$	89,097		$	72,059		$	85,688		$	91,967
Ending allowance and liability for losses	$	19,184		$	19,486		$	16,205		$	17,449		$	21,047

Short-term loan ratios:
Cost of revenue as a % of average short-term combined loan balance, gross^(a)(c)		24.0	%		25.6	%		19.1	%		21.0	%		26.0	%
Charge-offs (net of recoveries) as a % of average short-term combined loan balance, gross^(a)(c)		18.7	%		24.9	%		23.2	%		19.7	%		22.3	%
Gross profit margin		60.5	%		56.8	%		67.1	%		64.5	%		52.2	%
Allowance and liability for losses as a % of combined loan balance, gross^(c)(d)		23.0	%		21.9	%		22.5	%		20.4	%		22.9	%

The cost of revenue as a percentage of average loan balance for line of credit accounts exhibits a similar quarterly seasonal trend to short-term loan loss rates as the ratio is typically lower in the first quarter and increases throughout the remainder of the year, peaking in the second half of the year with higher loan demand. The gross profit margin is generally lower for line of credit accounts as compared to short-term loans because the highest levels of default are exhibited in the early stages of the account, while revenue is recognized over the term of the account. Underwriting changes made in the second quarter of 2017 have led to improved credit quality and higher year over year gross margin. The year over year decrease in the allowance for losses as a percentage of loan balance was also driven by the underwriting changes in the second quarter of 2017.

The following table includes information related only to line of credit accounts and shows our loss experience trends for line of credit accounts for each of the last five quarters (in thousands):

	2016						2017
	Third			Fourth			First			Second			Third
	Quarter			Quarter			Quarter			Quarter			Quarter
Line of credit accounts:
Cost of revenue	$	29,739		$	25,028		$	19,831		$	19,868		$	23,439
Charge-offs (net of recoveries)		20,973			25,229			24,660			18,786			19,476
Average loan balance^(a)		126,371			138,259			135,621			128,348			145,398
Ending loan balance		132,388			144,183			124,498			134,154			154,689
Ending allowance for losses balance	$	26,795		$	26,594		$	21,765		$	22,847		$	26,810

Line of credit account ratios:
Cost of revenue as a % of average loan balance^(a)		23.5	%		18.1	%		14.6	%		15.5	%		16.1	%
Charge-offs (net of recoveries) as a % of average loan balance^(a)		16.6	%		18.2	%		18.2	%		14.6	%		13.4	%
Gross profit margin		49.7	%		59.7	%		66.6	%		66.2	%		66.0	%
Allowance for losses as a % of loan balance^(b)		20.2	%		18.4	%		17.5	%		17.0	%		17.3	%

The cost of revenue as a percentage of average loan and finance receivable balance for installment loans and RPAs is typically more consistent throughout the year as compared to short-term loans and line of credit accounts. Due to the scheduled monthly or bi-weekly payments and delivery of receivables that are inherent with installment loans and RPAs, we do not experience the higher level of repayments in the first quarter for these products as we experience with short-term loans and, to a lesser extent, line of credit accounts.

The gross profit margin is generally lower for the installment loan product than for other loan products, primarily because the highest levels of default are exhibited in the early stages of the loan, while revenue is recognized over the term of the loan. In addition, installment loans and RPAs typically have higher average origination amounts. Another factor contributing to the lower gross profit margin is that the product yield for installment loans and RPAs is typically lower than the yield for the other financing products we offer. As a result, particularly in periods of higher growth for the installment loan and RPA portfolios, which has been the case in recent years, the gross profit margin is typically lower for this product than for our short-term loan and line of credit products. Our average installment combined loan and RPA portfolio balance outstanding at September 30, 2017 increased 15.6% in the current quarter compared to the prior year quarter. During the current quarter, we experienced a lower gross profit margin than we experienced in the prior year quarter as a result of strong growth in our domestic sub-prime installment portfolio.

The following table includes information related only to our installment loans and RPAs and shows our loss experience trends for installment loans and RPAs for each of the last five quarters (in thousands):

	2016						2017
	Third			Fourth			First			Second			Third
	Quarter			Quarter			Quarter			Quarter			Quarter
Installment loans and RPAs:
Cost of revenue	$	45,121		$	50,917		$	46,451		$	43,410		$	60,053
Charge-offs (net of recoveries)		37,383			46,411			55,179			44,443			46,598
Average installment and RPA combined loan and finance receivable balance, gross:
Company owned^(a)		419,225			448,953			440,886			433,698			487,436
Guaranteed by the Company^(a)(b)		6,600			6,093			4,874			3,631			4,628
Average installment and RPA combined loan and finance receivable balance, gross^(a)(c)	$	425,825		$	455,046		$	445,760		$	437,329		$	492,064
Ending installment and RPA combined loan and finance receivable balance, gross:
Company owned	$	445,100		$	453,307		$	421,014		$	452,116		$	520,388
Guaranteed by the Company^(b)		6,321			6,107			3,692			3,890			4,695
Ending installment and RPA combined loan and finance receivable balance, gross ^(c)	$	451,421		$	459,414		$	424,706		$	456,006		$	525,083
Ending allowance and liability for losses	$	50,495		$	54,861		$	46,471		$	45,484		$	59,220

Installment and RPA loan ratios:
Cost of revenue as a % of average installment and RPA combined loan and finance receivable balance, gross^(a)(c)		10.6	%		11.2	%		10.4	%		9.9	%		12.2	%
Charge-offs (net of recoveries) as a % of average installment and RPA combined loan and finance receivable balance, gross^(a)(c)		8.8	%		10.2	%		12.4	%		10.2	%		9.5	%
Gross profit margin		46.8	%		43.5	%		45.4	%		48.4	%		39.3	%
Allowance and liability for losses as a % of combined loan and finance receivable balance, gross^(c)(d)		11.2	%		11.9	%		10.9	%		10.0	%		11.3	%

Total expenses increased $10.4 million, or 14.4%, to $82.9 million in the current quarter, compared to $72.5 million in the prior year quarter. Foreign currency exchange rates did not have a significant impact on total expenses in the current quarter as compared to the prior year quarter.

Marketing expense increased slightly to $27.0 million in the current quarter compared to $26.7 million in the prior year quarter. The slight increase was primarily due to higher direct mail costs related to our domestic products and volume from lead providers in both segments, partially offset by lower digital marketing costs.

Operations and technology expense increased to $27.2 million in the current quarter compared to $20.7 million in the prior year quarter, primarily due to higher volume-driven underwriting and transaction expenses and headcount costs in our call center.

General and administrative expense increased $3.9 million, or 18.1%, to $25.2 million in the current quarter compared to $21.3 million in the prior year quarter, primarily due to higher corporate services personnel costs primarily driven by an increase in headcount in the current quarter compared to the prior year quarter.

Depreciation and amortization expense decreased $0.3 million, or 6.8%, in the current quarter compared to the prior year quarter, primarily due to the acceleration of depreciation in the prior year quarter resulting from the relocation of a datacenter in 2016.

Interest expense, net increased $2.2 million, or 13.5%, to $18.3 million in the current quarter compared to $16.1 million in the prior year quarter. The increase was primarily due to an increase in the average amount of debt outstanding, which increased $90.1 million to $717.4 million during the current quarter from $627.3 million during the prior year quarter, partially offset by a decrease in the weighted average interest rate on our outstanding debt to 10.34% during the current quarter from 10.42% during the prior year quarter.

(Benefit from) provision for income taxes decreased $6.4 million, or 149.2%, to a tax benefit of $2.1 million in the current quarter compared to a provision of $4.3 million in the prior year quarter. The decrease was primarily due to a 145.2% decrease in income before income taxes primarily related to the early extinguishment of a portion of our long-term debt.

As of September 30, 2017, the balance of unrecognized tax benefits was $631 thousand ($561 thousand net of the federal benefit of state matters), all of which, if recognized, would favorably affect the effective tax rate in any future periods. We had no unrecognized tax benefits as of September 30, 2016. We do not believe it is reasonably possible that, within the next twelve months, unrecognized domestic tax benefits will change by a significant amount. We record interest and penalties related to tax matters as income tax expense in the consolidated statement of income.

Our U.S. tax returns are subject to examination by federal and state taxing authorities. The IRS audits for tax years 2011 through 2014 were concluded with no adjustments to the financial statements. The 2015 tax year is open to examination by the IRS. The years open to examination by state, local, and foreign government authorities vary by jurisdiction, but the statute of limitation is generally three to four years from the date the tax return is filed.

Net (loss) income decreased $11.2 million, or 143.0%, to a net loss of $3.4 million during the current quarter compared to net income of $7.8 million during the prior year quarter. The decrease was primarily due to expenses related to the early extinguishment of a portion of our long-term debt.

NINE MONTHS ENDED SEPTEMBER 30, 2017 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2016

Revenue increased $56.9 million, or 10.5%, to $600.0 million for the nine-month period ended September 30, 2017, or current nine-month period, as compared to $543.1 million for the nine-month period ended September 30, 2016, or prior year nine-month period. On a constant currency basis, revenue increased by $63.1 million, or 11.6%, for the current nine-month period compared to the prior year nine-month period. Our domestic operations contributed an increase of $55.2 million, resulting from a 18.5% increase in line of credit revenue and a 14.0% increase in domestic installment loan and RPA revenue in the current nine-month period compared to the prior year nine-month period primarily driven by growth in our line of credit account and installment products. Additionally, international operations of revenue increased $1.7 million (an increase of $7.9 million on a constant currency basis).

Our gross profit increased by $18.3 million to $331.0 million for the current nine-month period from $312.7 million for the prior year nine-month period. On a constant currency basis, gross profit increased by $23.2 million for the current nine-month period compared to the prior year nine-month period. Our consolidated gross profit margin decreased to 55.2% for the current nine-month period, from 57.6% for the prior year nine-month period. The decrease in gross profit margin was primarily driven by the strong new customer growth of our domestic and international installment loan portfolios resulting in a higher mix of new customers overall which requires higher loss provisions as new customers default at a higher rate than returning customers with a successful history of loan performance. Management expects the consolidated gross profit margin will continue to be influenced by the mix of loans to new and returning customers, the mix of lower yielding and higher yielding loan products, and loan originations.

The following tables set forth the components of revenue and gross profit, separated by product and between domestic and international for the current nine-month period and the prior year nine-month period (in thousands):

	Nine Months Ended September 30,
	2017			2016			$ Change			% Change
Revenue by product:
Short-term loans	$	144,074		$	146,237		$	(2,163	)		(1.5	)%
Line of credit accounts		187,172			158,338			28,834			18.2
Installment loans and RPAs		268,069			237,320			30,749			13.0
Total loans and finance receivables revenue		599,315			541,895			57,420			10.6
Other		730			1,236			(506	)		(40.9	)
Total revenue	$	600,045		$	543,131		$	56,914			10.5	%

Revenue by product (% to total):
Short-term loans		24.0	%		26.9	%
Line of credit accounts		31.2			29.2
Installment loans and RPAs		44.7			43.7
Total loans and finance receivables revenue		99.9			99.8
Other		0.1			0.2
Total revenue		100.0	%		100.0	%

	Nine Months Ended September 30,
	2017			2016			$ Change			% Change
Domestic:
Revenue	$	504,326		$	449,100		$	55,226			12.3	%
Cost of revenue		226,461			204,070			22,391			11.0
Gross profit	$	277,865		$	245,030		$	32,835			13.4
Gross profit margin		55.1	%		54.6	%		0.5	%		0.9	%
International:
Revenue	$	95,719		$	94,031		$	1,688			1.8	%
Cost of revenue		42,626			26,351			16,275			61.8
Gross profit	$	53,093		$	67,680		$	(14,587	)		(21.6	)
Gross profit margin		55.5	%		72.0	%		(16.5	)%		(22.9	)%
Total:
Revenue	$	600,045		$	543,131		$	56,914			10.5	%
Cost of revenue		269,087			230,421			38,666			16.8
Gross profit	$	330,958		$	312,710		$	18,248			5.8
Gross profit margin		55.2	%		57.6	%		(2.4	)%		(4.2	)%

The average loan origination amount remained flat at $522 during the current nine-month period compared to $523 during the prior year nine-month period.

The cost of revenue in the current nine-month period was $269.0 million, which was composed of $269.0 million related to Company-owned loans and finance receivables. The cost of revenue in the prior year nine-month period was $230.4 million, which was composed of $230.4 million related to Company-owned loans and finance receivables. Total charge-offs, net of recoveries, were $264.1 million and $202.9 million in the current nine-month period and the prior year nine-month period, respectively.

Total expenses increased $6.0 million, or 2.7%, to $230.0 million in the current nine-month period, compared to $224.0 million in the prior year nine-month period. On a constant currency basis, total expenses increased $7.6 million, or 3.4%, for the current nine-month period compared to the prior year nine-month period.

Marketing expense decreased to $70.0 million in the current nine-month period compared to $73.5 million in the prior year nine-month period. Lower online marketing costs were partially offset by higher direct mail costs.

Operations and technology expense increased to $72.5 million in the current nine-month period compared to $61.7 million in the prior year nine-month period, primarily due to higher personnel expenses, underwriting and transaction costs and software costs primarily related to our domestic operations.

General and administrative expense was flat increasing only $0.3 million, or 0.5%, to $77.1 million in the current nine-month period compared to $76.8 million in the prior year nine-month period.

Depreciation and amortization expense decreased $1.6 million, or 13.4%, in the current nine-month period compared to the prior year nine-month period, primarily due to the acceleration of depreciation in the prior year nine-month period resulting from our exit from the Australian and Canadian markets and the relocation of a datacenter in 2016.

Interest expense, net increased $4.4 million, or 9.3%, to $52.5 million in the current nine-month period compared to $48.1 million in the prior year nine-month period. The increase was primarily due to an increase in the average amount of debt outstanding, which increased $60.0 million to $663.5 million during the current nine-month period from $603.5 million during the prior year nine-month period, partially offset by a slight decrease in the weighted average interest rate on our outstanding debt to 10.58% during the current nine-month period from 10.75% during the prior year nine-month period.

(Benefit from) provision for income taxes decreased $5.5 million, or 32.3%, to $11.5 million in the current nine-month period compared to $17.0 million in the prior year nine-month period. The decrease was primarily due to the decrease in income before income taxes and share-based compensation excess tax benefits.

Net income decreased $3.5 million, or 13.6%, to $22.4 million during the current nine-month period compared to $25.9 million during the prior year nine-month period. The decrease was primarily due to expenses related to the early extinguishment of a portion of our long-term debt and higher operating expenses partially offset by higher gross profit driven primarily by an additional contribution of $32.3 million from our domestic line of credit product in the current nine-month period compared to the prior year nine-month period.

Historically, we have generated significant cash flow through normal operating activities for funding both long-term and short-term needs. Our near-term liquidity is managed to ensure that adequate resources are available to fund our seasonal working capital growth, which is driven by demand for our loan and financing products, and to meet the continued growth in the demand for our near-prime

installment products. On May 30, 2014, we issued and sold $500.0 million in 2021 Senior Notes. On September 1, 2017, we issued and sold $250.0 million in aggregate principal amount of 8.50% Senior Notes due 2024 (the “2024 Senior Notes”) and used the net proceeds, in part, to retire $155.0 million in 2021 Senior Notes. On June 30, 2017, we entered into an asset-backed secured revolving credit agreement (the “2017 Credit Agreement”) which replaced our previous credit agreement (the “2014 Credit Agreement”) that was terminated on June 30, 2017, as further described below under “Revolving Credit Facilities.” As of October 30, 2017, our available borrowings under the 2017 Credit Agreement were $32.0 million. On January 15, 2016 and December 1, 2016, we entered into the 2016‑1 and 2016‑2 Securitization Facilities, respectively, as further described below. On October 20, 2017, we amended and restated the 2016-1 Securitization Facility, as further described below. As of October 30, 2017, the outstanding balance under our securitization facilities was $196.3 million. We expect that our operating needs, including satisfying our obligations under our debt agreements and funding our working capital growth, will be satisfied by a combination of cash flows from operations, borrowings under the 2017 Credit Agreement, or any refinancing, replacement thereof or increase in borrowings thereunder, and securitization or sale of loans and finance receivables under our consumer loan securitization facilities.

As of September 30, 2017, we were in compliance with all financial ratios, covenants and other requirements set forth in our debt agreements. Unexpected changes in our financial condition or other unforeseen factors may result in our inability to obtain third-party financing or could increase our borrowing costs in the future. To the extent we experience short-term or long-term funding disruptions, we have the ability to adjust our volume of lending and financing to consumers and small businesses that would reduce cash outflow requirements while increasing cash inflows through repayments. Additional alternatives may include the securitization or sale of assets, increased borrowings under the 2017 Credit Agreement, or any refinancing or replacement thereof, and reductions in capital spending which could be expected to generate additional liquidity.

On September 1, 2017, we issued and sold the 2024 Senior Notes. The 2024 Senior Notes were sold to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and outside the United States pursuant to Regulation S under the Securities Act. The 2024 Senior Notes bear interest at a rate of 8.50% annually on the principal amount payable semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1, 2018. The 2024 Senior Notes were sold at a price of 100%. The 2024 Senior Notes will mature on September 1, 2024. The 2024 Senior Notes are unsecured debt obligations of ours, and are unconditionally guaranteed by certain of our domestic subsidiaries.

The 2024 Senior Notes are redeemable at our option, in whole or in part, (i) at any time prior to September 1, 2020 at 100% of the aggregate principal amount of 2024 Senior Notes redeemed plus the applicable “make whole” premium specified in the 2024 Senior Notes Indenture, plus accrued and unpaid interest, if any, to the redemption date and (ii) at any time on or after September 1, 2020 at the premium, if any, specified in the 2024 Senior Notes Indenture that will decrease over time, plus accrued and unpaid interest, if any, to the redemption date. In addition, prior to September 1, 2020, at our option, we may redeem up to 40% of the aggregate principal amount of the 2024 Senior Notes at a redemption price of 108.5% of the aggregate principal amount of 2024 Senior Notes redeemed, plus accrued and unpaid interest, if any, to the redemption date, with the proceeds of certain equity offerings as described in the 2024 Senior Notes Indenture.

We used the net proceeds of the 2024 Senior Notes offering to retire a portion of our outstanding 9.75% senior notes due 2021, to pay the related accrued interest, premiums, fees and expenses associated therewith and for general corporate purposes, which may include working capital and future repurchases of our outstanding debt securities.

On January 15, 2016, we and certain of our subsidiaries entered into a receivables securitization (as amended, the “2016‑1 Securitization Facility”) with certain purchasers, Jefferies Funding LLC, as administrative agent (the “Administrative Agent”) and Bankers Trust Company, as indenture trustee and securities intermediary (the “Indenture Trustee”). The 2016‑1 Securitization Facility securitizes unsecured consumer installment loans (“Receivables”) that have been, or will be, originated or acquired under our NetCredit brand and that meet specified eligibility criteria. Under the 2016‑1 Securitization Facility, Receivables are sold to a wholly-owned special purpose subsidiary (the “Issuer”) and serviced by another subsidiary.

described below, the Issuer has issued and will subsequently issue term notes (the “Term Notes” and, together with the Initial Term Note and the Variable Funding Notes, the “Securitization Notes”). The maximum principal amount of the Securitization Notes that may be outstanding at any time under the 2016‑1 Securitization Facility is limited to $175 million.

At the end of each month during the nine-month revolving period, the Receivables funded by the Variable Funding Notes will be refinanced through the creation of two Term Notes, which Term Notes will be issued to the holders of the Variable Funding Notes. The non-recourse Securitization Notes mature at various dates, the latest of which will be October 15, 2020 (the “Final Maturity Date”). The 2016‑1 Securitization Facility has been amended to extend the revolving period to October 2017 and the latest maturity to October 2021, as discussed below.

The Securitization Notes are issued pursuant to an indenture, dated as of January 15, 2016 (the “Closing Date”). The Securitization Notes bear interest at an annual rate equal to the one month London Interbank Offered Rate (“LIBOR”) rate (subject to a floor of 1%) plus 7.75%, which rate is initially 8.75%. In addition, the Issuer paid certain customary upfront closing fees and will pay customary annual commitment and other fees to the purchasers under the 2016‑1 Securitization Facility. The Issuer is permitted to voluntarily prepay any outstanding Securitization Notes, subject to an optional redemption premium. Interest and principal payments on outstanding Securitization Notes are made monthly. Any remaining amounts outstanding will be payable no later than the Final Maturity Date. The Securitization Notes are supported by the cash flows from the underlying Receivables. The holders of the Securitization Notes have no recourse to us if the cash flows from the underlying Receivables are not sufficient to pay all of the principal and interest on the Securitization Notes unless the underlying Receivables breach the representations and warranties made by us as of the related sale date as described below. Additionally, the Receivables will be held by the Issuer at least until the obligations under the Securitization Notes are satisfied. For so long as the Receivables are owned by the Issuer, the outstanding Receivables will not be available to satisfy our other debts and obligations.

The agreements evidencing the 2016‑1 Facility, all dated as of the Closing Date, include (i) an Indenture between the Issuer and the Indenture Trustee, (ii) a Note Purchase Agreement among the Issuer, NetCredit Loan Services, LLC (f/k/a Enova Lending Services, LLC), as the Master Servicer, the Administrative Agent and certain purchasers, and (iii) a Receivables Purchase Agreement between us and Enova Finance 5, LLC. On July 26, 2016, we and certain of our subsidiaries entered into a First Omnibus Amendment (the “First Amendment”) of the 2016‑1 Facility that was established on the Closing Date, pursuant to various agreements with certain purchasers, the Administrative Agent and the Indenture Trustee. The First Amendment effected a variety of minor technical changes to the Indenture, the Note Purchase Agreement, the Receivables Purchase Agreement and the servicing agreement for the 2016‑1 Facility. These changes included revised procedures under the Note Purchase Agreement for the disbursement to the Issuer of proceeds from draws under the Variable Funding Notes and clarification of modifications that the servicer is permitted to effect to the terms of the Receivables that have been transferred into the EFR 2016‑1 Facility.

On August 17, 2016, we and one of our subsidiaries entered into an Amendment to the Receivables Purchase Agreement. This amendment modified an eligibility criterion for Receivables that we sell under the Agreement.

On September 12, 2016, we and certain of our subsidiaries entered into a Second Omnibus Amendment (the “Second Amendment”) to amend the Indenture and the Receivables Purchase Agreement. The Second Amendment authorized us to include in the 2016‑1 Facility Receivables originated by a state-chartered bank and acquired by a subsidiary of us from that bank, and it adjusted the Investment Pool Cumulative Net Loss Trigger for the Initial Term Note Investment Pool (as such terms are defined in the Indenture), which was the seasoned pool of receivables securitized under the 2016‑1 Facility on the Closing Date.

On October 20, 2016, we and certain of our subsidiaries entered into a Third Amendment and Limited Waiver (the “Third Amendment”) to amend the Indenture. The Third Amendment increased the maximum principal amount of the 2016‑1 Facility to $275 million, increased the Variable Funding Notes maximum principal amount to $40 million until December 31, 2016, and $30 million thereafter, and extended the term of the facility to October 2017. The Third Amendment also adjusted the Note Interest Rate on Term Notes issued after, and amounts outstanding under the Variable Funding Notes after, the date of the Third Amendment (as such terms are defined in the Indenture). The weighted average interest rate on such adjusted Notes will be 9.5%.

On November 14, 2016, we and certain of our subsidiaries entered into a Fourth Amendment (the “Fourth Amendment”) to amend the Indenture and Receivables Purchase Agreement. The Fourth Amendment adjusted the Investment Pool Cumulative Delinquency Trigger (as such term is defined in the Indenture), with an effective date of October 31, 2016.

On December 14, 2016, we and certain of our subsidiaries entered into a Fifth Amendment (the “Fifth Amendment”) to amend the Indenture and Receivables Purchase Agreement. The Fifth Amendment adjusted the Investment Pool Cumulative Delinquency Trigger (as such term is defined in the Indenture) for the Initial Term Notes, with an effective date of November 30, 2016, expanded the categories of Receivables that could be financed through the 2016‑1 Facility and made certain other minor changes. These changes will provide us with additional flexibility under the 2016‑1 Facility.

On December 1, 2016, we and certain of our subsidiaries entered into a receivables securitization (the “2016‑2 Facility”) with Redpoint Capital Asset Funding, LLC, as lender (the “Lender”). The 2016‑2 Facility securitizes unsecured consumer installment loans (“Redpoint Receivables”) that have been and will be originated or acquired under our NetCredit brand by several of our subsidiaries (the “Originators”) and that meet specified eligibility criteria, including that the annual percentage rate for each securitized consumer loan is greater than or equal to 90%. Under the 2016‑2 Facility, Redpoint Receivables are sold to a wholly-owned special purpose subsidiary of ours (the “Debtor”) and serviced by another subsidiary of ours.

The 2016‑2 Facility documents contain customary provisions for securitizations, including: representations and warranties as to the eligibility of the Redpoint Receivables and other matters; indemnification for specified losses not including losses due to the inability of consumers to repay the related Receivables; and default and termination provisions which provide for the acceleration of the 2016‑2 Facility in circumstances including, but not limited to, failure to make payments when due certain insolvency events, breaches of representations, warranties or covenants, failure to maintain the security interest in the receivables and defaults under other material indebtedness of the Debtor.

On October 20, 2017, we and certain of our subsidiaries amended and restated the 2016‑1 Securitization Facility (the “Amended Facility”). The counterparties to the Amended Facility included certain purchasers, the Administrative Agent and the Indenture Trustee. The Amended Facility relates to Receivables that have been and will be originated or acquired under our NetCredit brand by the Originators and that meet specified eligibility criteria. Under the Amended Facility, additional Receivables may be sold to the Issuer and serviced by another subsidiary of ours. As of the Closing Date, the Issuer owned eligible Receivables with an outstanding principal balance equal to $226.4 million.

Securitization Notes are non-recourse to us and mature at various dates, the latest of which will be April 15, 2021 (the “2017 Final Maturity Date”).

On June 30, 2017, we and certain of our operating subsidiaries entered into an asset-backed secured revolving credit agreement with a syndicate of banks including TBK Bank, SSB (“TBK”), as Administrative Agent and Collateral Agent, Jefferies Finance LLC and TBK as Joint Lead Arrangers and Joint Lead Bookrunners, and Green Bank, N.A., as Lender.

The 2017 Credit Agreement is secured by domestic receivables and replaced the 2014 Credit Agreement (as described below). The borrowing limit in the 2017 Credit Agreement increased to $40 million from $35 million in the 2014 Credit Agreement, and its maturity date is May 1, 2020. We had no outstanding borrowings under the 2017 Credit Agreement as of September 30, 2017.

The 2017 Credit Agreement provides for a revolving credit line with interest on borrowings under the facility at prime rate plus 1.00%. In addition, the 2017 Credit Agreement provides for payment of a commitment fee calculated with respect to the unused portion of the line, and ranges from 0.30% per annum to 0.50% per annum depending on usage. A portion of the revolving credit facility, up to a maximum of $20 million, is available for the issuance of letters of credit. We had outstanding letters of credit under the 2017 Credit Agreement of $8.0 million as of September 30, 2017. The 2017 Credit Agreement provides for certain prepayment penalties if it is terminated on or before its first and second anniversary date, subject to certain exceptions.

The 2017 Credit Agreement contains certain limitations on the incurrence of additional indebtedness, investments, the attachment of liens to our property, the amount of dividends and other distributions, fundamental changes to us or our business and certain other of our activities. The 2017 Credit Agreement contains standard financial covenants for a facility of this type based on a leverage ratio and a fixed charge coverage ratio. The 2017 Credit Agreement also provides for customary affirmative covenants, including financial reporting requirements, and certain events of default, including payment defaults, covenant defaults and other customary defaults.

On March 25, 2015, we and certain of our subsidiaries, as guarantors, entered into an amendment to our revolving credit facility with Jefferies Finance LLC, as administrative agent. The amendment reduced our unsecured revolving line of credit to $65.0 million (from $75.0 million) and increased an additional senior secured indebtedness basket to the greater of $20.0 million or 2.75% of consolidated total assets (as defined in the 2014 Credit Agreement) (from $15.0 million or 2% of consolidated total assets). In addition, the March 25, 2015 amendment revised certain definitions and provisions relating to limitations on indebtedness, investments, dispositions, fundamental changes and burdensome agreements to allow certain of our foreign subsidiaries, which opt to become guarantors of our obligations under the 2014 Credit Agreement, to be treated as domestic subsidiaries for purposes of those provisions.

On December 29, 2015, we and certain of our subsidiaries, as guarantors, entered into an amendment to the 2014 Credit Agreement, which temporarily increased our unsecured revolving line of credit to $75.0 million, an increase of $15.0 million ($5.0 million on December 29, 2015 and $10.0 million on January 4, 2016). Once we received the proceeds from the 2016‑1 Securitization Facility, we repaid the outstanding balance on the revolving line of credit in full and, in accordance with the terms of the amendment, the revolving commitment amount was reduced to $40.0 million.

On June 30, 2016, we and certain of our subsidiaries, as guarantors, entered into an amendment to the 2014 Credit Agreement, which increased the maximum allowable leverage ratio (as defined in the 2014 Credit Agreement) for the fiscal quarter ended June 30, 2016 to 4.00 to 1.00 (from 3.00 to 1.00) and for the fiscal quarters ended September 30, 2016 and December 31, 2016 to 3.50 to 1.00 (in each case, from 3.00 to 1.00).

On September 30, 2016, we and certain of our subsidiaries, as guarantors, entered into an amendment to the 2014 Credit Agreement, which increased the maximum allowable leverage ratio (as defined in the 2014 Credit Agreement) for the fiscal quarters ended September 30, 2016 and thereafter to 4.25 to 1.00 (from 3.50 to 1.00) and decreased our unsecured revolving line of credit to $35.0 million.

Our cash flows and other key indicators of liquidity are summarized as follows (dollars in thousands):

Net cash provided by operating activities increased $10.6 million, or 3.5%, to $311.3 million for the current nine-month period from $300.7 million for the prior year nine-month period. The increase was primarily driven by a $38.7 million increase in cost of revenue, a non-cash expense, during the current nine-month period, offset by a $3.5 million decrease in net income.

Other significant changes in net cash provided by operating activities for the current nine-month period compared to the prior year nine-month period included cash flows from the following activities:

Management believes cash flows from operations and available cash balances and borrowings under our consumer loan securitization facilities and 2017 Credit Agreement, which may include increased borrowings under our 2017 Credit Agreement, any refinancing or replacement thereof, and additional securitization of consumer loans, will be sufficient to fund our future operating liquidity needs, including to fund our working capital growth.

Net cash used in investing activities decreased $41.7 million, or 11.0%, for the current nine-month period compared to the prior year nine-month period. This decrease was primarily due to a $9.5 million decrease in net cash invested in loans and finance receivables, reflecting a $20.6 million increase in payments received from customers partially offset by an $11.1 million increase in the amount of loan originated or acquired, as well as an increase in the change in restricted cash resulting in a $29.7 million decrease in cash used in investing activities.

Cash flows provided by financing activities for the current nine-month period primarily reflects $95.0 million in net borrowings under our senior notes facilities, $21.1 million in net borrowings under our securitization facilities, an $11.3 million penalty paid in connection with the early payment of our 2021 Senior Notes and $9.6 million of debt issuance costs paid in connection with the 2017 Credit Agreement and 2024 Senior Notes. Additionally, on September 15, 2017, we announced the Board of Directors had authorized a share repurchase program for the repurchase of up to $25.0 million of our common stock through December 31, 2019 (the “September 2017 Authorization”). During the current nine-month period, we paid $1.1 million to repurchase common stock under the September 2017 Authorization. Cash flows provided by financing activities for the prior year nine-month period primarily reflects $137.0 million in net borrowings under our 2016‑1 Securitization Facility, partially offset by $43.4 million of net repayments under our unsecured revolving line of credit under the Credit Agreement and $3.5 million of debt issuance costs paid in connection with the consumer loan securitization financing transactions.

In certain markets, we arrange for consumers to obtain consumer loan products from independent third-party lenders through our CSO programs. For consumer loan products originated by third-party lenders under the CSO programs, each lender is responsible for providing the criteria by which the customer’s application is underwritten and, if approved, determining the amount of the consumer loan. We are responsible for assessing whether or not we will guarantee such loan. When a customer executes an agreement with us under our CSO programs, we agree, for a fee payable to us by the customer, to provide certain services to the customer, one of which is to guarantee the customer’s obligation to repay the loan received by the customer from the third-party lender if the customer fails to do so. The guarantee represents an obligation to purchase specific loans if they go into default, which generally occurs after one payment is missed. As of September 30, 2017 and 2016, the outstanding amount of active consumer loans originated by third-party lenders under the CSO programs was $28.9 million and $29.7 million, respectively, which were guaranteed by us. The estimated fair value of the liability for estimated losses on consumer loans guaranteed by us of $2.0 million and $1.7 million, as of September 30, 2017 and 2016, respectively, is included in “Accounts payable and accrued expenses” in the consolidated balance sheets. Our CSO programs are further described under the caption “Products and Services” above.

Market risks relating to our operations result primarily from changes in foreign currency exchange rates. We do not engage in speculative or leveraged transactions, nor do we hold or issue financial instruments for trading purposes. There have been no material changes to our exposure to market risks since December 31, 2016.

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, or the “Exchange Act”) as of September 30, 2017 (the “Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective and provide reasonable assurance (i) to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms; and (ii) to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

There was no change in our internal control over financial reporting during the quarter ended September 30, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or internal controls will prevent or detect all possible misstatements due to error or fraud. Our disclosure controls and procedures and internal controls are, however, designed to provide reasonable assurance of achieving their objectives, and our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective at that reasonable assurance level.

See the “Litigation” section of Note 8 of the notes to our unaudited consolidated financial statements of Part I, “Item 1 Financial Statements.”

There have been no material changes from the Risk Factors described in Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, except as follows:

The CFPB recently finalized a new rule that may affect the consumer lending industry, and this rule could have a material adverse effect on our U.S. consumer lending business.

The lending and financing industry continues to be targeted by new laws or regulations in many jurisdictions that could restrict the lending and financing products and services we offer, impose additional compliance costs on us, render our current operations unprofitable or even prohibit our current operations.

Governments at the national, state and local levels, as well as international governments, may seek to impose new laws, regulatory restrictions or licensing requirements that affect the products or services we offer, the terms on which we may offer them, and the disclosure, compliance and reporting obligations we must fulfill in connection with our lending and financing business. They may also interpret or enforce existing requirements in new ways that could restrict our ability to continue our current methods of operation or to expand operations, impose significant additional compliance costs, and may have a negative effect on our business, prospects, results of operations, financial condition and cash flows. In some cases, these measures could even directly prohibit some or all of our current business activities in certain jurisdictions, or render them unprofitable and/or impractical to continue.

In recent years, consumer loans, and in particular the category commonly referred to as “payday loans,” which includes certain of our short-term loan products, have come under increased regulatory scrutiny that has resulted in increasingly restrictive regulations and legislation that makes offering such loans in certain states in the United States or the international countries where we operate (as further described below) less profitable or unattractive. Laws or regulations in some states in the United States require that all borrowers of certain short-term loan products be reported to a centralized database and limit the number of loans a borrower may receive or have outstanding. Other laws limit the availability of some of our consumer loan products in the United States to active duty military personnel, active members of the National Guard or members on active reserve duty and their spouses and immediate dependents.

Certain consumer advocacy groups and federal and state legislators and regulators have advocated that laws and regulations should be tightened so as to severely limit, if not eliminate, the type of loan products and services we offer to consumers, and this has resulted in both the executive and legislative branches of the U.S. federal government and state governmental bodies exhibiting an interest in debating legislation that could further regulate consumer loan products and services such as those that we offer. The U.S. Congress, as well as other similar federal, state and local bodies and similar international governmental authorities, have debated, and may in the future adopt, legislation or regulations that could, among other things, place a cap (or decrease a current cap) on the interest or fees that we can charge or a cap on the effective annual percentage rate that limits the amount of interest or fees that may be charged, ban or limit loan renewals or extensions of short-term loans (where the customer agrees to pay the current finance charge on a loan for the right to make payment of the outstanding principal balance of such loan at a later date plus an additional finance charge), including the rates to

be charged for loan renewals or extensions, require us to offer an extended payment plan, limit origination fees for loans, require changes to our underwriting or collections practices, require lenders to be bonded or to report consumer loan activity to databases designed to monitor or restrict consumer borrowing activity, impose “cooling off” periods between the time a loan is paid off and another loan is obtained or prohibit us from providing any of our consumer loan products in the United States to active duty military personnel, active members of the National Guard or members on active reserve duty and their spouses and immediate dependents.

The Maryland General Assembly passed House Bill 1270 on March 31, 2017 and Senate Bill 527 on April 10, 2017. The governor of Maryland signed the legislation into law on May 25, 2017. The new law limits the total fees, charges and interest that can be assessed on unsecured revolving credit plans with Maryland consumers to an effective rate of 33% per year. The law went into effect on July 1, 2017 with regard to new revolving credit plans.

We cannot currently assess the likelihood of any future unfavorable federal, state, local or international legislation or regulations being proposed or enacted that could affect our products and services. We closely monitor proposed legislation in jurisdictions where we offer our loan products. Additional legislative or regulatory provisions could be enacted that could severely restrict, prohibit or eliminate our ability to offer a consumer or small business loan or financing product. In addition, under statutory authority, U.S. state regulators have broad discretionary power and may impose new licensing requirements, interpret or enforce existing regulatory requirements in different ways or issue new administrative rules, even if not contained in state statutes, that could adversely affect the way we do business and may force us to terminate or modify our operations in particular states or affect our ability to obtain new licenses or renew the licenses we hold.

Significant new laws and regulations have also been adopted in the United Kingdom, and further new laws and regulations will continue to be imposed. See “— The United Kingdom has imposed, and continues to impose, increased regulation of the short-term high-cost credit industry with the stated expectation that some firms will exit the market” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 for additional information. Furthermore, legislative or regulatory actions may be influenced by negative perceptions of us and our industry, even if such negative perceptions are inaccurate, attributable to conduct by third parties not affiliated with us (such as other industry members), or attributable to matters not specific to our industry.

Any of these or other legislative or regulatory actions that affect our lending and financing business at the national, state, international and local level could, if enacted or interpreted differently, have a material adverse impact on our business, prospects, results of operations, financial condition and cash flows and could prohibit or directly or indirectly impair our ability to continue current operations.

Judicial decisions, CFPB rule-making or amendments to the Federal Arbitration Act could render the arbitration agreements we use illegal or unenforceable.

We include arbitration provisions in our consumer and business loan and financing agreements. These provisions are designed to allow us to resolve any customer disputes through individual arbitration rather than in court and explicitly provide that all arbitrations will be conducted on an individual and not on a class basis. Thus, our arbitration agreements, if enforced, have the effect of shielding us from class action liability. Our arbitration agreements do not generally have any impact on regulatory enforcement proceedings. We take the position that the arbitration provisions in loan and financing agreements, including class action waivers, are valid and enforceable; however, the enforceability of arbitration provisions is often challenged in court. If those challenges are successful, our arbitration and class action waiver provisions could be unenforceable, which could subject us to additional litigation, including additional class action litigation.

In addition, the U.S. Congress has considered legislation that would generally limit or prohibit mandatory arbitration agreements in consumer contracts and has enacted legislation with such a prohibition with respect to certain mortgage loan agreements and also certain consumer loan agreements to members of the military on active duty and their dependents. Further, the Dodd-Frank Act directed the CFPB to study consumer arbitration and report to the U.S. Congress, and it authorized the CFPB to adopt rules limiting or prohibiting consumer arbitration, consistent with the results of its study.

Any judicial decisions, legislation or other rules or regulations that impair our ability to enter into and enforce consumer arbitration agreements and class action waivers will increase our exposure to class action litigation as well as litigation in plaintiff-friendly

jurisdictions, which would be costly and could have a material adverse effect on our business, prospects, results of operations, financial condition and cash flows.

The United Kingdom has imposed, and continues to impose, increased regulation of the short-term high-cost credit industry and previously stated its expectation that some firms will exit the market.

In the United Kingdom, the FCA regulates consumer credit and related activities pursuant to the FSMA and the FCA Handbook, which includes prescriptive rules and regulations and carries across many of the standards set out in the CCA and its secondary legislation as well as previous guidance initially set out by the OFT. The regulations under the FCA consumer credit regime are more prescriptive than the former U.K. consumer credit regime. The FSMA gives the FCA the power to authorize, supervise, examine and bring enforcement actions against providers of consumer credit, as well as to make rules for the regulation of consumer credit. On February 28, 2014, the FCA issued the CONC contained in the FCA Handbook. The CONC incorporates prescriptive regulations for consumer loans such as those that we offer, including mandatory affordability checks on borrowers, limiting the number of rollovers on short-term loans to two, restricting how lenders can advertise, banning advertisements that the FCA deems misleading, and introducing a limit of two unsuccessful attempts on the use of continuous payment authority (which provides a creditor the ability to directly debit a customer’s account for payment when authorized by the customer to do so) to pay off a loan. Certain provisions of the CONC took effect on April 1, 2014, and other provisions for high-cost short-term credit providers, such as the limits on rollovers, continuous payment authority and advertising, took effect on July 1, 2014. As a result of the FCA’s requirements, we made significant adjustments to many of our business practices in the United Kingdom, as discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 “— Our primary regulators in the United Kingdom have previously expressed serious concerns about our compliance with applicable U.K. regulations, which caused us to make significant changes to our U.K. business that have impacted and will continue to negatively impact our operations and results, and this impact has been and will continue to be significant.”

On January 2, 2015, the FCA implemented a cap on the total cost of high-cost short-term credit, which includes a maximum rate of 0.8% of principal per day and limits the total fees, interest (including post-default interest) and charges (including late fees which are capped at £15) to an aggregate amount not to exceed 100% of the principal amount loaned. The final rule required us to make changes to all of our high-cost short-term products in the United Kingdom. As a result of the final rule, we discontinued offering line of credit accounts to new customers in the United Kingdom in late 2014 and effective January 1, 2015, we discontinued draws on existing line of credit accounts in the United Kingdom.

The FCA conducted a consultation in 2015 and published its response on September 28, 2015, allowing firms to use continuous payment authority to collect repayments where a customer is in arrears or default and the lender is exercising forbearance. The FCA also imposed a number of regulatory changes on credit brokers and lenders operating in the high-cost-short-term credit market in the United Kingdom. The FCA also implemented a provision that requires providers of high-cost short-term credit include a risk warning in all financial promotions, including previously exempted size-limited ads like SMS text messages and pay-per-click ads. The majority of these changes came into force on November 2, 2015.

On November 29, 2016, the FCA issued a Call for Input seeking evidence and feedback to further inform its previous reviews of the high-cost credit market, including a review of the loan price cap that was implemented on January 2, 2015. On July 31, 2017, the FCA published the outcome of its review and decided not to change the price cap but to review it again in three years. The FCA found that regulation of high-cost short-term credit, including the price cap, has led to substantial benefits to consumers. The FCA validated concerns about specific products and segments of the high-cost credit market, including unarranged overdrafts and long-term use of high-cost credit and the rent-to-own, home-collected credit and catalog credit markets. The FCA plans to investigate those products and segments further and issue a Consultation Paper on proposed solutions in the spring of 2018. We do not currently know what solutions the FCA may implement as a result or how any changes may affect our business operations. If any new rules or guidance significantly restrict the conduct of our business, such implementation could have a material adverse effect on our business, prospects, results of operations, financial condition and cash flows.

On July 31, 2017, the FCA issued a Consultation Paper on proposed changes to its rules and guidance on assessing creditworthiness in consumer credit. The FCA requested responses to the consultation by October 31, 2017 and expects to publish its findings in the second quarter of 2018. We do not currently know whether or how the FCA may amend its rules and guidance on assessing creditworthiness in consumer credit or how it will affect our business operations. If any new rules or guidance significantly restrict the conduct of our business, such implementation could have a material adverse effect on our business, prospects, results of operations, financial condition and cash flows.

During the years ended December 31, 2016 and 2015, our U.K. operations represented 13.9% and 19.9%, respectively, of our consolidated total revenue.

These changes that we have implemented or are required to implement in the future as a result of such legislative and regulatory activities could have a material adverse effect on our U.K. business, as discussed in our Annual Report on Form 10-K for the fiscal year ended

December 31, 2016 “— Our primary regulators in the United Kingdom have previously expressed serious concerns about our compliance with applicable U.K. regulations, which caused us to make significant changes to our U.K. business that have impacted and will continue to negatively impact our operations and results, and this impact has been and will continue to be significant ,” and “— Due to restructuring of the consumer credit regulatory framework in the United Kingdom, we are required to obtain full authorization from our U.K. regulators to continue providing consumer credit and perform related activities in the United Kingdom, and there is no guarantee that we will receive full authorization to continue offering consumer loans in the United Kingdom.” We cannot give any assurances that the result of the FCA’s review of the high-cost credit market and the loan price cap and any potential new rules will not have a material impact on our U.K. products and services.

In the United States, the FCRA regulates the collection, dissemination and use of consumer information, including consumer credit information. Compliance with the FCRA and related laws and regulations concerning consumer reports has recently been under regulatory scrutiny. The FCRA requires us to provide a Notice of Adverse Action to a consumer loan applicant when we deny an application for credit, which, among other things, informs the applicant of the action taken regarding the credit application and the specific reasons for the denial of credit. The FCRA also requires us to promptly update any credit information reported to a consumer reporting agency about a consumer and to allow a process by which consumers may inquire about credit information furnished by us to a consumer reporting agency. Historically, the FTC has played a key role in the implementation, oversight, enforcement and interpretation of the FCRA. Pursuant to the Dodd-Frank Act, the CFPB has primary supervisory, regulatory and enforcement authority of FCRA issues, although the FTC also retains its enforcement role regarding the FCRA but shares that role in many respects with the CFPB. The CFPB has taken a more active approach than the FTC, including with respect to regulation, enforcement and supervision of the FCRA. Changes in the regulation, enforcement or supervision of the FCRA may materially affect our business if new regulations or interpretations by the CFPB or the FTC require us to materially alter the manner in which we use personal data in our credit underwriting.

In the United Kingdom, we are also subject to the requirements of the Data Protection Act 1988 (the “DPA”) and are required to be fully registered as a data-controller under the DPA. The DPA controls how organizations, businesses and/or the government use personal data and how they should process it. The current Data Protection regime will be strengthened by changes from the EU General Data Protection Regulation (“GDPR”), a regulation by which the European Parliament, the European Council and the European Commission intend to strengthen and unify data protection for individuals within the European Union (“EU”). It also addresses export of personal data outside the EU. The primary objectives of the GDPR are to give citizens back the control of their personal data and to simplify the regulatory environment for international business by unifying the regulation within the EU. When the GDPR takes effect, it will replace the data protection directive from 1995. The GDPR contains a number of new protections for EU data subjects and threatens significant fines and penalties for non-compliant data controllers and processors once it comes into effect. The regulation was adopted on April 27, 2016. It is effective May 25, 2018 after a two-year transition period and, unlike a directive, it does not require any enabling legislation to be passed by national governments.

On October 6, 2015, the European Court of Justice invalidated the so-called “Safe Harbor” framework, which previously evidenced compliance with the DPA and the European Union Data Protection Directive and allowed companies to pass European Union data to non-European Union countries if certain certification requirements were met by the company. Although many companies, including us, had Safe Harbor certification, the European Union and the United Kingdom provide other guidance regarding compliance with their data protection laws and regulations for companies who pass data outside the European Union. In addition, there are circumstances under which a company is exempt from complying with those laws and regulations. Despite the invalidation of the Safe Harbor framework, we believe we are exempt from and/or in compliance with all E.U. and U.K. privacy laws and regulations.

On February 2, 2016, the European Commission and the United States agreed on a new framework for transatlantic data flows: the “EU-US Privacy Shield”, which will replace the invalided Safe harbor framework. The EU-US Privacy Shield is a framework designed by the U.S. Department of Commerce (the “Commerce Department”) and European Commission to provide companies on both sides of the Atlantic with a mechanism to comply with EU personal data from the European Union to the United States in support of transatlantic commerce. On July 12, 2016, the European Commission adopted the EU-US Privacy Shield, which consists of four components: (i) the privacy shield principles, which is a code of conduct outlining protections for the handling of personal data; (ii) oversight and enforcement; (iii) ombudsperson mechanism; and (iv) safeguards and limitations. The Commerce Department began accepting certifications to the EU-US Privacy Shield on August 1, 2016. We expect to apply for certification to the EU-US Privacy Shield, and in the interim, despite the invalidation of the Safe Harbor framework, we believe we are exempt from and/or are in compliance with all E.U. and U.K. privacy laws and regulations.

On June 23, 2016, the United Kingdom voted to exit the European Union. The details and timeline of the exit have not yet been finalized. When the United Kingdom exits the European Union, it is expected that the United Kingdom will establish a new framework for data flow between the United Kingdom and the United States or will agree to continue the protections of the EU-US Privacy Shield for the transfer of personal data into and out of the United Kingdom. We expect to comply with any framework established by the United Kingdom for the transfer of personal data into and out of the United Kingdom.

The oversight of the FCRA by both the CFPB and the FTC and any related investigation or enforcement activities or our failure to comply with the DPA may have a material adverse impact on our business, including our operations, our mode and manner of conducting business and our financial results.

The following table provides the information with respect to purchases made by us of shares of our common stock.

Period	Total Number of Shares Purchased^(a)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan^(b)		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan^(b) (in thousands)
January 1 – January 31, 2017		—	$	—		—	$	—
February 1 – February 28, 2017		34,301		14.80		—		—
March 1 – March 31, 2017		2,122		13.55		—		—
April 1 – April 30, 2017		920		14.80		—		—
May 1 – May 31, 2017		—		—		—		—
June 1 – June 30, 2017		8,679		14.10		—		—
July 1 – July 31, 2017		22,610		16.22		—		—
August 1 – August 31, 2017		—		—		—		—
September 1 – September 30, 2017		80,000		13.45		80,000		23,924
Total		148,632	$	14.23		80,000	$	23,924

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Delaware		45-3190813
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification No.)

175 West Jackson Blvd. Chicago, Illinois		60604
(Address of principal executive offices)		(Zip Code)

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☐
		Emerging growth company	☐


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets – September 30, 2017 and 2016 and December 31, 2016	1
	Consolidated Statements of Income – Three and Nine Months Ended September 30, 2017 and 2016	2
	Consolidated Statements of Comprehensive Income – Three and Nine Months Ended September 30, 2017 and 2016	3
	Consolidated Statements of Stockholders’ Equity – Three and Nine Months Ended September 30, 2017 and 2016	4
	Consolidated Statements of Cash Flows – Three and Nine Months Ended September 30, 2017 and 2016	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	60
Item 4.	Controls and Procedures	60

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	61
Item 1A.	Risk Factors	61
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	65
Item 3.	Defaults upon Senior Securities	65
Item 4.	Mine Safety Disclosures	65
Item 5.	Other Information	65
Item 6.	Exhibits	66

SIGNATURES		67

	Lease Termination Costs			Other Exit Costs			Total
Balance at January 1, 2016	$	1,425		$	204		$	1,629
Payments		(1,132	)		—			(1,132	)
Adjustments		344			(69	)		275
Balance at December 31, 2016	$	637		$	135		$	772

Balance at January 1, 2017	$	637		$	135		$	772
Payments		(554	)		(9	)		(563	)
Adjustments		(83	)		(126	)		(209	)
Balance at September 30, 2017	$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Contingent consideration		Total
Balance at December 31, 2015	$	5,658	$	5,658
Adjustments		—		—
Balance at September 30, 2016	$	5,658	$	5,658

Exhibit No.		Exhibit Description


4.1		Indenture, dated as of September 1, 2017, by and among Enova International, Inc., each of the guarantors party thereto and Computershare Trust Company, N.A., as trustee and the Form of 8.500% Senior Note due 2024 (included as Exhibit A) (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K, filed September 8, 2017)

4.2		Fourth Supplemental Indenture, dated as of September 1, 2017, by and among Enova International, Inc., CNU of Iowa, LLC, Computershare Trust Company, N.A. and Computer Trust Company of Canada, as trustee (incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K, filed September 8, 2017)

10.1		Enova International, Inc. Supplemental Executive Retirement Plan, as amended and restated effective September 13, 2017

10.2		Second Amendment to Lease Agreement, dated September 13, 2017, between 175 Jackson L.L.C. and Enova International, Inc.

10.3		Form of Executive Change-in-Control Severance and Restrictive Covenant Agreement (Chief Executive Officer) (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K, filed September 15, 2017)

10.4		Form of Executive Change-in-Control Severance and Restrictive Covenant Agreement (Executive Officers other than the CEO) (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K, filed September 15, 2017)

10.5		Purchase Agreement by and among Enova International, Inc., the Guarantors party thereto and Jefferies LLC, as Representative of the Initial Purchasers listed therein, dated August 18, 2017 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K, filed August 24, 2017)

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

Date: November 1, 2017	ENOVA INTERNATIONAL, INC.

	By:	/s/ Steven E. Cunningham
		Steven E. Cunningham
		Executive Vice President, Chief Financial Officer
		(On behalf of the Registrant and as Principal Financial Officer)